The Financial Services Compensation Scheme (FSCS) protects the cash savings that you hold in any covered bank or building society account. The compensation limit for FSCS deposit protection is £120,000. Joint accounts are eligible up to the same limit of £120,000 per person.
The limit for temporarily high balances is £1.4m. (See below for more on this).
These limits were raised on 1 December 2025.
This increase in protection is good news for savers. We’ve just gone through a period of higher inflation and higher interest rates, so it is entirely appropriate for the deposit protection to be raised in turn, too.
And whereas other personal finance thresholds remain frozen (see income tax brackets) or have even fallen (dishonourable mention: the tax-free dividend allowance) the FSCS compensation scheme limit has gone up meaningfully.
Hurrah!
What is the FSCS?
The FSCS is a statutory compensation scheme for customers of firms authorised by the FCA (Financial Conduct Authority) and PRA (Prudential Regulation Authority).
The FSCS is funded by levies raised from such firms.
The deposit protection the FSCS offers is one of the significant benefits of cash for private investors. Everyone with savings should understand the details.
If an authorised bank or building society fails, then the FSCS will generally pay your money back to you within seven days, up to the compensation limit.
Protection applies per person per banking licence, regardless of how many accounts you hold.
- The key identifier to know is the bank or building society’s FRN 1. Every authorised institution has its own FRN and banking licence.
The FSCS protects cash deposits held with the vast majority of mainstream current and savings accounts at banks and building societies authorised by the PRA or FCA. (Electronic money institutions and payment apps – think Revolut or Wise – are not covered by the FSCS. Those regulated by the FCA should have other consumer safeguards in place. But they do not benefit from FSCS protection like a regulated bank.)
Make sure your bank is covered by the FSCS – don’t just assume it.
- The PRA (via the Bank of England) provides an updated list of the firms it regulates.
- You can also check whether your bank account is protected via an FSCS tool.
Note that overseas branches of UK banks are not usually covered by the FSCS scheme. There you’d be relying on local schemes, so check out that region’s regulations as needed.
Non-cash investments are treated differently under UK regulations. See our article on investor compensation for more on that.
What happens if I have more than £120,000 in a failed UK bank?
If you hold cash deposits with a financial institution in excess of the deposit insurance limit, then you’d become a general creditor of that institution if it failed.
For instance, if you have £200,000 in deposits in a sole account with a failed authorised bank, then the last £80,000 is not guaranteed. You wouldn’t be able to recover it via the FSCS.
It’s important to note the FSCS guarantees are on a per institution / banking licence basis. See below.
What counts as one institution for FSCS purposes? The FSCS compensation limit doesn’t apply per account or even per brand, let alone to multiple accounts at the same bank. It applies per banking licence. This is important because banks you may not realise are connected might well be owned and operated under the same licence. For instance, First Direct is a division of and shares a licence with HSBC. Conversely, other banks that have the same owner might operate under distinct licences. For example, NatWest and RBS share ownership but operate under separate licences.
How can I see which banks share a licence?
It’s not the easiest thing to determine! Banks and other savings institutions have been merged and dissolved over many years, obscuring who owns who and what licence they operate under. And the banks don’t exactly strive to highlight this information.
A good resource to check for shared licences is the excellent list Who Owns Whom? from Moneyfacts. The deposit-taking licence a bank or building society operates under is clearly shown in the rightmost columns.
You can also consult this list of banking brands. It’s a PDF maintained by the Bank of England, and appears to be kept up-to-date.
You can use that aforementioned FSCS tool to check whether your specific cash amounts held across multiple institutions are protected. It will tell you where you’re not covered.
MoneySavingExpert also has a tool to check which banks are linked.
Confused by the results you’re seeing? Check the FRN!
It’s easy to make a slip when using these tools.
For instance, here’s some output from the FSCS tool telling me £200,000 with – apparently – First Direct and HSBC Bank is safe:
What gives? As I stated above I know First Direct and HSBC share a banking licence. So the tool shouldn’t show £200,000 held across the two as protected.
