More than a quarter (28%) of people have either personally received or know someone who has received a lump sum of £120,000 or more, according to new research from the Financial Services Compensation Scheme.
The research suggests that over 5 million people have had the experience of receiving a lump sum, with a further 9.75 million people saying they know someone who has.
With an estimated £7 trillion expected to pass between generations in the coming decades, the FSCS said making awareness of the protection available to safeguard people’s money is more important than ever.
According to the findings, when receiving a large sum 39% of respondents said they would place the money in cash savings accounts within the first six months. However, whether their money would be protected remains a key concern.
One in three (30%) selected ‘whether the money is protected if my financial provider went out of business’ when presented with a list of various concerns, ranking higher than concerns about losing money due to being scammed (26%).
While 86% of those surveyed cited positive emotions related to managing a large sum of money, 32% reported negative emotions including feeling overwhelmed, anxious or uncertain.
FSCS protects eligible deposits up to £120,000 per person per authorised firm, with extra cover for temporary high balances of up to £1.4 million available for six months when receiving a large sum after major life events, such as selling a home or receiving an inheritance.
Martyn Beauchamp, chief executive of FSCS, said: “FSCS protection helps safeguard eligible deposits if an authorised firm fails. In certain life events, Temporary High Balance protection provides additional reassurance to UK consumers while they take time to plan carefully.
“Our research shows that around three quarters of people say understanding this protection makes them feel more confident when managing large sums of money and knowing their savings would be safe if a provider failed. That confidence matters because when a financial provider goes out of business, it can directly affect your savings, your family’s security and your peace of mind.”
To raise awareness about protection, FSCS has partnered with Jake Humphrey, founder and host of the High Performance podcast, who is encouraging people to carry out a simple financial ‘health check’, including understanding how their savings are protected if they receive a large sum.
Jake Humphrey said: “We spend a lot of time thinking about our physical and mental health but financial health matters too. Often, it’s the small habits like knowing how your savings are protected that make the biggest difference.
“One simple habit that really helps is understanding how much of your money is protected by FSCS. Knowing that your savings are protected up to certain limits gives you the confidence to pause, think clearly and make good decisions about what to do next.”
