31 May: As set out in PS25/16 ‘Implementing risk-based levies for the Financial Services Compensation Scheme deposits class’, FSCS compensation costs levies will be adjusted for the degree of risk incurred by deposit takers for the first time this year. The levy will be included in the Financial Conduct Authority (FCA) Regulatory Fees and Levies invoice that firms will receive in July 2017.
Compensation costs levies were previously based solely on the proportion of covered deposits held by a firm. As required by the recast Deposit Guarantee Schemes Directive, these levies will now also be adjusted for the degree of risk the firm incurs. Wholesale deposits are also included in covered deposits for the first time. Legacy cost levies are not affected by the risk adjustment.
A firm’s risk adjustment is calculated using a number of quantitative indicators, such as capital, leverage, liquidity, and asset quality.
A firm’s aggregate risk weighting will be included on its invoice from the FCA. More information on the risk adjustment can be found in the Statement of Policy ‘Calculating risk-based levies for the Financial Services Compensation Scheme deposits class’.
More detail on the Regulatory Fees and Levies invoice is available on the FCA website.
If you have further questions on receipt of your invoice, please speak to your usual PRA supervisory contact.
Amounts of compensation: deposits
Deposits held in banks, building societies and credit unions (including in Northern Ireland) that are authorised by the PRA are protected up to £85,000. This includes, for example, eligible deposits in current accounts, savings accounts, cash ISAs (held with a deposit taker) or savings bonds.
The deposit protection limit applies to the total eligible deposits of each person, per PRA-authorised firm. So for deposits in a joint account, this means that each account holder is protected up to the deposit protection limit, i.e. the total protection adds up to two times £85,000.
A PRA-authorised firm may own several banking and building society brands. This means that anyone who has deposits in more than one account under a single brand, or multiple accounts under different brands owned by a single firm, is only protected up to a total of £85,000 across all these accounts.
There will be temporary deposit protection for up to 6 months above the £85,000 limit for certain types of deposits classified as temporary high balances, such as the proceeds from private property sales. Protection will be up to £1million in most cases.
People with eligible deposits that add up to more than the deposit protection limit may wish to take steps to keep their deposits fully protected (e.g. by splitting their deposits across different PRA-authorised firms).
International banks in the UK
Depositors in some overseas firms in the UK (not including the Channel Islands or Isle of Man) are protected by the FSCS up to the deposit protection limit.
- UK-incorporated subsidiaries of European Economic Area (EEA) deposit-takers
- UK-incorporated subsidiaries of non-EEA deposit-takers
- UK branches of non-EEA deposit-takers authorised by the PRA to accept deposits in the UK.
Eligible depositors in UK branches of EEA banks are protected by the deposit guarantee scheme in the bank’s home state, usually up to a limit of €100,000. They are not covered by the FSCS. For more information on the extent and nature of non-UK deposit guarantee schemes, please refer directly to those schemes. If you are not sure how your money is protected, you can contact your bank for information.