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Cash held in bank accounts “temporarily” protected


People who have large amounts of money in their bank accounts for a small amount of time will now have their money protected in the event of their bank failing.

The Bank of England has announced that the Financial Services Compensation Scheme (FSCS) will be extended to include large sums of money that is in people’s bank accounts “temporarily”.

The FSCS can pay compensation to consumers if a financial services firm is unable, or likely to be unable, to pay them their money. Until these changes, the FSCS could only pay the first £85,000 on an account that was protected by the scheme. Now, as of 3rd July 2015, anyone who has up to £1 million in their account for less than six months could be compensated, should the inevitable happen.

These changes are in place for people who have a lot of money in their account because they are going through major changes in their life. These include people who have money due to:
- A house sale
- Redundancy money
- Wedding savings
- Compensation for criminal injuries or wrongful conviction
People claiming under these new rules will have to prove that the money was in their account only temporarily.

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