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Customers with joint accounts will be eligible to claim up to £100,000.

FSA's chief executive officer, Hector Sants, said:

"There has been extensive debate about the compensation levels. In the interests of providing clarity over the minimum level for the long term we have now decided to implement the move to a £50,000 limit from Tuesday.

"This change ties in with the introduction of the government's Banking Bill in Parliament which is due next week, and is also appropriate given the consolidation that has taken place in the banking sector.

"In addition, the Chancellor has made clear that the authorities will do whatever is necessary to maintain financial stability and protect depositors."

The Financial Services Compensation Scheme (FSCS) is funded by the financial services industry. The Financial Services Authority (FSA) as regulator is responsible for setting the compensation and eligibility limits that apply to the FSCS.

Further reforms

The government will shortly be introducing legislation to further enhance consumer confidence in the banking sector.

The FSA will also be consulting on further reforms, including:

• whether the compensation limit should be higher still
• the speed with which the FSCS can pay compensation
• the rules surrounding whether deposits are covered on a legal entity, a 'brand' or an 'account' basis

This will provide effective long-term compensation arrangements in which consumers can have confidence.

Further information

• Financial Services Authority Opens new window
• Financial Services Compensation Scheme Opens new window

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