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Martin's safety guide October 2007 (last year's!)
oliver_m_2
Posts: 30 Forumite
The following is a screenshot of Martin's safety guide from 11 October 2007 (last year's!)
As many of you I have invested in a fixed rate deposit with Icesave in October 2007. Unless I'm totally blind I cannot see anything in Martin's safety guide from October 2007 that there is something doggy about Icesave. Neither Icesave's passport compensation scheme is mentioned nor to be special cautious dealing with "foreign" banks. I don't feel that I was particularly warned through this website...
Maybe you?
*************************************************************
First there was Farepak and then thousands queued to 'rescue' their savings in Northern Rock. So how safe are your savings and what can you do about it? This is a full savings safety-check up, showing you how to easily save over £300,000 in perfect safety and the major pitfalls to avoid.
[FONT=Arial,Helvetica,sans-serif] [FONT=arial,helvetica,sans-serif]
Q. What's protected?
Q. Can banks go bust?
Q. How safe are my savings?
Q. What about joint accounts & ISAs?
Q. What counts as a bank?
Q. Can I get 100% safety on all savings?
Q. Are there any exceptions?
Q. Is this protection likely to change?[/FONT]
[FONT=arial,helvetica,sans-serif]Grab your financial lifejacket[/FONT][/FONT]
[FONT=Arial,Helvetica,sans-serif]Q. What's protected? Is it every type of savings?
No! There is a statutory scheme called the Financial Services Compensation Scheme, but it only applies to regulated financial organisations. This was the big problem with the Christmas Savings Scheme Farepak, as it had no protection whatsoever; when it went bust the money was gone. Thus if you want real safety the answer is a Bank or Building Society account, not savings stamps or hamper schemes.
It’s also important to note that this Q&A is about ‘saving’ not ‘investing’; if you put money in stocks and shares, or pension funds, then you’ve got a “risk based” investment and thus again there’s no protection.
Q. What are the chances that my bank will go bust?
Extraordinarily, unthinkably, ridiculously unlikely. In September 2007, Northern Rock had to secure an overdraft from the Bank of England due to a crisis in the global money markets, yet even that was nowhere near a full-scale bank collapse. I’m not foolish enough to say “no bank will ever go bust”, but I’m confident enough to give Accrington Stanley a better chance of winning the FA Cup than a UK bank going belly-up. And certainly you’ve a lot less chance of a bank going bust than you have money being stolen from under your mattress!
Q. If a bank did collapse, what protection would I get?
All UK deposits in bank or building society savings products are covered by the Financial Services Compensation Scheme (FSCS). This is effectively a government fund which promises that, in the event of a bank collapsing, you're guaranteed all the first £35,000 of your savings back.
This limit doesn't apply to firms that defaulted before 1 October 2007; then you get 100% of the first £2,000 of your cash back and 90% of the next £33,000 on top; so you'd get £31,700 of the first £35,000 back.
Q. What if my cash is in a joint account?
Money saved in an account registered in two names receives twice the protection; that's therefore the first £70,000. Don’t get too excited though, this isn’t an extra allowance; it’s simply the same protection as if each account holder had a separate product.
Q. Is this the same for cash ISAs and TOISAs?
Yes, these are simply a form of tax free savings account. So if you’ve got a Cash ISA or Tessa Only ISA (Toisa) you get exactly the same FSCS protection as in a savings account.
Q. Do I get the same protection for every account I’ve got?
No. It’s very important to understand that it’s not per account but per financial institution. In simple terms that means if you’ve got masses of savings all in one bank, then only the first £35,000 worth is protected.
Yet it gets a bit more complex than that. The technical definition is that you get the protection for each company independently registered with the Financial Services Authority (FSA). Over the years, many banks have merged or been taken over, blurring the lines over what actually constitutes a financial institution.
This means, bizarrely, that you only get one lot of £35,000 for the whole of HBOS, which is the combination of the Halifax, Bank of Scotland, Birmingham Midshires and others. Yet the structure of the other big banking group, RBS, means you get protection for each of its individual banks, the Royal Bank of Scotland, NatWest, Tesco and more.
Use the colour coded table below to see separate institutions
The table below shows you which banks are standalone and which are the same institution. Any banks shaded in the same colour (except white!) share the protection, so if you have money in a combination of them you only get one lot of the FSCS safeguard.
[/FONT]
[FONT=Arial,Helvetica,sans-serif]
[FONT=Arial,Helvetica,sans-serif]Last Updated: Oct 07. This table was compiled by checking the FSA registration number of each bank on their websites, and is based on the FSCS definition that each independently registered institution receives the £35,000 protection.[/FONT]
[/FONT] [FONT=Arial,Helvetica,sans-serif]
Q. How do I ensure every penny of my savings are 100% safe?
Well if you've less than £35,000 don't worry; they're already safe. Yet if you've more the golden rule is don’t put more than £35,000 in any one financial institution. Therefore spreading your savings around a number of accounts, while in my view is a bit of an overkill, is a perfectly sensible strategy; just check on the chart above to ensure that they genuinely are separate institutions first.
