Bank deposit protection to be reduced to £75,000.

Bank deposit protection to be reduced to £75,000. As if deposit holders needed another excuse to seek other homes for the derisory returns that are provided on deposits. The meddling European Union will reduce the overall protection for deposit holders and, via the FSCS, will reduce the amount it guarantees for bank deposits from the current level to £75,000 from next January.

This is in line with a European Union directive which harmonises limits across Europe at €100,000 or equivalent, and has been adjusted to the current exchange rate based on a weaker euro.

This weakening of the statutory protections is unhelpful to say the least.

The FSCS pointed out it has a new temporary protection for high balances, which means some deposits, such as from a house sale, will be protected up to £1m for a rolling six month period.

We are a trusting lot in the UK aren’t we? – leave our cash with the bank which (apart from the protection limit) is unsecured, get paid a pittance. The bank (or other institution) lend the same monies out (fully secured – normally mortgages or loans at a considerably high interest rate).

If you are reliant on your deposits for your income then surely you must be eating into capital now, given that your protection levels are being reduced. Isn’t it time you consider an alternative home for your money?

We have made a number of suggestions in our blog recently, including high yielding investment trusts and premium bonds.

Our recent article on investment dogs failed to mention that not one UK Equity Income fund is in the doghouse!

Whatever your financial situation any decent IFA, could I am sure, improve your lot!

 

Ray Best is a resilient Financial Planner with a unique approach to investment planning, his work ethic has propelled him from humble beginnings to be voted as a top UK Financial Planner by Vouched For (as published in the Sunday Times). These days he works with families with large investment portfolios or big inheritance tax liabilities, the first step, is to book a Discovery Meeting HERE.

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