Santander--FSCS Reduction Options

daveoc22

I've just received an email from Santander telling me about the reduction in protection to £75000 from January 1st and letting me know what my options are.


I have been expecting this as I understood that each Bank was making it's own arrangements to deal with the problem of customers with balances over the new limit.


I've copied the bit that tells you what options you have:

•

If you have over £85,000 with Santander UK plc you can withdraw up to £10,000 (£20,000 for joint accounts) from any of your accounts before 1 January 2016 without loss of interest or incurring any penalty.







•

If you have between £75,000 and £85,000, you will be able to withdraw up to the amount necessary to reduce the balance to £75,000. For example, if you individually have £80,000 you will be able to withdraw up to £5,000.







•

If you have a Cash ISA, you might want to consider doing a full or partial transfer to another ISA provider so you don't lose your ISA allowance. If you want to transfer your ISA to another ISA provider you will need to ask them to arrange this for you.

My query is on point 1. It says you can withdraw up to £10000 without loss of interest or penalty. I am fortunate to have £80000 in a fixed ISA with them and £20000 in a 123 account making a total of £100000.


I thought that the idea was that you could move any amount to get down to the £75000 new limit but, going by what Santander have put in the email, the most you can move and avoid a penalty is £10000.


My choice would be to move £25000 from the fixed isa, but I cannot see that I could do this without penalty.


Am I missing something?.

daveoc22

Apologies for the way this looks---it wasn't like this when I posted it.

ManAtHome

daveoc22 wrote: »

I thought that the idea was that you could move any amount to get down to the £75000 new limit but, going by what Santander have put in the email, the most you can move and avoid a penalty is £10000.

The protection limit is being reduced by £10k, so that's (at most) what they're allowing you to move without penalty. You're currently £15k over the £85k limit, after moving £10k you'll still be £15k over the new £75k limit, so looks like either a penalty (if possible on the ISA) or moving cash out of the 123 account.

chris_m

daveoc22 wrote: »

If you have over £85,000 with Santander UK plc you can withdraw up to £10,000 (£20,000 for joint accounts) from any of your accounts before 1 January 2016 without loss of interest or incurring any penalty.

My query is on point 1. It says you can withdraw up to £10000 without loss of interest or penalty. I am fortunate to have £80000 in a fixed ISA with them and £20000 in a 123 account making a total of £100000.

Am I missing something?.

Reading that, I'd say that you are missing the fact that you already have £15K of your savings unprotected.

Santander allowing you to remove £10K (i.e. the difference between the current and new protection limits) is simply putting you back in the same postion after the protection value changes as you are now, i.e. £15K unprotected.

daveoc22

chris_m wrote: »

Reading that, I'd say that you are missing the fact that you already have £15K of your savings unprotected.

Santander allowing you to remove £10K (i.e. the difference between the current and new protection limits) is simply putting you back in the same postion after the protection value changes as you are now, i.e. £15K unprotected.

Fair point, I had overlooked that I was already above the protection level.


I guess they are now looking at each persons account and emailing them options based on their individual circumstances.


Making more sense now. Thanks again.

Kernel_Sanders

Was this offer only emailed? I've been through my mother's correspondence from Santander and found no letter. She had over the £85,000 limit but we reduced it below £75,000 by closing a matured ISA, rather than taking £10,000 from a 2-year fixed rate bond she went and opened on new year's eve at a pawltry 1.7%

ManAtHome

Sounds like OPs contact was recent Kernel - when did you close the ISA? Maybe they're only mail-shotting anyone with more than £75k in fixed-term accounts.

daveoc22

Yes it was an email I received a few days back, sent on September 12th.


It was personally addressed to me, so I don't think it was a general mailout.

ab56

Dave, would they allow you to close your 123 account (as it is instant access) and reducing your fixed ISA by £5000 therefore reducing your total investment to £75000?

daveoc22

ab56 wrote: »

Dave, would they allow you to close your 123 account (as it is instant access) and reducing your fixed ISA by £5000 therefore reducing your total investment to £75000?

Decent idea but firstly I'd lose the 3% interest on the £20000 and also the fixed isa is at a rate that was only available to 123 account holders, so I'm not sure of the implications that would have of closing the 123 account.


As I said earlier I couldn't see the wood for the trees as I'd overlooked that I was already over the £85000. I've lived with that for x years so I'm starting to think to hold on until the isa matures in May next year and then see about splitting balances.


Thanks for the suggestion.

Archi_Bald

daveoc22 wrote: »

Decent idea but firstly I'd lose the 3% interest on the £20000

You never got 3% in the first instance, and with the new monthly charge, you will get even less. Have you maxed all the other interest paying current accounts and regular savers?