The protection applies to every UK registered financial institution. There are usually nine or ten very competitive accounts, meaning you can save well over £300,000 in perfect safety. To help, at least ten top accounts are included in the Top Savings Account article and then work your way down. Plus any new best buys go in the free weekly email. [/font]
[FONT=Arial,Helvetica,sans-serif]
Yet be very careful not to unduly sacrifice interest rates for safety. If you’re lucky enough to have very substantial savings, remember the likelihood of a bank going bust is tiny; so spreading lumps of £35,000s around 20 or 30 accounts; you’re likely to be giving up substantial amounts of interest and need to consider a balance.
Q. Are there any exemptions to the protection?
Good question, because in fact there are two.
First, if you save with Northern Rock. After the run on the bank in September 2007, the Government stepped in to give a 100% guarantee on all ‘existing savings’ there. On 9 October, this was extended to new deposits too.
In practice, this means anyone saving with Northern Rock, whether from before the crisis, since it, or even if you took your money out and now re-deposit it, will get back your whole balance, plus interest that you’re owed and any money that you subsequently deposit there in the future. The Treasury said the guarantee “will remain in place during the current instability in the financial markets”.
The second special exception is for money held with National Savings & Investments: it’s fully backed by the Treasury and so is 100% secure. Yet don’t simply dosh all your money there, often its rates aren’t too good, so be aware of the trade-off.
Q. Is this FSCS protection likely to change in the near future?
It’s hard to give any definite answer, but the signs are that some change is on the way. After complaints about the size of the previous guarantee, amounting to just £31,700 of anyone’s money, the protection raised to 100% of the first £35,000 on 1 October 2007. Yet there could be more change on the way, the Chancellor has hinted that thresholds may rise further - probably to somewhere nearer £100,000.
There are also rumours of the entire system of customer compensation changing to a more ‘US style‘ system where insolvent banks are effectively nationalised, and their assets used to refund money to savers.
At the moment it’s all spin and speculation; the moment anything concrete happens, all the details will be included in the free weekly MoneySaving email. [/font]
As many of you I have invested in a fixed rate deposit with Icesave in October 2007. Unless I'm totally blind I cannot see anything in Martin's safety guide from October 2007 that there is something doggy about Icesave. Neither Icesave's passport compensation scheme is mentioned nor to be special cautious dealing with "foreign" banks. I don't feel that I was particularly warned through this website...
Maybe you?
*************************************************************
First there was Farepak and then thousands queued to 'rescue' their savings in Northern Rock. So how safe are your savings and what can you do about it? This is a full savings safety-check up, showing you how to easily save over £300,000 in perfect safety and the major pitfalls to avoid.
[FONT=Arial,Helvetica,sans-serif] [FONT=arial,helvetica,sans-serif]
Q. What's protected?
Q. Can banks go bust?
Q. How safe are my savings?
Q. What about joint accounts & ISAs?
Q. What counts as a bank?
Q. Can I get 100% safety on all savings?
Q. Are there any exceptions?
Q. Is this protection likely to change?[/FONT]
[FONT=arial,helvetica,sans-serif]Grab your financial lifejacket[/FONT][/FONT]
[FONT=Arial,Helvetica,sans-serif]Q. What's protected? Is it every type of savings?
No! There is a statutory scheme called the Financial Services Compensation Scheme, but it only applies to regulated financial organisations. This was the big problem with the Christmas Savings Scheme Farepak, as it had no protection whatsoever; when it went bust the money was gone. Thus if you want real safety the answer is a Bank or Building Society account, not savings stamps or hamper schemes.
It’s also important to note that this Q&A is about ‘saving’ not ‘investing’; if you put money in stocks and shares, or pension funds, then you’ve got a “risk based” investment and thus again there’s no protection.
Q. What are the chances that my bank will go bust?
Extraordinarily, unthinkably, ridiculously unlikely. In September 2007, Northern Rock had to secure an overdraft from the Bank of England due to a crisis in the global money markets, yet even that was nowhere near a full-scale bank collapse. I’m not foolish enough to say “no bank will ever go bust”, but I’m confident enough to give Accrington Stanley a better chance of winning the FA Cup than a UK bank going belly-up. And certainly you’ve a lot less chance of a bank going bust than you have money being stolen from under your mattress!
