YBS proposed T&Cs say they can 'restrict transactions'. How does that comply with FSCS?

alanfp

Just received notification of proposed changes to the T&Cs for my savings account. States that
"We have the right to restrict transactions where we reasonably believe our financial stability may be at risk, such as actual or potential abnormal levels of withdrawals."
Surely this conflicts with the FSCS?  It's no help to me to know that my money is 'safe' but I can't get hold of it when I need it. I'm saving with a building Soc. so that I don't suffer from an inability to withdraw funds when I need them (like some poor people who have money lodged with some of Neil Woodford's funds).

Anyone know how this would work if push came to shove?

25_Years_On

What has this to do with FSCS? That's a compensation scheme for failed financial organisations.

alanfp

So if YBS go bust I will get my money, but if YBS think they are heading towards going bust, they can stop me getting my money. That doesn't sound right or logical. I'm potentially better protected if their situation is worse, which seems counterintuitive./ contradictory.

Albermarle

alanfp said:

So if YBS go bust I will get my money, but if YBS think they are heading towards going bust, they can stop me getting my money. That doesn't sound right or logical. I'm potentially better protected if their situation is worse, which seems counterintuitive./ contradictory.

Not really, if there was a big run on the bank, it would make sense that they can give themselves some breathing space. They could then potentially get bailed out, taken over etc like what happened in 2008, to Northern Rock for example. Much better than them actually going bust, not just for customers, but the whole banking system.

masonic

Nothing new here. The FCA has been requiring financial institutions to make things explicit in their T&Cs that have always been risks. No institution could guarantee that all of its customers could withdraw an unlimited amount of funds at any time.

When Dotcomunity Credit Union (former cash ISA top pick) was heading towards going bust everyone's accounts got frozen while the FCA and PRA investigated. Regulatory authorities can take enforcement action if they need to, and that's not in conflict with the FSCS. Weeks later, the FSCS was called into action only after the firm formally entered administration.

Individual customer accounts can also be frozen for weeks if the bank considers transactions to be suspicious. Technical issues can stop customers from accessing their money.

It is unwise to be completely reliant on a single banking institution.

Prism

In general banks can loan money that they don't have, and do not keep all of the cash that you deposit with them. They just need to have enough to keep things running smoothly but under extreme conditions, like a run on the bank, they need to have the ability to freeze access.

wmb194

For at least a decade I've seen this term in many building societies' T&Cs. I'm surprised YBS doesn't have it already.

alanfp

Thanks for your responses.

Albermarle said:

 Much better than them actually going bust, not just for customers, but the whole banking system.

better?  that depends on the timescale, i.e. how long it takes for me to get my money under the FSCS, and I don't know how long that timescale is, though I expect there are regulations or Codes of Practice... Compared with how long YBS can hold onto my money (and they are not stating anything about timescales, so it could be longer).

masonic said:

Nothing new here. The FCA has been requiring financial institutions to make things explicit in their T&Cs that have always been risks.

Actually it IS new (which is why they wrote to me today).  YBS T&Cs do not currently have this term.  You can check this on their website where T&Cs for accounts opened before May 2022 are different to accounts opened after May 2022.  

masonic

alanfp said:

masonic said:

Nothing new here. The FCA has been requiring financial institutions to make things explicit in their T&Cs that have always been risks.

Actually it IS new (which is why they wrote to me today).  YBS T&Cs do not currently have this term.  You can check this on their website where T&Cs for accounts opened before May 2022 are different to accounts opened after May 2022.  

It's a new addition to the T&Cs, but it has always been the case that YBS can lawfully restrict transactions if its financial stability is at risk.

Here is an example from 2015 where an ISA provider signed a Voluntary Imposition of Requirements and a customer reached out to the Bank of England and FSCS for an explanation: https://forums.moneysavingexpert.com/discussion/comment/67887013/#Comment_67887013