Post Office and Bank Of Ireland

theGrinch

In the current climate where things may go from bad to worse...am I correct in assuming the Post Office Savings products are actually provided by the Bank of Ireland?

Let's assume the Bank of Ireland gets into serious difficulty, are savings backed by the UK or Irish compensation scheme?

Do such schemes only guarantee the amount invested, within certain limits or does it also cover interest accrued?

For the inflation linked bonds it says...3 year Inflation Linked Bonds - Fully guaranteed until maturity if taken out before 31 December 2011. 5 year & 1 day Inflation Linked Bonds - N/A

atush

I was under thte idea they were covered by the irish scheme. but might be covered by both?

My only experience with a 'failed bank' was with Kaupthing Singer Friedlander. Which only failed due to actions by the UK govt. In that case (under the IOM compensation scheme), we got interest. but it was capped at 5% due to the scheme rules (although the acct I had was 7.1%). So I did receive 5% interest along with 100% of capital.

So the rule is to check the rules of the different compensation schemes. And if your savings is covered by more than one, use the one that allows payent of interest. and to stick w/in the limit of compensation pp. I had under 30K in the scheme as at the time it was guaranteed for 15Kpp. but it was raised to 50K even after the collapse. But I think interest may have had to fall into the overall amt?

barak

See -

http://www.moneysavingexpert.com/savings/safe-savings

p00pieb0tt0m

Post Office Savings are under the UK compensation scheme, and have been since Bank of Ireland went to the High Court to set up Bank of Ireland UK. Some of the investment products are provided by Family Investments.

oldagetraveller

Directly from their(P.O. Savings website) "key information".

"How your deposits are protected
Deposits with Bank of Ireland UK are protected by the Financial Services Compensation Scheme. Eligible deposits are protected up to the value of £85,000 per depositor, per institution. Full details can found on https://www.fscs.org.uk or by contacting the FSCS on 0800 6781100."

theGrinch

thanks. I did have a look. it is not obvious if the interest accrued is protected. It would seem that the capital and "period" invested is protected so that surely would mean the interest accrued too. However, I would need a definitive yes. Im sure many are in a similar position

dealsearcher

So the fact that the bond is invested in Ireland where high interest rates are possible because they need our money has no bearing on the risk?

alanq

If the risk is high, institutional investors and those wishing to deposit over the compensation limits will avoid or demand higher interest rates. To make up the shortfall, banks need to encourage deposits by increasing interest rates even to those whose deposits are at no risk because of FSCS or other deposit protection schemes.

dealsearcher

Thanks for the reply. It was expedient for the last government to guarantee savers accounts for political reasons. The risk to investors appears to be that the present government does the same thing if a significant problem arises with the Bank of Ireland UK.

In the past governments have changed the rules at short notice when it suits them. You only have to look at the changes in tax rules with regards to CGT, pensions, residency, domicile, etc. in recent years.

How much do you trust your government. I think a lot of people would say: 'Not a lot'

Reaper

dealsearcher wrote: »

In the past governments have changed the rules at short notice when it suits them. You only have to look at the changes in tax rules with regards to CGT, pensions, residency, domicile, etc. in recent years.

How much do you trust your government. I think a lot of people would say: 'Not a lot'

I think you are getting carried away there. The government does not have to pay savers if a bank goes down, that is paid for by the other members of the FSCS, so there is no need for them to change the rules. Besides it is crucial savers have faith in banks, that was the overriding concern during the original crisis and why the government went to such lengths to protect them. A run on the banks would have quickly got out of control.