Via FSCS, if a bank or mortgage company goes bankrupt and cannot repay a person’s money, the customer can get automatic compensation. This is if the company went bankrupt after January 1, 2017.
However, there are rules about what is protected.
For example, the bank or building society must be authorized by the Prudential Regulation Authority (PRA).
In addition, where a person holds their money can affect the amount of compensation to which a person is entitled.
FSCS explains: “If you have money in multiple accounts with banks that are part of the same banking group (and share a banking license), we should treat them as one bank.
“This means that our compensation limit applies to the total amount you hold on all of those accounts, not on each separate account.
“For our clearing limit to apply to each individual account, you must have money with different banks that do not share a license.”
As such, savers may want to check whether their savings are protected.
The FSCS has an online tool that can be used to verify this.
They should also report the amount of money saved with that bank, building society, or credit union.
The last requirement is to indicate whether it is a personal or individual account, a joint account, or through a charity or limited liability company.
The tool then shows how much money held in each bank, building society or credit union is protected.
It also indicates to what extent, if any, the savings are “at risk”.