The FSA has announced that the protection limit for savings has been increased to £50,000.

The Financial Services Authority (FSA) has announced that it has raised the compensation limit for bank deposits by £15,000 to £50,000 from Tuesday 7 October, and is considering whether to increase the limit further.

Joint account holders are now protected up to £100,000. The previous guaranteed amount of savings a customer could have in any one bank was £35,000, the level that was agreed in October 2007.

The financial services industry regulator introduced the change in light of recent unrest and lack of public confidence in the financial sector. Hector Sants, FSA’s Chief Executive, commented: “This change ties in with the introduction of the Government’s Banking Bill in Parliament which is due next week, and is also appropriate given the consolidation that has taken place in the banking sector.

“In addition, the Chancellor has made clear that the Authorities will do whatever is necessary to maintain financial stability and protect depositors.”

As well as a change to savings protection limits, the Financial Services Compensation Scheme (FSCS) investment limits and home finance intermediation limits will also change. Currently, 100% of the first £30,000 of a claim, and 90% of the next £20,000 are protected (totaling £48,000), and a proposed £2,000 increase is being discussed, again bringing the cover to 100% of the first £50,000.

Life and general insurance cover limits will also change – the future level of cover will now be 90% of the total claim, regardless of how much or how little the claim is.

The FSA is also to look into the speed at which the FSCS can pay customers compensation.