Bigger payouts brought infor victims of failed banks

Consumers will receive increased protection if a financial services firm goes under following the introduction of new compensation limits.

City watchdog the Financial Services Authority increased the amount the Financial Services Compensation Scheme will pay out.

The move aims to bring the level of cover offered on other financial products in line with that for savings accounts and to make the levels of compensation easier to understand.

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From today people will receive up to 50,000 of any money they lose through investments as a result of a company failure, as well as the first 50,000 lost on mortgage or home finance advice.

The change simplifies the old system, under which only the first 30,000 of money lost through investments was 100 per cent covered by the scheme, with 90 per cent of the next 20,000 also covered.

The new rules will also see people receive compensation equal to 90 per cent of losses on non-compulsory general insurance, such as home insurance, with no upper limit.