Are your savings safe? article discussion

bendipa

stphnstevey wrote: »

But whats happening to the bank itself?

It's still going, despite mammoth losses. The Central Bank of Ireland Governor is talking about winding it up during the next few months. But as I've said depositors who have €100,000 or less in savings are safe. All Anglo deposits and savings will be transferred to another as yet, unnamed bank.

John_Pierpoint

calypso_rhapsody wrote: »

Re posts 853 and 855 - i believe that this is a subtle change that will be introduced in January.

At present the FSCS protection does apply to the net position if you have an offset mortgage but, according to a report in the Sunday Times a few weeks ago, this will change in January when the new limit is brought in and the £85k will apply to the gross savings (or £170k if it's a joint account). So in the case boothie15 poses, only £85k of the 270k savings would be protected (unless it's a joint account) and the mortgage would still be due.

I should say that i have not verified the information in the Sunday Times article but i did post a message somewhere on this forum (no doubt if you search you will find it). There were several mortgage brokers quoted in the article. It is a very significant reduction in protection which is not being properly communicated to those affected.

Assuming that the ST article was correct, Boothie would be well advised to use his savings to pay off (or reduce) his mortgage if he is able to do so - or to move the savings elsewhere if not.

Gobaldy gook here:
http://www.fsa.gov.uk/pubs/handbook/hb_notice105.pdf

New rules hidden here (I think):

Guidance for deposit takers
in relation to exercise of
right of set-off
Banking: Conduct of Business
Sourcebook (Amendment No 2)
Instrument 2010 [FSA 2010/67]
20.12.10 2.60 – 2.64


Note date is in run up to Xmas - is this a good time to bury bad news ?

jamesd

boothie15 wrote: »

I have heard that the mortgage and the opposite amount in savings, in this case £150k, would "cancel" each other out and that the remaining £120k suplus would only be guaranteed to the tune of £85k, meaning mogage is paid off and £85k savings is safe.

Under the old rules, replaced from 31 December 2010, that was the position:

Add up all savings, deduct all debt, net result is whether you owe money or not, FSCS guarantee protects up to £50,000, now £85,000, of extra savings. But if debts are greater than savings you have no savings left, just lower debts.

So in your case £270,000 - £150,000 = £120,000 net balance. £50,000 FSCS protection, £70,000 lost, mortgage cleared.

boothie15 wrote: »

But this is vehemently denied by an accountant friend who reckons it's the former not the latter scenario outlined above. What is the correct answer?

The accountant isn't quite correct now either, but those who haven't read about the change to gross payout may still continue to give the now-wrong answer for some time:

"Gross payout, which protects customers by ring fencing their deposits if they have savings and loans with the same firm. Currently, any outstanding loan or debt would be deducted from any compensation."

The new situation:

Add up all in credit balances and pay out up to £85,000 FSCS payment.
Add up all debts and subtract any remaining credit balances over the £85,000. That's the amount still owed.

The change is the higher protection in credit balances and that you keep up to £85,000 in cash even if you have debts, so people can come out with more liquid cash than before.

boothie15 wrote: »

In the highly unlikely event of total collapse of a bank that one has a £150k mortgage offset against £270k savings, would the scenario be post-bust that only £85k of savings would be guaranteed, but I'd still be left with the £150k mortgage outstanding?

From 31 December you'd get an FSCS payment of £85,000. The remaining £270,000 - £85,000 = £185,000 would be offset against the £150,000 mortgage. Since that's £35,000 more than the mortgage you'd lose the £35,000 and have the mortgage cleared.

So your risk is now £35,000 less than it was, reflecting the increased limit.

I'm assuming here that you have independent mortgage, current account and savings account, with just an offset link between them. Some mortgage lenders have current account mortgages - big overdraft type. For the big current account type the positive or negative balance would be used in the calculation, so it works as it did except for the higher limit.

The effect is to make the non-current account type of offset mortgage more attractive, since you keep more of the savings if there's a failure but are still protected by the mortgage balance plus the FSCS limit in some way.

All this subject to any clarifications that may be made. My lender hadn't heard about the change, but noted that lots of people were off because of the season and that next week would be a better time to ask.

