Do the banks want my money?

innovate

2010 wrote: »

All this FSA £85k guarantee has never been tested as no bank has been allowed to go to the wall yet.

Several credit unions have gone to the wall since the £85K limit came into existence. They were all covered under the £85K scheme and depositors got their monies back very swiftly. So I'd say the system is well tested in terms of processes and procedures.

Of course credit unions are a lot smaller than a bank but the basic issues are the same, and therefore well covered. So - god forbid - if the FSCS needs to spring into action at the collapse of a bank, I believe all will work very well.

The FSCS processes and procedures were also "tested" very extensively following the Icesave collapse. They did a fabulous job back then returning deposits to savers.

innovate

2010 wrote: »

The fallout would ruin this country`s financial reputation.

What, again?

There's hardly much reputation left after the RBS disaster, the Barclays LIBOR fixing, HSBC's money laundering and the like.

The only 'saving grace' for the UK financial industry is that bankers around the world are equally capable to lie, cheat, and gamble with depositor's money.

2010

Innovate
Always glad to read your 2p worth.( even if a bit naive at times)
You obviously have more faith in the system than me.
If a major financial institution went to the wall there`s no way the FSCS could repay in full everyone`s money.
A few minor back street credit clubs is hardly a test.

innovate

2010 wrote: »

Innovate
Always glad to read your 2p worth.( even if a bit naive at times)
You obviously have more faith in the system than me.
If a major financial institution went to the wall there`s no way the FSCS could repay in full everyone`s money.
A few minor back street credit clubs is hardly a test.

Not sure who is naive here.

The FSCS guarantee stands up to £85K per person per financial institution, full stop. There is absolutely no reason to assume that there would not be enough money to pay the depositors of a given financial institution should they go against the wall. At the same time, wide-ranging measures to prevent defaults from happening in the first instance are being implemented by banks (not by their choice, but by Regulation).

Of course, if all the banks collapsed at the same time, the FSCS funds would be insufficient to pay all the depositors. However, in this scenario, the very last thing people would be thinking of would be money - it would be armageddon and nobody would need money any more.

opinions4u

The biggest test of the FSCS has been Bradford and Bingley - £14bn. The money wasn't in the kitty but the Treasury lent the FSCS the funds. Similar with the Icelandics, albeit for smaller amounts.

The financial services industry has to repay those funds, with interest, via the FSCS levy. That's banks, building societies, insurers and dunstonh.

But any collapsed institution does have assets. Bradford and Bingley's sit under NRAM and are strangely profitable. As those mortgages are repaid over the next couple of decades they will contribute towards clearing the FSCS debt to the Treasury.

Barnsley Building Society members are seeing a distribution of funds recovered from the Icelandic assets unwinding. Small fry compared to B&B which, in turn, is a drop in the ocean to the £300bn in LBG deposits.

At the point of crisis, things are bad. Over the subsequent years things unwind and stabilise and funds are recovered. It will take time, but the state will, eventually, get the vast majority it's / our money back.

talexuser

opinions4u wrote: »

It will take time, but the state will, eventually, get the vast majority it's / our money back.

I really wish I could believe this taking inflation and the loss of output during the recession(s) into overall account.

We were told MPs expenses had been sorted, still we get fraud at the taxpayer's expense. We were told Levenson would come up with all the answers, now that is to be watered down to suit vested interests. We were told the banks would be reformed so the crunch could never happen again, Vickers report watered down, kicked down the road and no progress on separating retail from investment. We were told take the pain and the deficit would be halved by next election, enter a new BOE honcho to keep interest rates at rock bottom for the foreseeable future. Now suddenly the nation's accounts suddenly has billions extra from the interest of lending money to ourselves and billions extra from sales that haven't even happened yet, but we need more huge cuts in services.

Sorry to be so negative but no wonder people are cynical about the difference between what we're told and the resulting outcome.

2010

talexuser wrote: »

Sorry to be so negative but no wonder people are cynical about the difference between what we're told and the resulting outcome.

Most of government promises/policy is of the "keep your fingers crossed it doesn`t happen" variety.