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<p>The Deposit Guarantee Scheme Directive (DGSD) updates existing legislation designed
to harmonise the level of deposit protection provided across the European Economic
Area (EEA), of which the UK is a part.</p><p> </p><p> </p><p> </p><p>This is a single
market measure to ensure that depositors are entitled to the same level of protection
(equivalent to €100,000 per regulated firm, regardless of currency) wherever in the
EEA they deposit their money; and that UK firms are not competitively disadvantaged
in relation to firms in other EEA jurisdictions.</p><p> </p><p> </p><p> </p><p>As
a result of the current strength of the pound in relation to the euro, it has been
necessary for the Prudential Regulation Authority (PRA) to revise the sterling coverage
limit provided by the UK’s deposit guarantee scheme, the Financial Services Compensation
Scheme (FSCS). However, the Government has taken action to ensure that UK depositors
are not exposed to a sudden reduction in the level of protection they receive.</p><p>
</p><p> </p><p> </p><p>HM Treasury has laid a statutory instrument to ensure that
depositors who are currently entitled to £85,000 of protection from the FSCS will
continue to be until 31 December 2015, after which the new deposit coverage limit
of £75,000 will come into effect.</p><p> </p><p> </p><p> </p><p>This will ensure that
there is sufficient time available for depositors to be made aware of the changes,
and to take any necessary steps to manage their financial affairs appropriately in
light of this change. It is estimated that 5 per cent of retail depositors are affected
by this change.</p><p> </p><p> </p><p> </p>
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