Are my Savings safe? Discussion Area

bintheredunthat

[FONT=Arial, Helvetica, sans-serif][/FONT]
[FONT=Arial, Helvetica, sans-serif]I have a savings account with ICICI opened a couple of years ago and a new Term Saver deposit account opened on 16/10/07. The other day I received this email from them ...................[/FONT]
[FONT=Arial, Helvetica, sans-serif]With effect from 16th October 2007, ICICI Bank UK PLC has become a subscriber to the Banking Code, which sets good standards of practice for financial institutions to follow when they are dealing with personal customers in UK.Our Terms and Conditions have been reviewed and updated accordingly.[/FONT]
[FONT=Arial, Helvetica, sans-serif]The new Terms and Conditions will be applicable to all the accounts opened after 18th October 2007. For accounts opened on or before 18th October 2007, these will be effective from 5th December 2007 ..........which I assume means neither of my accounts are 100% protected ?[/FONT]
Confirmation please.

Crabman

bintheredunthat wrote: »

[FONT=Arial, Helvetica, sans-serif]I have a savings account with ICICI opened a couple of years ago and a new Term Saver deposit account opened on 16/10/07. The other day I received this email from them ...................[/FONT]
[FONT=Arial, Helvetica, sans-serif]With effect from 16th October 2007, ICICI Bank UK PLC has become a subscriber to the Banking Code, which sets good standards of practice for financial institutions to follow when they are dealing with personal customers in UK.Our Terms and Conditions have been reviewed and updated accordingly.[/FONT]
[FONT=Arial, Helvetica, sans-serif]The new Terms and Conditions will be applicable to all the accounts opened after 18th October 2007. For accounts opened on or before 18th October 2007, these will be effective from 5th December 2007 ..........which I assume means neither of my accounts are 100% protected ?[/FONT]
Confirmation please.

The Banking Code is completely separate to the Financial Services Compensation Scheme (FSCS) - the money is protected up to £35,000 per account holder as per the article (link in first post).

gt94sss2

bintheredunthat wrote: »

[FONT=Arial, Helvetica, sans-serif]I have a savings account with ICICI opened a couple of years ago and a new Term Saver deposit account opened on 16/10/07. The other day I received this email from them ...................[/FONT]
[FONT=Arial, Helvetica, sans-serif]With effect from 16th October 2007, ICICI Bank UK PLC has become a subscriber to the Banking Code, which sets good standards of practice for financial institutions to follow when they are dealing with personal customers in UK.Our Terms and Conditions have been reviewed and updated accordingly.[/FONT]
[FONT=Arial, Helvetica, sans-serif]The new Terms and Conditions will be applicable to all the accounts opened after 18th October 2007. For accounts opened on or before 18th October 2007, these will be effective from 5th December 2007 ..........which I assume means neither of my accounts are 100% protected ?[/FONT]
Confirmation please.

Your ICICI accounts are and always have been protected by the Financial Services Compensation Scheme (FSCS) up to their specified limits - like all retail banks in the UK.

All ICICI have done now is join the British Banking Code which is a voluntary set of standards that institutions who subscribe to it follow.

Regards
Sunil

bintheredunthat

Thanks for both replies, that's put my mind ( and money!) at rest.

jamesd

The following statement in the article appears to be substantially inaccurate and misleading:

'if you put money in stocks and shares, or pension funds, then you’ve got a “risk based” investment and thus again there’s no protection'

You might consider the role and protection delivered by trustees who hold the assets in collective investment schemes, including unit trusts, pensions and stocks and shares ISAs.

For example, the trustees provided 100% protection to the consumer holders of collective investment schemes operated by Barings Bank.

Even to say that investments are not covered by the FSCS is inaccurate because it covers insured investment vehicles.

An accurate version that doesn't get into an essay about protection might be saying that if you own the shares of a company that goes bust you're likely to lose that money. That's narrow enough to be accurate and probably sufficient for this location.

notahopeinhell

At the risk of appearing naive or just stupid as a novice in "money matters" is it possible to say whether I should move my redundancy money from the Alliance and Leicester Bank to a traditional mutual building society (or two) given the problems with Northern Rock?

In other words is a traditional B.S. less likely to be affected by the sub-prime problem than a bank and therefore more secure?

I guess it may be impossible to say but any advice gratefully received I cannot afford to lose the money as I am still out of work.

jamesd

The problem here is use of the money markets to fund lending. A&L, Barclays and Bristol & West are some firms that use a fairly high amount of that sort of borrowing.

A traditional building society with lots of savers is less likely to need to borrow to fund mortgage lending. But still you're better off spreading the money around in 35k or so chunks so that you get the compensation if the extremely unlikely event happens and they become bankrupt.

On the other hand, the government could afford to let a small bank or building society fail. It can't afford to let a large one fail. So there's some added safety from being with a larger institution for that extra protection.

Use at least two so that if one does have trouble you'll have the other one to rely on while the mess is sorted out.

Spread the money around as described in the article and sleep easy.

notahopeinhell

Thanks for your advice, jamesd.

I have about £20k in A&L and some savings in building societies like the Cheshire B.S. and the Derbyshire.

I doubt if these are "big" institutions so I may move my cash to the Nationwide perhaps or another bigger society as your comments about the government being less concerned about a smaller society going bust seems to be a good one. But wouldn't the £35k safeguard still apply to them anyway?

Crabman

notahopeinhell wrote: »

Thanks for your advice, jamesd.

I have about £20k in A&L and some savings in building societies like the Cheshire B.S. and the Derbyshire.

I doubt if these are "big" institutions so I may move my cash to the Nationwide perhaps or another bigger society as your comments about the government being less concerned about a smaller society going bust seems to be a good one. But wouldn't the £35k safeguard still apply to them anyway?

Yep it would still apply as they are members of the Financial Services Compensation Scheme

jamesd

Yes, it would still apply. The only issue is that it may take a while to sort out a rescue so there might be a few weeks or even months when the money is temporarily unavailable. Using two means that won't be a big problem. A&L is one of the big ones but also one of those with most short term borrowing. Really you can just use Martin's article and pick some that offer the highest rates, or close to the highest.