Santander Offset Mortgage - FSA protection?

tangoc

I have called Santander and they have told me that if anything were to 'happen' to them then my offset savings would go to pay off my mortgage and I would not get any protection from the FSA. I have read elsewhere that the FSA covers £85000 per person of savings even in an offset situation. Does anyone have the correct info relating to this? I have asked Santander to put this in writing to me, the girl on the phone said that this is the information that they have been sent by email internally recently.

ACG

Your still covered for upto £85k in savings - as to how it would work on an offset account im not 100%. It would seem strange that they would take the flexibility involved with an offset away from you.

But i dont think you need to worry about Santander going under.

tangoc

Thanks..Im not too worried about Santander going under I am just confused that they are telling me that I am not covered by the FSA for my offset savings pot and yet other sources say that I am? I would just like to know 100% what the situation is so that I am fully informed. I will try and contact FSA tomorrow.

Gentoo365

You have been given incorrect information.

This is what would happen.

The first 85k is protected and will be supplied to you via BACS in 7 days
The remaining amount (i.e. savings above 85k) would be used to offset what you owe.

EDIT - Important Clarification. This is only true if the balances are separate. i.e. you have two account numbers. So if you have a 'savings account' and a 'mortgage' you are covered. If you just have a mortgage that allows overpayments then you are not. Get clarification from the Financial Services Compensation and Santander which applies to you.

http://www.fscs.org.uk/industry/sub-schemes/accepting-deposits/payout-arrangements-from-1-january-2011/

How are offset mortgages dealt with?

If a deposit account is separate from the mortgage balance, it would be dealt with separately and compensation would be calculated on a gross basis. However, if the deposit account is combined with the mortgage account and operated as one large overdraft, the FSCS would have to treat it as an overdraft and no compensation would be payable. It is important that consumers appreciate the difference between these accounts.

If the accounts are separate the FSCS would pay compensation up to the limit and the remainder would automatically be set-off against the debt (or in this case mortgage) under insolvency law.

tangoc

Brilliant, thats the information I needed. Thank you.

The_J

Your savings will be deducted from the mortgage if it is sold on to another provider.

Senior_Paper_Monitor

I have taken this up in some detail (with referenec to their 'flexi offset accounts') with Santader via two separate routes (result is two different answers) on behalf of clients !!

They do not have a document that confirms the position - but they have agreed to provide the necessary 'comfort letter' by the end of this week - 10 working days from the official acknowledgement of the enquiry and request for supporting document.

I will happily publish that when received.


My current undertsanding (pending written confirmation) is both components stand outside the guarantee scheme - but they will offset the balances.

tangoc

Yes I checked my documents and it seems that the 'savings' account share the same account number to my mortgage..really didnt think that was the case but it is...there you go. Just for my piece of mind I am arranging for a chunk of savings to be moved to a proper savings account which would be covered by the FSCS. I will be slightly worse off 0.05% but for now I would rather know that my savings are safe.

The_J

Mate, Santander are the 4th biggest bank in the world. If they go down your savings will be the least of your worries, there probably won't be a FSCS to compensate you.

You'd be better taking a few grand out, buying yourself a rifle, a shotgun, the necessary licenses, a few thousand rounds and a couple of extra locks for each window and door.

dimbo61

I have an offset mortgage and love the flexability that it offers but I cant help wondering why anyone would need to have over £85,000 in an offset account and a Hugh mortgage.
Why not pay off some of the mortgage now and bring your savings down to less than £85,000.
No one needs more than £85K Just in case and the mortgage needs to be paid off sooner or later

TrickyDicky101

As long as you owe on your mortgage, with the same account number you are implicitly protected should the bank go under as the savings element will offset the mortgage balance