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Extra protection for building society customers

Consumers get extra protection for their savings

Nationwide Branch

The Financial Services Authority has introduced a rule allowing building societies that merge to retain their separate compensation limit. 

Before now anyone with money in two building societies that merge could find only the first £50,000 of their savings protected. The industry watchdog hopes that savers with more than £50,000 in a newly merged building society won’t withdraw a proportion of their savings to keep within the limit. 

The additional level of protection, which will operate until 30 September 2009, has been introduced amid a wave of announced mergers, including between Scarborough and Skipton, Derbyshire and Nationwide and Chelsea and Catholic building societies.

Jon Pain, retail markets managing director at the FSA, said: ‘The exception we are introducing today to our compensation rules will allow a society which merges with another, and which continues to operate under its former name, to continue to have separate FSCS deposit limits for the pre-merger account holders of the business.

‘Following mergers this will help existing savers with the societies who want to keep below the deposit protection limit and also reduce withdrawals from the successor society driven purely by compensation considerations on the part of savers.’

The maximum limit for savings protected under the Financial Services Compensation Scheme was raised from £35,000 to £50,000 in October.

Click here for more on how to protect your savings.

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