On 3 October 2008, FSA published Consultation Paper 08/15 (CP08/15) in which it sets out its review of the Financial Services Compensation Scheme (FSCS) limits. The review forms part of FSA's banking reform work programme.

In a related press release, FSA announced that, with effect from 7 October 2008, the compensation limit for bank deposits has been increased from £35,000 to £50,000. This change was mooted in the third consultation on financial stability and depositor protection which was published by the Tripartite Authorities (FSA, HM Treasury and the Bank of England) in July 2008 (see Legal update, Tripartite authorities consult on the special resolution regime). It has been implemented without FSA going through the usual consultation and cost-benefit analysis procedures as section 155(7) of the Financial Services and Markets Act 2000 allows FSA to waive these procedures if it considers that the delay involved in complying with them would be prejudicial to the interests of consumers.

Amongst other things, CP08/15 details the depositor compensation limit change and explains how it relates to FSA's proposal for changes to the other FSCS limits.

Hector Sants, FSA's Chief Executive, said the change to the depositor compensation limit was intended to provide clarity for the long term and tied in with the introduction of the Banking Bill in Parliament, scheduled for the week commencing 6 October 2008. Alluding to the measures taken in respect of HBOS plc and Bradford & Bingley plc, Mr Sants added that the change was "appropriate, given the consolidation that has taken place in recent weeks".

CP08/15 closes on 5 January 2009. PLC Financial Services will report on the proposals in CP08/15 in more detail shortly.