MSE News: Chancellor faces renewed call to prevent 'absurd' savings protection cut

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Andrew Tyrie has written to Chancellor George Osborne calling for him to prevent an 'absurd' savings protection cut...

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Chancellor faces renewed call to prevent 'absurd' savings protection cut




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MARTYM8`

Why is it absurd.

If you have over £75k of savings why can't you use your brain and spread the funds about?

Why should other taxpayers bailout wealthy people with no common sense.

PS Its an EU scheme - inevitably the thresholds will be set in euros.

Archi_Bald

Incredible. How can someone be the Chairman of the Treasury Committee and have so little comprehension?

The number of people immediately affected by the reduction is miniscule. They will be able to re-direct a few thousand as required to other accounts.

I don't recall Mr Andrew Tyrie writing any open letters to demand better protection when our protection was less than half the £75K it will be from January 2016 onwards.

So whatever drives Mr Tyrie, it can't be the concern for the deposit holders. If there is anything absurd, it is his most recent letter.

masonic

Andrew Tyrie really ought to educate himself about where this limit comes from and what protection savers had before it was introduced. I'm sure he is not advocating returning to the £50k FSCS protection limit that is currently in force in the UK for assets not subject to EU regulation.

dunstonh

Problem with politicians today is that they dont like to explain. Instead they prefer to cave in to the media and consumer groups.

If the Chairman of the Treasury committee cannot fathom out the reasons and the logic behind them then he really shouldnt be in that role.

VT82

Normally I'm totally 'caveat emptor', especially when it comes to people dealing with their money and banks. But on this occasion I disagree with all of you bashing Andrew Tyrie. He can understand perfectly the formulaic logic of why the threshold is being reduced, and yet still say that the logic is flawed. The UK is a strong enough voice in Europe to be able to demand carve outs when they create stupid situations like this, and that is what he is demanding we at least try to do. No point bashing him and say we should just roll over and obey because we told the EU we would 5 years ago.


And although, yes, most people have less than the FSCS threshold in savings, when a new best buy account is launched, I know for a fact that a good 30%+ of accounts that are opened are being opened with £80k+, or are soon topped up to that level. It is people with that much money who see the value in managing their savings into the best accounts, and for whom the FSCS really matters, and on whom the savings and mortgage market really relies. There are lots of reasons why reducing the FSCS threshold is a 'bad thing', most of which are covered in the article. So people who say 'oh this issue doesn't affect 95% of the population' are really the ones pandering to the masses, not Andrew Tyrie (whoever he is), who is actually saying we should try and do the right thing.


And no, I don't have £85k+ in savings. And the cash I do have is spread across 4 banks to maximise interest anyway. So, like Taylor Swift re: Apple Music, I'm not saying this for selfish reasons

Archi_Bald

Where was Tyrie when the rest of the EU declared their €100K limit? I still remember when even Ireland announced it in 2008, and it took the UK until 2010 to provide us with equivalent cover http://www.bbc.co.uk/news/business-12093658

It wasn't Tyrie who gave us the higher limits, but an EU Directive.

dunstonh

He can understand perfectly the formulaic logic of why the threshold is being reduced, and yet still say that the logic is flawed.

The logic isnt flawed. It created a standard across Europe to prevent large flows of money from one country to another. Something that occurred during the credit crunch. If the UK pushed for a higher limit, then it would go against that principle.

No point bashing him and say we should just roll over and obey because we told the EU we would 5 years ago.

The limit was increased by the EU compared to the UK level previously. If it was good enough then, why not now?

VT82

Archi_Bald wrote: »

Where was Tyrie when the rest of the EU declared their €100K limit?

Where was Martin Lewis? Where were most people? At the time, the priority was increasing the limit to stabilise the banking system. The risk of linking it to Euros wasn't as much of a concern at the time. But the past is the past, and it's one thing that can't be changed, but that shouldn't stop people from trying to get things right for the future.

VT82

dunstonh wrote: »

The logic isnt flawed. It created a standard across Europe to prevent large flows of money from one country to another. Something that occurred during the credit crunch. If the UK pushed for a higher limit, then it would go against that principle.

The limit was increased by the EU compared to the UK level previously. If it was good enough then, why not now?

You really think rich Belgians would move money into British banks, suffering exchange rate risk, and comission costs in both directions, for the sake of another £10k of FSCS protection? I guess that's why so much cash was flooded into Irish banks when the Irish Government moved to guarantee 100% of deposits - not!

The logic IS flawed - because it ignores the all-important fact that British savers don't care what they are covered for in Euros - they care what they are covered for in GBP. And anyone ignoring this fact for the sake of maintaining the status quo / rich-bashing / lazy-bashing is being deliberately obtuse.

PeacefulWaters

I know for a fact that a good 30%+ of accounts that are opened are being opened with £80k+

I would dispute that fact.

Around 98% of accounts of a typical mainstream deposit taker have less than £80k in them. The make up of a new best buy issue is similar.

Around 30% of the balances in those accounts will be over and above the FSCS limit. But these balances belong to 2% of depositors.