The Financial Services Authority has announced it will require all banks, building societies and credit unions to display information explaining deposit guarantee schemes to their customers.

Firms will need to explain to customers which deposit guarantee schemes apply to their deposits. Currently depositors in banks incorporated in the UK are protected by the

Financial Services Compensation Scheme up to a limit of £85,000. Any further deposits are not covered.

Depositors in a bank based in the European Economic Area and which operate a branch in the UK are not protected by the FSCS but the deposit guarantee scheme in the home country.

The rules, which come into effect on 31 August, mean stickers will have to be displayed in the branch window, cashier window and on a poster in a prominent position inside.

Andrew Bailey, FSA director of banks and building societies, said: “Customers need to feel confident about their money and to do this they need to know what the compensation limits are and which scheme would provide cover in the event of a bank, building society or credit union failure.

“Too many people assume that because their branch is located on a local high street in the UK, they are covered by the FSCS. This is not true for UK branches of EEA banks where the home country’s deposit guarantee scheme applies.”

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