Financial Services Compensation Scheme - Net Claim?

masonic

deFoix said:

SFindlay said:

Not unfair in the slightest, if the bank has gone out of business then it has creditors to pay. Your house belongs to bank until you pay mortgage off therefore administrators have to recoup what assets they can and your house is a bank asset!! Would you prefer they repossess your house (since it belongs to bank) or allow you to continue paying hour mortgage??? 

Yes but by the same token my "deposits" in my current account are owed to me (*my* assets) so why should the bank get to write these off but still keep their mortgage asset?

Providing you keep up repayments in line with your mortgage agreement, the bank would have no claim over your home. The bank would not get to write off your savings. They still owe you the money and you could claim for it as an unsecured creditor of the bank. It is unlikely there would be sufficient assets in the business to satisfy your claim, however, so going down the FSCS route is preferable.

2unlimited91

deFoix said:

Ok, so you're saying that in the example I gave that I would be loose $5k owing to the £85k compensation limit?

I would imagine that, as well as claiming £85k from the FSCS, you could claim the other £5k as a reduction of your outstanding mortgage (from £100k to £95k).

However, this does rely on the current/savings account and mortgage being contracts between you and the same other party. Which they might not be, if some parts of the bank's operations (e.g. the mortgage book) were transferred to somebody else, which might happen quickly under the emergency powers that can be used when financial institutions get into difficulties. So I wouldn't too be sure that this would work in practice.

pramsay13

2 points from me. 

1 the chances of any bank going under these days are slim to none. Since the crash there have been many changes about how and why they do business, and who they do business with, making for a more secure future.

2 if the worst happens and a bank does go bust and you had £90,000 saved (not sure why when it is very easy just to move £5kto another bank or overpay mortgage) then you would not automatically lose the £5000. You would definitely be safe for the £85,000 that is guaranteed but you would still be owed the £5000 by the original bank and depending what happens once their assets and liabilities are sorted out you may well get £5000 returned or possibly a proportion of it.

Blackbeard_of_Perranporth

Question. If OP has £90,000 sat idle in the bank earning next to sweet FA, he is financially astute as my cat. And he only eats pedigree kill!