Thoughts re: FSCS and saving with a Challenger bank (Vanquis say)

peteduk

Bowlhead99: Sorry I had not seen any earlier post on this so appreciate you reiterating it again.
Albermarle: Thank you for your latest comments. That was exactly what I was thinking.
I am now reassured that I shouldn't fear the worst (although it seems to me there is not an explicit and absolute guarantee).
My lump sum is large to me but substantially less than the £85K FCCS limit. So I will look again and probably open an account tonight.
Thank you all,
Peter

bowlhead99

peteduk said:

I am now reassured that I shouldn't fear the worst (although it seems to me there is not an explicit and absolute guarantee).
My lump sum is large to me but substantially less than the £85K FCCS limit. 

There is a Financial Services Compensation Scheme that protects customers depositing money in a regulated financial institution if they do not get their deposit back due to the deposit-taking institution going out of business, up to the compensation limit. Your amount is substantially less than the compensation limit. If you did not get your deposit back but the deposit taking institution is still in business then you would complain to the financial ombudsman who would tell the institution to pay you back your deposit as promised. If you did not get your deposit back and they went out of business, then the FSCS covers you.

MCGINTY_2

What is there to stop the limit being reduced in a crisis situation. Legislation is already in place for Bank Bail Ins. If depositors have kept the majority of deposits below £80k there is no money for Bail Ins. The obvious solution is to reduce the limit to a much lower figure. That is why I am moving funds into NSand I.

peteduk

Hello McGinty_2,
I did make my deposit in the end but you are the 1st voice echoing some of my concerns.
It feels to me that people more and more expect to be protected but without considering the source of their protection and if it is sustainable. Then again I am a poor judge as I only have cash savings and didn't invest since the 2009 crash partly due to these same fears, and the lack of risk acknowledgement in anyone I asked. Obviously I have been wrong for a long time and continue to be so!

Thrugelmir

Albermarle said:

Metro bank is probably one of the weaker UK outfits. Challenger banks otherwise aren't heavily into lending money out. 

It seems to me that 'challenger banks' is a rather wide ranging term . For example you have 

Challenger banks would be those that have applied to have full clearing house functionality through the BOE. To do so requires adhering to stringent and sizable capital requirement regulations. The biggest complaint from those wishing to take on the established encumbrents. 

2010

A more likely scenario that a bank going under.
We`re all in this together.
https://www.bbc.co.uk/news/world-europe-21814325

peteduk

This was also in the back of mind 2010,
thank you

EthicsGradient

2010 said:

A more likely scenario that a bank going under.
We`re all in this together.
https://www.bbc.co.uk/news/world-europe-21814325

That, however, showed the problems of the euro. One central bank had several diverging economies to act with, and gave most weight to the largest, ie Germany, and others on a similar trajectory, eg Netherlands. Cyprus had to fit in with that, which meant taking money from depositors.
The UK is in the preferable position of having a central bank that only has one government and economy to worry about; so we can design our policy (eg bailing out banks, guaranteeing the average individual's deposits) to fit us in an emergency. We can see from the covid-19 response so far that the Tories are quite willing to go for massive government spending to keep the typical individual/voter above water, and the Bank of England to support that.
It's taken time for Euroland to get a spending plan; when that finally seems to have been agreed between France and Germany yesterday, there was a 5% gain in European stock markets.