MSE News: Savings protection to rocket to £85,000

Noble_Savage

MSE_Guy wrote: »

So I would counter your suggestion this is sensationalist. We have published an official statement from the horse's mouth, ie, the body that would pay out any compensation.

Thanks for that Guy, but the official body in respect of the level of compensation is actually the FSA, not the FSCS. As you say, the FSCS pay out the compensation, but it is the FSA that determines the level of cover.

The FSA has only just put out its consultation document on this subject to the industry, so it's interesting that the FSCS are pre-judging that process and saying that the industry has already agreed to it. The consultation process doesn't end until the first week of November. Have they got a crystal ball?

For the avoidance of doubt, If I were a betting man I would put money on the level being £85,000. And I know that the media has sometimes to indulge in simplification, shall we say, to get its message over. But, call me pedantic if you will, there's a difference between a proposal and an agreement. Just ask Mrs Noble Savage!

Former_MSE_Guy

You're correct that the FSA gives the FSCS its powers so it has the final say.

But the FSCS knows exactly what is going on and it's in constant contact with the FSA and industry.

From our point of view, the single aim of the story is to inform consumers what the compensation limit will be so they can plan their savings accordingly (for the few lucky enough to have over £50k!). Details such as consultations are irrelevant to the average person - they just want to know what will happen to their money.

We have to make judgment calls on who we trust before putting out a story and in this case we (and other media such as the Times) have the confidence to say the limit will go up to £85k, with the caveat that exchange rate fluctuations could change that as we've said, based on a very good source in the form of the FSCS, which is trustworthy.

Had the FSCS not been so definite we'd have been more cautious but remember the body that oversees compensation has sent a press release to all personal finance media saying the limit will rise to £85,000.

And I'm glad Mrs savage said yes!

Noble_Savage wrote: »

Thanks for that Guy, but the official body in respect of the level of compensation is actually the FSA, not the FSCS. As you say, the FSCS pay out the compensation, but it is the FSA that determines the level of cover.

The FSA has only just put out its consultation document on this subject to the industry, so it's interesting that the FSCS are pre-judging that process and saying that the industry has already agreed to it. The consultation process doesn't end until the first week of November. Have they got a crystal ball?

For the avoidance of doubt, If I were a betting man I would put money on the level being £85,000. And I know that the media has sometimes to indulge in simplification, shall we say, to get its message over. But, call me pedantic if you will, there's a difference between a proposal and an agreement. Just ask Mrs Noble Savage!

barak

MSE_Guy wrote: »

.....The FSCS put out a press release yesterday to say the rise is DEFINITELY happening which is why we wrote this story...

I can't seem to find any Press Release from yesterday on the FSCS website. :undecided

http://www.fscs.org.uk/news/2010/

or the FSA's either

http://www.fsa.gov.uk/Pages/Library/Communication/PR/2010/index.shtml

baby_boomer

£85K may sound rich.

But it might yield only £150 per month in retirement.

That's only two beers a day where I live!

No wonder the current pensions' "debate" is taking place in cloud cuckoo land.

Bullfighter

This is a meaningless gesture, to keep up the pretence that your savings are safe.

These guarantees only made sense when you had lots of financially independent entities. Today we have maybe 5 global retail banking institutions, the rest are completely intertwined through CDS and CDO type derivatives that a domino effect would occur should any bank default.

The majority of banks are all technically insolvent, even with their growing capital adequacy ratios, because they are still using fantasy accounting standards to value their balance sheet assets.

The numbers are quite simply mind blowing.

If for example Santander collapsed amid a Spanish sovereign debt restructuring event, where would the UK government find the billions to cover the UK deposits? Insurance? Well, just look at AIG collapsing when the Goldman CDO/CDS ponzi scheme blew up.

If you have hundreds of thousands in cash I would seriously consider physical assets including gold, agriculture and property.

Old_Wrinkly

barak wrote: »

I can't seem to find any Press Release from yesterday on the FSCS website. :undecided

http://www.fscs.org.uk/news/2010/

Strictly speaking, that is their general news page.
Their Press Release page is
http://www.fscs.org.uk/industry/press-releases/
(or http://www.fscs.org.uk/news/press-releases/ :undecided)
but there is nothing there either ...

What I find a bit irritating about all this is that the conversion (on the date chosen) gives us a figure of virtually £87,000 which the FSA have decided to round down to £85,000 because it is 'easier for consumers to remember'.
Yeh, right ... (why not £88,000 - that would be easier.)

For those who wish to look at the FSA consultation document itself, it is at :
http://www.fsa.gov.uk/pubs/cp/cp10_22.pdf
(the relevant chapter is chapter 10).

As far as I recall, the EU directive requires the conversion to be on the date the Directive comes into force, rather than the FSA's date of 1 October - which they have used because they "have a statutory obligation to consult publicly on proposed rules before implementation". Any 'rounding-off' should be based on that 31 December figure. (Personally, I believe it would have to be rounding up.)

alanq

For some people savings protection will not rocket but plummet.

The temporary arrangement whereby merged building societies trading under separate brands had £50,000 of cover each (for pre-existing customers) will cease at the end of the year. People locked into long term accounts may find themselves over the FSCS limit even though it has been increased.

Old_Wrinkly

MSE_Martin wrote: »

The following is the FSCS's statement that started this and Guy spoke to them and they confirmed the limit was confirmed. This was a perfectly legitimately reported story.

"FSCS statement on change to compensation limit for deposits

Mark Neale, Chief Executive of the Financial Services Compensation Scheme (FSCS), said:

“We welcome the increase in compensation limits from £50,000 to £85,000 that will come into force from 31 December 2010. The increase will mean that almost 99% of FSA-authorised consumer deposits will be covered if their provider goes bust.

Am I alone in thinking this doesn't accurately reflect the data given in Table 1 (paragraph 10.25) of the FSA consultation document?
85% for Banks and something just above 88% for Building Societies would give an overall figure of 86 or 87% (in my view).
Or does Mr Neale not know the difference between 'deposits' and 'accounts'?

PasturesNew

This is good news for me. Finally I will know where my money is. I had to split it up into so many different pots - and get so many different accounts - that I've got it all over the place and so never even look at it/touch it as it's all so complex with different passwords, logins, systems.

This will be the catalyst for me to finally choose the best few accounts instead of having it at god knows what rate and where.

Mind you - as a single person - it's bl00dy annoying that a couple can keep their money simply together at the same bank ... whereas I lose out by having to go to many banks at lesser and lesser rates.

Mrs_Scrooge_2

All very well, but by force of all these mergers, all our eggs are in one basket.
We started off with a N & P account > Abbey > Santander.
We also had a National Girobank Acct > Alliance & Leicester > Santander.
When first Santander took over A & L we were supposed to have separate guarantee limits: now we don't.