FSCS cash limit coming down to £75K / new £1m temp protection

Pincher

Archi_Bald wrote: »

The FSCS is not a 'government scheme'. It is an industry scheme that the financial services industry must provide by law. The liability is with the financial services industry, not the government.



For FSCS funding, see http://www.fscs.org.uk/industry/funding

Like IATA? Didn't they do a claim on your credit card or travel insurance before bothering us thing because they didn't have enough money a few years ago?


If FSCS isn't backed by the UK government, then it's a house of cards.


I wonder what the super rich do? Buy insurance from Goldman Sachs? If I was a Russian Oligarch, can I buy insurance against Putin confiscating all my money? Hmm, pay out 10 billion dollars, or hire a contract killer to have me quietly murdered for US$100k, it's a no brainer.

Masomnia

Still way too high.

It creates perverse incentives.

Savers should be incentivised to pool their money between different institutions and decide whom to lend their money to based on relative risk. Not the nonsense system we have now where you can lend money to a bank at a higher interest rate with no greater risk than another with a lower interest rate; it only encourages excessive risk taking by banks.

redux

Pincher wrote: »

If I was a Russian Oligarch, can I buy insurance against Putin confiscating all my money?

Yes. A football club or newspaper in the UK.

jimjames

Masomnia wrote: »

Still way too high.

It creates perverse incentives.

Savers should be incentivised to pool their money between different institutions and decide whom to lend their money to based on relative risk. Not the nonsense system we have now where you can lend money to a bank at a higher interest rate with no greater risk than another with a lower interest rate; it only encourages excessive risk taking by banks.

That certainly seems to be a problem. The DotCom debacle shows how a player can offer an unsustainable, market beating rate but then rely on the FSCS to actually pay that to the savers which is funded by savers at more prudent banks and building societies.

Something seems to be wrong when that is allowed to happen with no risk to the saver in taking such an unsustainable rate.

polymaff

Masomnia wrote: »

Still way too high.

It creates perverse incentives.

Even more so as one of the new,smaller, banks offering higher rates is of the size that could be baled out. Could FSCS really bale out any of the big banks?

Archi_Bald

polymaff wrote: »

Could FSCS really bale out any of the big banks?

Yes they could bail the savers out, if it is just one of the big ones. The Treasury would give the FSCS a loan (as it has done before), and the BoE would print extra money if needed.

If it is more than one bank going up the creek in the same time period, we'd likely have a much bigger problem at our hands, and money would be the last thing on our minds.

polymaff

Archi_Bald wrote: »

Yes they could bail the savers out, if it is just one of the big ones. The Treasury would give the FSCS a loan (as it has done before), and the BoE would print extra money if needed.

If it is more than one bank going up the creek in the same time period, we'd likely have a much bigger problem at our hands, and money would be the last thing on our minds.

We'll see - maybe.

The OED accepts both bail and bale in this context - BTW.

evenasus

I've only just found out about this protection reduction limit.
I watch the news on TV every day and if it's been mentioned, I've missed it.

I do have some in fixed term bonds which don't mature until 2018. It's all well and good being allowed a withdrawal but a pain to find somewhere else to deposit.

Just another reason for leaving the EU.

masonic

evenasus wrote: »

Just another reason for leaving the EU.

The UK set the limit at £50,000. The limit is still £50,000 for investments as they are not covered by the EU directive, which rather suggests the UK would not have raised the limit for savings if it hadn't been forced to do so.

So you'd rather go back to the UK limit of £50,000 than stick with the EU limit when it adjusts to £75,000?

Reaper

2010 wrote: »

So if only 5% are affected, why change it.
EU interference yet again.

The UK chose £50,000 to be its guarantee limit. It was only raised to £85k at the insistence of the EU.

So far from blaming the EU for making it £75k you have them to thank that it is not much lower.

And the reason it is changing is simply the amount is specified in Euros as the majority of the continent use them.