Offset / FSA compensation

jrs101

Hi,

I need clarity on the following and ideally a definitive answer please.

If you have money offset in an offset joint mortgage, are you both covered uo to £50K each for any savings offset?

And if so, is it as simple as if you say owe 200k and have 80k savings then if the bank goes bust you would then owe £120K. Can you not claim from the FSA for the £80K? Also, in that example if you can claim, is it split in two claims (as its joint) for £30K and 50K??

Anyone have an actual clear answer?

Loughton_Monkey

I quote from relevant pages of the FSA guidelines on the issue.

Seems to me you can set off one against the other.

Personally, though, I was in this position, with an offset mortgage. For no particular reason, I kept my mortgage large, and savings large. But then I got a bit edgy and deliberately thre the savings back into the mortgage to end with small mortgage/small offset savings. Although not necessary, I just felt more comfortable that way.



What happens if I owe money to a bank, building society or credit union that fails?

Amounts owed to the failed firm (for example, loans, mortgage or credit card debts) are taken into account before any compensation is paid.
If you are a borrower with the same firm this may affect the amount you can claim, as the amount of your deposits may be 'set-off' against any amounts you owe.
If a firm were to fail, FSCS would consider a depositor's overall net claim, which would include taking into account any amount owed which the firm may set off.
In the event that set off is applied, and if the borrowings exceeded the depositor's savings, there would be no overall claim against the failed firm, and the depositor would not be entitled to any compensation.
For example, if a depositor had a mortgage of £200,000 and savings of £150,000 with the same bank, set off may be applied by the Insolvency Practitioner dealing with the bank failure. As a result, the depositor may end up owing the bank £50,000, so there would be no positive balance and no claim for compensation.

dunstonh

For reference, its not FSA compensation. Its FSCS. The FSCS and FSA are two different things.