£85,000 savings guarantee

George_Mainwaring

I understand that your savings in each banking group is guaranteed by the government up to £85,000, but does this mean they absolutely certainly will give you the full amount or, in the event of your bank collapsing, are they likely to offer you only a proportion of it? A bit like how you may insure something for £1000 but when you make a claim they wriggle like eels and only pay out £400 etc.

Also, are there any obvious exemptions or caveats? Is money in fixed term ISAs and other fixed term accounts/bonds covered? What about, for example, a high street bank stocks & shares-based ISA product in the event the bank goes bust?

I take it you wouldn't get any interest owed? So if you put £1000 in a 5-year account that was set to pay £5% AER as a lump sum at the end, and the bank went bust the day before it matured, the government would only give you £1000?

Also, does anyone know the likelihood of getting all your money back if you had £85,000 in a HBOS bank and another £85,000 in the Natwest? My understanding is that all your money is guaranteed in this event, but would the Government actually pay out?

atush

If you get any of it, it will the full amt. If the govt went bust, I assume they would just print money.

And if the acct is joint, you are covered up to 170K

As to interest, I assume you would get it but there could be a cap. the only exp I have if this is I had money in an Icelandic bank sub based in the IOM. I got 100% of the capital back, plus 5% interest. I was due 7% int (and some was in a one year bond that hadn't matured) but they had a cap of 5% on interest.

Timay

It has to be in a uk registered financial institution if you want it guarenteed, not all banks in the uk are so you will have to check whether it is or not

If it isn't it is only guaranteed up to the amount the banks home country goverment says it will guarantee usually a lot less.

George_Mainwaring

atush wrote: »

If the govt went bust, I assume they would just print money.

This is an interesting point about the true worth of the guarantee. We all saw what the recession did to the value of the pound last time, and although there were a few bailouts, no major bank actually went bust as a result.

For the situation to be so grim that banks actually fold and people start claiming their money from the government, just how much will £85,000 be worth in real terms, and what could you do with it afterwards to protect it from high inflation and devaluation!

George_Mainwaring

Timay wrote: »

not all banks in the uk are

I take it all the popular UK high street banks are UK registered, even if they have clever accountants registering holding companies in the Seychelles to avoid corporate tax?

opinions4u

It is not a government guarantee.

It is an FSCS guarantee paid for by the financial services industry (with the help of a repayable loan from HM Treasury).

coastline

We all know that theres been a banking crisis but does anyone think that this situation will happen....people losing life savings.
Obviously its better to be safe than sorry...it hasnt happened yet to a major bank so whats the odds that it will given they are building their reserves up again..
Really wondering wether big cash investors do this with several savings accounts....I'm sure plenty do..
There again I might have read that the government said a year ago that it wouldnt bailout anymore..??

innovate

All the details are on the FSCS site, and an overview is on MSE.

George_Mainwaring

coastline wrote: »

We all know that theres been a banking crisis but does anyone think that this situation will happen....people losing life savings.

Generally no, and if it did then I doubt the government or the banking industry could afford to magic-up enough cash to refund everyone in the country. Not without triggering hyperinflation at the same time.

However... Europe is looking very delicate at the moment, with no obvious path to recovery and a strong possibility that things may get worse before they get better.

This combined with poor interest rates in the UK means that some people may well move away from high street banks and go to smaller banks offering better returns. It's banks like these which could run into problems (possibly because of Europe) and cause people to lose their savings.

I'd never heard of Northern Rock before it was in the news, so I doubt I'd have banked with them 5 years ago. But in hard times I'm certainly looking around at lots of banks I've never heard of before to see how they compare with the Halifax, Natwest, Barclays and friends, and could end up saving with one that does go bust!

I think it unlikely, but given that some people insure their mobile phones, I think it's only sensible to make sure your life savings are 'insured'.

MonkeyMad

If there was a general need to call on this gtee with large scale intervention by HMG, I would mitigate the inflationary effects bound to be present in the wider economy by investing in guns, food, fuel, and water, since those would be the most useful things in the aftermath

atush

Indeed if things got that bad you'd be talking canned food and candles etc.