Are your savings safe? article discussion

kaennchen

willum wrote: »

Not Strictly 'Savings' but - will pension annuities which are currently being paid, be affected by the current situation?

The FSCS website is not very clear, but I believe the short answer is that you get the first £2,000, plus 90% of the balance - with no limit. Example: Suppose your annuity is £10,000p.a., and suddenly ceases completely. Taking into account your life expectancy, this might be worth, say, £100,000. You'd get £2,000 plus 90% of £98,000, ie £90,200. If the annuity does not cease completely, ie continues at a lower rate, this would reduce the level of compensation, obviously.

ps646566

I still don't think it's as clear cut as it might seem, even for overseas banks which are fully signed up to the UK scheme (ie not just branches).

If a UK bank fails -- like Northern Rock did -- it is highly likely that HMG will move in to quell the troubled waters for fear of the domino effect that would likely occur if they didn't. Whatever happens, the overall issue of whether or not the bank is insolvent remains a UK issue, and the FSCS compensation scheme is partnered with the Treasury, the Bank of England, and the FSA who between them will make all the key decisions.

If an overseas bank fails however, the whole issue of whether and when it is irrevocably isolvent, and when compensation should be paid out will not be a solely UK issue. We don't know how that will all take place, how long it will take, and how messy it will be. Certainly HMG and therefore the FSCS, nor the UK banks which support it, will not have the same vested interest in keeping the lid on things. Following the FSA's recent public note of caution on this subject, the reaction to British savers who complain that they are not getting their money back quick enough is likely to be "Well, we did warn you."

Some might say that the same could happen with a foreign-owned bank like Abbey, but I don't think so. An large established British outfit which was subsequently bought by foreigners is likely to be viewed differently by HMG than an overseas outfit that decides to raise funds in the UK.

I have withdrawn all funds from overseas banks, regardless of the exact nature of the compensation arrangements. The advantage in interest rates would have to be a lot more compelling than it is for me to consider going back to them, and even then it would only be to those where involvement with a foreign compensation scheme is not a possibility.

baby_boomer

Why should struggling British banks should have to bale out a foreign bank (through the demands the FSCS will make of them)? They won't be very happy if it ever comes to it..

chris1

Meltdown wrote: »

Pensions seems to come under the "long-term insurance" category and the compensation there is 100% of the first £2000 plus 90% of the remainder of the claim.

Is this for pensions in payment? Or pensions savings just with an insurance company? Apparently pensions savings such as unit trusts in a SIPP come under 'investments' and are only covered up to £48,000 per person, 100% of the first £30,000 and 90% of the next £20,000.

Not really good enough when you consider this would be your life's savings...

Aegis

Investments in unit trusts are held in trust, and as such remain yours even when dealt with through investment houses. Your investments would still be fine even if your dealer went bust. If your investment went bust on its own, then that's a performance risk and not therefore covered, but the chance of anything losing literally 100% of its value is fairly slim. As long as you diversify, you should be fairly ok as far as SIPP investments go.

System

baby_boomer wrote: »

Why should struggling British banks should have to bale out a foreign bank (through the demands the FSCS will make of them)? They won't be very happy if it ever comes to it..

Banks will do it because it's in their own self interest, nothing else.

Unlike that deadbeat duo from Edinburgh & Fife, who buy a failed bank on my behalf. Why should I have to spend my taxes bailing out a privately owned company, that cant manage itself.

I bet we are going to get lumped with 8/9% of it post 2010/2011 :rolleyes:

ianmr65

ps646566 wrote: »

If a UK bank fails -- like Northern Rock did -- it is highly likely that HMG will move in to quell the troubled waters for fear of the domino effect that would likely occur if they didn't..

Indeed, and the BoE have just thrown a massive and unprecedented £50 - £100bn + life belt to said UK banks precisily to stop one or more of them failing cos of the fall in value of their mortgage backed obligations..

Bear in mind that is 5-10%% of the UK GDP, but only about a month or twos worth of their mortage debt.

Merv and Gord have put a lot, and i mean lot of conditions on this. And expect banks, and their shareholders to cough up a fair chunk themselves.

Banks which take up this offer will be close to desperate for the cash and will pay through the nose.

As i have been saying for some time the banks that are most at risk of failing are banks with high exposure to the UK and US sub prime property markets. Many of which are UK high street names.

If you want a Janet and John version read Robert Peston blog

http://www.bbc.co.uk/blogs/thereporters/robertpeston/

How much evidence do people need!!!

ianmr65

baby_boomer wrote: »

Why should struggling British banks should have to bale out a foreign bank (through the demands the FSCS will make of them)? They won't be very happy if it ever comes to it..

I suspect that foreign banks (hsbc?) will be bailing Uk banks (hbos?),
And in the case that the FSCS pays out on a large bank failure, it won't be bailing out the failed bank, (WHICH WON'T EXISIT ANYMORE!!!) - it will be compensating depositors, who would otherwise have lost all their cash.

jeanssis

......................................

jamesd

If the account is in your own name only you should reduce the amount there to 34,000 to allow for adding of interest and move out the thousand or so in interest twice a year so it doesn't go over 35,000.

The savings are covered only by the FSCS but that doesn't cover 100% of the savings value, just 100% of the first 35,000.

If your husband had an account in his own name he could put the same amount in and each of you as individuals would be protected for up to 35,000 in the account in their name. But if one had 40,000 and the other 30,000, only 35,000 in the first account and all 30,000 in the second account would be protected.

In addition to the protection from the FSCS you should consider that it'll take a few weeks to get the problem sorted out so it's a good idea to have accounts somewhere else just so it's not all tied up at the same time.