FSCS 85k protection
Discussion
This link shows which banks share the same banking licence and are therefore connected for the purposes of the £85k per institution protection limit
if you put it in an NS&I account 100% of your money will be protected.
if you put it in an NS&I account 100% of your money will be protected.
bennno said:
Apologies if a daft question but is there a risk to having high value pension all with one provider
AIUI your pension investments should be ring-fenced. So even if the provider goes belly up somebody else should be able to take them over(Isn't this what recently happened to the company which were sponsoring PH? The one with julianPH, Nik, Adam....)
Go here for the best and most up to date checkers, depending on the type of investment.
https://www.fscs.org.uk/
https://www.fscs.org.uk/
bennno said:
Apologies if a daft question but is there a risk to having high value pension all with one provider
Depends whether it's a SIPP or defined benefit pension. The later is considered an insurance contract and 'safer'With a SIPP, then your underlying assets are ringfenced. So the question becomes, do you understand what those assets are ? What is your SIPP really invested in & is the valuation you receive reliable ?
Even then, I favour a 2 provider split. If something happens to a provider, it could potentially take a year or more to regain access to your assets, so an alternate source of funds is advantageous.
2008 systemic global bank failure imminent and averted
2024 we are even more intrinsically connected and the figures multiples higher (only just over x10 the HS2 costs = the funds for "The Emergency Economic Stabilization Act of 2008" )
Recently impending bank failures have been managed so no one needed to claim theirs, in fact bank balances/deposits far far greater than the protected level have been protected (SVB/Credit Suisse), no depositors have lost money (afaik)
So if you ever actually need to try and claim your £85K back, it'll likely be a huge event and not one bank, or at least that's the indication recent events suggest to me? You would be one of many thousands?
The FSCS obviously don't have all our £0-85K's waiting in the wings do they, so while the idea is they only have to cover the odd failure here and there, it seems these days any major bank failing appears to be too big an event even to risk, so why the limit anyway? and if it does happen it'll be systemic and they'll be overwhelmed by the sheer number of banks/people? so not have the ability to recompense everyone.
It's just to give comfort IMO, "you'll get that money back regardless", so cool right? it's quite the confidence trick really that we don't question the need for it, I mean they are saying without it your £85k placed in a bank the day before (used to be "as safe as money in the bank") can just 'poof' be gone, £85k in a classic car, or cash or whatever is risky perhaps but can't just instantly disappear.
But if we amass £160K we can relax as soon as it's split over x2 institutions, because then it's protected by the same organisation FSCS that is funded by all the banks (ie we inadvertently pay for it to insure ourselves?) and that if you look into it, can't hope to cover everyone's funds in the event of one of the main stream banks you've chosen (makes sense to chose a decent large household name one doesn't it?) failing.
The biggest risk if you are confident , after all the shenanigans above, that your money is restored is that there is no guarantee when your digital balance is back and you can access your money again that it'll buy you the same or anywhere close to what it used to?
If we have enough we all do it, but it'd provide me with little comfort reassurance. This may read a bit tin foil hat, perhaps I've gone a bit hyperbolic? but what above is untrue......
2024 we are even more intrinsically connected and the figures multiples higher (only just over x10 the HS2 costs = the funds for "The Emergency Economic Stabilization Act of 2008" )
Recently impending bank failures have been managed so no one needed to claim theirs, in fact bank balances/deposits far far greater than the protected level have been protected (SVB/Credit Suisse), no depositors have lost money (afaik)
So if you ever actually need to try and claim your £85K back, it'll likely be a huge event and not one bank, or at least that's the indication recent events suggest to me? You would be one of many thousands?
The FSCS obviously don't have all our £0-85K's waiting in the wings do they, so while the idea is they only have to cover the odd failure here and there, it seems these days any major bank failing appears to be too big an event even to risk, so why the limit anyway? and if it does happen it'll be systemic and they'll be overwhelmed by the sheer number of banks/people? so not have the ability to recompense everyone.
It's just to give comfort IMO, "you'll get that money back regardless", so cool right? it's quite the confidence trick really that we don't question the need for it, I mean they are saying without it your £85k placed in a bank the day before (used to be "as safe as money in the bank") can just 'poof' be gone, £85k in a classic car, or cash or whatever is risky perhaps but can't just instantly disappear.
