Are your savings safe? article discussion

mickandsus · 19 March 2008 at 6:13PM

I think the main article should point out that your savings are not guaranteed under the scheme if you have debts with the same bank, ie a mortgage. So although your savings of say 35k may be going towards reducing your debt, should anything go wrong with the bank, you won't actually get that cash back. Not good if you need the actual money rather than a lower debt.

I've only ever seen this mentioned once in the media, in the Times on 17 Feb 08 ("Keep your loans and savings separate") but it seems pretty major to me.
http://business.timesonline.co.uk/tol/business/money/savings/article3381218.ece

MoneyTown · 19 March 2008 at 6:39PM

mickandsus wrote: »

I think the main article should point out that your savings are not guaranteed under the scheme if you have debts with the same bank, ie a mortgage. So although your savings of say 35k may be going towards reducing your debt, should anything go wrong with the bank, you won't actually get that cash back. Not good if you need the actual money rather than a lower debt.

I've only ever seen this mentioned once in the media, in the Times on 17 Feb 08 ("Keep your loans and savings separate") but it seems pretty major to me.
http://business.timesonline.co.uk/tol/business/money/savings/article3381218.ece

The article is just telling you that the savings and debt to the lender are added together at the compensation stage. This means that you may lose liquid assets (cash savings) though overall you will be no worse off because the debt is reduced equally...... bad if you need the cash but not terrible.

wildehse · 19 March 2008 at 6:58PM

What happened to savers when BCCI went bust?
Was BCCI a UK institution?

tonynotts · 19 March 2008 at 7:25PM

I recently read an article in the Daily Mail stating that FSCS are considering increasing the protection threshold for savings from £35,000 to £50,000. I think this is a wise move in today's climate.

ianmr65 · 19 March 2008 at 7:39PM

tonynotts wrote: »

I recently read an article in the Daily Mail stating that FSCS are considering increasing the protection threshold for savings from £35,000 to £50,000. I think this is a wise move in today's climate.

True, untill you consider that the US level for the same protection is $500,000 dollars

nilrem_2 · 19 March 2008 at 7:42PM

wildehse wrote: »

What happened to savers when BCCI went bust?
Was BCCI a UK institution?

You cannot compare the banks discussed here as used by most UK savers with the likes of BCCI they were a different kettle of fish altogether! Read all about them here
http://en.wikipedia.org/wiki/Bank_of_Credit_and_Commerce_International

Flynn_2 · 19 March 2008 at 7:54PM

HOLLY wrote: »

Thank you .
It is an 11 Month Fixed Rate Bond with Birmingham Midshires.
I took it out in September 2007.

Birmingham Midshires are part of HBOS who have been in the news recently, possibly because rumours have been deliberately started to drive down their share price. See http://news.bbc.co.uk/1/hi/business/7305039.stm .

If you are totally locked in that might even be a good thing in a funny way rather than a having an expensive get-out clause that you might be tempted to take. I think the rate they offered was about 6.7% which is still good. The chances of you losing out are incredibly low in reality so if you're locked in the best course is to forget about it and enjoy it when you pocket all that lovely interest in August.

CautiousPete · 19 March 2008 at 8:52PM

Having read similar articles about not putting all investments in one basket, Iasked my financial adviser to check out for me how safe a number of my investments were, which were held in Skandia. For the benefit of other readers, here's the reply my adviser forwarded from Skandia on 01-Feb-08:

Following your referral of the client's enquiry concerning statutory protection for investors, should Skandia become insolvent or unable to meet its financial obligations, I have the following clarification for you

Skandia as a company, for Isa, Pep and Unit Trust investors, is not considered to retain any of the financial liability for investors.

This is because when a client invests via these products they invest not with Skandia directly but with the fund group or groups that manage the funds within the portfolio of funds held inside of the client's Skandia product wrapper.

If we think of this in more basic terms Skandia is merely the provider of the investment product but the client still invests with each fund group, with this providing the same level of protection as if the client were to go directly to each fund group company.

As to the level of protection that this affords clients this is the same as that confirmed in law by the Financial Services Compensation Scheme (FSCS).

For the type of investments which Skandia offers to ISA, Pep and Unit Trusts investors this provides security as outlined below.

The crucial thing to convey to clients is that these financial limits apply to each financial institution, so that if the client's investments are spread between companies, then each of the investments with each firm is safeguarded to the levels below:

Allowance per individual: £48,000 per person:

Amount protected with each fund management group: 100% of the first £30,000 and 90% of the next £20,000

I hope this confirms the scope of both Skandia and our fund management group contacts in this regard.

[For further information the clients can refer to the Financial Services Compensation Scheme's website at http://www.fscs.org.uk/

I hope this helps.
CautiousPete

alanbt · 19 March 2008 at 9:43PM

debbie42 wrote: »

This has been asked a few times now on this thread. I really don't get the worries here, unless I'm being naive?

If your savings directly offset your mortgage, then you still owe the bank some cash, unless your savings are more than your mortgage. Say your mortgage was for £100K and you had £60K of savings. You are therefore paying interest on £40K, yes? In which case, you owe the bank £40K. Why the worry?

p.s. I have one of these mortgages, and the statement comes to me like an overdraft account, so it's nothing like the creditor/debtor scenario just posted of. It isn't in two separate accounts.

it's not naivity; it is just uncertainty

if the bank does collapse do the savings just mean the first £35000 is protected or the first £35000 OVER and above the mortgage

strangely enough i do have more savings than mortgage, where much of them are cash isas

my ofset mortgage is a series of seperate accounts it is NOT a ONE account

logic suggests that it is safe; but then logic suggested that the northern rock was safe....

jamesd · 19 March 2008 at 10:29PM

HOLLY, since it's part of HBOS it'll be too big to allow it to fail. Good idea to split it when you get the chance, just to be more cautious, though. No point in choosing to take more risk even if something bad happening to savers does seem unlikely. Savers did not lose money in either of the last two bank failures in the UK (Northern Rock and Barings).

If it was a small regional building society there's be a greater chance that it might be allowed to fail but even that is currently unlikely because of the nasty consequences for consumer trust.

Are your savings safe? article discussion

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