£50,000 limit.

solomon4222

Hello All,
could anyone advise me on the following situation.
I have fixed term bonds with BRADFORD & BINGLY,
& THE ABBEY, when i invested in these bonds, the
ABBEY and B&B were separate institutions,
they have now amalgamated, becoming 1 institution, which leaves me at risk, because i am now well over the £50,000, F.S.A guarantee, i phoned
B&B this morning, i asked if i could cancel one of my
bonds, they told me i could not cancel until the maturity date which is next September.
ARE THEY CORRECT IN THIS STATMENT, IS THERE
NOTHING I CAN DO.
ANY ADVICE VERY MUCH APPRECIATED.
Ray.

Baldur

solomon4222 wrote: »

ARE THEY CORRECT IN THIS STATMENT, IS THERE NOTHING I CAN DO.

It depends on the Terms & Conditions of the bond, which you should have received when you opened it. It's highly likely to say that only the holder's death or bankruptcy can break the bond.

Masomnia

Hi Ray, I'm not sure about the terms and conditions of the account, but I imagine you are getting a very good rate with the bonds you have.

Interest rates, as I'm sure you know, were cut massively recently, and look set to be cut again. So in a few weeks time you will be getting a return well above the base rate.

Santander, who owns them both, is one of the biggest banks in the world and the chance of them going under is next to nill. If they did go under then money would be the least of our worries in all probability. My advice is to no worry and enjoy your excellent rates.

treecity

This state of affairs is not ethical IMO. I too had Abbey and B+B, luckily not fixed terms so I was able to move money elsewhere.

I also have A+L but they are currently operating under their own liecence.

In theory, if A+L go under Abbey's licence eventually, you could potentially have £150K invested in what was 3 institutions and therefore guaranteed to just having 50K of the 150K safe.

Surely you should have the right to cancel a fixed term bond under these circumstances. If not, something needs to change. The banking industry is beginning to operate like used car sales.

sabretoothtigger

B&B lost its own license I guess? Santander didnt buy toxic debt directly afaik, just the usual home market mortgages and they are ten times the size of bb

dunstonh

This state of affairs is not ethical IMO.

If you purchase a product with no get out clause then you are taking the risk of circumstances changing but not being favourable for you. If you want flexibiliy to move then you dont tie it up.

You cannot have your cake and eat it.

treecity

dunstonh wrote: »

If you purchase a product with no get out clause then you are taking the risk of circumstances changing but not being favourable for you. If you want flexibiliy to move then you dont tie it up.

You cannot have your cake and eat it.

I don't think that's quite right...

Have your cake and eat it?!

How do any of us know who will be taken over next? If you have money in any 2 institutions that are currently not connected you are basically taking a risk, according to your statement.

We are told not to put more than 50K in any one institution. Okay, so we are doing that. But now we are also expected to predict the future takeovers in the banking industry? Yeah, right!

justaquickie

dunstonh wrote: »

If you purchase a product with no get out clause then you are taking the risk of circumstances changing but not being favourable for you. If you want flexibiliy to move then you dont tie it up.

You cannot have your cake and eat it.

That certainly appears to be the current state of affairs, but I don't believe it's fair or ethical. When organisations merge, they have the free choice to continue operating under dual compensation licences. If they decide to save themselves money by not doing so, it is at the expense of some people losing their compensation cover. I believe this should be taken out of the hands of the banks and BSs and stipulated by regulation.

Consider if the (separate) providers of your house and car insurance were to merge and then reduced the max cover provided so it no longer covered both - so a house fire that reduced the house to rubble and also burnt out your garaged car left you out of pocket - there would be outrage if you were not permitted to change or move the policies.

I accept that tying your money up in fixed bonds currently means accepting the consequences, but by stipulating get-out clauses that would have to be honoured, the regulators could protect savers and also encourage the take-up of fixed term bonds, which is good for all parties.

Paul_Herring

treecity wrote: »

I don't think that's quite right...

Have your cake and eat it?!

That's right.

How do any of us know who will be taken over next? If you have money in any 2 institutions that are currently not connected you are basically taking a risk, according to your statement.

The risk is in your taking the fixed rate savings bonds. If you don't want to risk being in this situation, simply don't take up more than one fixed rate savings bond/don't save more than £50K in fixed rate savings bonds in total.

It's quite a simple proposition. If you want to save more than 50K in fixed rate savings bonds, and then you start complaining/wanting your money out early when institutions start merging and causing you to go over limit, that is "having your cake and eating it."

You have a choice, just don't complain if it's the wrong one, since you know the potential pitfalls now.

soulsaver

I am glad somone else is complaining - same happened to me.... twice! ING KE & Heritable got lumped together and also Nationwide & Cheshire - Ive lost over £1000 in interest 'cos my policy is not to exceed the fscs limits and thus had to take penalties to break 2 FTBs. I'd only opened the Cheshire a couple of days beforehand! And no you don't get 14 days with a FTB...:mad:

dunstonh

We are told not to put more than 50K in any one institution. Okay, so we are doing that. But now we are also expected to predict the future takeovers in the banking industry? Yeah, right!

If that is a concern of yours then dont use products which clearly state in their T&C that the money is tied up in such a way you cannot access it.

They are not breaking any T&C. It is you that wants to do that.