Well, study the names on the left for a clue to the mystery. You’ll see their FRNs are different.
The HSBC Bank with the FRN 114216 is not the ring-fenced entity HSBC UK Bank Plc where UK savers stash their cash – and which has the same FRN 765112 as First Direct.
Below is the correct output, showing £80,000 – that is, the amount in excess of the £120,000 FSCS deposit protection – is at risk if I have £100,000 in each of these two entities:
It’s pretty confusing – and as an aside no wonder fraudsters have apparently singled out this ‘other’ authorised HSBC entity as part of ‘clone’ scams, as documented by the FCA in this PDF.
Indeed I can’t actually find HSBC’s UK FRN on its website. Which is sub-optimal, to say the least. Far better if all banks and building societies were required to include their FRN in the same place in the footers of their website, say.
It’s not the point of this article to belabour the fact that the situation is a confusing mess. (MSE has done a good job of that.)
However I’d urge you again to triple-check everything, because it is a bit of one.
Spread your cash between separate institutions to maximise protection
As we’ve said, the FSCS will compensate you for up to £120,000 on cash deposits held with any ‘authorised institution’ in the event of its failure.
(Joint accounts are eligible for FSCS up to the same limit per eligible person. But I’m going to ignore joint accounts hereon for simplicity. Do the maths for homework!)
The total protection is calculated by adding up all the money you’ve spread across any of that institution’s subsidiary banking brands registered under the same banking licence.
Again, HSBC UK Bank and First Direct are registered under the same banking licence.
Let’s say:
- You have £100,000 on deposit with HSBC
- You have another £100,000 deposited with First Direct
In the event of failure you’d only be automatically compensated by the FSCS for £120,000 of the total £200,000 you’d placed with them.
In contrast £200,000 split across two firms with different banking licences would be covered in full.
Once you have more than £120,000 in cash savings you should therefore open a new bank account with a bank that operates under an entirely distinct banking licence. By doing so, you can continue to ensure all your savings are eligible for compensation in the event of a failure.
Remember to consult a credible list to ensure your money is appropriately diversified across different banking licences.
Temporarily high limits
The FSCS provides a special £1.4 million protection limit for temporarily high bank balances held with a bank, building society, or credit union if it fails.
This special limit offers people with some types of temporary high balances protection for six months.
If you’d just sold a house, for instance, you might have a temporarily high balance. The special protection means you don’t have to open numerous different bank accounts just to protect your short-term cash pile.
Other scenarios where this limit might apply include inheritances or divorce settlements.
Previous changes in deposit protection
The deposit guarantee limit was changed to £120,000 in December 2025. Before then it was £85,000.
Before that, the limit periodically changed to mirror the EU’s €100,000 standard. As you might imagine, given how currency rates fluctuate this led to some confusion amongst savers and even pundits.
Happily, post-Brexit that mechanism no longer governs the UK limit.
(Have we finally found a Brexit benefit?!)
At the last count, roughly 95% of people were covered by the previous compensation limit anyway.
Hard though folks like us may find it to believe, the majority of British people have less than £120,000 in savings. (A woeful five million have no savings at all.)
Beyond cash
The FSCS deposit protection only covers cash savings. Notably it does not cover money market funds.
Rather, such funds are protected by FSCS investor compensation rules, provided the funds are from firms authorised by the FCA or PRA. At the time of writing the limit for such protection is still just £85,000.
Remember that other lower-risk assets, specifically UK government bonds, have a different risk profile to cash. They won’t be in any immediate danger should a commercial bank go bust.
I say ‘immediate danger’ because in a scenario where UK banks are going under left and right, investors may question the viability of the UK state. Government bonds could then plummet in price. Given we can print our own currency to meet our obligations though, it seems more likely to me they’d rise in value in such a crisis, at least in pound sterling terms.
Former fund manager and Monevator contributor Lars Kroijer has written about the safety of your cash in the bank. Lars believes you should assess the credibility of individual banks, even with the FSCS protections. Read his piece for more.
