Santander savings NOT covered by BOE 50K guarantee?

guygamps

Hi, I have just walked out of Santander to give myself a few days to think about this.

My daughter (just 18) has about 7000£ to put in a savings plan.

Santander have a product which allow you to put up to 3600 in what they call a super cash ISA, this gets 5.5% for 1 year, clearly a good rate, and in return for that rate you have to match the investment in another product, of which there are various choices.

We settled on a 3 year 9 month product which is linked to stock market, it will pay after the term 16% tax free if the FTSE has gone up at all,, and 0.25% if the FTSE ends lower than opening. The closing value is based upon average of last 6 months of the plan,.

Anyway we like the plan, and my daughter was going to sign on the dotted line, when the "advisor" mentioned that the 3yr/9mnth investment product is operated by another company and is not covered by the BOEs 50K gaurantee scheme.

not that I am expecting Santander to collapse, but no one saw the last round of collapses coming so whose to say.

I was really very very surprised at this little revelation, and for now have chosen to walk away from the product.

So comments please, and recommendations for any other ways of investing about £7k with a good return and guaranteed no loss. ICICI Hi Save?

What do the forum think

GUY

ses6jwg

guygamps wrote: »

Hi, I have just walked out of Santander to give myself a few days to think about this.

My daughter (just 18) has about 7000£ to put in a savings plan.

Santander have a product which allow you to put up to 3600 in what they call a super cash ISA, this gets 5.5% for 1 year, clearly a good rate, and in return for that rate you have to match the investment in another product, of which there are various choices.

We settled on a 3 year 9 month product which is linked to stock market, it will pay after the term 16% tax free if the FTSE has gone up at all,, and 0.25% if the FTSE ends lower than opening. The closing value is based upon average of last 6 months of the plan,.

Anyway we like the plan, and my daughter was going to sign on the dotted line, when the "advisor" mentioned that the 3yr/9mnth investment product is operated by another company and is not covered by the BOEs 50K gaurantee scheme.

not that I am expecting Santander to collapse, but no one saw the last round of collapses coming so whose to say.

I was really very very surprised at this little revelation, and for now have chosen to walk away from the product.

So comments please, and recommendations for any other ways of investing about £7k with a good return and guaranteed no loss. ICICI Hi Save?

What do the forum think

GUY

The FSCS is the least of your worries tbh...

guygamps

ses6jwg wrote: »

The FSCS is the least of your worries tbh...

please expand...

atypical

It's a poor product. A 16% return over 3 years 9 months is 4% annually. You can get 4.5% guaranteed on a 4 year fixed term deposit with ICICI.

Link to the Santander product here.

agsnu

Uh, the investment product is not a savings product... So your title is wrong. Not to mention, the FSCS isn't operated by the BoE.

guygamps

atypical wrote: »

It's a poor product. A 16% return over 3 years 9 months is 4% annually. You can get 4.5% guaranteed on a 4 year fixed term deposit with ICICI.

Link to the Santander product here.

yes, we are looking at the ICICI Hi Save Products, and also Principality BS. remember that although the APR equates to 4%, we also get one year at 5.5% on same amount in Super Cash ISA, but you are right, it is not a great product in itself.

I have "tested" ICICIs customer service today, ringing and asking a load of questions about their HiSave products, their responses were reasonably well informed, and I think it is well worth pursuing.

Principality BS I had never heard of until today when I looked at Money Supermarket, ICICI I see all over Asia especially (and not suprisingly) in India, a country I visit about 4 times a year on business.

Santander I would consider a "safe place" to put money for sure, but both others operate under 50K guarantee scheme

Lokolo

As for the £50k compensation rate. This does not apply to investment products. Only money products.

That is why the second half of your money isn't covered. And the first half is.

guygamps

Lokolo wrote: »

As for the £50k compensation rate. This does not apply to investment products. Only money products.

That is why the second half of your money isn't covered. And the first half is.

Thanks for the explanation, makes sense now. The person in the branch could not explain that, she kept just saying "only this product isn't covered", in fact ALL investment products are covered,, just as you bank accounts of various flavours, now i understand, thanks

GUY

atypical

guygamps wrote: »

we also get one year at 5.5% on same amount in Super Cash ISA, but you are right, it is not a great product in itself.

You have to ask yourself if the extra 2 or 3% on half the money (for only 1 year) is worth the risk of potentially getting next to nothing on the other half for nearly 4 years. Even if you don't get next to nothing you'll still achieve less than you would have got in an equivalent length fixed term deposit.

Lokolo wrote: »

As for the £50k compensation rate. This does not apply to investment products. Only money products.

There is also £50k of cover for investments "if an authorised investment firm is unable to pay claims against it" for example "when an authorised investment firm goes out of business and cannot return investments or money."

Don't know how or if it applies to this particular product though. There's more info' here.

Lokolo

atypical wrote: »

There is also £50k of cover for investments "if an authorised investment firm is unable to pay claims against it" for example "when an authorised investment firm goes out of business and cannot return investments or money."

Don't know how or if it applies to this particular product though. There's more info' here.

I don't think its £50k. I think its something redicously stupid like £48k at 100% and antyhing over at 90%. Something like that.

Although those sort of amounts wouldn't matter for the OP.

atypical

Lokolo wrote: »

I don't think its £50k. I think its something redicously stupid like £48k at 100% and antyhing over at 90%. Something like that.

Before 1st January it was 100% of the first £30,000 and 90% of the next £20,000 up to £48,000 per person per firm. It is now £50,000 per person per firm.