MSE News: Banks should warn over savings safety limit, survey says

jimjames

Lomcevak wrote: »

How many of those other 88% had nothing like the level of savings required to even care what the answer was? Maybe loads knew they'd be protected at their level of savings and would never be near the limit, but it's not as nice a soundbite. For most people wondering whether £75k is or isn't protected would be a nice problem to have...

This is a really key point.

I'd love to know the answer and to get them to ask a second question.

Are your savings anywhere near the protection level?

From discussions in the office I reckon the vast majority of people have well under £20k of savings so this is irrelevant.

innovate

jimjames wrote: »

Are your savings anywhere near the protection level?

trouble is, most of the surveyed probably haven't got a clue what the right number would be.

innovate

Martinslovechild wrote: »

It doesn't matter what the limit is, be it £85K, £850K or £8.5M, there simply is no pot of cash which will pay out to savers if the worst happens.

The media cleverly ignores this fact, the Bank of England ignores it - it's all to prevent people from withdrawing their cash in huge quantities.

The only way to pay people £85K would be to print additional cash on top of the Quantitative Easing programme currently underway.

I have absolutely no faith whatsoever in obtaining any cash deposited in a bank should it fail as - just like government pensions - there is no "pot of gold" which is invested on the taxpayers' behalf.

It all depends on your definition of "the worst".

If "the worst" is that one or two banks go bust, the FSCS funds will most likely be able to cover it without a blink. Several smaller outfits have gone bellies up in the last few years and nobody ever even heard of it. The FSCS paid out, savers were happy, life goes on. Just like with any insurance cover, which the FSCS cover essentially is.

If "the worst" means all banks go bust, then protecting your savings will be the least of the problems you have. Mass riots, food shortages, and breakdown of all known social infrastructure would be what you'd have to face, amongst many other unsavoury issues.

runninglea

so for anyone who has saved up their isa allowance every year - they must be at about 70 - 75k held in one institution.

In reality they should be moving their money to at least two accounts!

innovate

runninglea wrote: »

so for anyone who has saved up their isa allowance every year - they must be at about 70 - 75k held in one institution.

Not necessarily. Nothing forces you to have all your cash ISA funds with the same organisation

runninglea wrote: »

In reality they should be moving their money to at least two accounts!

In reality, £75K in a single financial institution is perfectly safe. But most "hard core" ISA-exploiters will probably not have their money just in cash, because S&S ISAs will have given them better returns than cash ISAs. With S&S ISAs, the £85K limits become irrelevant. There is good reason to believe that there are ISA millionaires out there.

Martinslovechild

innovate wrote: »

There is good reason to believe that there are ISA millionaires out there.

Agreed, there certainly are. Here's an article from The Daily Telegraph which discusses this very subject.

All the people featured in the article made their million by using Stocks & Share ISAs (and likely TESSAs or TOISAs before them). I doubt that it's possible to achieve a million by saving in cash ISAs, simply because returns are much lower than Stocks & Shares ISAs and also the annual allowance is half as much.

talexuser

It seems the high isa millionaires invested in individual shares, which was naturally a high risk strategy.

I wondered what max contributions to a fund (or tracker) would have done since the first pep.

The example they quote is a couple pooling resources to get £1 mil at 25 years for a 5% average growth - I assume for the max S&S pep/isa limit each year compounded.

So I guess a single person in reasonable funds might be £500k or thereabouts, or a bit ahead with good fund selection?

But if you had taken income I doubt you would reach that?

barak

"MSE News: Banks should warn over savings safety limit, survey says"

What on earth is this about? They already do in their Terms & Conditions don't they?
e.g.

Financial Services Compensation Scheme.
Derbyshire Building Society is a trading division of
Nationwide Building Society.
We are covered by the Financial Services
Compensation Scheme (FSCS). The FSCS can pay
compensation to depositors if a building society
is unable to meet its financial obligations. Most
depositors – including most individuals and small
businesses – are covered by the scheme.
In respect of deposits, an eligible depositor is
entitled to claim up to £85,000. For joint accounts
each account holder is treated as having a claim in
respect of their share so, for a joint account held
by two eligible depositors, the maximum amount
that could be claimed would be £85,000 each
(making a total of £170,000). The £85,000 limit
relates to the combined amount in all the eligible
depositor’s accounts with the building society,
including their share of any joint account, and not
to each separate account.
Nationwide Building Society operates under
the trading names of: Cheshire Building Society,
Derbyshire Building Society, Dunfermline
Building Society and Nationwide UK (Ireland).
The FSCS limit relates to the combined amount
in all the eligible depositor’s accounts with all
of the building society trading names including
Nationwide.
For further information about the scheme
(including the amounts covered and eligibility to
claim) please ask at your local branch, refer to the
FSCS website www.FSCS.org.uk or call: 0800 678
1100 or 020 7892 7300.

IronWolf

I'm totally against the nanny state but I actually think this is a good idea. Most people dont understand how banks work. They should be told upfront when money they are depositing is no longer guaranteed under FSCS.

We should also make it known the NS&I is a government backed savings vehicle which covers 100% of the amount deposited and is an alternative.

Then next time a bank goes bust we should wipe out those deposits over the limit.

opinions4u

They already have to tell ALL customers about the FSCS.

Twice a year when statements are sent or once a year as a bespoke letter when statement aren't sent.

If you've got £85k+ good for you. You should also have the sense to understand these things from the communications already issued.

It's the consumer who ends up paying for anything extra that's demanded by regulators and other bodies. So make sure it adds value instead of tying organisations up in totally unnecessary red tape for the benefit of nobody.