Bottom line: If you’re lucky enough to have a lot of cash, pay attention.
I have a dream: one very high guarantee limit, never changing
I believe the FSCS deposit protection limit should be much higher. Perhaps a million pounds.
After all, it’s there to give us confidence in the banking system. Not to generate business for banks by forcing people with a lot of cash to run a side hustle managing half a dozen or more bank accounts to ensure they remain protected.
True, for most savers there will be no practical difference between £120,000 and £1 million protection for cash. Both numbers are fantasy figures for the average UK saver.
Yet even though most savers would never hit either limit, frequent changes do muddy the waters and undermine confidence.
Ideally anyone in the street could tell you what the compensation limit is. It wouldn’t change often. Perhaps once a generation?
But at the time of writing I’m confident most people either couldn’t tell you what the limit is or they’d think it’s still £85,000.
It’s a bit silly. From the UK state’s point of view, FSCS deposit protection is akin to the deterrent effect of nuclear weapons. It’s there but you don’t ever want to use it in size.
If the FSCS ever had to start bailing out big UK High Street banks, we’d be in serious trouble. So the state would probably step in anyway. (In the last financial crisis the UK government even covered private savers with overseas failed banks that weren’t protected. Next time it could be more or less generous).
Ample compensation
What the FSCS is really there to do is stop bank runs, like we saw with Northern Rock in 2007. The fact that it’s there should mean we never need to use it, because savers know their money is protected.
Given a deposit guarantee scheme is not something that should be called upon in the normal run of things, why not make it big enough to cover nearly everyone in almost all eventualities?
I guess there does have to be some limit to the protection. Without it, oligarchs might move billions to UK banks for their rock-solid protection. That would represent a huge liability to the state.
A £1m threshold would make the specific limit irrelevant for virtually everybody – even the vast majority of those with multiple accounts under the same banking licence. But it would also be enough to prevent money-shuffling shenanigans by the safety-seeking ultra-wealthy.
£1 million is easy to remember, too!
For now though it’s £120,000 per authorised institution. To be totally safe you should diversify any cash savings beyond that amount between institutions operating under different licences.
It’s always prudent to assume failure is possible. Even if it’s very unlikely.
Note: This post has been updated, and some older comments below may refer to the previous FSCS compensation limit. I’ve kept the old comments for historical interest and context, but please do check the date of the comments if you’re confused.
- Firm Reference Number, but nearly always called an FRN in the literature.[↩]
Where, as in my case, would cash held by a “banking” type of share dealer i.e. iWeb, which is operated by Halifax Share Dealing, fit into all of this?
I don’t think this is too bonkers. The amount is only reviewed once every 5 years, so it’s not like it’s going to bounce up and down like a yo-yo. I think the 5-year period is the main fact to get across, other than the actual amount.
I also like the idea of the £1m short-term protection as there are sometimes in life when a vast chunk of cash ends up in your hands, if only for a fleeting moment. It would be sods law if your bank collapsed while you had a few hundred thousand in cash from a recent house sale in your current account! Now that particular “black swan” isn’t so much of a worry (not that it was much of a worry anyway).
John
“I don’t think this is too bonkers. ” You are too mild: fussing about the £75k is just knickers-in-a-twist journalism. The protection for temporary big sums seems pretty welcome to me.
If I sell 400K of shares and it is via Barclays Stockbrokers (part of Barclays bank and ALL cash deposits are under the bank banner) for say 3 months during market turbulence, will it be covered? Does anyone know the answer please.
A more relevant question is what would happen if we had a Cyprus/Greece moment and our government couldn’t afford to keep their promise. In those circumstances I’d be more concerned about whether I was going to salvage anything at all – the limit being £75,000 instead of £85,000 would be the least of my worries.
@All — Regarding broking accounts, your broker should be keeping your cash with one or more banks, and as I understand it that is where the FSCS comes in with respect to the circumstances you’re talking about. Where the broker fails, a different scheme is in operation. When we last looked into it, the system was complicated and apparently imperfect.
