£85k Savings Protection - Is it Smoke and Mirrors?

innovate

smithy009 wrote: »

Today the language has changed. We have "secured" (<£85) and non-secured funds (>£85k). In Cyprus the "secured" funds are now "limited withdrawal" funds, so people no longer have control over their money, and have no idea when they will.

It's not anywhere near as bad as you make it sound.

Firstly, how many people have how much over £85K in cash savings?

Secondly, how many of those with over £85K (or £170K in joint accounts) haven't yet heard of the FSCS limit per financial institution?

Thirdly, how many people don't really have over the limit in a single financial institution? There are, of course, still idiots who think they would get bailed out in full whatever, and they deserve to get burnt as and if. But my take is that the number of people without guarantee is minute.

opinions4u

innovate wrote: »

Firstly, how many people have how much over £85K in cash savings?

I would estimate that around 2% of bank customers have over £85k in the same bank.

I'd also estimate that it equates to around 25% of deposits.

jimjames

smithy009 wrote: »

Is anyone else coming to the conclusion that having cash in a bank is possibly the riskiest place to leave it right now?

And if so, what should you do with it?

Having over £85k in one of the European banks might be, I think the chances in the UK are far lower.

My understanding from Cyprus is that all deposits over £85k/ 100k Euros are frozen so if you just went over the limit you are not able to access any of your money other than 120 per day.

The latest news on the bailout is not good either. An additional $6 billion hole found in less than a month, all of which must be covered by Cyprus and the bank account holders. It may end up being more than 60% for some.

nilrem_2

One thing that I always wonder about is where do the super rich keep their cash?

Some of the so called celebs and super rich bankers and their ilk must have used up all the £85k options so what do they do with the surplus, I realise they have property and perhaps Gold but when you are receiving a salary in excess of £100k per week it must be a problem?

opinions4u

nilrem wrote: »

One thing that I always wonder about is where do the super rich keep their cash?

Some of the so called celebs and super rich bankers and their ilk must have used up all the £85k options so what do they do with the surplus, I realise they have property and perhaps Gold but when you are receiving a salary in excess of £100k per week it must be a problem?

Put it this way, most of it isn't in cash.

Aegis

nilrem wrote: »

One thing that I always wonder about is where do the super rich keep their cash?

Some of the so called celebs and super rich bankers and their ilk must have used up all the £85k options so what do they do with the surplus, I realise they have property and perhaps Gold but when you are receiving a salary in excess of £100k per week it must be a problem?

Diversified investments mostly. Once you get above a certain level of cash, investing the rest for higher returns tends to make sense to most people with a lot of money.

If it doesn't, they could find an open account with NS&I if they were too concerned, or possibly invest in very short term gilts (i.e. ones where capital movement is essentially not going to happen as the maturity date is so close).

Some I've seen buy property every time they can afford one, others pile into every weird and wonderful scheme they see, very few hold cash beyond a certain point.

Martinslovechild

It seems to me that the government is responsible for a vast amount of wealth passing from savers over to borrowers during the past 5 years through schemes such as "Funding For Lending". Banks can access cheap cash and don't need to tap savers which mean savings interest rates being hit. It's now virtually impossible for a saver to see a real return on their money (i.e. after inflation) whereas borrowers are witnessing mortgage rates at historic lows.

To add to the misery, the Bank Of England has been given carte blanche to print hundreds of billions of pounds and in so doing so devaluing sterling (anybody who has travelled outside of Europe to places such as the Far East will be surprised how much less their pound is worth than it was five years ago).

Anyway, I'm a little off-topic... I agree with the original poster and the £85K guarantee is definitely a case of 'smoke and mirrors'. But then a government statutory pension is the same thing - there is no pension pot either (though I used to foolishly believe that there was - "there's one for many companies so why isn't there one for the statutory scheme?" I used to think). No wonder retirement dates are being pushed back and it's no longer possible to opt out of S2P/SERPS.

The £85K rule is simply a "promise" - but as most taxpayers will be aware - promises can be broken. Even people with short memories will recall the tories promising that IHT would be increased to £1 million if they were voted into power, yet just months later we were told that they couldn't afford it.

The £85K is a promise designed to keep order, nothing more. It's not a "guarantee" because, as the original poster has already pointed out, if a bank the size of HSBC were to go bust, there would simply not be enough to compensate everybody. If the government stepped in to print the required amount, hyper-inflation would ensue and the "value" of the money would be effectively worthless.