Are your savings safe? article discussion

Meltdown_2

jamesd wrote: »

as part of HBOS that particular building society

Just to clarify :
Birmingham Midshires is no longer a Building Society. (Same as Halifax - simply marketing names/divisions of HBOS).

rozeepozee

TheBigQuestion wrote: »

“Any debts with the same institution are subtracted from your savings
A piece of minutiae in the Financial Services Compensation Scheme rules dictates that if you have debts, such as a mortgage, loan or credit card with a bank that you also have savings with, any outstanding debts will be subtracted from the savings. For example if you have £20,000 in savings and a £15,000 loan, in the unlikely event that bank went bust you'll only get £5,000 compensation.
“

I called the FSCS about the above piece of information, with respect to offset mortgages. The example i gave was you owed 100K (off set mortgage) , had 105K in the bank. In the case of a bank failure, you would not necessarily have the 100K mortgage cleared and put in a claim for 5K. Instead you may end up still owing 100K and only be able to claim 35K. The person i spoke to they would try to provide the service as described in the article , but in the end, it would be a government policy decision at the time of the claspe. He kept using te phrase “Right of Offset” which would need to be in the morguage agreement

Can anyone clarify the situation, i.e written examples ro government / FSCS documentation?

After this post I'm completely confused! I've asked my bank to confirm that the position as set out in Martin's article is correct but if anyone can clarify meantime, please do.

silvercar

just got to the point where I reckoned I could risk putting my offset savings well above the FSCS and then TheBigQuestion posts; now I'm unsure again and I only have days to make my decision!

No point asking the bank / BS as they would be a gonner if you needed to claim. I find it very frustrating that the FOS/ FSCS can't give straightforward information, they are meant to be representing customers interests!

Meltdown_2

silvercar,
I think you are being a bit unfair on the FOS.
For example, see the part of the latest edition of Ombudsman News relating to banking issues
http://www.fos.org.uk/publications/ombudsman-news/68/68-banking_casestudies.html

They are establishing precedents and getting compensation for customers.

silvercar

I'm not asking for an investigation into anything, I just want to know if my offset savings are safe: a policy statement is all I require.

Anyone have a view on whether savings in a biggish building society would be safer than in a bank?

jamesd

silvercar, see this emailed reply from the FSCS and my clarification of what it means.

Basically: banks automatically have a right to offset, building societies would do it by contract, so check your lender to see if the term is there. Since the term normally protects them to the disadvantage of consumers, it probably is.

marmites_2

I have just got rid of an endowment, to help pay off mortgage, the rest i have just put in the icesave account, i read about it on this site and did not realise that if they go bust, it could take ages to recover my money, should i take it out to be safe???????

Aegis

marmites wrote: »

I have just got rid of an endowment, to help pay off mortgage, the rest i have just put in the icesave account, i read about it on this site and did not realise that if they go bust, it could take ages to recover my money, should i take it out to be safe???????

If you're that worried, split your capital across several banks so that you always have easy access to the majority of your savings even if one major bank goes under.

silvercar

jamesd wrote: »

silvercar, see this emailed reply from the FSCS and my clarification of what it means.

Basically: banks automatically have a right to offset, building societies would do it by contract, so check your lender to see if the term is there. Since the term normally protects them to the disadvantage of consumers, it probably is.

Thanks for that, I have found this statement amongst 20 pages of T&Cs:

"We [the building society] have the right to retain and set-off all money in any account you hold with us against any money you may owe us (whether under a mortgage, loan, guarantee or otherwise) which is due for payment, but which has not been paid. Any money that has been used in this way will not qualify for offset benefit."

Does this cover them going bust or does it only cover arrears on repayments?

Another term gives them the right to change any term or condition when they need to!

jamesd

That specifies that it is for money which is due for payment and has not been paid.

I don't trust that to be a full offset right because the term restricts it to only that case. Unless there's a term elsewhere saying that the mortgage becomes due if they go bankrupt.

Clarification is required and I can't clarify further. Asking your lender might produce a useful answer.