Up to £1million of your savings could be protected by the Bank of England

The Bank of England, under its Prudential Regulation Authority (PRA), has proposed that by July 2015 a maximum of £1million in savings with an individual bank will be protected for a term of six months.

This is of particular interest to property investors and developers who may have large sums deposited for short periods of time between sale completions and purchases. Currently the maximum protected with an individual bank or building society is £85,000.

The proposals are designed to avoid any future runs on banks such as the one that caused the collapse of Northern rock and to comply with changes to the European directive.

The PRA also have plans to create a system of transferring accounts away from a failed bank to a solvent one so that savers will be able to withdraw funds as required within 24 hours.

Andrew Baily PRA chief executive said the regulations would ensure “a stable financial system” and added “these proposals will allow customers to have continuous access to the money in their bank account.”

This is the first part in the process of making sure retail customer deposits are protected and separated from bank investment activities by 2019. The separate ring fenced arms of banks will be required to have different chief executives and chairmen and plans to achieve this by the end of this year.