See these two articles:
http://monevator.com/investor-compensation-scheme/
http://monevator.com/nominee-accounts/
I’d welcome more *information* if anyone has it; please don’t post ad hoc musings under the guise of information, as this area is confusing and to some frightening enough as it is. 🙂
@BRIAN — I don’t have a definitive answer, I’m just a humble amateur investor and blog scribe, but going on my previous reading and the investor compensation posts I linked to above, my hunch is you’d have £75,000 protected (from 1 Jan 2016) if the money was being held in a bank account or £50,000 if it as held somewhere within the broking subsidiary.
Clearly the best people to ask here are Barclays Stockbrokers (and if you do please do come back to share what they say…)
@BeatTheSeasons — I don’t really see why that is a “more relevant” question with respect to the FSCS but it’s not an entirely unworthy one.
For my two pence: anything is possible, but in most scenarios I think the UK would be able to pay up what it promised as it can print money to honour its commitments — a big difference to Cyprus. Perhaps that might not hold if it were trying to control money supply for some other reason (say hyperinflation) but really you’re talking Wiemar Republic style scenarios there that are not very amenable to gaming out in advance (but very amenable to doomster prophecies… 😉 )
Really compensation is not going to be the best place to turn in scenarios like you’re describing. I’d say better to have put some money into alternative assets in advance if it’s a real worry for you (e.g. overseas property or gold in Switzerland or diamonds sewn into your favourite hunting jacket or what have you).
Sounds like they are resizing the safety nets ahead of an en masse tight rope wobble. The timing couldn’t be worse in terms of giving investors and savers confidence in markets. I think a good question is raised by @BeatThe Season. Although the UK is in a stronger position, if Greece opts to stay in the EU their destiny and sovereignty is no longer in their own hands and that is the biggest threat economically.
Fair comments by @ The Investor whom I realise is wary of the tin foil hat brigade 🙂 However, in any scenario with multiple banks going bust I think we’d have more to worry about than a £10k cut to the FSCS limit. You also have to wait a long time to get your money, as I found out with Icesave, so even moderately high inflation would still give fully protected savers a significant haircut.
@BeatTheSeasons — Hah! 😉 Well, to be fair as I said I don’t think it’s an unworthy question. But I do think you could write it in response to almost anything.
Say we did a post on mortgages. “Well I think with Britain facing an eventual day of reckoning in the banking sector what particular interest rate you lock-in is going to be the least of your concerns”.
Or household insurance: “Finding an insurer who will actually be able to stand behind their payments when the next financial crisis takes away the entire banking sector is the real non-trivial challenge”.
Etc etc.
Of course, some blogs/writers do write that sort of thing in response to almost anything, particularly back in the days when it looked like they might be right (2007-2010). Negative headlines generate demonstrably more interest and clicks from readers and so forth, so I understand why. And blog comment writers with even less sense of accountability never cease. (See The Telegraph comments, etc).
As I say, I’m not in disagreement with the actual point — I’m the chap who has warned you should assume every investment can fail remember. 🙂
But in practical terms, the cut in the FSCS limit and responding to it by recalibrating any ‘spreading around’ you’ve done previously is very actionable. Cowering before a doomsday thesis and saying doing so is “more relevant” is something else entirely, in my view. 🙂
Cheers!
The problem goes further than just a change of amount in my opinion.
We have entered an era of DIY savings, investment and pension freedom et al which should be keep rules simple for all to understand. This is not the case including the amount change.
If the exchange rate is the reason then should both cash and investments be covered?
Further confusion arises when you view the PRA link to reveal the list of banks – this is written from a legal point of view whereas consumers don’t have that view eg First Direct is not listed as its under HSBC.
Why should a consumer have to dig around to find high street names – that is the name people use!!
FSCS also means if you bank with say Lloyds and your investment platform holds your cash in Lloyds, you have to find out the information & do the maths then compare risk against the £75k
The ‘authorities’ should maintain this information for consumers to refer to not on 3rd parties to ‘pull information’ together.
