We explain how you can make sure all of your savings are covered by the Financial Services Compensation Scheme.
Are my savings covered?
In a word, yes, the Financial Services Compensation Scheme is in place to protect your savings and provide you with compensation should your savings provider be unable to pay out.
They cover up to £85,000 (as of the 31st December, 2010) of any savings you hold in each official UK ‘financial institution’, an amount that was increased to it’s current level after the run on Northern Rock.
If you have less than £85,000 anywhere then you can be confident that all of your savings will be returned to you in the event of a bank or building society collapse.
However, if you hold more than £85,000 in cash based savings (i.e. in a savings account or ISA) it’s worth checking to make sure where your money is held as there is a chance that some of your funds may fall outside of the jurisdiction of the FSCS’s guarantee.
You can use our FSCS compensation limits search to find out if your savings are fully protected.
How can I protect my savings?
The confusion arises as it’s not per account or even per bank to which the £85,000 compensation guarantee applies. Instead it’s dependent on FSA registration.
The FSCS will only pay out £85,000 per person, per FSA authorised institution so accounts held in jointly registered banks or building societies (whereby they operate under a shared FSA licence) will only be covered once by the scheme.
Some companies, such as Natwest, are registered as separate institutions (despite being owned by RBS) and therefore hold their own FSA registration licence number. Any savings held in accounts with these banks will be compensated up to a maximum of £85,000.
Others, such as HSBC and First Direct, are registered with the FSA under one licence. So, instead of savings in the banks being guaranteed separately, a combined total of £85,000 is protected by the compensation agreement. This means that if you were to have £85,000 in savings with HSBC and £85,000 in an account with First Direct, you would still only be eligible for a maximum of £85,000 compensation if the group were to go bust.
For this reason it’s a good idea to spread your savings across a number of financial institutions so that you don’t hold more than £85,000 with any one. Doing this will guarantee that all of your savings are safe should the worst happen.
As the £85,000 guarantee applies per person, per registered institution, accounts held in joint names attract double the cover (£170,000) as each depositor is eligible for compensation up to the maximum FSCS limit.
For more information on the operation of this scheme and to make a claim visit the FCSC's official website.
Use our FSCS compensation limits search to find out which banks are safe for your savings.
Which banks count as one?
In the UK a huge number of banks and building societies operate under FSA regulation however, the ‘main’ can be categorised into the following institutions.
- ASDA
- Barclays, Standard Life, Woolwich
- Capital One
- Citi bank
- Co-operative Bank, Smile, Britannia
- HBOS, Halifax, Bank of Scotland, Intelligent Finance, Birmingham Midshires, The AA, Saga
- HSBC, First Direct
- ING Direct
- Liverpool Victoria (LV=)
- Lloyds TSB, Cheltenham & Gloucester
- Nationwide, Cheshire Building Society, Derbyshire Building Society, Dunfermline Building Society
- Natwest
- Post Office, Bank of Ireland
- Royal Bank of Scotland
- Sainsbury’s Finance
- Santander (previously: Abbey, Bradford & Bingley & Alliance & Leicester) Cahoot
- Skipton Building Society
- Tesco Bank
- Virgin Money
- Yorkshire Bank, Clydesdale Bank
- Yorkshire Building Society, Barnsley Building Society, Chelsea Building Society, Egg, N&P Building Society
Savings held in any one of the above groups will be protected up to a combined £85,000 compensation limit by the FSCS.
To double check your savings are covered, you can search for your bank or building society using our FSCS Search.
Do banks ever change their FSA status?
Banks and building societies merge frequently so while the above list is relevant now, things may be different in a matter of months. For this reason it’s important not to rest on your laurels, particularly in financially volatile times. While there is no need to go overboard, occasionally checking whether your savings are fully protected is a good idea.
How can I check a bank's registration?
The FSA website is the most up to date record of banks, building societies and other financial institutions in the UK. By using their search facility to compare the banking registration numbers of the banks you’re interested in (i.e. Lloyds TSB and Halifax) you’ll be able to determine whether they count as joint or separate institutions.
It's a good idea to find out the full, official name of the bank you're interested in before you search (for example Barclays is registered as Barclays Bank PLC) as there can be multiple entries with similar names. Knowing which organisation is relevant to you makes the whole process a lot easier.
The quickest way to do this is to simply visit the website of the bank or building society you're interested in as most display their full name, registered address and FSA registration number at the bottom of the home page or in their 'Contact us' or 'Legal' section.
What about Lloyds TSB and HBOS?
At the time of writing the financial firms held under the HBOS umbrella still stand separately from Lloyds TSB. This means that for the time being any savings you have in Lloyds TSB will be guaranteed up to the £85,000 limit and, in addition, any savings you hold with HBOS will be guaranteed up to £85,000 too.
It’s likely to take months before the finer details of this massive commercial merger are finalised and two outcomes are possible.
The first is that Lloyds TSB continue to run the two companies as separate entities, maintaining their separate FSA licences just as RBS did when they took over Natwest a few years ago. In this case up to £85,000 of savings in each institution will be covered.
Alternatively, a complete merger may be agreed whereby the two companies amalgamate under a single FSA licence. If this were to happen only £85,000 of your savings in total would be covered in any Lloyds TSB – HBOS run bank or building society.
What about Abbey and A&L?
Similarly, Alliance & Leicester has recently been taken over by Spanish bank Santander who also own the now rebranded Abbey, Cahoot and ASDA bank. Until the 28th May, 2010 they were operating under a separate licence. However, the two banks have been officially merged and so now only a combined total of £85,000 (£170,000) in both banks will be covered by the FSCS.
If you hold combined savings of more than £85,000 (£170,000 in joint accounts) in accounts with Santander and Alliance &d Leicester you are entitled to move some of your money so that you remain fully covered. You can withdraw up to £85,000 (£170,000 for joint accounts) without notice or penalty so that your total savings with the newly joined banks equals £85,000 (£170,000 for joint accounts).
For instance, if you have £50,000 in accounts with Alliance & Leicester and £40,000 in accounts with Santander, £5,000 of your savings are no longer guaranteed by the FSCS's protection. As such, you are entitled to withdraw this now uncovered £5,000 without penalty, even if it is tied up in a fixed rate account. You will then be able to reinvest it elsewhere so that all of your money remains fully protected.
