Building society security
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Spugx
Posts: 5 Forumite
Hi - It always seems to be the smaller building societies that offer the best fixed term and variable rates - I know we are supposedly covered by the 85000 protection - but it worries me NSANDI say they are 100% safe as they are part of the Bank of England - which to me implies that the building societies are less secure - any views on the reality of the government paying 85000 to multiple investors when a building society goes bust ? - thanks
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The government is not directly responsible for the FCSC scheme . It is funded by levies on the financial /banking industry .
Most of these smaller building societies ( and smaller banks ) only have relatively small numbers of customers . Plus as can be seen from the past, usually a bigger institution will swallow them up ( with encouragement from the government )if they are thought to be getting into trouble .4 -
Spugx said:it worries me NSANDI say they are 100% safe as they are part of the Bank of EnglandNS&I is both a government department and an Executive Agency of the Chancellor of the Exchequer.as well as "more than £202 billion invested" indicating that they're a different order of magnitude from the vast majority of building societies....
In the 2008 crisis, FSCS had to borrow from the Treasury to satisfy its obligations, so, although it's true that FSCS is independently funded, there is a government safety net if needed.
https://www.fscs.org.uk/news/fscs-news/book-closed-on-2008-banking-crisis/During the crisis, we had to borrow a large amount of money from HM Treasury so we could pay compensation quickly and not leave customers out of pocket.4 -
If your savings account is FSCS protected, your money up to £85k is as safe in this account as it would be in NS&I. The main difference in all likelihood would be the higher interest your money earns in a savings account although there are savings accounts with derisory interest rates, too2
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the 85k is safe, it's anything above this value that is at risk.1
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Ah, but what if the Earth collides with Mars, or the Ruskies drop a bomb on Downing St?Few things in life offer complete certainty, only different degrees of certainty. NS&I is backed by the state and it's very unlikely that the state would not back the FSCS if necessary. In 2008, the government ensured that even those with savings in foreign banks not covered by the FSCS got their money back. So keep below £85k per FSCS covered institution (check here) and that's very high on the scale of certainty.All you have to worry about then is inflation.1
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