The Financial Services Compensation Scheme (FSCS) will, from 7 October 2008, cover the first £50,000 of your savings. This change has been planned for some time and has clearly been brought forward to limit the panic amongst jittery savers (myself included).
There is talk of simplifying the rules too, which would be helpful. In the meantime, here’s a full breakdown on the FSCS website about the compensation limits.
Also, don’t forget that if you have a joint account you are covered up to £100,000 per institution.