The Financial Services Authority (FSA) is planning to make it obligatory for all banks, building societies and credit unions in the UK to prominently display how much compensation savers could claim in the event of an institution failing, and where from.
The information will need to be displayed in every branch and on all websites.
The regulator says it wants to improve confidence around compensation by increasing awareness of deposit protection.
Proposals published today will require each FSA-authorised bank or building society based in the UK to state that:
“Your deposits are protected up to £85,000 by the Financial Services Compensation Scheme, the UK deposit protection scheme.
“Any deposits you hold above this amount are not covered.”
Banks with branches in the UK but headquartered and authorised in the European Economic Area will have to state that deposits held with them “are not protected by the UK Financial Services Compensation Scheme”.
They will also have to state which other national scheme is providing the protection.
FSA chief executive officer, Hector Sants, comments: “It is vitally important that customers have confidence in the banking system and that is why we are taking this step of making it obligatory for firms to prominently display compensation information.”
He adds: “Customers should also know which compensation scheme they are relying on, which country it is based in and understand how it would work – for example how long it would take to get your money back.”
A year ago, national compensation schemes across the entire European Economic Area were harmonised to offer cover at €100,000 or the local currency equivalent and ensure eligible consumers are paid within 20 working days.
In addition, at the start of this year the UK introduced faster payout rules, with a target of a seven day payout for the majority of claimants and the remainder within 20 working days; and gross payout, which protects customers by ring fencing their deposits if they have savings and loans with the same firm.