UK government (or other) guarantee for savings


J

James Harris

I've been trying to find a clear statement on safety limits of UK
savings but cannot find anything definitive. If I state what seems to
be the case perhaps someone can correct if necessary or point to a
definitive web site...? From reports such as

http://news.bbc.co.uk/1/hi/business/7021414.stm

and others it seems that:

1. Total savings in a UK shore-based bank are government-guaranteed up
to £35,000.
2. Ditto for a building society
3. Above £35,000 with any one institution is not (yet) guaranteed in
any way
4. This limit applies to the total savings so if we have ISA and
deposit account with £30,000 in each there would still only be £35,000
guaranteed.
5. Savings with Northern Rock (being taxpayer-owned) are 100%
guaranteed regardless of how much is saved with them - ISAs, savings
accounts and current accounts.

Is that close?
 
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M

Martin

I've been trying to find a clear statement on safety limits of UK
savings but cannot find anything definitive. If I state what seems to
be the case perhaps someone can correct if necessary or point to a
definitive web site...? From reports such as

http://news.bbc.co.uk/1/hi/business/7021414.stm

and others it seems that:

1. Total savings in a UK shore-based bank are government-guaranteed up
to £35,000.
2. Ditto for a building society
3. Above £35,000 with any one institution is not (yet) guaranteed in
any way
4. This limit applies to the total savings so if we have ISA and
deposit account with £30,000 in each there would still only be £35,000
guaranteed.
5. Savings with Northern Rock (being taxpayer-owned) are 100%
guaranteed regardless of how much is saved with them - ISAs, savings
accounts and current accounts.

Is that close?

--
James

==================================================

I think that's right.

Also, two other things to be aware of...

1. Separate deposits in the same, but apparently different, banks are
treated as one deposit - so the combined limit is still only £35k (e.g.
Halifax & Sainsburys accounts);

2. While many commentators suggest that HMG wouldn't allow savers to lose
if another bank goes toes up, they have little or no incentive to bail out
savers. N.Rock cannot be allowed to become a binding precedent.
 
D

David Woolley

James said:
I've been trying to find a clear statement on safety limits of UK
savings but cannot find anything definitive. If I state what seems to
Didn't take me long to find this the other day:

http://www.fscs.org.uk/

Incidentally, what matters is whether the deposit taker is separately
registered, rather than whether it is an independent company. If you
delve into the above site you will find this point explained.
 
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T

Toom Tabard

I've been trying to find a clear statement on safety limits of UK
savings but cannot find anything definitive. If I state what seems to
be the case perhaps someone can correct if necessary or point to a
definitive web site...? From reports such as

 http://news.bbc.co.uk/1/hi/business/7021414.stm

and others it seems that:

1. Total savings in a UK shore-based bank are government-guaranteed up
to £35,000.
2. Ditto for a building society
3. Above £35,000 with any one institution is not (yet) guaranteed in
any way
4. This limit applies to the total savings so if we have ISA and
deposit account with £30,000 in each there would still only be £35,000
guaranteed.
5. Savings with Northern Rock (being taxpayer-owned) are 100%
guaranteed regardless of how much is saved with them - ISAs, savings
accounts and current accounts.

Is that close?
It also helps to be aware of the limits of 'safety' on what is
essentially an untried scheme in terms of major meltdown. Compensation
under FSCS is funded by a levy on the remaining financial
institutions, so e.g the bigger the crashing player, the less the
money to call on. FSCS can apparently raise up to £1.8bn per annum
from other savings instititions, If this is not enough it can levy all
related financial instititution members which will bring the total up
to approx £4.3bn per annum.

To put that in context total retail (savings) deposits with Northern
Rock were £20+bn and commercial loans were £70+bn.
So there are questions regarding how transparent the levels of losses
are, and whether the bank closes before the level of losses become too
large.

I believe there may also be issues of commercial loans sometimes being
preference loans and having greater call on a banks assets, leaving a
larger amount of customer losses to be funded by the compensation
scheme.

Toom
 

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