The end of January saw a boost for savers as the Financial Services Compensation Scheme (FSCS) raised its limit for savings protection by £10,000 to £85,000. FSCS chief executive Mark Neale said: “Our new limit will protect about 98% of the UK public. So people can be sure their money in banks, building societies and credit unions is safe.”
But has the new limit influenced how much savers put into fixed term bonds, which typically attract higher deposit amounts than instant access products?
An analysis of the deposits raised via PBF’s distribution network and on-boarding platforms before and after the change on 31 January has shown a material shift upwards in the average amount pledged by savers when they open an account. In the three months leading up to the change, average pledged amounts were around £33,000, whilst immediately following the change and in the two months since, the average has been around £41,000. That’s close to being a 25% uplift.
So the change is not only good news for savers, but also for banks raising deposits.