What happens if your bank goes bust?

Billycock

Malkytheheed said:

Stuggling to understand how "class" comes into the Financial Services Compensation Scheme   

I'm struggling to understand why you don't understand the gist of the OP's post

grumiofoundation

reveller said:

Wow, not the debate I was expecting.

It was a hypothetical question.

I was wondering if my bank went bust, what protection is there for normal people without credit who would struggle without daily access to their cash?

I only mentioned the FSCS scheme as that is all I can find out about on Google. It seems unfair that the middle classes would be fine while poorer people would be up sh*t street.

Billycock said:

Malkytheheed said:

Stuggling to understand how "class" comes into the Financial Services Compensation Scheme   

I'm struggling to understand why you don't understand the gist of the OP's post

Is the FSCS compensation scheme  what is putting poorer people up the aforementioned creek and allowing the middle classes to be fine though?

There are many, many issues facing the poorer in society. And I would expect I could walk around every school, homeless, charity headquarters and food bank in the country without hearing the "Financial Services Compensation Scheme" mentioned in the top lets say 50 issues facing the poorest in society.

Thrugelmir

reveller said:

Wow, not the debate I was expecting.

It was a hypothetical question.

I was wondering if my bank went bust, what protection is there for normal people without credit who would struggle without daily access to their cash?

I only mentioned the FSCS scheme as that is all I can find out about on Google. It seems unfair that the middle classes would be fine while poorer people would be up sh*t street.

How do think the compensation scheme is funded? 

masonic

reveller said:

Wow, not the debate I was expecting.

It was a hypothetical question.

I was wondering if my bank went bust, what protection is there for normal people without credit who would struggle without daily access to their cash?

I only mentioned the FSCS scheme as that is all I can find out about on Google. It seems unfair that the middle classes would be fine while poorer people would be up sh*t street.

A bank failure would probably go easier for them than if they had to spend a few days in hospital, or were otherwise prevented from making financial transactions. At least they'd be more likely to have some forbearance should some of their regular payments bounce as a result of a bank failure. What could be done in such a situation? Even cash in the post direct from the printing presses would likely arrive too late.

jimjames

ouMalkytheheed said:

Billycock said:

Malkytheheed said:

reveller said:

 Seems like very poor protection for poorer people.

There are 344 banks in the UK. So you could have £25,000,000 protected by the governemnt as straight up "cash". And thats before you take into account investments held in non banks such as property, businesses, stocks, bonds. 

Not sure who these "poor" people are that arent properly protected? 

IMO what the OP is saying is along the lines of,
I've only £50 to my name, what happens if my bank goes pear shaped? How long will it be before I'm reimbursed the £50? I'm skint in the meantime. It's not that difficult to understand. 

Then my point is two fold. If you can't get hold of your money for 7 days then it doesn't matter if you are "rich" or "poor". You have no cash for 7 days. Everyone is in the same boat. 

No, everyone is not in the same boat. It might be hard to understand if you are comfortably off but some people have little money and live from day to day. If one of my banks goes bust I have funds in a number of other banks I can get to. If you only have £50 to your name it's not very easy to split across accounts and in any case many people may not even be able to open another account.

Malkytheheed said:

Billycock said:

Malkytheheed said:

reveller said:

 Seems like very poor protection for poorer people.

There are 344 banks in the UK. So you could have £25,000,000 protected by the governemnt as straight up "cash". And thats before you take into account investments held in non banks such as property, businesses, stocks, bonds. 

Not sure who these "poor" people are that arent properly protected? 

IMO what the OP is saying is along the lines of,
I've only £50 to my name, what happens if my bank goes pear shaped? How long will it be before I'm reimbursed the £50? I'm skint in the meantime. It's not that difficult to understand. 

Second, surely everyone can "survive" for 7 days without cash? I mean a couple cans of beans in the cupboard will ensure that you survive the week till you get your money back. 

You're assuming that everyone has enough money to buy extra food to keep in the cupboard as spare. I think there is a real lack of understanding about the lives some people in this country live. If it was really as easy as you seem to think then there would be no need for food banks.

tr7phil said:

reveller said:

Wow, not the debate I was expecting.

It was a hypothetical question.

I was wondering if my bank went bust, what protection is there for normal people without credit who would struggle without daily access to their cash?

I only mentioned the FSCS scheme as that is all I can find out about on Google. It seems unfair that the middle classes would be fine while poorer people would be up sh*t street.

Do "normal" people really access their bank account daily?  Also 65% of adults have a credit card, that sounds quite normal to me...

So 35% of people don't have access to a credit card and only the money in their bank?

10 million people have under £100 in savings (20% of population)
https://www.ybs.co.uk/media-centre/savings-crisis/index.html

I don't know the answer to giving access to funds faster but it is a real problem for some people. Fortunately it's not been an issue with a clearing bank so far.
<Rant over>

Malkytheheed

Malkytheheed said:

Second, surely everyone can "survive" for 7 days without cash? I mean a couple cans of beans in the cupboard will ensure that you survive the week till you get your money back. 

