FSCS protection

Bankorspend

While the FSCS protects your deposit to the maximum stated amount if its member bank 'fails',will your deposit be compensated if it was lost due to other causes eg. fraud by the bank (opens and working normally one day,disappears into thin air the following day)?I am looking for a short term fixed rate bond and wonder if I should stick to the few household well known banks instead of the unknown foreign banks operating on line offering better rates even if they are covered by the FSCS.

Ifts

Should not matter if its a household name or a foreign bank as long as it has FSCS protection then up to £85k will be covered if something went wrong.

You are right its the less well known ones that are offering the better rates:
http://moneyfacts.co.uk/savings/fixed-rate-bonds/

Sometimes account opening procedure can be a little more difficult with the less well known banks (usually down to problems like verifying your i.d. and asking you for certified copies of various forms).

masonic

Those rates are not as good as the best rates paid on current accounts offered by the high street banks (see this guide, so you should consider spreading the first £30k between those.

Ifts is right in so far as you would be in the same situation if any FSCS covered bank failed, but of course not all banks have the same likelihood of doing so and if it did happen it would likely take several months for you to get your money back. If this money is needed at some specific time in the future, that might influence your decision.

bigadaj

masonic wrote: »

Those rates are not as good as the best rates paid on current accounts offered by the high street banks (see this guide, so you should consider spreading the first £30k between those.

Ifts is right in so far as you would be in the same situation if any FSCS covered bank failed, but of course not all banks have the same likelihood of doing so and if it did happen it would likely take several months for you to get your money back. If this money is needed at some specific time in the future, that might influence your decision.

Yes, though the payout from the Icelandic banks happened within a matter of weeks; on and those obscure banks rbs and lloyds needed government bailouts during the gfc so it isn't necessarily obscure banks where the risks lie.

Bankorspend

Thanks for all the replies above.
A bank could fail due to ill advised but honours, or unfortunate business decisions.What if it 'failed' due to deliberate fraud on its part eg here today,closed and gone tomorrow with the owner disappeared into thin air?Does the FSCS cover that as well?

grey_gym_sock

if a bank is part of the FSCS, then it's covered, regardless of why it fails. if it's something calling itself a bank, but not part of FSCS, it isn't covered. i don't think any real banks are 1-person operations which could disappear overnight.

it might be worth noting that, even for a bank whose deposit accounts are covered by FSCS, they may offer other products (not deposit accounts), which aren't covered in the same way.

PeacefulWaters

Bankorspend wrote: »

Thanks for all the replies above.
A bank could fail due to ill advised but honours, or unfortunate business decisions.What if it 'failed' due to deliberate fraud on its part eg here today,closed and gone tomorrow with the owner disappeared into thin air?Does the FSCS cover that as well?

Simple answer:

Yes.

RickyC_IFSWP

Bankorspend wrote: »

Thanks for all the replies above.
A bank could fail due to ill advised but honours, or unfortunate business decisions.What if it 'failed' due to deliberate fraud on its part eg here today,closed and gone tomorrow with the owner disappeared into thin air?Does the FSCS cover that as well?

If a bank cannot or doesn't settle its liabilities (i.e. doesn't repay depositors their money back) regardless of the reason then this is a default or "fail", so FSCS would cover it up to the threshold.

Bankorspend

Thanks for the very helpful replies.