£50000 protection

eegabeeva

G_M wrote: »

If you have £50,000 invested in a bank which goes bust you likely to lose nearly all of it. Your shares may, eventually, pay out 5p for each pound invested if you are lucky.

Do not forget the 50k covered by the FSA scheme refers to capital plus interest ! Therefore if you put 50k into one account you would loose any interest if they went down ! I think a lot of people out there have not realised this.

GeorgeHowell

The government is only guaranteeing National Savings and Northern Rock, to the best of my knowledge, and there is no limit with these. The £50,000 limited guarantee applying to all other FSA registered organisations is with the FSCS. This is a quango, and its compensation fund is supported by a levy of the banks and building societies which it has signed up. Should the occasion arise that it had insufficient funds to meet its short term obligations, then we might assume that the Bank of England would provide it with a loan such that it could. The alternative would be a run on every bank considered to be at any risk, and no government could afford to let this happen if it had aspirations of staying in office and getting back again within a generation.

eegabeeva

solomon4222 wrote: »

Hi all,
with the current situation with the banks,
where do people stand with the governments £50,000 guarentee,
if the bank a person is with goes bust.
any info appreciated.
Ray.

The £50,000 that is covered by the FSCS includes capital plus interest ! Therefore if you put 50k into a single account & the bank goes down you would loose any interest ! "Not a lot a people know that" !

Reaper

GeorgeHowell wrote: »

Should the occasion arise that it had insufficient funds to meet its short term obligations, then we might assume that the Bank of England would provide it with a loan such that it could.

It's already happened. In fact it first happened way back when Bradford and Bingley go into trouble. The FSCS borrowed £14 billion from the government and are having to pay the government £450 million in interest. Article here.

dunstonh

This is a quango, and its compensation fund is supported by a levy of the banks and building societies which it has signed up.

Its actually funded by all FSA authorised firms. I'm not looking forward to the next FSA and FSCS levies....

Should the occasion arise that it had insufficient funds to meet its short term obligations, then we might assume that the Bank of England would provide it with a loan such that it could.

It already has provided loans to the FSCS and we have to pay them back. The assets of the B&B should also go towards covering some of the liability paid out.

edit: did I really take that long to press enter. Reaper beat me to it.

irritated

£50000 protection - have just been into Nationwide branch and they have told me that in September 2009 this will revert back to £35000. Anybody else heard about this - was it in the "smallprint" of Government legislation??

Baldur

irritated wrote: »

£50000 protection - have just been into Nationwide branch and they have told me that in September 2009 this will revert back to £35000. Anybody else heard about this - was it in the "smallprint" of Government legislation??

They appear to be referring (in a garbled way) to the 'extended' cover for mergers - see http://www.fscs.org.uk/consumer/key_facts/limitations_of_the_scheme/compensation_limits/

........Depositors who join the merged building society will only be entitled to the usual FSCS coverage for deposits of £50,000, regardless of whether they open accounts with each of the two merged businesses. The new rule will operate until 30 September 2009. Further information can be found on the FSA's website.

opinions4u

irritated wrote: »

£50000 protection - have just been into Nationwide branch and they have told me that in September 2009 this will revert back to £35000. Anybody else heard about this - was it in the "smallprint" of Government legislation??

No. Nationwide subsidiaries, Cheshire and Derbyshire, currently enjoy a separate £50k limit which is currently scheduled to end in September (and come under the Nationwide's £50k limit).

I suspect that it will be extended for a further period of time, but we shall see.

The £50k number won't go down though.

soulsaver

opinions4u wrote: »

No. Nationwide subsidiaries, Cheshire and Derbyshire, currently enjoy a separate £50k limit which is currently scheduled to end in September (and come under the Nationwide's £50k limit).

I suspect that it will be extended for a further period of time, but we shall see.

The £50k number won't go down though.

That is as I understood it too. I've subsequently read that it exclusively applies to deposits in existence prior to the merger announcements in Sept 08 being separately protected til Sept 09. Additional deposits since that date are only covered up to the £50K total I believe.