You're assuming that everyone has enough money to buy extra food to keep in the cupboard as spare. I think there is a real lack of understanding about the lives some people in this country live. If it was really as easy as you seem to think then there would be no need for food banks.

Ok. I'll entertain this. ...even though it's clearly argument for arguments sake. 

Are you seriously telling me. Over the course of the next year say. Everyone cannot muster together £0.90p for 7 tins of beans to have as an emergency should your bank go bust?? Or indeed get said tins of beans from a foodbank for free if need be?

My point was if someone doesn't have access to cash for 7 days (assume 1 bank account). It doesnt matter if they were rich or poor prior. For those next 7 days. Everyone is in the same boat. And would all indeed "survive". 

And AGAIN. If you only have £50 to your name. You can open 4 more accounts FOR FREE. and stick a tenner in each. 

So to sumarise:

• Get 7 cans of emergency food from the foobank -FREE
• Open more bank accounts -FREE

As much as it suits the "not everyone is as fortunate as you" mantra. I simply don't buy it. This isn't a real complaint.

jamesd

reveller said:

So, I know you can get £85k back as compensation but I have been wondering about the day after. Would you be left without any money until then? Seems like very poor protection for poorer people.

Nothing you'd notice without watching the news would happen.

Since the days of Northern Rock banking regulations have been changed and major banks are now structured as a retail company and a holding company. The retail company provides the day to day services and holds the deposits and the holding company does the borrowing. If the holding company fails, it'll be replaced by another one before failure or immediately after failure. That will result in losses to shareholders but no change to the services provided by the retail bank. Since the retail bank has the deposits and none of the debt, it's not in a position to fail.

For much smaller banks and credit unions the record keeping requirements have also been improved with a view to compensation being paid within a week with no need to even request it. For these, you would notice because all transactions would cease and you'd need to open a new account somewhere else. This has been done using the new rules many times and it seems to work as intended.

Both poor and rich people are allowed to have more than one bank account and it's useful to have at least two to protect against troubles like this or the more banal ones when cash machine networks fail for a while.

Hexane

grumiofoundation said:

Billycock said:

Malkytheheed said:

Billycock said:

Malkytheheed said:

reveller said:

 Seems like very poor protection for poorer people.

There are 344 banks in the UK. So you could have £25,000,000 protected by the governemnt as straight up "cash". And thats before you take into account investments held in non banks such as property, businesses, stocks, bonds. 

Not sure who these "poor" people are that arent properly protected? 

IMO what the OP is saying is along the lines of,
I've only £50 to my name, what happens if my bank goes pear shaped? How long will it be before I'm reimbursed the £50? I'm skint in the meantime. It's not that difficult to understand. 

Then my point is two fold. If you can't get hold of your money for 7 days then it doesn't matter if you are "rich" or "poor". You have no cash for 7 days. Everyone is in the same boat. 

Second, surely everyone can "survive" for 7 days without cash? I mean a couple cans of beans in the cupboard will ensure that you survive the week till you get your money back. 

If you only have £50 to your name then open a new account with a different bank and put £25 in each. 

If you were to understand what it means to be really poor then where's the money coming from to buy - I mean a couple cans of beans in the cupboard will ensure that you survive the week till you get your money back. 
Yes granted £25 in two banks, maybe that's what the OP needs to know in order to have something. Obviously wasn't aware when compiling the post.
What you need to do is give the homeless a few bob! He who helps the poor borrows from the Lord and the Lord will repay you for your deeds.

A cynic (or a true MSEr) would ask what interest rate is he offering? 

Based on Matthew 25:14 I would say it's implied that an expected profit of anything up to 100% is on the cards. It's suggested that only retaining the original capital, and thus losing out to inflation, will literally lead to "weeping and gnashing of teeth".

[Deleted User]

eskbanker said:

Daliah said:

eskbanker said:

reveller said:

So, I know you can get £85k back as compensation but I have been wondering about the day after. Would you be left without any money until then? Seems like very poor protection for poorer people.

You don't "get £85k back as compensation", you get your balance back, up to £85K!  FSCS aims to do so within 7 days, which is way better than it used to be - what sort of turnaround do you believe is achievable?

To be fair, the FSCS refer to your money as 'compensation'. Strange but true.

Given what the 'C' stands for in 'FSCS', it's perhaps not that strange!  However, the term is a bit ambiguous, in that it's often used to describe an additional sum awarded over and above direct loss recovery, so I felt it was worth clarifying that here it's very much the latter rather than the former, and also that it's not a fixed £85K but the actual balance, just in case OP (or anyone else) had the wrong end of the stick....

It's defined as compensation so that the fund/scheme can still pursue the assets of the failing bank. Also, it's harder for the depositors to claim the fund/scheme plus retain any subsequent repayment of monies recovered from the failed institution.