The new compensation scheme for savings will mean the end of separate protection for building societies that have merged.

As of  31 December, the UK Financial Services Compensation Scheme (FSCS) level of protection has risen to £85,000 bringing the UK in line with a Europe wide compensation limit at or equivalent to €100,000.

But the new scheme ends the one that has been in place since 2009 which protected savers who had money with different building societies that had merged.

For example, the Co-operative Bank took over Britannia Building Society in 2009 and until now there was separate protection of £50,000 per institution if you had accounts with Britannia and with the Co-operative.

If customers still have accounts with merged organisations they will only be eligible for compensation up to the new £85,000 limit across all accounts with those merged organisations.

This is the same as the overall rules for compensation which apply to regulated institutions rather than specific accounts with an organisation or specific subsidiaries of a banking group.

In 2009, the Derbyshire and the Cheshire building societies merged with Nationwide Building Society and the group bought part of the Dunfermline Building Society, and these trading names still operate.

However, under the new rules the compensation limit is £85,000 per individual across all accounts held with the businesses that are part of the Nationwide group.

Other building societies affected in the same way include: Yorkshire Building Society which also operates under the trading names Barnsley Building Society and Chelsea Building Society; Skipton Building Society, which merged with Scarborough Building Society in 2009; and Coventry Building Society which owns Stroud and Swindon.

The rules for joint accounts in regulated banks and building societies remain the same but reflect the new limit. So each individual in a joint account is covered up to £85,000 per institution, so the total compensation limit for joint account holders is £170,000.

© Fair Investment Company Ltd