Summary : Information not fit for purpose
It is completely BONKERS – whatever happened to “free” market?
If in spirit EU is about solidarity, support & unity, and as such people can move around freely to work wherever they can find opportunities within that union then why can’t they protect their hard earned money wherever they can within the union. If the UK or any other member country is in a position to provide that haven then what exactly is the issue?
“The lowering of the deposit guarantee limit is due to the European Union Deposit Guarantee Schemes Directive. It fixes a limit of €100,000 (or the equivalent) across Europe..”
Wrong, or at best misleading. The EU fixes a MINIMUM guarantee limit of 100,000 Euro (or equivalent). You imply this is a maximum limit and that is not true. The UK banks are simply taking advantage in a drop of value of the Euro to reduce their equivalent UK Pound guarantee limit – nobody is forcing them to do it, least of all the EU.
@Adi — Perhaps, but don’t blame me, I am going on information from the FSCS. To quote directly, it says:
If you think I’ve misinterpreted that, fair enough, but I don’t think the blame lies with me in that case.
Do you have a source for your alternative view, as it’d obviously be worth reading that and learning more. 🙂
Isn’t the fscs scheme just a vanity trick,as far as I’m aware they have very little funds to protect depositors,the scheme is there to stop people panicking if we have a financially troubled bank.
If a bank fails we would all loose out as the government would have to use QE or print money to cover the cost,so the cost would be shared by all depositors (by devaluation of the pound).
So in short we would all have the same amount of money we had before the bank failed but it would just be worth a lot less. Maybe that should be in the wording of the guarantee.
@Steve — Yes, it is a bit opaque as to how much funding they have in reserve. (Does anyone know of a published figure?) However they are regularly compensating people who’ve lost money in various ways (see the sidebar on its FAQ page for examples). Does the FSCS have the $1.3 trillion or so in reserve that HSBC from memory has in cash deposits around the world? Certainly not. However if HSBC was to fail to the extent that any compensation scheme had to cover that — without recourse to the balancing assets on its books etc etc — then we’d really be in trouble. For more realistic failures or mismatches between losses and recoverable funds, the scheme should payout.
Whilst taking the point, I think the flaw in your QE merry-go-round argument is the distribution of losses between bailed-out depositors and the country as a whole. If you’d lost £100K in a single failed bank and via some convoluted mechanism the government ultimately bailed you out, I think you’d not lose any sleep over the fact that every citizen in the country was £100 poorer or whatnot. Rather, you’d be happy your financial life wasn’t perhaps holed below the waterline, through no fault of your own versus a saver in some other similar sized bank.
We need banks to have an economy as constituted, as you know, so I believe we do have to ‘socialize’ these risks to some extent.
One thing worth mentioning on the subject is that money with NS&I is 100% guaranteed by HM Treasury. You can put up to £2m in an NS&I Direct Saver Account (as you do) and earn 0.80% gross (0.70% after May). Greetings from Helsinki.
@SFG — True, mucho protection, and from memory NS&I is paying among the top rates currently, too. Certainly was a few weeks ago. 🙂 I do try to resist putting every last thing into these articles though — we’re already at 1700 words here! (I shoehorned in the nod to Lars’ “how safe is cash really” post.)
Hi @Investor
Just after your first direct and hsbc example (45k in each) the next paragraph you carry on the example and state the 85k will be fully covered by banks with different licences. That should refer to the £90k again since 85k is covered by all again!
@Marked — Ack! Thanks, fixed now.
When Icesave (and Icelandic banks in general) hit problems in 2008, the FSCS proved a lifeline for me. Without it, all the money I’d saved in my ISA would have been lost. So it definitely works and is worth noting for any savers.
strikes me if its purpose is a deterrent on bank-runs then then the only necessary pre-requisite is that the majority have 85k in one bank.
Possibly the Icelandic example is a straw-man as the liabilities for the UK govt of some Icelandic accounts going up in smoke must be a tiny fraction of the liabilities generated from a (large) domestic bank going down, i.e. easily covered.
