FSCS: How you’re protected on savings, insurance & investments discussion

MSE_Amy

This discussion relates to the FSCS: How you’re protected on savings, insurance & investments guide. 

artyboy

Broken link... good start 

dunstonh

Looking forward to the article on how it describes investments FSCS protection (once the link is working).   That is one of the most complicated areas going.

masonic

Yes, it will be nice to have a clear article to point to so that pages of forum discussion on the topic can be avoided.

MSE_James

Sorry about the URL troubles - if you try now it should work fine

Reaper

I think the investment section could be a little clearer. For example it says "If you've put cash into an investment fund, you'll get 100% of the first £85,000 back" 

Most of the time it won't apply as even if the controlling fund goes bust the fund has still got the underlying assets it invested in that are ring fenced for investors.

An example of when FSCS protection would kick in is if they only pretended to invest your money and then ran off with it.

fimacdoodle

I thought that if a wee 'bank' was owned by a larger umbrella bank - you would only be paid out under the umbrella one under FSCS - but I see virgin is being bought by nationwide and my email says they will cover both 85k in either institution. Is that a one off ?

wmb194

fimacdoodle said:

I thought that if a wee 'bank' was owned by a larger umbrella bank - you would only be paid out under the umbrella one under FSCS - but I see virgin is being bought by nationwide and my email says they will cover both 85k in either institution. Is that a one off ?

No, Lloyds and Halifax/BoS have separate FSCS cover as does NatWest/Ulster and RBS.

Albermarle

Pension provider goes out of business: 100% of your claim

Generally speaking the FSCS can protect pensions that are provided by UK-regulated insurers. Where it can pay compensation, it will cover the pension at 100% with no upper cap. Pensions covered in this way include:

• Annuities – where you exchange the cash in your pension for a regular income from an insurance company.
• Personal pensions – these are set up yourself by contacting a pension provider. The amount you’ll get back depends on how much has been paid in, how your investments have performed, and any charges taken.
• Stakeholder pensions – these may be offered by your employer, or you can set one up yourself. They often have flexible, minimum contributions and don't require you to make any investment decisions if you don't want to. 

However, Self-Invested Personal Pensions (SIPPs), which are DIY personal pension that let you choose your own investments, aren't treated in the same way. Here, where the FSCS can pay compensation, it will normally cover the pension at 100% with an upper cap of £85,000. 

The FSCS can't protect Occupational Pension Schemes (OPS) if they fail. These may be protected by the Pension Protection Fund (PPF). If you're not sure what sort of pension you have, then you can check with your employer, or pension provider.

What about a typical DC workplace/autoenrolment pension, where it is basically a personal pension, but just put in place by the employer and part funded by them? I do not think you would normally refer to these as an OPS.

I would assume ( possibly wrongly) that if the workplace pension scheme was with an insurer ( Scottish Widows, Standard LIfe etc ) and your money was in one of their insured funds that went under,  then you would be compensated 100%. Whereas if your workplace pension was not with an insurer, but with say Peoples Pension, or HL, then you would not be covered.

Albeit it being a very unlikely scenario. 

In any case I think workplace pensions that are not OPS ( held by Millions of people) should be mentioned in the article in some way. I know it is not simple because these sort of pensions can be set up in different ways ( mastertrust etc)

dunstonh

Its worth noting that most life & pension funds no longer have 100% FSCS protection.     They have to be internally invested funds run by the insurer.   Not external funds. 

Some providers believe  that even internal unit linked funds will be capped to £85k and only With Profits funds will have 100% FSCS protection.  The FSCS have been asked before to clarify the position but they have refused saying that they will look at the scenarios if and when they happen.  To date, it has not been tested.