Protecting your savingsProtection for savings with foreign banks

Banks established outside the European Economic Area (EEA) must be authorised by the FSA before they can operate in the UK. If these banks failed, your savings would be covered by the FSCS. For example, Indian bank ICICI is covered up to the £50,000 FSCS limit.

Banks established within the EEA will be covered under their home country’s compensation scheme, giving a minimum level of cover of 50,000 euros. Some European banks have also signed up to a ‘topping up’ scheme, whereby the FSCS will compensate savers for the difference between the EEA level and the UK limit should their bank go bust. The top-up scheme includes Bank of Cyprus and Fortis.

In the event that a European compensation scheme is unable to pay out, the FSCS will currently only cover deposits between the EEA limit and the FSCS maximum of £50,000, unless the government announces special measures, as was the case with Icesave UK.

If you have savings in an Irish bank you should bear in mind that they are not permitted to remain members of the UK compensation scheme, and so you are not covered by the FSCS. If you want to be covered by the UK compensation scheme, consider switching your savings into an authorised UK provider's savings account.

Meanwhile, the British government has guaranteed the deposits of UK savers in Icelandic bank Icesave. The FSCS has said that the 200,000 plus people with savings in Icesave will be contacted shortly, receiving their savings from early November. Icesave customers don't need to do anything until the FSCS contacts them.

To find out if your bank has signed up, put ‘EEA’ in the search box on www.fscs.org.uk.