£50,000 limit.

treecity

dunstonh wrote: »

All I can say is that there IFAs are lucky not to have clients like you.

Hmmm, I wonder how impressed your clients would be to read that?

Primrose

I think it is very unfair that people who have invested in various fixed term rates under £50,000 with separate institutions and then find they have have merged/been taken over and are only covered by one £50,000 limit are having the rug pulled from under them. Surely the answer is to increase the compensation rate to £100,000 or force merged institutuions to retain their separate licences for a period of 5 years, which would cover the expiry of all fixed term accounts. Surveys reveal that many people do not have anywhere near this amount of savings, so in the hopefully unlikely event of another financial institution needing to be rescued, the compensation level would not be too enormous.
Savers have had a huge scare in recent months about the security of their money. As a country we have been living beyond our means for years and if the government wants the ethics of this attitude to change, they have got to create a climate where there is no doubt in peoples' minds that any money they put aside for their childrens' education and their old age is 100% safe.

soulsaver

Primrose wrote: »

I think it is very unfair that people who have invested in various fixed term rates under £50,000 with separate institutions and then find they have have merged/been taken over and are only covered by one £50,000 limit are having the rug pulled from under them. Surely the answer is to increase the compensation rate to £100,000 or force merged institutuions to retain their separate licences for a period of 5 years, which would cover the expiry of all fixed term accounts. Surveys reveal that many people do not have anywhere near this amount of savings, so in the hopefully unlikely event of another financial institution needing to be rescued, the compensation level would not be too enormous.
Savers have had a huge scare in recent months about the security of their money. As a country we have been living beyond our means for years and if the government wants the ethics of this attitude to change, they have got to create a climate where there is no doubt in peoples' minds that any money they put aside for their childrens' education and their old age is 100% safe.

Good points; and good suggestion - must keep separate licence for period stretching beyond fixes... .

Paul_Herring

must keep separate licence for period stretching beyond fixes... .

Well back in the real world, when there was talk of LTSB and Halifax merging, people brought up this exact point, and it was pointed out by quite a few financial media, that the merger would take sufficiently long that anyone who acquired a year long FRSB would have had it mature by the time one of the licences ceased to be.

Are there any cases where less than a year has gone by between announcement and cessation of one of the two licences concerned?

grnglide

Agreed - they only need do it for the accounts which the people can't get their money out.

In the past have IFAs always considered the possibility of institutions merging and diluting the FSCS coverage?

It is an area where the FSCS need to step up to the mark otherwise coverage of fixed term accounts is very dubious. What would happen if ING went belly up at present? The ex KE and Heritable customers were dumped outside the FSCS scheme by the FSCS themselves (with help from the Goverment).

grnglide

Paul_Herring wrote: »

Well back in the real world, when there was talk of LTSB and Halifax merging, people brought up this exact point, and it was pointed out by quite a few financial media, that the merger would take sufficiently long that anyone who acquired a year long FRSB would have had it mature by the time one of the licences ceased to be.

Are there any cases where less than a year has gone by between announcement and cessation of one of the two licences concerned?

Even that doesnt really work. Once the announcement was made all FTBs opened from then on would be in an uncertain situation until the merged institutions started operating under a single licence.

Where merged institutions operate with separate licences (A&L and Abbey?) can they decide to change to a single licence at any time?

Paul_Herring

Even that doesnt really work.

Why ever not?

Once the announcement was made all FTBs opened from then on would be in an uncertain situation until the merged institutions started operating under a single licence.

Well since 'prior warning' has been given, and you're one of the ones concerned about limits, you simply don't use either/both/any of those institutions, leaving you free to, perhaps, use the others.

I'm failing to see what's wrong with this, for the people moaning about not knowing about the risk that is. And assuming they have more than the £50k saved.

I'm wondering how many people that is actually, compared to the ones 'complaining on behalf of other people, (without their knowledge.')

treecity

grnglide wrote: »

Agreed - they only need do it for the accounts which the people can't get their money out.

You say that but what will happen if we get to the stage where there are not enough individual institutions to spread your money around?

dunstonh

In the past have IFAs always considered the possibility of institutions merging and diluting the FSCS coverage?

None at all I would think. However, the warnings about not being able to access funds regardless of events would have been given. Its a standard risk warning.

If you enter into a contract which states the funds are inaccessible apart from death, then later on an unpredicted event occurs that you personally dont like then cant really expect them to make the funds available.

If you didnt know that they were not inaccessible then its not a case of not reading the small print but not reading any print at all. Is that the fault of the bank?

Who is going to pay the costs to the bank for you exiting early? Perhaps that is the solution. You can exit but you have to cover the financial loss to the bank. Maybe get 95% of your original depost back if you want to do it.

soulsaver

Paul_Herring wrote: »

Are there any cases where less than a year has gone by between announcement and cessation of one of the two licences concerned?

Well if I haven't misunderstood your point: B&B with ABBEY/Santander; CheshireBS + DerbyshireBS+ Nationwide due December and NW is only maintaining one licence; Heritable+KE+ING;
And a couple of other BS minnows in the Yorkshire area, done or due.
There may be more, these are the ones I can think of immediately.

It's a broader discussion but the Derbyshire BS IoM taken over by Kaupthing is what brings this home to you. I'm not sure if the Derbyshire off shore bond holders had time to withdraw theirs or not but their plight is the picture we're seeking to avoid.