Are your savings safe? article discussion

Fit_Like

Hi
OK Im panicing! I am in the fortunate position to only owe £5k on my mortgage with the remainder being in the flexible mortgage account with the A&L. Its over £35k, and in both my OH and my own names. Does this mean that "if" the A&L collapsed that we would be covered for £70k? and realistically should I just pay the £5k off and be done with it?

debbie42

MoneyTown wrote: »

The article is just telling you that the savings and debt to the lender are added together at the compensation stage. This means that you may lose liquid assets (cash savings) though overall you will be no worse off because the debt is reduced equally...... bad if you need the cash but not terrible.

I see what people are concerned about now: it's the liquidity of the money? We are getting the benefit (tax wise etc.) of offsetting the savings with the mortgage, which is why most people have thes accounts (together with flexibility benefits).

However, if your mortgage bank went bust then you'd still have big problems regarding the debt, regardless of any savings elsewhere.

Dinah_Gale_2

I see from Martin's chart that Anglo Irish bank have the passport scheme.

Forgive me if I'm incredibly dim here. I have my 'old age' money in cash (I'm retired) and have a substantial proportion of it in an Anglo Irish fixed-rate bond due to mature in December.

Should the worst happen would I only be covered for 20 euros? I have butterflies just thinking about it. Can't even remember what the conversion rate is just now.

Thanks for all this, Martin, and all the more knowledgeable folks who are helping out with advice here.

~Martin, your e-mails have saved me lots since I've been receiving them. More power to you!

RDL7553181

MSE_Dan wrote: »

Yep, as long as the annual turnover is less than £1,000,000

Does anyone know the terms under which businesses are covered by FSCS? I can't find information on the FSCS web site. Are limited companies covered? If so, are they treated as a seperate entity (and therefore safe for £35k)?

Thanks for your help.

RDL

rickbonar

The government needs to guarantee up to £100,000 per saver per bank as soon as possible. Maybe even £200,000.

Imagine the scenario where another major building society is rumoured to by having difficulties, once again investors with more than £35,000 will start drawing their money, then smaller investors, and a knock on effect will occur with all the banks.
Ironically this situation would bankrupt not only the banks but Mr Brown and the bank of england and for us our paper money worthless.

I think £100,000 or more guarantee at least would certainly stop this from happening and actually secure more investors from all over the world.

Backtracking and reneging as they appear to doing with Northern Rock will have the opposite effect.

dirtdigger

Are income bonds safe?
I have £30,000 with Norwich Union, £25,000 with Prudential and £25,000 with Legal and General.
Should I close these bonds and put my capital into three bank accounts?

ps646566

Dinah_Gale wrote: »

I see from Martin's chart that Anglo Irish bank have the passport scheme.

Forgive me if I'm incredibly dim here. I have my 'old age' money in cash (I'm retired) and have a substantial proportion of it in an Anglo Irish fixed-rate bond due to mature in December.

Should the worst happen would I only be covered for 20 euros? I have butterflies just thinking about it. Can't even remember what the conversion rate is just now.

Thanks for all this, Martin, and all the more knowledgeable folks who are helping out with advice here.

~Martin, your e-mails have saved me lots since I've been receiving them. More power to you!

There are mixed views on Anglo-Irish Bank, regarding how safe they are. My guess is they're not a critical risk but things can change.

They are in the so-called passport scheme which means that 90% of savings are covered up to €20,000 (about £14000 I think). However if your savings are more than £14000 then you will be covered up to a maximum of £14000 by the Irish equivalent of the FCSC -- ie it might cover you 100%. The rest, up to £35000, is supposed to be covered by the FSCS.

There are a number of unanswered questions :-

How likely is it that the Irish government would 'do a Northern Rock' should this bank fail ?

If for any reason the overseas FSCS equivalent cannot or will not cough up, then is the FSCS obliged to pick up the tab ? If so how long would have to elapse with no payment forthcoming before they would do so ? If not, then why is this fact not made public ?

Why are Anglo-Irish bank allowed to put in their terms and conditions statements which imply that savinngs with them are fully covered by the £35000 FSCS limit, when if fact they may not be ? Until the Daily Mail and subsequently the FSA publicised the implications of the passport scheme, we did not know that this potential problem existed. You have to trawl A-I's website to find out the true facts. If push came to shove, then this should be referred to the Financial Ombudsman.

I shan't be placing any more money with overseas institutions until and unless all these questions are answered satisfactorily.

jamesd

Fit_Like, the amount at risk is savings minus mortgage balance, so you cannot lose any money in your situation because your mortgage is greater than your savings. You'd be left with no savings and your equity increased by the value of your savings. Then you could remortgage elsewhere to free up the savings again. Joint accounts normally count as half of the balance for each person so you'd end up with twice the total protection.

rickbonar, consumers pay for the guarantee scheme, via charges paid by the members of it. It's not funded out of general taxation. Similarly, Northern Rock had to pay the Bank of England for much of its protection. There are limits about how much it's reasonable to ask people with common lower balances to pay to protect the relatively wealthy minority who don't want to be bothered to use several different accounts. Once you have significant money you're supposed to be paying attention to the risk issues.

Fit_Like

jamesd wrote: »

Fit_Like, the amount at risk is savings minus mortgage balance, so you cannot lose any money in your situation because your mortgage is greater than your savings. You'd be left with no savings and your equity increased by the value of your savings. Then you could remortgage elsewhere to free up the savings again. Joint accounts normally count as half of the balance for each person so you'd end up with twice the total protection.

Hi Jamesd - thanks for your reply - just to clarify my mortgage is 80k and is offset by savings of £75k in a flexible mortgage plan, so my mortgage is effectivley 5k - so I would be covered for £70k if the unthinkable happened?

crockpot

Hi

Hope you can help me, read th thread but might be having a blond./senior moment!!

I have a Yorkshire building soc off sett mortgage

Mortgage debt is £18500 and savings in 3 linked savings accounts of £10k

So would I be ok?

Thanks in advance