Does FSCS cover interest?

Young_Offender

Does anyone know whether the FSCS would cover interest as well as the basic capital? Say you had £30,000 in a 12-month bond at 7%, and the bank went bust at month 11, you would effectively be losing nearly £2,000 if you only got your original investment back.

If it only covers the basic balance, then accounts that pay monthly interest look a lot more attractive.

Oblivion

Young_Offender wrote: »

Does anyone know whether the FSCS would cover interest as well as the basic capital? Say you had £30,000 in a 12-month bond at 7%, and the bank went bust at month 11, you would effectively be losing nearly £2,000 if you only got your original investment back.

If it only covers the basic balance, then accounts that pay monthly interest look a lot more attractive.

The FSCS guarantee will cover your capital and any interest accrued up to the day the bank / building society went bust, subject to the limit (currently £35,000 per person per separately registered institution). Interest would be calculated on a daily basis whether or not you had opted for monthly or annual interest.

This link may prove useful.

Dave.

Paul_Herring

Young_Offender wrote: »

Does anyone know whether the FSCS would cover interest as well as the basic capital? Say you had £30,000 in a 12-month bond at 7%, and the bank went bust at month 11, [...]

Using that specific example, you'd get the principle and 11 months of interest, and no more interest during the time it takes to process your claim.

da2berry

Q1: If you have an account with say 34K which is accruing a good rate of interest and the bank goes bust, is ther any interest paid on the amount from that point to when the FSA pays out (since this could be up to 6 months)? Q2: does the FSA give a max time to process and pay out on a claim (so we can calculate the potential max loss in interest)?

Oblivion

da2berry wrote: »

Q1: If you have an account with say 34K which is accruing a good rate of interest and the bank goes bust, is ther any interest paid on the amount from that point to when the FSA pays out (since this could be up to 6 months)?

Apparently not from what I have seen published so far. Not sure where you get your '6 months' from since the system hasn't really been exposed to a large scale bank collapse yet.

da2berry wrote: »

Q2: does the FSA give a max time to process and pay out on a claim (so we can calculate the potential max loss in interest)?

There are no reported timescales for an FSA payout as yet. Gordon Brown has hinted that future legislation may address this issue however. We shall see.

Dave.

Paul_Herring

da2berry wrote: »

Q1: If you have an account with say 34K which is accruing a good rate of interest and the bank goes bust, is ther any interest paid on the amount from that point to when the FSA pays out (since this could be up to 6 months)?

Nope. The institute you have your money with has stopped trading. There is no one to pay you interest. (No - the FSCS is not obliged to carry on paying the interest.)

Q2: does the FSA give a max time to process and pay out on a claim (so we can calculate the potential max loss in interest)?

Nope. 6 months is merely a suggestion, not a hard and fast rule.

http://www.fscs.org.uk/consumer/FAQs/Deposit_claims_FAQs/ - question 6.

Oblivion

Are you stalking me Paul :rotfl:


Dave

Paul_Herring

Oops - not intentional, sorry