Savings of up to £1 million to be protected under new rules

Under new rules proposed by the Bank of England people’s savings balances of up to £1 million will be protected in some circumstances.

The proposals are designed to cover money temporarily deposited in an account for up to six months and will include the proceeds from the sale of a property.

The Financial Services Compensation Scheme (FSCS) rules currently mean that a maximum of £85,000 (£170,000 for joint accounts) worth of savings if a bank or building society goes bust.

The new financial limits are expected to come into force by summer 2015.

As part of range of a wider range of moves to improve protection for consumers, people will be able withdraw their money within 24 hours, even if the bank has gone bust.

Within the next five years banks have to split their retail banking business from their investment activities and that the retail arm would have to be independent from the rest of the bank with a separate CEO and board of directors.

Andrew Bailey, deputy governor of the Bank of England said: “Improving the resilience and resolvability of firms has been at the heart of international and domestic reforms since the financial crisis.”

He added: “Ring-fencing will improve banks’ resilience, by protecting them from shocks, and facilitate orderly resolution – both of which are needed for a stable financial system.”

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