We’d like to remind Forumites to please avoid political debate on the Forum.

This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Large amount of money safe for short duration

2»

Comments

  • Flugelhorn
    Flugelhorn Posts: 7,450 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    NS&I direct saver will protect it all 
  • TiVo_Lad
    TiVo_Lad Posts: 465 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    masonic said:
    TiVo_Lad said:
    Be aware that the temporary high balance protection offered by the FSCS is NOT automatic, unlike the £85K per person (£170K joint) protection which normally pays out in about a week. You have to claim against the scheme for temporary high balance cover and it is entirely at the discretion of the scheme whether your claim is paid out or not. Claims can also take several months to pay out if successful. If you rely on the temporary high balance protection you run the risk of either losing your money entirely if the scheme rejects your claim, or you're left in limbo while your claim is assessed. Make sure you consider those points before deciding what to do.
    Has a claim ever been made under the temporary high balance regime? It was introduced after the last retail bank failure. I believe only credit unions have failed holding consumer deposits since then, and it seems unlikely they would have been holding >£85k of anyone's cash.
    Not that I'm aware of. The FSCS is an insurance policy at the end of the day and it's designed to cover a failure where no-one is prepared to step in and take on a collapsing financial institution. In reality, if any UK financial institution was allowed to simply fail without some form of rescue it would create huge instability. The big UK banks (and the Nationwide BS) are "too big to fail" so the Treasury would likely intervene and anyone smaller would simply be taken over by one of the bigger players at the "invitation" of the BoE.
    BUT, are you prepared to risk your life savings even on the smallest chance? Personally, no. I have my house proceeds sprinked across a number of different institutions keeping everything under the £85K limit. Yes I could put everything in NS&I, but I can get a better return elsewhere for a bit of effort.
  • GrubbyGirl_2
    GrubbyGirl_2 Posts: 1,018 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Because the additional protection is not always a given I transferred my house sale (£550k) into NS&I.  Not the best interest rate (2.85%) at the moment but 100% secure.
  • TheBanker
    TheBanker Posts: 2,253 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Personally, I think the chance of HSBC collapsing in the next few weeks is almost non-existent. However, like you I would worry so my decisions would be to reduce my worrying, rather than because I fear for the future of HSBC.

    The point with the high balance protection, as well as a lack of clarity as to exactly what's covered, is that it could take weeks or longer to receive the money. Anything over £85k isn't covered by the FSCS's automatic payment processes. 

    So I would move the money to NS&I and accept that the rate will be low, but it's only for a few weeks so the actual 'loss' won't be huge. 

    Two things to consider:
    1. How you can actually make the payment to NS&I given it will be too big to send via internet banking. You might want to discuss this with HSBC in advance. I'd also check whether NS&I have any limits for money coming back the other way, and the timescales involved. HSBC may want evidence of the sale/purchase of the properties so be prepared to provide this if requested. You might also need to go to a branch so it's worth checking where your nearest one is and when they're open. 

    2. You will have to accept that for a short period on the way in, and again on the way out, this money will be with HSBC and you will be reliant on the FCSC High Balance cover. I think this is unavoidable but as it will be a couple of days at most I would not worry unduly.

    One final point which isn't directly related to your query. I have seen a fraud recently involving a house purchase, where the solicitor's email was compromised and the fraudster sent fake emails to clients to get deposits transferred to a fraudulent account. No matter how genuine it looks, don't act on an email instruction to transfer funds until you have spoken to the solicitor (using what you know to be their genuine phone number, not the one from the email!) and confirmed all the details. 
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 352K Banking & Borrowing
  • 253.5K Reduce Debt & Boost Income
  • 454.2K Spending & Discounts
  • 245K Work, Benefits & Business
  • 600.6K Mortgages, Homes & Bills
  • 177.4K Life & Family
  • 258.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.2K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.