Bank posters highlight cash safety net
Posters and stickers telling people how much of their money is protected if their bank goes bust must be prominently displayed in branches under new rules which have come into force.
The Financial Services Compensation Scheme (FSCS) said raising awareness about how deposits are protected if a financial institution goes bust could help prevent a repeat of any similar scenes to the queues of customers rushing to empty their accounts from Northern Rock five years ago.
Mark Neale, chief executive of the FSCS, said: "The banking crisis shows how important it is for consumers to have clear information about the protection which is available to them. We never again want to witness a run on a bank because people are not aware their money is safe. We have been working with major firms to help build consumer awareness about FSCS. Firms should ensure that information about protection is prominently displayed in branches and online, and that their employees are able to answer questions."
The scheme covers savings up to £85,000 for single accounts and £170,000 for joint accounts if a financial institution goes bust.
The compensation limit applies to money lost per banking licence and not per individual brand, meaning that consumers who want to remain within the limit have to know which banking groups own individual brands, which is something the new rules will also help increase awareness of.
While the scheme covers deposits held with UK banks and subsidiaries of foreign banks which operate in the UK, it does not cover money held with UK branches of European banks, which are covered by the relevant compensation scheme in the country where the bank has its head office.
Under the new rules, UK branches of foreign banks from the European Economic Area (EEA) will have to specify that their customers are not covered by the FSCS and clearly state which national scheme they are covered by.
The FSCS previously launched a £4 million publicity campaign in a bid to raise the scheme's profile, but later acknowledged that awareness had not increased to the levels hoped. Since 2001 it has helped more than 4.5 million people and paid out more than £26 billion.
The new requirements have been set out by the Financial Services Authority (FSA), which said that too many people assume that they are automatically covered by the FSCS because their branch is located on a UK high street, which is not always the case.