Banks should be compelled to warn people when their savings breach the amount that would be protected if their provider went bust, according to a survey of MPs and consumers.
Some 81% of MPs surveyed for the Financial Services Compensation Scheme (FSCS) said that banks and building societies should have to make it clear to savers when their deposits exceed the £85,000 compensation limit that anything above this amount is not protected.
There was also widespread backing among the population generally for the idea of financial institutions being forced to do this, with 76% of consumers surveyed also agreeing that this should happen.
The FSCS is the UK’s savings safety net, which is funded by an industry levy and covers up to £85,000 for single accounts and £170,000 for joint accounts if a financial institution goes bust.
The body, which has previously acknowledged that its own publicity efforts have not increased awareness to the levels it had hoped, wants to see financial institutions doing more to increase awareness about compensation limits in their routine dealings with customers, such as in their advertising.
It has raised concerns that awareness about compensation limits is still too low, with a previous study in December finding that just 12% of people know exactly how much of their money would be protected if their bank went under.
The lack of awareness has persisted despite rules coming into force last August which mean that banks, building societies and credit unions must prominently display stickers or posters publicising compensation levels.
The savings safety net’s latest research also found that more than three-quarters of MPs believe that banks and building societies should include information about the FSCS in their advertising and four-fifths agree that increasing awareness of the body would boost consumer confidence and financial stability.
FSCS chief executive Mark Neale said that awareness about savings compensation is generally high in the United States, where financial institutions routinely include such information in their advertising.
He said: “It’s too late for people to find out about FSCS when a run on a bank starts. We believe firms can, and should, do more. Importantly, MPs and the public also support people being told when they exceed the compensation limit. We hope firms will take up the challenge and continue working with us to improve awareness of the Financial Services Compensation Scheme.”
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