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 of any savings you hold in each official UK financial institution.
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 is 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 scheme's guarantee.
FSCS cover up to £1 million
This rule has been put in place to protect you after a house sale, inheritance or any other temporary high value deposit.
Up to £1 million of your savings will be protected for six months following new rules announced in July 2015.
You will not have to wait more than 24 hours to withdraw your money should your bank go bust.
How can I protect my savings?
The confusion arises as it is not per account or even per bank to which the £85,000 compensation guarantee applies. Instead it is dependent on FCA registration.
The FSCS will only pay out £85,000 per person, per FCA authorised institution.
Accounts held in banks or building societies that operate under a shared FCA 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 FCA registration licence number.
Others, such as HSBC and First Direct, are registered with the FCA 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 is a good idea to spread your savings across a number of financial institutions so that you do not hold more than £85,000 with any one. Doing this will guarantee that all of your savings are safe should the worst happen.
What about joint accounts?
Accounts held in joint names attract double the cover (£170,000 per separate institution) as each depositor is eligible for compensation up to the maximum FSCS limit.
What about ISAs?
Should you lose ISA savings or investments as a result of an ISA provider failing, you would be able to reinvest the money in an ISA with a different provider. As long as you do this as soon as it is returned to you, your money will keep its tax free status.
Which banks count as one?
In the UK, a huge number of banks and building societies operate under FCA regulation;
'Main' institutions covered under a single licence
Bank of Cyprus UK
Bank of Ireland UK, Post Office
Bank of Scotland, Aviva, Halifax, Intelligent Finance, Birmingham Midshires (BM Savings), AA, Saga, Capital Bank, St James's Place Bank
Barclays, Standard Life Cash Savings, The Woolwich
Clydesdale Bank, Yorkshire Bank
The Co-operative Bank, Smile, Britannia
Coventry Building Society, Stroud & Swindon
HSBC, First Direct
Lloyds Bank, Lloyds Bank Private Banking
Nationwide, Cheshire Building Society, Derbyshire Building Society, Dunfermline Building Society
Royal Bank of Scotland
Santander (previously: Abbey), Cahoot
Skipton Building Society, Scarborough Investments Direct
Tesco Personal Finance PLC
Yorkshire Building Society, Barnsley Building Society, Chelsea Building Society, Norwich & Peterborough Building Society
Do banks ever change their FCA 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, occasionally checking whether your savings are fully protected is a good idea.
How can I check a bank's registration?
The FCA 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 are interested in, you will be able to determine whether they count as joint or separate institutions.
You can check the full name of your bank or building society on their website, as most display their full name, registered address and FCA registration number in their 'Contact us' or 'Legal' section.
What about Abbey and A&L?
Similarly, Alliance & Leicester was taken over by Spanish bank Santander who also own the now rebranded Abbey, Cahoot and ASDA banks. The two banks officially merged and so now only a combined total of £85,000 (£170,000) in both banks will be covered by the FSCS.
What about Barclays and ING Direct UK?
ING Direct UK has now been sold to Barclays and re-branded Barclays.
Previously customers with deposits with ING Direct UK were not protected by the FSCS. Following the sale, if you have savings with Barclays (the new name for ING Direct UK, previously Barclays Direct), you will share protection under the same umbrella as Barclays.
Deposits held with both are now protected up to £85,000 (£170,000 for joint accounts) under the FSCS.
Alternative compensation schemes
The offshore subsidiaries of many UK banks are covered by other protection schemes and while European banks can be FCA authorised, many will have their deposits covered elsewhere.
Here are some of the other main schemes, and how much they cover:
|Scheme||Per Person*||Shared Accounts*|
|Dutch Deposit Guarantee Scheme (DDGS)||€100,000||€200,000|
|Isle of Man Depositor's Compensation Scheme (IDCS)||£50,000||£100,000|
|Jersey Depositor Compensation Scheme (JDCS)||£50,000||£100,000|
|Guernsey Banking Depositor Compensation Scheme (GBDCS)||£50,000||£100,000|
If you are unsure as to which scheme your money is protected by, contact your bank and building society to find out.