Will my money be safe for a little while…

Annie1612

I sold my house a while back and rented while looking for a new one. I put the house money into different savings accounts. I now need to collect all the money back together (350k) in my current account to pay for the new house. We haven’t exchanged yet but are getting close- maybe a week away to exchange. Will that sum of money be covered by the FSCS if anything bad should happen, given it’s for a house purchase? It is nearly 6 months since I sold my house. 

SiliconChip

If the money is going to leave your account for the solicitor's account (either on completion day or some time between exchange and completion) before the 6 months is up then it's likely to be covered by the Temporary High Balances rules. But note that the 6 months starts from the day the money is first available to you, so if it goes past that then the protection ends. However, the chances of any current account provider failing in the next week is so small that it's not really worth worrying about.

https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/

eskbanker

This actually raises an interesting point - the temporary high balance provision protects funds in a range of scenarios, including both property sale and property purchase, so these are recognised as different events and therefore it could theoretically be argued that up to 12 months between sale and purchase would be covered!

It would be risky to have to rely on succeeding with such an argument, but in OP's case, where the sale proceeds were distributed across multiple accounts, there should be a more defensible stance that the funds are protected for up to six months before purchase rather than six months from sale.

FSCS are non-committal anyway, in that they caveat the entire protection with "We can’t confirm whether a particular temporary high balance is protected unless your bank, building society or credit union actually fails.This is because we need to review all available evidence to check there’s a sufficient connection between the relevant life event and the sums in an account before we can make a decision".

SiliconChip

eskbanker said:

This actually raises an interesting point - the temporary high balance provision protects funds in a range of scenarios, including both property sale and property purchase, so these are recognised as different events and therefore it could theoretically be argued that up to 12 months between sale and purchase would be covered!

It would be risky to have to rely on succeeding with such an argument, but in OP's case, where the sale proceeds were distributed across multiple accounts, there should be a more defensible stance that the funds are protected for up to six months before purchase rather than six months from sale.

FSCS are non-committal anyway, in that they caveat the entire protection with "We can’t confirm whether a particular temporary high balance is protected unless your bank, building society or credit union actually fails.This is because we need to review all available evidence to check there’s a sufficient connection between the relevant life event and the sums in an account before we can make a decision".

I doubt whether there has ever been a temporary high balance claim as I'm not aware of the failure of any FCA regulated bank so there probably isn't any case history to go by, but I'd imagine the FSCS would wish to make a strong argument against your 12 month scenario, perhaps by relying on 

"The protection begins on the date the money becomes legally transferable to you, or from when it is first credited to your account or to a client's account on your behalf. You can move the funds to another account in your name and maintain the protection, but the six-month period would not begin again."

eskbanker

SiliconChip said:

eskbanker said:

This actually raises an interesting point - the temporary high balance provision protects funds in a range of scenarios, including both property sale and property purchase, so these are recognised as different events and therefore it could theoretically be argued that up to 12 months between sale and purchase would be covered!

It would be risky to have to rely on succeeding with such an argument, but in OP's case, where the sale proceeds were distributed across multiple accounts, there should be a more defensible stance that the funds are protected for up to six months before purchase rather than six months from sale.

FSCS are non-committal anyway, in that they caveat the entire protection with "We can’t confirm whether a particular temporary high balance is protected unless your bank, building society or credit union actually fails.This is because we need to review all available evidence to check there’s a sufficient connection between the relevant life event and the sums in an account before we can make a decision".

I doubt whether there has ever been a temporary high balance claim as I'm not aware of the failure of any FCA regulated bank so there probably isn't any case history to go by, but I'd imagine the FSCS would wish to make a strong argument against your 12 month scenario, perhaps by relying on 

"The protection begins on the date the money becomes legally transferable to you, or from when it is first credited to your account or to a client's account on your behalf. You can move the funds to another account in your name and maintain the protection, but the six-month period would not begin again."

There have been plenty of credit union failures, but yes, agreed that they're perhaps statistically unlikely to have triggered FSCS THB.

Personally I don't think that quoted wording actually addresses the hypothetical scenario - IMHO its purpose is to clarify that there isn't a timescale extension achievable by moving funds, rather than covering the two separate life events situation.  It was really a bit of a thought experiment though, so I'm not necessarily claiming that it's particularly viable, but if FSCS were to rely heavily on that quote then I don't personally think that would suffice, but I don't know to what extent FSCS decisions could be appealed....