FSCS Limit
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If the banks were as strong as they should be, there shouldn`t be any limit on savings.As for the argument that very few people have above £75k in cash,if it`s that small a number it doesn`t really matter about a limit.
But there are large absolute amounts of money in that realm, just not large absolute numbers of people.
The man on the street, making up the majority of the voting public, doesn't think someone earning £125k or £500k or £5m needs an annual personal allowance to help him afford life's necessities, so a somewhat arbitrary limit is set.
Similarly, the man on the street does not want to pay high account fees or receive low interest rates to provide 100% guarantee of income and capital to someone who has £5m sloshing around on deposit which hasn't been spread over multiple counterparties or asset classes due to greed or laziness. So a somewhat arbitrary limit is set.0 -
Unless you are absolutely loaded and £75,000 is your rainy day savings, or you expect to spend it within the next few years, holding over £75,000 in cash instead of investing it diversely is high-risk in terms of inflation risk and shortfall risk.
£35,000 or so (excluding house sales and other temporary high balances) would be a perfectly sensible limit. The government should not be encouraging people to hoard money under the mattress.0 -
There shouldn't be any protection, or what there should be should be minimal - ie the average balance at most.
Savers should have to take on some risk when they choose a bank, to incentivise banks to act responsibly to attract savers. We shouldn't have the ridiculous situation like we had at the GFC where you could get 6% in an Iceland bank with no more risk than HSBC or whomever at 2%.“I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse0 -
Savers should have to take on some risk when they choose a bank, to incentivise banks to act responsibly to attract savers. We shouldn't have the ridiculous situation like we had at the GFC where you could get 6% in an Iceland bank with no more risk than HSBC or whomever at 2%.
Well, there was more risk at the Icelandic bank and it wasn't covered by FSCS, but our government was nice and helpful and bailed out the UK depositors to save those individuals a large loss of wealth and avoid a loss of confidence in banks at a time that many of them were struggling.
After that "warning shot" which will have put the wind up some people without actually letting them suffer too badly, there has been more publicity about FSCS. Both to allow people to have confidence in saving decent chunks of money in financial institutions and not be tempted to keep it under the mattress for fear of market shocks , but also to remind you that you're only covered by the UK scheme where you see the logo and not if you are chasing high rates in dodgy overseas banks outside the scope of the scheme.
I don't really have a problem with that approach but to avoid people thinking they can ignore the rules and keep getting bailed out, I would hope that if there was an "Iceland II", govt would not be so quick to leap to protect UK savers this time around.0 -
They simply shouldn't have repaid amounts over the then Icelandic limit.
A haircut like savers got in Cyprus...0 -
They simply shouldn't have repaid amounts over the then Icelandic limit.
A haircut like savers got in Cyprus...
I agree, getting 80 or 90% back would have taught people that risk is something to be considered in future without actually making anyone destitute. Otherwise why should taxpayers shoulder the cost of meeting high risk gambles when they don't pay off? Oh... the credit crunch... the banks... doh!0 -
I agree, getting 80 or 90% back would have taught people that risk is something to be considered in future without actually making anyone destitute. Otherwise why should taxpayers shoulder the cost of meeting high risk gambles when they don't pay off? Oh... the credit crunch... the banks... doh!
Agree with the principle but was happy the practice was followed.
I remember earning market beating rates with kaupthing even after they werent solvent and then getting all my money back, can't beat it.
Has made me more wary though, can't totally recall exact amounts but think I was probably close to the limits at that time.0 -
The main reason for the collapse of the Icelandic banks (as if most people didn`t know) was greedy, incompetent bankers who decided to concentrate more on the investment side, trying to acheive rapid expansion and growth.
Rings a bell, RBS,HBos etc.
Interesting reading.
http://www.rna.is/media/skjol/RNAvefurKafli21Enska.pdf0
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