The Financial Services Compensation Scheme’s (FSCS) Temporary High Balance (THB) protection for deposits of up to £1m will be temporarily extended from six to 12 months for deposit-taker failures occurring from this Thursday, 6 August 2020.
THBs are exceptional and short-lived deposits resulting from certain major life events including money deposited in preparation for buying a main residence; money paid in relation to a divorce or dissolution of a civil partnership; a redundancy payout; and compensation in respect of a person’s death.
The Prudential Regulation Authority (PRA) has temporarily extended FSCS coverage for THBs in response to the impact of Covid-19 on the residential property and investment markets, in recognition that some people have reduced access to banking services. Due to the impact of COVID-19 there may be more depositors with large balances who need a longer period of protection by FSCS.
For deposit-taker failures after 6 August 2020, the extension will apply to both new and existing THBs received. Money deposited into an account with an authorised UK bank, building society or credit union in February 2020, with the six-month THB coverage due to end in August 2020, will now be protected until February 2021. Similarly, if a qualifying THB is deposited in September 2020, coverage would run until September 2021, as opposed to March 2021.