It would be interesting to compare and contrast what happened to Icelandic savers back then, whether they were treated quite so gently by their govt
Overall, bit like trident, works as a deterrent (allegedly), but as soon as you have to deploy – everyones already lost anyway.
Even if you did lose – you’d have to be running an odd looking portfolio for it to be catastrophic I would have thought?
thats weird – random paragraphs deleted from my last post – my most searing insights seem to be missing..
@TI – you using ‘deep learning’ AI to autoprune the comments? Its true the robots are coming! Hopefully they’ll be able to generate the comments as well soon and we can all take a well-earned break? But then what will I do with my days. Oh god..
what happens if you have a mortgage and savings with the same bank?
let’s say you have a £500k fixed rate mortgage with Mega Bank A and you’ve inherited £200k recently and it’s currently on deposit also with Mega Bank A.
Mega Bank A goes bust
Does the £200k get netted off the £500k mortgage, leaving you with a £300k debt to the administrator or do you still owe £500k on the mortgage, receive £85k from the FSCS and lose £115k from your savings?
http://www.thisismoney.co.uk/money/experts/article-1709499/Is-my-mortgage-wiped-if-bank-goes-bust.html
thats not very symmetrical is it?
@The Rhino — No idea what’s happened to your paragraphs I’m afraid? (Let’s face it, if I had such technology and I wanted to deploy it then I’d have been wielding it around a particularly contentious political issue… 😉 )
@rugby trader — An interesting question that I don’t have the answer to. If they did net off then having your savings with your mortgage provider could be a stellar hedge! But I am pretty sure your mortgage would just go into the hands of the receivers as one of the bank’s assets.
Update: The Rhino’s link above does confirm that you’d still be liable for the mortgage, and states that this is what happened with the various banks we saw get into deep difficulties during and after the financial crisis.
To: BeatTheSeasons
Our government could just print money to satisfy any liabilities. So to get in a mess like Cyprus of Greece, we would firstly have to join the Euro. Such stupidity seems unlikely, since the referendum result last year.
Actually, when Greece, Italy or France really rock the boat by being the first to leave the Euro, I suppose the sterling equivalent FCSS compensation limit might fall ?
IIRC the Eurpean Directive harmonised various existing schemes across the EU to ensure there was a level playing field. This is the reason it changes, viewed from Brussels it’s common sense, viewed from London it seems a bit pointless. Whilst I don’t like what it illustrates, it’s actual existence is reasonably benign.
It however absolutely pointless to point out any flaws (real or imagined) in it or any other directive, or suggest that in any way the UK has any choice in this. Directives are mandatory (though annoyingly a lot of picking and choosing goes on over the channel), we are legally SUPPOSED do as we are told, by and large the UK is a good at doing as it’s told, overly so IMHO which probably played a part in the leave vote. We enthusiastically implement whatever madness gets shipped over to us
There are lots of directives, some considerably less pleasant and more invasive (all legally binding on the member states, that said compliance in the rest of the EU can charitably be described as patchy). Mortgage affordability rules for example are also from the EU, the EU decides if you can afford the mortgage you apply for, indirectly at least. The EU end state is to have all EU countries governed from Brussels and everything be covered by directives. As everyone knows I am vehemently opposed to that end state.
I appreciate the tangential relevance, but can we leave the politics off this thread please guys otherwise it’s just going to descend into another Brexit debate and I think it’s best we keep those quarantined to our quarterly bespoke bust-ups.
Cheers!
https://monevator.com/financial-services-compensation-scheme/#comment-795582
Been searching for an answer to this for almost an hour but no joy… Seems like a pretty basic question and indeed would be a natural hedge for figures above FSCS limit.
@kakak — I don’t know the factual answer to your question and this is 100% *not* financial advice anyway.
What I can say is your cash savings are a liability of the bank and your mortgage is an asset. (We don’t naturally think of mortgages as assets but that’s what they are to a lender).
