With investments put away in savings accounts, investments and mortgages, you’d assume that there is some kind of protection in place. But exactly how safe are your savings in the event of an authorised financial services firm going bust? That’s exactly what happened during the 2008 banking crisis, and UK taxpayers had to pay out £4.5bn to the people who had saved their money with Icelandic bank, Icesave.
You’ll be happy to hear that there is a safeguard in place for such an occurrence that can make such drastic means unnecessary, depending on which banks are affected. The Financial Services Compensation Scheme (FSCS) was established to provide you with a level of protection. Up to £85,000 worth of cash savings are covered per individual, per financial institution, to be exact.
What does it mean by ‘per financial institution‘? The FSCS only applies to funds that are saved within a financial institution with a banking authorisation. This means that it’s likely that not all of your bank accounts, or even all of your banks, are covered. If you have savings of £85,000 or more with two different banks who are owned by the same institution with just one authorisation, you’re only covered for a total of £85,000.
On the plus side, there is a measure in place to protect temporary high balances. Should you, for example, sell a house or receive inheritance, you will be covered for up to £1m for six months for some funds.
Actions you can take
If any of this raises concerns, there are things you can do to optimise your protection:
How can we help?
We work with the UK’s leading Asset Managers and Investment Institutions with one goal in mind; to create a risk-based plan designed to grow your wealth, but most importantly without exceeding the level of risk that you are prepared to accept.
Please email Tom or call him on 01293 227670 if you would like to discuss options to maximise your savings and investments or visit our website to find out more about the range of services we can offer.