06 Oct 2015 9:34 AM

As from 1 January 2016 the level of protection for people with savings with a bank, building society or credit union is reducing from £85,000 to £75,000.

The change has come about under the European Union Deposit Guarantee Schemes Directive which has fixed the deposit guarantee limit to a consistent level across Europe of €100,000 (approx. £75,000 in sterling).

If you have more than £75,000 on deposit with the same financial institution you may wish to consider moving funds around before 1 January 2016 to ensure that all of your savings are protected.

There are special agreements in place to help savers avoid loss of interest if they need to move money from certain accounts to reduce their exposure to risk.

If you have multiple savings accounts that total in excess of £75,000, it is wise checking whether they are different brands of the same bank, because if this is the case you will have the protection of only one licence.

However, the change is unlikely to affect many savers as according to the FSCS 95% of people have under £50,000 in savings.

For more information on the protection limit changes and the arrangements for moving deposits between accounts please go to the Financial Services Compensation Scheme website.