Due to the ongoing economic slowdown and the near-collapse of a few banks in the UK it is quite natural for savers to worry about the extent to which their savings are covered by the Financial Services Compensation Scheme.
Compensation from banks
Initially the savings were covered up to GBP35000 until 7 October 2008. After this the limit was raised to GBP50000 provided they are not all held with the same savings institution. Simultaneously the limit on joint accounts has also been raised to GBP100000. At the same time all the money saved with National Savings & Investments or Northern Rock continues to remain guaranteed by the Government and therefore is fully safe.
Deposits in the Post Office and Irish banks operating in the UK such as Anglo-Irish Bank Allied Irish Bank and Bank of Ireland are also 100% safe and guaranteed by the Irish government.
As pointed our earlier this guarantee is available to one of the different savings accounts with the same provider. Hence if you need guarantee for all your savings it is best to spread your savings over as many savings institutions as possible. Even then you have to be careful because due to a series of mergers takeovers joint ventures and subsidiaries you may end of putting your savings under the same provider. If this happens your money will be vulnerable to risk if the bank collapses. You will get the guarantee for only one account. To avoid making such mistakes you need to be careful while choosing the banks for spreading your savings.
As for stock market-based investments you are entitled to a compensation of the first GBP30000 in addition to 90% of the next GBP20000 amounting to a total of GBP48000.
Compensation from building societies
Building societies are generally mutual in character and therefore are independently governed by their own boards. Hence each of the countrys building societies will be separately covered by the FSCS up to GBP50000 for each saver. However Nationwide is planning to acquire Cheshire and Derbyshire building societies by the end of 2008. If this happens the compensation package will be the responsibility of Nationwide. Nationwide is very unique in a sense that it is the only institution where several building society brands are grouped together under one authorization.
Apart from that the Chelsea Building Society is in charge of the savings compensation for London & Country savings. Similarly the Newcastle Building Society takes care of the BMW savings. Those building societies that were bought by other banking groups lose their building society status and fall under that group in terms of compensation.
Author Resource:-
Anjitha is a financial adviser and well known for his finance related articles . You can find more financial articles written by the author by visiting the following link .
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