From 1 January 2016, the Financial Services Compensation Scheme (FSCS) will reduce the compensation limit for savers from £85,000 to £75,000.

Currently, anyone with savings up to £85,000 (or up to £170,000 for joint accounts) in a bank or building society would be covered for this amount if the institution goes bust.

The limit is set by the European Union Deposit Guarantee Schemes Directive that fixes the level of protection across Europe at €100,000 or its equivalent. When the level was agreed in 2010, that figure translated into £85,000. But the FSCS said that due to the value of the euro falling against the pound, the limit is being re-set based on the exchange rates applying on 3 July 2015.

Autonomy Wealth View: Whilst the FSCS points out that the lower limit will still cover 95% of savers, it is important to remember that where you have savings with more than one bank or brand which actually share the same license, you will only usually be covered if the total amount does not exceed the limit.