Andrew Rosindell – 2016 Parliamentary Question to the HM Treasury
The below Parliamentary question was asked by Andrew Rosindell on 2016-02-02.
To ask Mr Chancellor of the Exchequer, if he will estimate the value of savings held in the UK that are no longer covered under the Financial Services Compensation Scheme as a result of changes implemented in January 2016 under an EU directive on deposit protection units; and if he will make representations to his EU counterparts on reversing the effect of that directive.
Harriett Baldwin
The Deposit Guarantee Scheme Directive (DGSD) is a single market measure to ensure that depositors are entitled to the same level of protection wherever they deposit their money, and that UK firms are not competitively disadvantaged in relation to firms in other European Economic Area (EEA) jurisdictions.
As a result of the recent strength of the pound in relation to the euro, it was necessary for the Prudential Regulation Authority (PRA) to review the sterling coverage limit. On 31 December 2015, the FSCS coverage limit changed to £75,000 per person, per authorised firm. The vast majority of UK depositors are not directly affected – more than 95% of depositors are still fully protected by the FSCS after this change.
The Government brought forward legislation to ensure that the deposit protection limit was maintained at £85,000 until 31 December 2015, to ensure those depositors affected had the time to be informed of the change and to take any actions they felt appropriate. In addition, the PRA made new rules to ensure that, until 31 December 2015, depositors with more than £75,000 worth of deposits at a single authorised firm could withdraw those deposits without penalty.
The Government has made representations to the Commission to suggest that the reviews of the coverage level in non-euro states should occur after the Commission completes its review of suitability of the coverage level as a whole and also that changes for non-euro states reflect genuine, very large and lasting changes in exchange rates.
