Are your savings safe? article discussion

Dotti

In the 'Are your savings safe?' the categories of protected savings include 'small business account (with annual turnovers below £1millon). We have a business account with Barclays but have a turnover (at present) of between £1 and £2m. We are lucky enough to operate with a positive bank balance over £50,000 and are concerned we may not be covered at all by the FSCS scheme. Does anyone know whether we would be or not? (At least, Barclays seems to be one of the most stable banks at the moment).

Thanks

Baldur

@ mrsmilky & Dotti,

You could both ask your questions to the FSCS directly - http://www.fscs.org.uk/consumer/contacts/

Contacts

• Call our Customer Services Team on: 020 7892 7300
  Please note that due to higher than usual demand it may take us longer to answer your calls and emails. We apologise for any inconvenience this may cause.
  
• Email: [EMAIL="enquiries@fscs.org.uk"]enquiries@fscs.org.uk
  [/EMAIL]Please include your full name and address with any message you send us.
• Frequently Asked Questions (FAQs)

Write to:
Financial Services Compensation Scheme
7th floor, Lloyds Chambers
Portsoken Street
London E1 8BN

Fax: 020 7892 7301

Dotti

Thanks Baldur, will let the forum know if we get an answer!

chris1

mrsmilky wrote: »

I have a business account with Abbey and so do my parents & brother. We are all directors of one of the companies, but only two of us are share holders...

Hows does the £50K cover relate to our savings... are business accounts covered in the same way as personal accounts? and I'm presumming only the actual share holders get the allowance as they actually own the company....

sorry if this has been asked before...

If it's a small limited company then it's the company which will be covered, as it's a separate legal entity. It wouldn't affect your personal £50K cover.

chris1

Dotti wrote: »

In the 'Are your savings safe?' the categories of protected savings include 'small business account (with annual turnovers below £1millon). We have a business account with Barclays but have a turnover (at present) of between £1 and £2m. We are lucky enough to operate with a positive bank balance over £50,000 and are concerned we may not be covered at all by the FSCS scheme. Does anyone know whether we would be or not? (At least, Barclays seems to be one of the most stable banks at the moment).

Thanks

I understand that if it's a small limited company it will have its own £50K cover as it's a separate legal entity. If it's a non-incorporated business account such as an account belonging to a self-employed business person then the £50K cover is shared by that person's business and personal accounts together.

HTH

Dotti

Thanks chris1. I have just received a reply from customer services at the FSCS website which I thought wld be of interest to others:

"Thanks you for your recent e-mail about compensation available from the Financial Services Compensation Scheme (FSCS) for bank and building society deposits in the event of an insolvency.

The FSCS is a fund of last resort, which deals with claims for compensation against authorised financial services firms that have gone out of business or been declared insolvent.

[FONT=&quot]From 7 October 2008, when a bank of building society, authorised by the Financial Services Authority (FSA), is unable to pay back the deposits that have been made, the FSCS can pay 100% of the first £50,000 of each depositor's claim per authorised institution.

[/FONT]This is calculated with reference to the value of a person's total deposit with the relevant institution, regardless of the number of accounts a person has their money in. As far as joint accounts are concerned, each person is considered to own an equal share of the deposit in that account.

FSCS protects private individuals and small businesses.
A limited company would be treated as having a claim, and hence protection in its
own right up to the £50,000 limit, if it fell within the definition of a "small company".

[FONT=&quot]A company qualifies as a "small company" under the provisions of section 247 of the Companies Act 1985 (which still applies to any company whose financial year commences before 6th April 2008) if it fulfils two of the following three criteria:
.it has a turnover of not more than £5.6 million;
.it has a balance sheet total of not more than £2.8 million; and
.it has not more than 50 employees [/FONT]

Similarly, a company qaulifies as a "small company" under the provisions of section 382 of the Companies Act 2006 if it fulfils two of the following three criteria;
.it has a turnover of not more than £6.5 million;
.it has a balance sheet total of not more than £3.26 million, and
.it has not more than 50 employees

For a partnership, the entity (i.e. the partnership, not the individual partners) could claim up to £50,000. A Limited Liability Partnership - LLP - is a "body corporate" and therefore needs to satisfy the small companies test above. Individual
partners would also be entitled to a separate claim in their personal capacity (i.e. in
respect of their own personal accounts with the same bank)."
[FONT=&quot][/FONT][FONT=&quot][/FONT]
Hope the above is of help to people.

mrsmilky

Thanks that is really helpful...

