The age old 85k question.

Bazzalona13295

A question which hopefully won't take too much time to answer. The 85k that is covered, does this include interest? Not going to get near the 85k (be nice one day) but the terminology I've read is 'customer deposits which can be taken in different ways.

Cloth_of_Gold

I don't believe so. I'm pretty certain it's just £85K, so if you have £85K deposited in a bond, for example, and the bank/BS failed, you would just get you £85K back, not any interest it had earned as well.

Bazzalona13295

Cloth_of_Gold said:

I don't believe so. I'm pretty certain it's just £85K, so if you have £85K deposited in a bond, for example, and the bank/BS failed, you would just get you £85K back, not any interest it had earned as well.

That is how I read it, thanks.

boingy

Perhaps someone else can confirm but my understanding is that interest that is earned but not yet paid *is* included in the cover up to that £85k so if you deposit, say, £65k in a savings account that pays annual interest and the bank goes under 11 months later you will get your £65k plus 11 months interest. 

subjecttocontract

That's not my understanding, but I could be wrong. I'm under the impression that you get back your deposit plus interest up to £85K to the point of the Bank failure and they aim to pay you within 7 days.

It's £170K guarantee for joint accounts.

masonic

Accrued interest is covered, but only if you leave sufficient headroom, which is why it is advisable not to have deposits right up to the limit.

FSCS covers money that financial institutions are obliged to pay you, so you are also covered for things like compensation from a Financial Ombudsman decision.

Bazzalona13295

Thanks for all the replies.

The 85k is a figure I'll not get near but my thinking was if I had say almost 2 years interest on 30k that would be (very roughly) pushing 3.5 - 4k, decent amount to lose if not covered.

It was the wording of 'customer deposit' as interest accrued isn't really applicable to that.

Hoenir

Which financial institution do you think might fail and you have concerns about? 

masonic

Bazzalona13295 said:

Thanks for all the replies.

The 85k is a figure I'll not get near but my thinking was if I had say almost 2 years interest on 30k that would be (very roughly) pushing 3.5 - 4k, decent amount to lose if not covered.

It was the wording of 'customer deposit' as interest accrued isn't really applicable to that.

You'd need to turn to the PRA rulebook for the definition of "deposit", which is:

https://www.prarulebook.co.uk/rulebook/Glossary/FullDefinition/53131/19-11-2023

So if funds were left in an account for some period of time, the question to ask is what would the institution be obligated to repay the consumer under the contract? For the vast majority of accounts, where interest is calculated daily, interest up to the point the contract was dissolved by the institution would be credited. For fixed term accounts, in practice, the option to have the same treatment was given, along with the option to delay compensation until the end of the fixed term and receive full interest in line with the contract. Though this may depend somewhat on the T&Cs of the specific account.

It's important to note, though, that depositor protection is just one limb of the FSCS, which on the whole protects claims of several different natures related to institutions carrying out regulated activities with or without authorisation.

Bazzalona13295

Hoenir said:

Which financial institution do you think might fail and you have concerns about? 

Mainly Metro. Not done anything so its hypothetical but I suppose whoever the bank is the same principle apllies.

subjecttocontract

None.
If a bank was about to fail it's more likely to be taken over.