The age old 85k question.

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  • friolento
    friolento Posts: 1,095 Forumite
    First Post Name Dropper Photogenic
    edited 19 November 2023 at 2:20PM
    Hoenir said:
    Which financial institution do you think might fail and you have concerns about? 

    Any.

    Some are much more likely than others to fail. For example, Credit Unions fails quite frequently. Also smaller investment and insurance firms. All of them are financial institutions. I wouldn't exclude any bank, either, especially not one of the new fintechs. £698m was paid back under the FSCS scheme last year, and the forecast for this year is £625m. Have a look on the FSCS site.
  • I wasn't aware that any banks of building societies had ever gone bust. I thought they have always been taken over by others or the Government and not allowed to fail ?
  • Hoenir
    Hoenir Posts: 1,928 Forumite
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    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.
    Your concern is understandable. As the media tends to blow up any negative news into a crisis. Which is then amplified on social media through a broader lack of comprehension. Since the GFC of 2006-2008. Regulation and supervision of the UK banking sector has become increasingly onerous.  . 
  • masonic
    masonic Posts: 23,205 Forumite
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    edited 19 November 2023 at 2:36PM
    I wasn't aware that any banks of building societies had ever gone bust. I thought they have always been taken over by others or the Government and not allowed to fail ?
    This has been the case where possible, but not in all cases. For example, Landsbanki, operating in the UK as Icesave, was taken over by the Icelandic FSA before the UK could act. It was therefore limited to freezing its financial assets in the UK and voluntarily extending FSCS cover to savers (as it was not covered by the UK scheme). All others failing around that time were either bought or nationalised.
  • Hoenir
    Hoenir Posts: 1,928 Forumite
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    Depositors in Icesave did receive their money back in full. The FSCS scheme ran in deficit for some years after. The money being recouped by a higher levy being imposed on all UK banking institutions. 
  • masonic
    masonic Posts: 23,205 Forumite
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    edited 19 November 2023 at 3:01PM
    Hoenir said:
    Depositors in Icesave did receive their money back in full. The FSCS scheme ran in deficit for some years after. The money being recouped by a higher levy being imposed on all UK banking institutions. 
    Indeed we did, and for that I'll always be grateful to Gordon Brown and Alistair Darling. Though not all depositors received their money back in full. Businesses, including several councils, charities and the police, that were not covered by the FSCS instead received payments many years later from the Icelandic government. I'm not sure whether or not they eventually received all of their capital back or if they suffered a partial loss, but last I heard there was still a substantial balance outstanding.
  • The way I read it was, Lump sum + interest is covered up to 85k in total.
    Thats why I save 81k at 5%' I know Im risking £50 in total as interest is £4050.00 for the year.
    A small but acceptable risk.



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