MSE News: Savers to benefit from increased protection in the event of...

Options
Former_MSE_Lucinda
Former_MSE_Lucinda Posts: 46 Forumite
edited 19 January 2017 at 6:00PM in Savings & investments
The level of protection for individual savers with money in banks and building societies that go bust is set to increase to £85,000, the Financial Services Compensation Scheme (FSCS) has confirmed...
Read the full story:
'Savers to benefit from increased protection in the event of banks going bust'
OfficialStamp.gif
Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.

Comments

  • Consumerist
    Consumerist Posts: 6,310 Forumite
    Name Dropper First Post First Anniversary
    Options
    Once we have left the EU will this protection be reduced to its level before the EU imposed the €100,000 level on us?

    If I remember correctly, the original protection was at about £35,000.

    Whist I'm generally in favour of Brexit, I do fear the consequences of our parliament having unfettered control of our consumer legislation.
    >:)Warning: In the kingdom of the blind, the one-eyed man is king.
  • alanq
    alanq Posts: 4,216 Forumite
    Combo Breaker First Post
    Options
    Consumerist wrote: »
    If I remember correctly, the original protection was at about £35,000.

    It was £31,700. (100% of 1st £2000, 90% of next £33,000)
  • 2010
    2010 Posts: 5,360 Forumite
    Name Dropper First Anniversary Photogenic First Post
    Options
    Why would it go down if the banks are as strong and stress tested as they say they are?
  • nbrewitt
    nbrewitt Posts: 74 Forumite
    First Anniversary First Post Combo Breaker
    Options
    Whilst I welcome the move, would it ever really be required? I imagine most of the major savings providers would never get into a Northern Rock type situation again, would they?
  • ColdIron
    ColdIron Posts: 9,049 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Options
    It's already paid out £28 billion, Bradford & Bingley etc
  • 2010
    2010 Posts: 5,360 Forumite
    Name Dropper First Anniversary Photogenic First Post
    Options
    nbrewitt wrote: »
    Whilst I welcome the move, would it ever really be required? I imagine most of the major savings providers would never get into a Northern Rock type situation again, would they?

    So you would actually trust the banks to behave themselves?

    They still need a lot tighter regulation than even now.

    Their retail banking should be entirely ring-fenced and separated from their "gambling" investment side.
  • VT82
    VT82 Posts: 1,079 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Options
    Consumerist wrote: »
    Once we have left the EU will this protection be reduced to its level before the EU imposed the €100,000 level on us?

    If I remember correctly, the original protection was at about £35,000.
    alanq wrote: »
    It was £31,700. (100% of 1st £2000, 90% of next £33,000)

    It was £50k (effective 7th October 2008 to 31st December 2010). But the Government will be able to choose what it wants to do with the FSCS threshold. I think more likely to go up than down. They hated having to put it down from £85k to £75k.

    Also, UK banks will likely continue to follow the European Banking Authority's regulation for a long time after Brexit, including the liquidity stress testing framework, to facilitate inter-bank dealing. Part of this liquidity framework is predicated on there being increased riskiness of unprotected deposits. A lower FSCS means more unprotected deposits, which means higher liquidity requirements for banks, so more liquidity holding costs, and banks less profitable. Not going to happen.
    MSE wrote:
    the saver can make a claim through the FSCS
    MSE, this is misleading and unduly worrying to the reader. Payouts under the FSCS will typically be automatic and paid within 7 days.
  • phillw
    phillw Posts: 5,594 Forumite
    First Anniversary Name Dropper First Post
    edited 20 January 2017 at 2:36PM
    Options
    VT82 wrote: »
    But the Government will be able to choose what it wants to do with the FSCS threshold. I think more likely to go up than down. They hated having to put it down from £85k to £75k.

    The UK government has become very good at happily going along with the EU but then telling us that they are unhappy about it (or even just making stuff up about the EU). They tell us that employment rights won't be eroded during brexit, but they have been fighting (and losing) in the European courts to remove employee rights for years. So I don't believe it's more likely to go up.

    If the government get rid of all the red tape, like they say they will, then the main difference is that the threshold won't change when sterling vs euro changes. I'm not sure how many saver "benefit" from this, most people are worse off because of this news as it means that sterling has slumped and any money you have in the bank is now worth less. I'm therefore hoping for decreased protection in the next two years.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards