Advice on UK banking FSCS - just a couple of quick questions

Emanef

Hi guys

I just want to clarify. From what I've read on MSE about the UK banks' Financial Services Compensation Scheme, joint account holders effectively get up to £85k cover each, but I can't quite work out how it works in all scenarios.

For example, if my wife has a single account with HSBC, and we also have a joint account. If, in theory, she had £85K in her single account, and we had £85K in the joint one, would only half the joint one get cover (on the grounds that she gets £85k cover on her single account and only 50% of the joint account is covered for me?) Or would the fact that I have up to £85k protection as well mean the joint one would also get £85k cover, even though her £85k has been 'used up' by the single account? Is the value of joint accounts always split 50/50 on calculating cover, or can more be considered for one person if the other has other accounts?

Also, is First Direct considered a different 'institution' to HSBC, even though it's a subsidiary of it, or would they be considered the same?

I hope that makes sense.... thanks!

gt94sss2

Emanef wrote: »

Is the value of joint accounts always split 50/50 on calculating cover, or can more be considered for one person if the other has other accounts?

Based on the examples on the MSE site:

1. Your joint account would be considered 50:50 - and that would be covered for upto £170,000. So in your example, the entire £85k there would be covered first.

2. This would leave your wife with £42.5k of protection to cover her sole account.

The FSCS site is slightly more flexible. It states:

FSCS will assume that the money in that account is split equally between account holders, unless evidence shows otherwise.

You're probably better off contacting the FSCS (or reading their FAQ) if you have more detailed questions.

Also, is First Direct considered a different 'institution' to HSBC, even though it's a subsidiary of it, or would they be considered the same?

HSBC and First Direct qualify as 1 under the FSCS as they share the same banking licence (its £85,000/per banking licence not per brand)

Having said that HSBC are one, if not the financially strongest, banks out there.. so I personally wouldn't be worried if I kept more than £85k there but might wonder why I was doing so given the interest rates they currently pay.

Regards
Sunil

Emanef

That's great, makes sense, thanks Sunil.

Yes, HSBCs rates are terrible, but we're currently living abroad so opening savings accounts in the UK is harder when we don't want to risk tax status by saying we're currently resident in the UK, plus getting the paperwork back and forth is reliant on family visiting! We do need to get more organised though....!

Emanef

Yes, just to confirm (in case anyone else isn't sure), I saw it on the First Direct website;

Your eligible deposits with HSBC Bank plc are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit protection scheme. This limit is applied to the total of any deposits you have with HSBC Bank plc and first direct.
Any total deposits you hold above the £85,000 limit between HSBC and first direct are not covered.