So in a meltdown scenario, there are buyers for assets but not for liabilities. I would imagine your mortgage (among thousands of others) would be packaged up and sold to another financial company and you’d continue to be on the hook. Mortgages are sold like this even in normal times. Metro sold a bunch the other day, for example.
The bank’s promise to honour your savings with interest on the other hand wouldn’t attract many takers! Hence the FSCS.
I strongly suspect that they are completely separate issues. (Unless perhaps you have an offset mortgage?)
But as I say I have never come across specific rules for what would happen so would be interested if someone can flag them, too.
It’s a very unlikely scenario anyway now, at least with all the big regulated banks.
p.s. Apologies, I meant to write in a meltdown scenario, there are buyers for assets but not for liabilities. Corrected the comment accordingly!
@The Investor – thanks for the answer. Sounds very plausible indeed.
No offset mortgage, no. ISA size is several times the FSCS limit and I was considering whether having a mortgage with the same financial group could help me sleep better at night.
I wish I shared your optimism on the likelihood of big banks effing up beyond the regs wildest scenarios (I’m a pessimist). And I don’t really fancy the prospect of spreading the ISA pot across different groups. A nice problem to have I guess.
Breaking news: The FSCS compensation limit is getting hiked to £120,000 from next month:
https://www.theguardian.com/money/2025/nov/18/uk-bank-building-society-customer-protection-limit-rise-fscs
We’ll hopefully update our pages shortly thereafter!
Here’s a question… How would the Trading 212 Cash ISA be protected? They use “partner banks” and spread your cash over 8 different banks. Big names like Barclays, Lloyds, NatWest and Santander and also some lesser known ones like Mizuho, TD, RBC.
Would you be protected up to £120,000 per partner bank (less any cash deposits you hold directly with that bank)? Or are you covered up to £120,000 in total with Trading 212?
@cm258 In the worst case scenario, you could end up not covered at all. If Trading 212 were to go bust, it would be up to their records to prove which customer’s money is with each bank. The same records poor enough to make them go bust.
In the US there was a story of Yotta. Yotta was a “fintech savings platform” and relied on Synapse to keep track how much money they kept in each bank. When Synapse went bankrupt, customers of Synapse’s clients, got back random amounts. The banks claimed they gave back all they got, but those amounts did not match what the customers had put in. Because the customers did not have a direct relationship with the bank, and Yotta had accounts with multiple banks, some people got everything (because the banks records and Yotta’s records matched), others got a fraction or even nothing. This article is a decent summary: https://prospect.org/2024/05/23/2024-05-23-fintech-fight-frozen-bank-accounts-synapse/
If the fintech had an account with a single bank, their insolvency would have been caught earlier, or FDIC would have covered losses for customers because a bank failed to police an FBO (For the Benefit of, basically trust) account. People who were trying to get multiple-times FSCS protection got none.
Things like Raisin and presumably HL Active savings take a lot of the hurt out of multiple accounts, in particular taking the ever-increasingly tedious anti money-laundering bollocks into one hit, rather than loads.
AIUI they spread this over multiple accounts via a proxy, so once you have the individual savings account(s) each is protected by the FSCS or the relevant EU partner bank.
Of course I could understand it wrong, but that seems to be the whole point in much of the ballyhoo in their promotional guff.
People should note if you go this way there is a significant (3 to 5 working day) drag on actually getting hold of your loot from a no-notice account to spend on your Lamborghini, which is not the same as marching into your bank collaring some fellow and say “Hey do a CHAPS/BACS transfer to my conveyancing solicitor and make it snappy by noon today my man” as you twiddle with your monocle
@cm258 Trading 212 appears to rely on FSCS coverage from its partner banks: “In the unlikely event one of our partner banks were to fail, your uninvested cash is protected by the FSCS under the Deposit Guarantee Scheme (DGS). It can protect you up to £120,000 per banking group.”