Dotti wrote: »

Thanks chris1. I have just received a reply from customer services at the FSCS website which I thought wld be of interest to others:

"Thanks you for your recent e-mail about compensation available from the Financial Services Compensation Scheme (FSCS) for bank and building society deposits in the event of an insolvency.

The FSCS is a fund of last resort, which deals with claims for compensation against authorised financial services firms that have gone out of business or been declared insolvent.

[FONT=&quot]From 7 October 2008, when a bank of building society, authorised by the Financial Services Authority (FSA), is unable to pay back the deposits that have been made, the FSCS can pay 100% of the first £50,000 of each depositor's claim per authorised institution.[/FONT]

This is calculated with reference to the value of a person's total deposit with the relevant institution, regardless of the number of accounts a person has their money in. As far as joint accounts are concerned, each person is considered to own an equal share of the deposit in that account.

FSCS protects private individuals and small businesses.
A limited company would be treated as having a claim, and hence protection in its
own right up to the £50,000 limit, if it fell within the definition of a "small company".

[FONT=&quot]A company qualifies as a "small company" under the provisions of section 247 of the Companies Act 1985 (which still applies to any company whose financial year commences before 6th April 2008) if it fulfils two of the following three criteria:[/FONT]
[FONT=&quot].it has a turnover of not more than £5.6 million;[/FONT]
[FONT=&quot].it has a balance sheet total of not more than £2.8 million; and [/FONT]
[FONT=&quot].it has not more than 50 employees [/FONT]

Similarly, a company qaulifies as a "small company" under the provisions of section 382 of the Companies Act 2006 if it fulfils two of the following three criteria;
.it has a turnover of not more than £6.5 million;
.it has a balance sheet total of not more than £3.26 million, and
.it has not more than 50 employees

For a partnership, the entity (i.e. the partnership, not the individual partners) could claim up to £50,000. A Limited Liability Partnership - LLP - is a "body corporate" and therefore needs to satisfy the small companies test above. Individual
partners would also be entitled to a separate claim in their personal capacity (i.e. in
respect of their own personal accounts with the same bank)."

Hope the above is of help to people.

Numerarius

I get all the details of what is covered in British banks covered by the FSCS for joint accounts within one institution (i.e. £100,000).. What has not been explained is, what happens to that cover on a joint account if one member dies. If the account is a joint account with a fixed term and then the bank goes bust, what cover is due to the surviving holder of the original joint account? Bet you haven't thought of that one Martin?

John_Pierpoint

I don't know the answer, as the day one of the joint holders dies the other one is entitled to 100% of the account.
However 6 months ago I asked what the situation of an executor (ie a trustee) would be and the answer was 50K for their personal account and 50K for their trustee account.

The technical answer would be interesting BUT so far the government has bailed out every British bank and building society (even if they are borrowing 11,000 GBP per man, woman, pensioner and child in the country to do so and try to get the economy moving again.)

I think a large section of this country will be wrecked for a decade, if a British bank is allowed to do a "Lehman".

ELLIESLUG_2

I currently have savings in a Post Office account which is controlled by the Bank Of Ireland. I thought that this had been Nationalised but have since learnt that this is Anglo-Irish Bank which is totally different.
I know that ALL savings are guaranteed by the Bank Of Ireland until Sept 2010 and they have sent me an Email confirming this.

The question is "How reliable is this statement"? Could BOI suddenly change the rules and if so do you think they would give notice so that savings could be removed?

I would value expert opinions on this.