Are your savings safe? article discussion

superstar_2

What is the current ratings for Halifax Bank of Scotland (HBOS) and HSBC?

OR kindly provide me with the link where i can find out more about that myself.

Thanks

napoleon

We're all doomed I tell ya

codetown

to Martin and the MSE team:

The article is quite good, but needs to be improved:
a) you always talk about banks in the article. You should mention that the same compensation rules apply to building societies

b) The table: 'Which savings providers count as one financial institution?' seems to me very limited. How did you choose the 41 financial institutions you list? And how can we check for other financial institutions?

For example how can we check if a particular building society (say: Coventry BS, Yorkshire BS etc) is a separate financial institution for the FSCS scheme?

Meltdown_2

codetown,
ALL building societies are separate financial institutions for the FSCS.

TractorGirl327

I'd like to know what the situation is with childrens accounts?

I have a savings account with the Halifax in my sole name in which there is £31,000 , so under the £35,000 threashold

However, my 2 children (age 7 and 4) have monthly saver accounts, also with the Halifax, with me as the named adult on their accounts. The 7-year-old has just over £4,000 and the 4 year-old has almost £2,000, so this obviously takes accounts in my name to over £35,000.

Thanks.

cb101

Hi

I have been reading various posts on here regarding how safe the offset savings are in an offset mortgage plan.
I queried this with IF since my 60k mortgage is fully offset by my savings- so if the worst scenario happened- a) would my savings be used to pay off my mortgage or b) would I be guaranteed only 31.7k of my savings and still owe the approx 29k of mortgage?

I received the following reply and I don't think I'm any the wiser or maybe it means b) as above?


"Thank you for your Email.

Halifax / Bank of Scotland / Birmingham Midshires / Intelligent Finance being part of HBOS and one of the world's strongest banks. We have assets of over £660bn and one of the strongest credit ratings of any bank.

Under the Deposit Sub-Scheme of Intelligent Finance, compensation payments are limited to 100% of the first £2,000 and 90% of the next £33,000 of customer's total protected deposits, making a maximum payment to that depositor of £31,700.

The total liability is worked out on all the accounts in the name of a depositor held with the financial institution concerned, including the depositors share in a joint account. The trustees of a trust account would normally be regarded as a separate depositor.

This means that if a customer has made deposits in a savings or bank account with Halifax Plc (including the divisions of Halifax Plc, for example Intelligent Finance), there could be a maximum payment to that depositor of £31,700 under the Deposit Sub-Scheme.

If the unthinkable was to take place our mortgage business would be sold/bought by another company who would also be responsible for recovering repayments."

Can anyone confirm this means b)?
In which case having more than 31.7k or 35k offset savings isn't such a good idea?

Thanks

C

Meltdown_2

cb101,
it seems to me that the email reply was written by a piece of software which has not been updated in some time .... £31,700 indeed! :rolleyes:

arty4

In Martin's article 'Are your savings safe?', under the heading 'Is the FSCS big enough to cope?', he writes: '... from 1 April 2008 a review of the FSCS has said the overall capacity will be capped at just over £4 billion every year.' I read this some time ago, then forgot where I'd read it, and subsequently rang the FSCS to ask about this 'cap' that I'd heard about. The guy who answered the phone utterly denied any knowledge of any such cap, and the best he could do was refer me to their 'FSCS Plan and Budget 2008-9' (under Industry>Publications if you want to see it), where the best I could glean was that they had an overall budget of £130m, of which £25m (!) was allocated for running costs, and £5m was allowed for bank deposits. So I am still wondering about the overall capacity of the FSCS to cope...

jamesd

arty4, The March review of FSCS funding by the FSA made proposals that would significantly increase the annual cap to about 4.4 billion Pounds a year by having firms involved in different business areas pay levies for losses outside their own area. Without this change the limit is 2.4 billion Pounds for deposits in bank accounts.

If there were losses beyond that there are crisis management arrangements involving the Bank of England and Treasury that may or may not provide additional funding.

baby_boomer

TractorGirl327 wrote: »

I'd like to know what the situation is with childrens accounts?

I have a savings account with the Halifax in my sole name in which there is £31,000 , so under the £35,000 threashold

However, my 2 children (age 7 and 4) have monthly saver accounts, also with the Halifax, with me as the named adult on their accounts. The 7-year-old has just over £4,000 and the 4 year-old has almost £2,000, so this obviously takes accounts in my name to over £35,000.

Top question! I'm sure you're not the only one potentially affected.

This is unknown territory but I personally think you are probably over the threshold .

By way of example (in the absence of a directly comparable example involving the FSCS because we don't have one, fortunately ), if these same accounts were at a smaller building society which merged with a larger one, then your windfall amount would usually be worked out as a % of the combined balance of your personal account plus your children's accounts where you are trustee - i.e. ALL the money would usually be counted as yours on the basis that you were the member of the society on each of the three accounts (assuming that you were first named in each case - e.g. Ms. Jan TractorGirl Ttee for Miss Tessa TractorGirl).

Re earlier discussion, it's not a comfort that the American version of the savers compensation scheme is funded - whereas ours is not .