The maximum compensation payable to account holders and savers if their bank collapses is to return to its previous limit of £85,000.

The Bank of England said the change to the Financial Services Compensation Scheme (FSCS) would happen by 30 January 2017. The compensation limit was lowered to £75,000 in July 2015, following sterling's rise against the euro. But since the Brexit vote, sterling has fallen more than 10% against the euro. The amount of compensation payable is set at €100,000 across the European Union, and under normal circumstances is re-calculated in sterling every five years. But the European directive involved allows a more frequent assessment where there are "unforeseen events, such as currency fluctuations".

Consultation period

The Bank of England's move suggests that it believes the fall in the value of sterling is at least semi-permanent. The FSCS covers current and savings accounts, and cash ISAs. The new maximum compensation - of £85,000 per person per bank - was previously in place for five years, up to July 2015. However Andrew Tyrie, the chairman of the Treasury Select Committee, said the level had been altered seven times in the last ten years......Read more here