MILLIONS of people with savings in UK bank accounts will soon have more of their cash protected.
The Prudential Regulation Authority (PRA), which oversees banking in the UK, proposed increasing the amount of savings that are protected if a financial firm goes bust to up to £110,000 in March.
If you put money into a bank, building society or investment firm that is properly regulated, some of your savings are protected by something called the Financial Services Compensation Scheme (FSCS).
The FSCS is paid for by all regulated financial companies.
If your bank or financial provider goes out of business, the scheme gives you your money back, up to a certain limit.
At the moment, the most you can get back is £85,000.
But the new plans from the PRA mean this could soon go up to £110,000, to keep up with rising prices over the years.
A consultation on the changes finished on June 30.
And the PRA will confirm the new rules in November.
The PRA is expected to confirm the new rules in November, and if agreed, the increased savings protection will begin on December 1.
Over the past three years, the FSCS has paid out £10.1million in compensation to savers, which it said largely related to small credit union failures.
Credit unions are where locals pool their money together to lend to one another at reduced rates.
These have surged in popularity over the past few years, but several have recently gone bust.
Sam Woods, deputy governor for Prudential Regulation and CEO of the PRA, said: "Confidence in our financial system is an essential foundation for economic growth.
"We want to support confidence in our banks, building societies and credit unions by raising the amount that people can keep in their account which is covered by the deposit guarantee scheme to £110,000 per person, so all that money is safe even if the firm fails."
If your bank or financial company goes out of business and cannot pay its debts, you might be able to get your money back through the FSCS.
The company must be properly regulated by the FCA or PRA for you to be covered.
You can find out if your bank is regulated by visiting bankofengland.co.uk/prudential-regulation/authorisations/which-firms-does-the-pra-regulate.
You're able to get compensation if you lose money because the company has gone bust.
If your bank, building society or credit union fails, you will automatically get back up to £85,000 - there's nothing you need to do.
For other types of firms, you may need to make a claim yourself online. You can do this at claims.fscs.org.uk.
You'll need to fill in some details and may have to upload some documents as proof.
Visit the FSCS's website at fscs.org.uk/making-a-claim/claims-process/before-claiming/ to see what to do for each type of financial firm.
For example, complaints against an insurer may require you to provide your policy documents, while for investment claims you will need proof that the firm gave you advice.