Q. If a bank did collapse, what protection would I get?
All UK deposits in bank or building society savings products are covered by the Financial Services Compensation Scheme (FSCS). This is effectively a government fund which promises that, in the event of a bank collapsing, you're guaranteed all the first £35,000 of your savings back.
This limit doesn't apply to firms that defaulted before 1 October 2007; then you get 100% of the first £2,000 of your cash back and 90% of the next £33,000 on top; so you'd get £31,700 of the first £35,000 back.
Q. What if my cash is in a joint account?
Money saved in an account registered in two names receives twice the protection; that's therefore the first £70,000. Don’t get too excited though, this isn’t an extra allowance; it’s simply the same protection as if each account holder had a separate product.
Q. Is this the same for cash ISAs and TOISAs?
Yes, these are simply a form of tax free savings account. So if you’ve got a Cash ISA or Tessa Only ISA (Toisa) you get exactly the same FSCS protection as in a savings account.
Q. Do I get the same protection for every account I’ve got?
No. It’s very important to understand that it’s not per account but per financial institution. In simple terms that means if you’ve got masses of savings all in one bank, then only the first £35,000 worth is protected.
Yet it gets a bit more complex than that. The technical definition is that you get the protection for each company independently registered with the Financial Services Authority (FSA). Over the years, many banks have merged or been taken over, blurring the lines over what actually constitutes a financial institution.
This means, bizarrely, that you only get one lot of £35,000 for the whole of HBOS, which is the combination of the Halifax, Bank of Scotland, Birmingham Midshires and others. Yet the structure of the other big banking group, RBS, means you get protection for each of its individual banks, the Royal Bank of Scotland, NatWest, Tesco and more.
Use the colour coded table below to see separate institutions
The table below shows you which banks are standalone and which are the same institution. Any banks shaded in the same colour (except white!) share the protection, so if you have money in a combination of them you only get one lot of the FSCS safeguard.
[/FONT]
[FONT=Arial,Helvetica,sans-serif]
[FONT=Arial,Helvetica,sans-serif]Which savings providers count as one financial institution?[/FONT]
Abbey (1)
Alliance & Leicester
Anglo Irish Bank
Bank of Cyprus
Bank of Ireland (2)
Barclays
Bank of Scotland (3)
Birmingham Midshires (3)
Bradford & Bingley
Cahoot (1)
Capital One
Chelt'ham & Gloucester (8)
Citibank
Clydesdale Bank (4)
Co-operative Bank (5)
Direct Line (6)
Egg
First Direct (7)
Halifax (3)
HSBC (7)
ICICI
ING Direct
Intelligent Finance (3)
Landsbanki (Icesave)
Liverpool Victoria
Lloyds TSB (8)
Nationwide
Natwest
Northern Bank
Post Office (2)
Royal Bank of Scotland (6)
Saga (3)
Sainsburys
Scottish Widows
Smile (5)
Standard Life
Tesco
The AA (3)
Virgin Money
Yorkshire Bank (4)
[FONT=Arial,Helvetica,sans-serif]Last Updated: Oct 07. This table was compiled by checking the FSA registration number of each bank on their websites, and is based on the FSCS definition that each independently registered institution receives the £35,000 protection.[/FONT]
Q. How do I ensure every penny of my savings are 100% safe?
Well if you've less than £35,000 don't worry; they're already safe. Yet if you've more the golden rule is don’t put more than £35,000 in any one financial institution. Therefore spreading your savings around a number of accounts, while in my view is a bit of an overkill, is a perfectly sensible strategy; just check on the chart above to ensure that they genuinely are separate institutions first.
The protection applies to every UK registered financial institution. There are usually nine or ten very competitive accounts, meaning you can save well over £300,000 in perfect safety. To help, at least ten top accounts are included in the Top Savings Account article and then work your way down. Plus any new best buys go in the free weekly email. [/font]
[FONT=Arial,Helvetica,sans-serif]
Yet be very careful not to unduly sacrifice interest rates for safety. If you’re lucky enough to have very substantial savings, remember the likelihood of a bank going bust is tiny; so spreading lumps of £35,000s around 20 or 30 accounts; you’re likely to be giving up substantial amounts of interest and need to consider a balance.
Q. Are there any exemptions to the protection?
Good question, because in fact there are two.
First, if you save with Northern Rock. After the run on the bank in September 2007, the Government stepped in to give a 100% guarantee on all ‘existing savings’ there. On 9 October, this was extended to new deposits too.
In practice, this means anyone saving with Northern Rock, whether from before the crisis, since it, or even if you took your money out and now re-deposit it, will get back your whole balance, plus interest that you’re owed and any money that you subsequently deposit there in the future. The Treasury said the guarantee “will remain in place during the current instability in the financial markets”.
