Has any person or organisation lost money from a UK bank failure?

Ash_Pole

I've a feeling the banks in 2008 were all bailed out. From memory the Iceland banks weren't covered by the FSCS but I think any potential losses were made good. So has anyone actually lost money from the failure of a UK bank in, say, the last say 40 years? This question arose from a charity I'm involved with, so if anyone can comment on charities or corporate accounts as well as personal I would be interested. Thank you!!

eskbanker

FSCS started in 2001 and its interventions are mentioned here (short answer is 'no'!):

https://www.fscs.org.uk/media/press/2018/sep/10-years-after-failures/

There have been quite a few credit unions that have gone bust, plus investment banks and brokers, but if you're referring to UK retail banks with cash deposits then I don't believe there's been anything this century.

A similar question to yours generated some discussion at:

https://www.reddit.com/r/UKPersonalFinance/comments/w7q9v5/has_anyone_ever_lost_money_in_a_bank_making_the/?rdt=34176

Ayr_Rage

Icesave did have FSCS protection as it was a UK internet bank branch of Landsbanki.

I was one of those paid back when it failed.

boingy

No they haven't. 

daveyjp

BCCI collapse?

masonic

Ayr_Rage said:

Icesave did have FSCS protection as it was a UK internet bank branch of Landsbanki.

I was one of those paid back when it failed.

It was not covered by the FSCS (not at all initially, and when UK compensation was lifted to £50k, only compensation above the limit of the Icelandic scheme was covered by the FSCS). Alistair Darling and Gordon Brown extended compensation after the collapse when it became clear the Icelandic scheme would not pay out. As a fellow customer I am surprised you do not remember this. The initial picture was not good at all - see MSE press release from the time: https://blog.moneysavingexpert.com/2008/10/icesave-angry-frustrated-and-upset/

masonic

On the subject of organisations, I don't believe the councils who lost millions ever got it all back, see for example https://www.bbc.co.uk/news/uk-politics-26052949

x44

Well ....errr yes actually: some (few) certainly did

It was not exactly a mainstream bank but look up the case of the Southsea Mortgage and Investment Company.  A sort of pseudo building socierty I suppose with only around £10m  in retail deposits. It went bust in 2011 and HMG in this case stuck to the rule of the law and so those deposits up to 85K were protected and anything about that was not.

Apparantly there were 14 customers with deposits over that sum who only got their £85K and that was it.

Were there any groups going bust - I've no idea but at the time this one featured quite a bit in the press.

At the time it was regarded as a "warning shot over the bows" to those who might have thought the £85K limit did not "really" apply as previously HMG had compensated everyone. ie Northern Rock, Bradford and Bingley and the rest.... either by direct individual payouts by the FSCS to customers (Icesave) or more commonly by another financial group being paid by the FSCS to take over the front website/running in total (Kauphing Edge customers went to ING Direct via the FSCS) in a semi seemless transfer as far as the customer was concerned.

Hoenir

Ayr_Rage said:

Icesave did have FSCS protection as it was a UK internet bank branch of Landsbanki.

I was one of those paid back when it failed.

The scheme didn't actually have sufficent money to meet the claims. A levy was placed on all financial institutions for several years to recoup the money. Consumers ultimately footed the bill. 

NameWithheld

I don't think we got the uncredited interest on Icesave accounts

masonic

NameWithheld said:

I don't think we got the uncredited interest on Icesave accounts

I got interest up to the deemed date of default. For those in fixed term products who wanted full contractual interest for the whole term, they could reject the UK Govt offer and apply manually to receive compensation after their maturity date. I don't know if anyone was brave enough to try that. I know I took the money and ran ASAP.