The £85K protection, or risk it?

rogermhunt

I just wondered what people thought about the risk associated with not following the 'recommendation' of keeping no more than £85K in each banking group.
i.e. I'm aware that big banks have collapsed in the past, but there's usually some king of warning . . . . so I guess I'm trying to understand the size of the risk of putting all of one's eggs into one basket.
Of particular interest to me is how safe is Lloyds (and Halifax)? What's the probability of them going bust and me losing all my savings (were I to keep all of it with them)?
I'd be grateful for anyone's thoughts

Gromitt

Its unlikely, but possible.

But why would you want to keep > 85K in there anyway? TSB rates are poor. Halifax is OK if your still on a bonus offer with their online saver getting 2.8%

Don't forget TSB and Halifax have their own banking license, so they have separate 85K pots.

grizzly1911

A question oft raised is how watertight is the £85k compensation anyway? If there was a run on one establishment could it all be paid out?

Also what happens if you put money into a fixed savings account (365 days for instance) on day 1 when an establishment is covered and it subsequently loses it on day 200. Would your saving still be covered.?

I have been mulling over whether to put some money into an Indian Bank that is registered and covered by FCSC but I just don't know.

rogermhunt

Gromitt wrote: »

Its unlikely, but possible.

But why would you want to keep > 85K in there anyway? TSB rates are poor. Halifax is OK if your still on a bonus offer with their online saver getting 2.8%

Don't forget TSB and Halifax have their own banking license, so they have separate 85K pots.

Thanks Gromitt . . . . Sorry, I misled slightly, because my current account is with lloyds TSB whilst all my savings (£90K) are currently with Halifax (Cash ISA at 3% and Online Saver at 2.8%). You're right in that the bonus will end (for me, next April and June respectively) and so I will be moving what I've got now, at those times.
However, I'm expecting a legacy payment £80K+ in two weeks time and an endowment maturity in Feb 2013 and so hence my questions about the £85K, which banks are in which groups etc.
The best rates at the moment are with Halifax where my existing money is. So, this question relates to whether I'd be foolish to put all the new money into the Halifax (which has the best rate for me in comparison to what can be got elsewhere), or could I risk putting it in Halifax until I move everything (£170K+) about next year?
I'm confused about your comment re TSB and Halifax 'banking licences' because I've read that a person would only be covered for £85K for the Lloyds Banking Group (which, as I understand it, includes Halifax). You appear to be suggesting that Lloyds and Halifax have their own separate £85K protection, even though they belong to Lloyds Banking Group.
Hope what I've said makes sense!

badger09

rogermhunt wrote: »

Thanks Gromitt . . . . Sorry, I misled slightly, because my current account is with lloyds TSB whilst all my savings (£90K) are currently with Halifax (Cash ISA at 3% and Online Saver at 2.8%). You're right in that the bonus will end (for me, next April and June respectively) and so I will be moving what I've got now, at those times.
However, I'm expecting a legacy payment £80K+ in two weeks time and an endowment maturity in Feb 2013 and so hence my questions about the £85K, which banks are in which groups etc.
The best rates at the moment are with Halifax where my existing money is. So, this question relates to whether I'd be foolish to put all the new money into the Halifax (which has the best rate for me in comparison to what can be got elsewhere), or could I risk putting it in Halifax until I move everything (£170K+) about next year?
I'm confused about your comment re TSB and Halifax 'banking licences' because I've read that a person would only be covered for £85K for the Lloyds Banking Group (which, as I understand it, includes Halifax). You appear to be suggesting that Lloyds and Halifax have their own separate £85K protection, even though they belong to Lloyds Banking Group.
Hope what I've said makes sense!

This is the 'definitive' list from FSA

http://www.fsa.gov.uk/Pages/consumerinformation/uk_groups/index.shtml

After some mergers/takeovers, separate licences are retained - I don't pretend to know why.

As for risking more than £85k with one institution - I wouldn't, but it must depend on your attitude to the perceived risk. Don't forget joint accounts qualify for £170k protection.

EDIT: I did post this link in your other thread on a similar topic

opinions4u

badger09 wrote: »

After some mergers/takeovers, separate licences are retained - I don't pretend to know why.

To stop a portion of customers withdrawing half their savings.

rogermhunt

badger09 wrote: »

This is the 'definitive' list from FSA


After some mergers/takeovers, separate licences are retained - I don't pretend to know why.

As for risking more than £85k with one institution - I wouldn't, but it must depend on your attitude to the perceived risk. Don't forget joint accounts qualify for £170k protection.

EDIT: I did post this link in your other thread on a similar topic

Thanks Badger09 . . . . I did read the link you posted on my other thread and it seemed to be telling me that because Halifax is part of the Lloyds Banking Group, then I would only receive £85K protection in total (e.g if I had £10K in Lloyds and £90K in Halifax, I'd only get £85K protection) . . . and yet Gromitt suggests that they have their own banking licences . . . that's why I'm confused (or maybe I'm dim ).
Regarding the rsik element . . . . I'm not a risk taker; however, my perecption at least is that a banking group as big as Lloyds (and Halifax) has a very low risk of going down the pan in the next 6 months and so I feel I'd be safe to put eveything in there until April/June next year . . . . it's stupid I know, but I just want to get a feel from others as to whether the risk is indeed 'miniscule'.

talexuser

rogermhunt wrote: »

big banks have collapsed in the past, but there's usually some king of warning . . . .

Do you remember the queues round the block on TV when Northern Rock went bust? Did those people have some kind of warning in time?

TCA

In 2008 when the compensation limit was £35k, I thought I was being clever by splitting my savings up accordingly. Cue the Iceland debacle. I got all my cash back (eventually) but it would have been fine if I'd left it all where it was. Not suggesting that as a course of action but strange things can happen.

opinions4u

rogermhunt wrote: »

Thanks Badger09 . . . . I did read the link you posted on my other thread and it seemed to be telling me that because Halifax is part of the Lloyds Banking Group, then I would only receive £85K protection in total (e.g if I had £10K in Lloyds and £90K in Halifax, I'd only get £85K protection) . . . and yet Gromitt suggests that they have their own banking licences . . . that's why I'm confused (or maybe I'm dim ).

You have definitely misinterpreted it.

The Halifax web site spells it out for you too.

Added peace of mind from the Financial Services Compensation Scheme
The Financial Services Compensation Scheme provides customers with extra peace of mind that their money is safe.

Lloyds Banking Group
Halifax is a trading name of Bank of Scotland plc. Bank of Scotland plc is one of Lloyds Banking Group plc's group companies.

Bank of Scotland plc and Lloyds TSB savings continue to be covered separately under this scheme, as both organisations are covered by separate banking licences. Should there be any changes to our banking licences in future, we will contact you to tell you about them in the usual way.

Regarding the rsik element . . . . I'm not a risk taker; however, my perecption at least is that a banking group as big as Lloyds (and Halifax) has a very low risk of going down the pan in the next 6 months and so I feel I'd be safe to put eveything in there until April/June next year . . . . it's stupid I know, but I just want to get a feel from others as to whether the risk is indeed 'miniscule'.

LBG is 40% state owned.

rogermhunt

Thanks to everyone who posted . . . . I'm now clear on the information I was seeking.