Deposit Protection Cut

The level of protection for bank and building society deposits has been cut by £10,000 to £75,000, although for existing deposits the change will not take effect until the start of next year.

Blame the EU

The reason for the cut is down to the European Deposit Guarantee Schemes Directive.

This Directive states that every five years non-Eurozone countries have to recalculate their minimum deposit protection limit, setting it at the equivalent in their domestic currency of €100,000, subject to a limited amount of rounding.

The pound has strengthened against the euro since the limit was last set in mid-2010, which is good news for Mediterranean holidaymakers, but bad news for depositors, already suffering over half a decade of ultra-low interest rates.

Temporary high balances

At the same time as announcing the cut, the Bank of England introduced a new £1 million, six month protection level for ‘temporary high balances’.

This is designed to cover circumstances where an account is temporarily holding a large payment, eg an inheritance, pending future investment or expenditure. There is a specified list of events covered, including redundancy and divorce(!).


If you have more than £75,000 with one bank (£150,000 for joint accounts), then you may want to consider opening an account with a different bank to retain your deposit protection. Remember different institutions may count as one bank for deposit protection purposes if they share a common banking licence (eg Halifax and Bank of Scotland).

Even though interest rates look set to start rising slowly in 2016, holding large sums on deposit may be unwise. Before going through the money-laundering hoops of opening a new deposit account, make sure you discuss your other options with us.

You can contact us via email or call 01825 76 33 66.