Is money protected by the FSCS while in the middle of a BACS transfer?

mememememe

Hi there, just wondering if money that is in the middle of a BACS transfer (i.e. when the money is not available to withdraw from the originating nor receiving account) is still protected by the FSCS?

dtaylor84

mememememe wrote: »

Hi there, just wondering if money that is in the middle of a BACS transfer (i.e. when the money is not available to withdraw from the originating nor receiving account) is still protected by the FSCS?

Last October, when Kaupthing went into administration, many people were in exactly this position. My recollection is that BACS transfers which had reached a certain stage completed normally, whilst others were bounced back to Kaupthing (once they went into administration no new withdrawls were allowed). Those that bounced back to Kaupthing were covered by the FSCS. (Icesave was similar, but more complicated due to the 'passport exemption' they had opted to use, combined with the Icelandic government's solvency problems.)

Ultimately, if a bank at either end of the BACS transfer fails, the transfer will either complete or be bounced back. If the money ends up at the bank which has failed, it will be covered by whatever compensation scheme applies to deposits with that bank. If the money ends up at the other bank, there is hopefully no problem.

Now, what happens if APACS fails, I have no idea. Although I assume the money never actually "belongs" to them, so the above would still apply.

mememememe

So I'm taking it that as long as i'm transfering money between two banks that are both covered by the FSCS then my money is safe all of the time. Thanks!