Savers with cash in the UK arm of overseas banks risk losing a chunk of their deposit protection because of the soaring pound against the euro.
British-based banks and building societies are covered by the Financial Services Compensation Scheme (FSCS), guaranteeing up to £85,000 per person, per institution if one fails.
Some EU-based banks with satellite businesses in the UK, such as the Spanish owned Santander UK, are also covered under the FSCS. But others have opted out and use the EU passport scheme instead.
These include ING Direct and Triodos Bank, which guarantee up to €100,000 per person, per institution under their country’s own safety-net scheme.
Last July, €100,000 would have matched or even topped £85,000 — the same level as under the FSCS.
But since exchange rates shifted, €100,000 equals around £78,000. Savers with deposits worth more than the new protected limits should consider moving their money.
Kevin Mountford, of website MoneySupermarket, says: ‘If you’re worried, then it’s worth moving some of your savings to a different provider to ensure it’s all adequately protected.’
The Bank of Cyprus UK changed tack last month and now uses the FSCS, sheltering the savings of 50,000 people in Britain and covering up to £85,000 or £170,000 for joint accounts.
Previously, money was guaranteed by the Cypriot Deposit Protection Scheme, but only up to €100,000.