Savings up to £35K given 100% protection - 1 Oct 07

munk

Like baby_boomer says, one thing to keep in mind is that if a high level of protection is introduced - say the £100k being bandied about - then that level has to be paid for by the banks through higher contributions to the FSCS. In turn those costs would be passed on to the consumer through higher charges or lower interest rates.

roddydogs

Can i assume that all building socys are seperate for the purpose of th £35000 limit?

baby_boomer

roddydogs wrote: »

Can i assume that all building socys are seperate for the purpose of th £35000 limit?

You certainly may.

There is some joint activity e.g. Britannia & Yorkshire accounts can be operated in each others' branches and East Midlands' Societies pool their admin resources to cut costs.

But they are all separately accredited to the FS compensation scheme.

ashm1 wrote: »

Is there still only 4 million in the fund ?

Wait for Gordon to twist banks' arms (to lower savings rates) to get it funded in the future .

The move from a an unfunded scheme to a funded scheme is necessarily going to be painful.

MSE needs to lobby Gordon to keep costs manageable. Otherwise the vast majority of us will lose out.

A possible danger is that MSE may think it might get more publicity (and therefore revenue) by continuing to criticise the Treasury for not protecting ALL income.

isofa

munk wrote: »

Like baby_boomer says, one thing to keep in mind is that if a high level of protection is introduced - say the £100k being bandied about - then that level has to be paid for by the banks through higher contributions to the FSCS. In turn those costs would be passed on to the consumer through higher charges or lower interest rates.

It just depends how much bank contributions would increase to have to cover a larger FSA protection amount. I bet it wouldn't be much, after all you have to weigh up the likelihood of a bank handling personal accounts crashing (last one over 100 years ago), it's a very low probability. Let's face it banks make massive profits from our deposit and savings accounts, so I can't see savings rates falling significantly due to this either, it's a free market, banks with better rates on offer will gain keener savers, as they do today.

Better regulation should also be brought in too.

gt94sss2

DocProc wrote: »

'Per financial institution' doesn't mean the same as ‘per account'. Be careful not to choose more than one subsidiary in a group as you'll only be covered once by the FSCS.

Eg, , the RBS group incorporates NatWest, Royal Bank of Scotland, Direct Line and Ulster Bank. The £35,000 maximum compensation limit will only apply once even if you hold a separate account with each company.

This example is wrong - NatWest, Royal Bank of Scotland and Ulster Bank are all covered separately under the FSCS as they are all registered independently with the FSA, even though they are all part of the RBS group.

I presume you got the above text from this Fool article but they have now corrected that text.

Regards
Sunil

munk

isofa wrote: »

It just depends how much bank contributions would increase to have to cover a larger FSA protection amount. I bet it wouldn't be much, after all you have to weigh up the likelihood of a bank handling personal accounts crashing (last one over 100 years ago), it's a very low probability. Let's face it banks make massive profits from our deposit and savings accounts, so I can't see savings rates falling significantly due to this either, it's a free market, banks with better rates on offer will gain keener savers, as they do today.

Better regulation should also be brought in too.

Yes I thought better of my post last night after watching the Working Lunch's (WL) coverage of it (note, link is to a video clip) on the bbc site - I think you're right in that it probably wouldn't cost the banks all that much more in contributions to the FSCS. The factor of increased compensation increasing charges/lowering rates wasn't even mentioned on WL so perhaps it isn't that much of an issue.

The WL article brought up another interesting aspect though in that some people are worried that by raising the compensation level it will put people off investing in other vehicles that could potentially offer them much higher gains - funds/shares/life/etc - instead going for the easy option of dumping £100k into a bank and feeling safe knowing it won't disappear overnight. Have to admit there's a part of me thinks 'fair enough'.

(Semi) interesting tidbits from the article on WL - Italy has the current highest compensation level at 100% of £76k (iirc) and apparently soon all EU countries will have to have a minimum compensation level of 90% of first ~£14k (€20k). Ok not that interesting heh.