Investor Compensation Protection Extension

Investor Compensation Protection Extension

Investor compensation protection for merging Building Societies is to be extended until the end of 2010.

Unlike Banks, which normally retain their separate banking licences when they merge and therefore have a full £50,000 investor compensation protection level for each bank, when a Building Society merges or is taken over by another Bank of Building Society, it ceases to exist and therefore you only have one Investor Compensation Protection limit.

The Financial Services Authority temporarily changed the Investor Compensation Protection rules last year so that when a Building Society merges, double protection is still in place, just in case you have too much money invested in both the closing Building Society and the acquiring Building Society or Bank.

Given the recent takeovers of various mutual societies such as Derbyshire and Dunfermline by Nationwide, the Financial Services compensation scheme has been extended to ensure that savers have adequate protection for say three or even more seperate £50,000 investor coimpensation limits.

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