85k FSCF protection…is it irrelevant?

theinbetweener007

Hi all

Over the course of this year I have liquidated 95% of my Stocks & Shares portfolio, leaving only shares which are in the red so as not to crystallise those losses. I know it’s best not to try and time the market but so far, liquidating has proven the correct decision. I plan to go back in once the recession has hit. 

Up to this point, I did well trading tech stocks but selling them means I have multiple 6 figures in cash sitting in my S&S ISA. I have opened one of the high-ish Cash ISA rates available today. But now I am debating how much to transfer. Everybody always quotes the 85k FcSa protection….but how likely is it would be ever needed? Has anyone ever needed it from a high street bank or building society? How likely is it that there would be no warning long before they hit trouble?

I should also state that I have 1 S&S ISA and 1 new cash isa which I opened recently meaning, I think, that I cannot open another cash isa this year. 

any advice is welcome. I am torn between leaving the money where it is, transferring all of it to the cash isa so at least it’s earning hundreds per month tax free or splitting it. 

A nice problem to have I know but it is still playing on my mind. 

Thank you for any points of view or insight you can share. 

 

Daliah

I have needed FSCS twice and I would never go over £85k on any cash accounts, except when temporary high balance applies.

masonic

Hopefully everyone quotes £85k FSCS protection rather than FSCF or FCSA, but it is not just a theoretical risk. The Icelandic banking crisis and credit crunch saw savers calling on it. It is much more important to cash ISAs where banks can use your money to fund their business activities rather than S&S ISAs where your assets are ring-fenced from the firm's business. If you didn't wish to split it, then a safer investment within the S&S ISA might be a better option. Consider individual short dated government bonds or a short dated fund to get some sort of return. Alternatively a NS&I cash ISA would be backed by the Treasury, although you won't get the best rate.

ColdIron

That'll be the FSCS (Financial Services Compensation Scheme) and not the FSCF or the FcSa

theinbetweener007

masonic said:

Hopefully everyone quotes £85k FSCS protection rather than FSCF or FCSA, but it is not just a theoretical risk. The Icelandic banking crisis and credit crunch saw savers calling on it. It is much more important to cash ISAs where banks can use your money to fund their business activities rather than S&S ISAs where your assets are ring-fenced from the firm's business. If you didn't wish to split it, then a safer investment within the S&S ISA might be a better option. Consider individual short dated government bonds or a short dated fund to get some sort of return. Alternatively a NS&I cash ISA would be backed by the Treasury, although you won't get the best rate.

Yes, I meant the FSCS. 

Short dated government bonds are not something I thought of. Thanks for the suggestion. 

theinbetweener007

Deleted_User said:

Look into how your S&S ISA platform handles your cash. You may well find that they are splitting it between multiple deposit takers, giving you multiple lots of FSCS protection. (OTOH, if you also hold cash elsewhere with the same deposit takers they are using, you will only get one lot of £85k protection in total for the same deposit taker.)

E.g. HL are quite informative about their policy: https://www.hl.co.uk/about-us/cash ... and they are putting a maximum of 35% with any one deposit taker.

You are a star. I am with HL so this seems to suggest my total balance is safe as they automatically spread it. 

Thank you. 

dunstonh

 Everybody always quotes the 85k FcSa protection

Not for investments.  Just for deposits.

 Has anyone ever needed it from a high street bank or building society?

Yes. (noting by that you are referring to bank and building society accounts and not investments.

jimjames

theinbetweener007 said:

Hi all

I should also state that I have 1 S&S ISA and 1 new cash isa which I opened recently meaning, I think, that I cannot open another cash isa this year. 

If the cash ISA is opened this year and new money paid in then you cannot open another cash ISA and pay more new money in. You can still however open any number of cash ISAs and transfer money from your S&S ISA to them, assuming the provider allows partial transfers.

Alistair31

Daliah said:

I have needed FSCS twice and I would never go over £85k on any cash accounts, except when temporary high balance applies.

May I ask, what were the circumstances? 

Daliah

Alistair31 said:

Daliah said:

I have needed FSCS twice and I would never go over £85k on any cash accounts, except when temporary high balance applies.

May I ask, what were the circumstances? 

First one was the IceSave debacle, and the second one was a rogue outfit that posed as a Credit Union and went bust.

Albermarle

 I plan to go back in once the recession has hit. 

It is probably worth noting that the markets will have already priced in some kind of recession, so when one actually happens it could well be that markets rise, as they will be looking ahead to when it stops. Also the US economy is looking stronger than UK/Europe and the US influences global share markets more than any other area.