This was the limit during the post-crash period from 2010 onwards but was reduced to the current £75,000 due to EU requirement. The £85,000 limit was in effect for almost five years until 3 July 2015.

The limit was reduced to £75,000 because the EU Deposit Guarantee Schemes Directive required non-euro member states of the EU to adjust their deposit protection limits to the equivalent of €100,000.

Under the proposals depositors will be protected up to £85,000 as of 30 January 2017.

Financial institutions will have until 30 June 2017 to implement the necessary changes to systems and materials.

The PRA is consulting on whether to:

• provide a five-month transitional period for firms to implement the new deposit protection limit; and
• require firms to notify the PRA if they are ready to implement the rule changes prior to 30 June 2017.

The PRA justifies its decision to raise the limit as the EU directive ‘also requires that limits are adjusted outside of the five-year review cycle following unforeseen events such as currency fluctuations. Taking into consideration the developments in financial markets following the UK’s referendum vote to leave the EU on 23 June 2016, including with respect to the GBP/EUR exchange rate, the PRA considers that a structural shift in the exchange rate has occurred.  These events were unforeseen when the UK limit was reduced in 2015’.

The PRA will continue to monitor fluctuations in the exchange rate but, barring unforeseen events, will seek to avoid making further adjustments to the deposit protection limit.

The PRA Deposit protection limit – CP41/16 consultation closes for comment on 16 December 2016.