Britain’s MPs believe that financial services firms should do more to tell consumers about how their savings are protected, reveals a recent survey by the Financial Services Compensation Scheme (FSCS).
More than three quarters of MPs believe banks and building societies should include the FSCS in their advertising, while 84% of MPs agree that firms should have to tell people about the FSCS when selling financial products.
The FSCS poll also revealed strong support for financial institutions to make it clear to savers when their deposits exceed the £85,000 compensation limit that anything above this amount is not protected. Eight in 10 (81%) of MPs agreed that banks and building societies should warn people when they go over the limit. The measure is supported by 76% of the general population.
Awareness of FSCS still too low
The FSCS is the UK’s savings safety net, which can automatically pay out up to £85,000 for single accounts and £170,000 for joint accounts if a financial institution goes bust.
However, 79% of MPs agree that there is lack of public awareness of the FSCS. This is supported by FSCS research – a study in December found that just 12% of people know exactly how much of their money would be protected if their bank went under.
A Which? public survey carried out in March 2012 revealed that, worryingly, 22% of people thought that the amount they would be compensated for was unlimited.
This lack of awareness has persisted despite rules coming into force last August which mean that banks, building societies and credit unions must prominently display stickers or posters publicising compensation levels.
FSCS awareness will boost consumer confidence
Eight in 10 (81%) MPs believe increasing awareness of FSCS will increase consumer confidence and financial stability.
Mark Neale, FSCS chief executive, said ‘our research suggests that banks and building societies are improving the quality of information they give to people about FSCS. However, too few people still know about the protection FSCS provides, which the industry funds so more needs to be done.’
‘It’s too late for people to find out about FSCS when a run on a bank starts. We believe firms can, and should, do more. Importantly, MPs and the public also support people being told when they exceed the compensation limit. We hope firms will take up the challenge and continue working with us to improve awareness of the Financial Services Compensation Scheme.’