So if you're willing to take the risk, give it a week or two, if not viable, try the FSCS itself rather than a mortgage lender.

gordonjazz

I recently intended to open a 3 year Post Office Growth Bond and invest nearly the maximum FSCS protected deposit amount. When I asked their Customer Service representative what the protected amount was they said it was the equivalent of €100,000. When I checked this they insisted this was correct. So I rang the FSCS and was told it had been decided that £85,000 would be the Sterling equivalent of €100,000 for the next five years. When I asked what would happen if the Euro crashed, was split into two rates or completely abandoned within the next five years they replied that the £85,000 figure would be "reviewed"!
How, on that basis, am I expected to make a decision on what is a safe amount to deposit over the next five years? Why when I am investing sterling in a British institution am I at the mercy of the vagaries of the Euro? (I know that this account is run by the Bank of Ireland but this FSCS arrangement applies to other investment offers that are not).
Is this protection less secure than when it was fixed at £50,000?

stphnstevey

bendipa wrote: »

It's still going, despite mammoth losses. The Central Bank of Ireland Governor is talking about winding it up during the next few months. But as I've said depositors who have €100,000 or less in savings are safe. All Anglo deposits and savings will be transferred to another as yet, unnamed bank.

Anyone any more news on this? I did like them as they were offering 2%, which I can't get elsewhere

History_Buff

I have recently received a letter from Santander regarding an investment product I took out 15 months ago. The letter advises that although I was told when taking the product out that I would be covered by the FSCS this is no longer the case and I would only be covered in certain circumstances.
The circumstances are if my claim relates to how my capital was sold or managed than the FSCS coverage may be available. However, this would not be available if my claim relates only to the original investment and guaranteed minimum return not being paid due to Santander becoming insolvent.

How safe is my money? Does anyone have any comments regarding this?

murphydavid

History_Buff wrote: »

I have recently received a letter from Santander regarding an investment product I took out 15 months ago. The letter advises that although I was told when taking the product out that I would be covered by the FSCS this is no longer the case and I would only be covered in certain circumstances.
The circumstances are if my claim relates to how my capital was sold or managed than the FSCS coverage may be available. However, this would not be available if my claim relates only to the original investment and guaranteed minimum return not being paid due to Santander becoming insolvent.

How safe is my money? Does anyone have any comments regarding this?

This thread relates to savings - "how safe are my savings" (not money). I think if you want comment on investment products you might want to re post on another thread?

Hope this helps

soulsaver

stphnstevey wrote: »

Anyone any more news on this? I did like them as they were offering 2%, which I can't get elsewhere

Off the top of my head:

NRock 2.5 easy access; Post Office 2.9; Halifax 2% easy access or 2.5% w/d limits (both add 0.2% if funding a c/a £1k pm); Egg 2.8%;
Lloyds Vantage 4%....etc

Or did you mean something else?

soulsaver

gordonjazz wrote: »

I recently intended to open a 3 year Post Office Growth Bond and invest nearly the maximum FSCS protected deposit amount. When I asked their Customer Service representative what the protected amount was they said it was the equivalent of €100,000. When I checked this they insisted this was correct. So I rang the FSCS and was told it had been decided that £85,000 would be the Sterling equivalent of €100,000 for the next five years. When I asked what would happen if the Euro crashed, was split into two rates or completely abandoned within the next five years they replied that the £85,000 figure would be "reviewed"!
How, on that basis, am I expected to make a decision on what is a safe amount to deposit over the next five years? Why when I am investing sterling in a British institution am I at the mercy of the vagaries of the Euro? (I know that this account is run by the Bank of Ireland but this FSCS arrangement applies to other investment offers that are not).
Is this protection less secure than when it was fixed at £50,000?

I agree: the fscs guarantee at the outset should remain for the length of a fix term bond. Complicated Yes but shouldn't mean impossible.

soulsaver

expatasia wrote: »

Say you held 250k Sterling in an instant access account offshore (IOM or Guernsey ie. potentially risky) gaining virtually no interest and you were barred on resident grounds from opening UK mainland bank accounts or a NS & I saver account, where would you put the money in the current climate?

Suggest you try this in another or its own thread for a better response.