https://helpcentre.trading212.com/hc/en-us/articles/360007315158-How-is-my-money-protected (expand the box Trading 212 UK Ltd. Protection)
@TI #31 the position with offset mortgages was ‘clarified’ in 2011 (things may have changed since, of course). See https://citywire.com/funds-insider/news/offset-mortgages-new-compensation-rules-explained/a461448. My summary is that the FSCS would cover the deposit balance up to the limit, and then expect the liquidators to net off the rest. That presupposes that the mortgage part hasn’t been sold on. And is the liquidator required to net off the rest or just expected to? That doesn’t sound cast iron: having more than the FSCS limit in the credit account of an offset mortgage is taking a risk on what happens in liquidation, as you note.
@ermine (#36)
HL active savings withdrawals. They can go much faster than this. For example, I requested a withdrawal from an easy access sub-account at 10am on Monday and it was (temporarily!) in my bank account by 5pm on Tuesday.
According to HL, each sub-account has its own FSCS protection with the partner bank (so care still needs to be exercised not to exceed £120k).
Does anyone have an (insider) view of how much firepower the FSCS actually has? I am especially interested in annuities. Allegedly, some insurers or annuities have an unlimited cover by FSCS. Which would be very attractive, *if* we can count on the FSCS providing cover in a serious crisis. E.g. an inflationary bust that decimates institutions with inflation-linked liabilities.
@Alan S #40
Interesting that HL Active Savings is snappier returning your money than Raisin. I passed on Active Savings despite HL’s frequent entreaties to give it a go because, well, I already have an ISA with them that is well over the FSCS limit and I don’t need any extra exposure to the private equity enterprise that is HL.
However, for people that don’t have that restriction/reservation, it seems to be a good option along the same lines, allowing you to balkanise your cash holding across multiple banks without having to fill in multiple forms.
Interesting reservation cited by Syfer Polski #36 re Yotta, which appeared to be along the same lines as Raisin/HL AS, which implies the counterparty you have to worry about is the aggregator going bust, because that’s the flipside of not having to fill in lots of forms. I don’t plan on holding for than £120k in cash over the long term, because my networth is not enough to allocate such a large amount to cash strategically, but it’s an interesting cautionary tale against using such aggregators. If you read the Wikipedia piece on Yotta you do wonder about the fishy fintech character
but then that’s fintech all round for you – recent and very virtual does not inspire confidence in this mustelid
@Anyone: re (as ever excellent) updated article above (“Remember that other lower-risk assets, specifically UK government bonds, have a different risk profile to cash. They won’t be in any immediate danger should a commercial bank go bust”): how would this actually work if you held low coupon linkers on a zero fee platform that then went under???
On the subject of T212:
You can see where your cash is held. I currently have some money in a cash ISA with them and it is held with 11 different banks. They give the bank names and the proportion of your money held with each. I have no control over where it goes or the proportion though. Currently Barclays, Natwest, and Lloyds together have about 50% of it.
I also have a small amount of cash in my S+S ISA with them. This is currently spread across the same 11 banks and also 6 different money market funds.
You can transfer cash between the two different accounts instantly (so it’s ready to pounce instantly in the event of an American politics-inspired correction!).
I don’t think increasing the FSCS to 120K is that much of a win at all – just better than a kick in the short and curlies but for most means nothing.
Why can’t this useless govt. get anything right and be coherent in what they say. If so they would have applied it to investments and equalised both together at the same time – why just apply it to savings?
It particularly doesn’t make any sense when Reeves told Martin Lewis in his interview for ML money show, that the reason for now limiting what we can put into a cash ISA (<65 years) was to encourage growth with more investment in companies (and therefore discourage cash savings).
How the hell does giving a higher FSCS to cash over investments do that?? They just talk BS. And apparently from what I understand they have no plans to increase the FSCS on investments anytime soon.
What a disjointed and useless lot this govt. are – as bad as the last lot – do nothing for the vast majority of people in this country. Can't wait to see Starmer and his crooked crew be booted out in the near future as they will be – I'll be there, steel toe capped boots ready and willing.