The Financial Services Compensation Scheme (FSCS), which protects savers' money in the event a bank or building society goes under, has increased the maximum level of protection back to £85,000 per person per banking licence.

Joint accounts will be protected up to a maximum of £170,000.

Previously, only the first £75,000 (or £150,000 for joint accounts) of savings with any participating financial institution was covered.

The increase was made as a result of a weaker pound: the amount of compensation payable is set at €100,000 across the European Union, so the threshold was amended to account for sterling's fall against the euro since the Brexit vote.

Mark Neale, chief executive of the FSCS, said of the change: "The limit increase will protect even more of peoples' savings.

"The new limit will protect about 98% of people so it is worth people knowing their limits."

Crucially, the FSCS limit only applies per banking licence, rather than per bank.

So, for example, you are only covered for £85,000 worth of savings across both HSBC and First Direct.

Temporary high balances

You could be covered for sums above the savings limit in certain circumstances.

For example, if you recently sold a property or inherited a large sum of money, the FSCS will consider these "temporary high balances" that could be covered up to a maximum of £1 million for a few months.

Learn more about whether you're qualify for this cover on this part of the FSCS site.

How to make a claim through the FSCS

If you hold savings with an authorised bank, credit union or building society that has gone bust, the FSCS will automatically compensate you for your loss.

If you want to claim on another product covered by the FSCS, you will need to complete an application form.

It will then then investigate whether your claim is valid and inform you if you will be compensated.

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