In an uncertain world, we explore what you can do to safeguard your savings. Previous taxpayer bailouts for collapsed banks serve as a reminder of the fragility of financial services, and savvy savers should take reasonable steps to make sure their money is protected.
The Financial Services Compensation Scheme (FSCS) provides protection in the UK for savers. It protects 100% of the first £85,000 you save, per person, per financial institution. It is important to note that this is not per account. Its main aim is to return your savings to you within 7 working days in the event that your bank goes bust. If you save in a joint account, with the allowance being per person, you will be protected as a couple up to £170,000 held in that account.
What if I save with different banks?
Many banks operate within groups, and where this is the case, your savings are considered to be combined, so anything exceeding £85,000 would be outside the scope of the FSCS protection.
If your banks operate under the same group but hold separate licences, you would have full protection for the first £85,000 held in each bank.
Which savings are protected?
Savings are only protected by the FSCS where they are held with an FCA regulated financial institution.
The most common types are savings that are protected under the FSCS are;
- Current accounts.
- Savings accounts
- Small business accounts.
- Cash ISAs (including Help to Buy ISAs & Tessa-only ISAs).
- Some ‘deposit accounts’ – where interest paid depends on stock market performance.
- CASH saved within a SIPP pension
- Some guaranteed equity bonds.
The FSCS does not protect the following;
- Investment losses.
- Money in savings stamp schemes.
- Cash saved in a Christmas hamper club.
- Cash on a prepaid card.
- Money held by firms you’ve ordered from but haven’t yet had the goods from.
- Cash in a PayPal account.
- Money in a cashback site account.
- Loyalty points.
Remember that not all banks offering savings accounts are regulated in the UK, it will be dependent on their registration with the Financial Conduct Authority.
Source: moneysavingexpert.com
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