The second special exception is for money held with National Savings & Investments: it’s fully backed by the Treasury and so is 100% secure. Yet don’t simply dosh all your money there, often its rates aren’t too good, so be aware of the trade-off.
Q. Is this FSCS protection likely to change in the near future?
It’s hard to give any definite answer, but the signs are that some change is on the way. After complaints about the size of the previous guarantee, amounting to just £31,700 of anyone’s money, the protection raised to 100% of the first £35,000 on 1 October 2007. Yet there could be more change on the way, the Chancellor has hinted that thresholds may rise further - probably to somewhere nearer £100,000.
There are also rumours of the entire system of customer compensation changing to a more ‘US style‘ system where insolvent banks are effectively nationalised, and their assets used to refund money to savers.
At the moment it’s all spin and speculation; the moment anything concrete happens, all the details will be included in the free weekly MoneySaving email. [/font]
0
Comments
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Looks like the question on savings being safe has been unprofessionally doctored by yet another newbie- but maybe I'm just overly suspicious!0
-
Yawn. Go back to the ICESAVE T&Cs you meticulously saved last year when opening the account - the protection is detailed there.
This is getting boring now. I've got a better idea - blame me because I don't give a poo what you dimwits looking to blame someone else for our collective inability to predict the future think about me.0 -
We added the text, as Martin has stated, in the early part of this year, 2008.
This is discussed at length on other threads,Former MSE team member0 -
The following is a screenshot of Martin's safety guide from 11 October 2007 (last year's!)
Well it wasn't going to be October 11th This Year was it ???? :eek: :eek:
Dope :money:'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
Well, I guess nonone is getting the point.
I'm not blaming anyone. Those having a fixed rate deposit with Icesave starting
in October 2007 couldn't know how risky Icesave was. Neither the "doggy"
compensation scheme nor to be special cautious dealing with "foreign" banks
was mentioned at that time.
So could the ones calling the others dimwits because they have saved with
Icesave take in consideration that it might be that they have started to
save with Icesave (and couldn't get out because of a fixed rate deposit)
before any warnings have been issued?
Even Martin didn't know about it and therefore he didn't mention it all in
his "full savings safety-check up, showing you how to easily save over £300,000
in perfect safety and the major pitfalls to avoid" from October 2007.0 -
The real life safety guide:
This is how banking works (against you.)
-The bank has £0, you have £100 paper notes
-You deposit £100 in paper cash, you now have a bank statement of £100
-Someone asks for a loan of £100 and gets a £100 credit to their account
-They withdraw your £100 of cash-your bank statement remains at £100
-You can electronically transfer that £100 to anyone else if you want to buy something on debit card for example.
-So you have £100 on your debit card which you can spend, and the other person has £100 in cash to spend...the money is doubled!!! If the money available to spend is doubled but your £100 stays the same (plus a little interest) your buying power halves.
-If you choose not to spend on your debit card but try to withdraw cash, this is a run on the bank and the bank will ask for a tax payer bail out.
Since very few people do ask for cash, banks are permitted by law to do this nine times. The banks of course know form experiance that only 1/9th of demands will be in the form of hard cash so they always make up and lend a digital 9 times the original paper or coin. Every time you deposit £1 in the bank your buying power is reduced by a factor of 9.
Keeping your money in a bank makes you poorer, the only person that gains is the banker.
Deep down you already know this, but have never thought about it before.
(This stems back to a time when, gold bars were real money and gold certificates were the digital money. Goldsmiths could forge 10 certificates for every 1 bar of gold they had. As long as people were happy with the gold certificates and didn’t withdraw the gold things would be fine)
Now the real problem! If there was £100 to start with and £900 was lent at interest of 0.2% even if the borrowers took all the money of that originally existed and added it to their loans they will still be short of the total repayments: £900 at 0.2% interest is £1080. Where can that £80 come from? No where, someone has to give up something they owned before they borrowed. The process can take place slower if the interest rate charged is lower than 0.2% but compound interest on debts that will always end the same way.
We have simply come to the crunch, where is that extra money? It never existed to start with, it hasn't been magicaly created by fractional reserve....Stuck!
Keep your money in your own safe, don't be succered in by the promise of a little interest. Unitll fractional reserve banking is abolished, saving in a bank will lead us to this everytime.0 -
Keeping your money in a bank makes you poorer, the only person that gains is the banker.
Deep down you already know this, but have never thought about it before.
Full of bright ideas aren't you? Thanks for the enlightenment.....0 -
Did you:
a) take professional advice from a qualified expert who would be liable to you for any errors? or
b) make up your own mind, by researching on or off line and investigating any terms and conditions in as much detail as you wished?
If (a) then your advisor is liable to you.
If (b) then you are responsible for your own decisionsI'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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