Reaching ISA limit. What do people do?

RMWD

I have a cash ISA. What do people do when their ISA goes beyond the £35000 guarantee limit? Do you just risk it or are ISA's guaranteed whatever?

RMWD

TehJumpingJawa

Open a 2nd with a different bank?

dunstonh

I have a cash ISA. What do people do when their ISA goes beyond the £35000 guarantee limit?

Those that are paranoid act like headless chickens and post to internet forums. Those that are not paranoid dont worry about it.

Comfortably_Numb

dunstonh wrote: »

Those that are paranoid act like headless chickens and post to internet forums. Those that are not paranoid dont worry about it.

I've just heard Martin on the radio, and he said spread your money around if you have over £35,000.

Does he mean it, or is he just giving a safety first answer.

Rebchappers

As far as i am aware, ISAs are treated the same as any other investment for the purposes of the Financial Services Compensation scheme... your money is guranteed up to the value of £35000 per investor & per institution. You can always transfer part of your ISA funds to another provider (providing both institutions allow partial transfers). This will keep it tax free and you will be covered under the scheme for the full amount.

Even if you have in excess of £35000 in a particular institution, there is a chance that you may get back part/all of the excess during the insolvency process. The institution may have enough funds left over after repaying debts etc, that are then shared out between depositers. This is separate from the monies received under the FSCS and are not guranteed and should not be relied upon.

Hope this helps

Fella

dunstonh wrote: »

Those that are paranoid act like headless chickens and post to internet forums. Those that are not paranoid dont worry about it.

Really?

From the Treasury Committee:

In a banking reform report, the all-party Treasury Committee warns that unless the Government does more to protect savers against failing banks there remains a serious risk that it will have to pump taxpayers' money into the banking system in a repeat of the Northern Rock incident.

It also notes that should a UK bank fail, savers would be "deprived" of their money for several months and would be forced to write off any funds over £35,000.

And here's the link to the article:
http://www.iii.co.uk/articles/articledisplay.jsp?article_id=9957802&section=Banking&campaign=pfnspecial0001&link=risk_PFNspecial_511_101&cp_c=vsvtyb

Rebchappers

Just a thought... i presume you are talking about cash ISAs? The situation surrounding stocks and shares ISAs is slightly different i think

dunstonh

Comfortably_Numb wrote: »

I've just heard Martin on the radio, and he said spread your money around if you have over £35,000.

Does he mean it, or is he just giving a safety first answer.

It depends on how paranoid you are. Obviously sticking to 35k per bank will help you sleep at night but you do need to be aware that if the likes of LloydsTSB goes under that there is not enough money to cover the FSCS payments. Also the chances of them going under are so remote that its not a risk worth worrying about. If you are with HSBC, LTSB or Santander for example then you are being excessively paranoid if you are letting this worry you.

and yes, stocks and share ISAs have their own protection level (although that is more or less irrelevant due to the fact that most hold direct assets like unit trusts, investment trusts or shares).

isofa

Complete with dunstonh on this - it has been debated to death on these forums, why not have a search and read?

There is a very small risk a major bank in the UK will collapse and a personal depositor will lose money. Martin is always taking the "safety" first stance in print, radio and TV, but it depends how worried you are.

How many times has it happened with personal banks in the past 100 years?

Even though no depositors money was really at risk with NR, the government still stepped in to sort it out, do you think they'd let a UK high street name go to the wall, losing millions of electorate pounds in personal accounts?

I've got a million and other things to worry about other than this.

Fella

isofa wrote: »

Complete with dunstonh on this - it has been debated to death on these forums, why not have a search and read?

There is a very small risk a major bank in the UK will collapse and a personal depositor will lose money. Martin is always taking the "safety" first stance in print, radio and TV, but it depends how worried you are.

How many times has it happened with personal banks in the past 100 years?

Even though no depositors money was really at risk with NR, the government still stepped in to sort it out, do you think they'd let a UK high street name go to the wall, losing millions of electorate pounds in personal accounts?

I've got a million and other things to worry about other than this.

But was is happening this week shows that the last 100 years are not much of a precedent. If Lehman can disappear overnight do you really think there is no possibility that a UK bank can?

I don't see the harm in a cautious approach. We're in unkown territory.

isofa

Fella wrote: »

But was is happening this week shows that the last 100 years are not much of a precedent. If Lehman can disappear overnight do you really think there is no possibility that a UK bank can?

I don't see the harm in a cautious approach. We're in unkown territory.

Lehman Brothers aren't (weren't?!) a personal bank, any more than Barings were. However look at the two large US mortgage companies, the government stepped in straight away.

There have been serious financial problems in the markets before during the past century.

I personally think my money is safe and I'm not worrying about it.

I think there is an incredibly slim chance of a UK bank going under, but an even smaller likelihood of any of the ones I have deposits with folding.

HBOS are in trouble, so in steps LoydsTSB, and the government will turn a blind eye to the competition regulation.

I think much of this is stirred up by the media, which if you look at the NR fiasco, the media whipped up such a frenzy that people were queuing to withdraw money.