But if we amass £160K we can relax as soon as it's split over x2 institutions, because then it's protected by the same organisation FSCS that is funded by all the banks (ie we inadvertently pay for it to insure ourselves?) and that if you look into it, can't hope to cover everyone's funds in the event of one of the main stream banks you've chosen (makes sense to chose a decent large household name one doesn't it?) failing.
The biggest risk if you are confident , after all the shenanigans above, that your money is restored is that there is no guarantee when your digital balance is back and you can access your money again that it'll buy you the same or anywhere close to what it used to?
If we have enough we all do it, but it'd provide me with little comfort reassurance. This may read a bit tin foil hat, perhaps I've gone a bit hyperbolic? but what above is untrue......
Scootersp said:
2008 systemic global bank failure imminent and averted
2024 we are even more intrinsically connected and the figures multiples higher (only just over x10 the HS2 costs = the funds for "The Emergency Economic Stabilization Act of 2008" )
Recently impending bank failures have been managed so no one needed to claim theirs, in fact bank balances/deposits far far greater than the protected level have been protected (SVB/Credit Suisse), no depositors have lost money (afaik)
So if you ever actually need to try and claim your £85K back, it'll likely be a huge event and not one bank, or at least that's the indication recent events suggest to me? You would be one of many thousands?
The FSCS obviously don't have all our £0-85K's waiting in the wings do they, so while the idea is they only have to cover the odd failure here and there, it seems these days any major bank failing appears to be too big an event even to risk, so why the limit anyway? and if it does happen it'll be systemic and they'll be overwhelmed by the sheer number of banks/people? so not have the ability to recompense everyone.
It's just to give comfort IMO, "you'll get that money back regardless", so cool right? it's quite the confidence trick really that we don't question the need for it, I mean they are saying without it your £85k placed in a bank the day before (used to be "as safe as money in the bank") can just 'poof' be gone, £85k in a classic car, or cash or whatever is risky perhaps but can't just instantly disappear.
But if we amass £160K we can relax as soon as it's split over x2 institutions, because then it's protected by the same organisation FSCS that is funded by all the banks (ie we inadvertently pay for it to insure ourselves?) and that if you look into it, can't hope to cover everyone's funds in the event of one of the main stream banks you've chosen (makes sense to chose a decent large household name one doesn't it?) failing.
The biggest risk if you are confident , after all the shenanigans above, that your money is restored is that there is no guarantee when your digital balance is back and you can access your money again that it'll buy you the same or anywhere close to what it used to?
If we have enough we all do it, but it'd provide me with little comfort reassurance. This may read a bit tin foil hat, perhaps I've gone a bit hyperbolic? but what above is untrue......
Whilst correct that FSCS is unlikely to be seriously tested by a bank going under (they have to burn through significant capital first and would then almost certainly be subject to a buyout), the point you're perhaps missing is that FSCS compensation doesn't just apply to UK residents.2024 we are even more intrinsically connected and the figures multiples higher (only just over x10 the HS2 costs = the funds for "The Emergency Economic Stabilization Act of 2008" )
Recently impending bank failures have been managed so no one needed to claim theirs, in fact bank balances/deposits far far greater than the protected level have been protected (SVB/Credit Suisse), no depositors have lost money (afaik)
So if you ever actually need to try and claim your £85K back, it'll likely be a huge event and not one bank, or at least that's the indication recent events suggest to me? You would be one of many thousands?
The FSCS obviously don't have all our £0-85K's waiting in the wings do they, so while the idea is they only have to cover the odd failure here and there, it seems these days any major bank failing appears to be too big an event even to risk, so why the limit anyway? and if it does happen it'll be systemic and they'll be overwhelmed by the sheer number of banks/people? so not have the ability to recompense everyone.
It's just to give comfort IMO, "you'll get that money back regardless", so cool right? it's quite the confidence trick really that we don't question the need for it, I mean they are saying without it your £85k placed in a bank the day before (used to be "as safe as money in the bank") can just 'poof' be gone, £85k in a classic car, or cash or whatever is risky perhaps but can't just instantly disappear.
But if we amass £160K we can relax as soon as it's split over x2 institutions, because then it's protected by the same organisation FSCS that is funded by all the banks (ie we inadvertently pay for it to insure ourselves?) and that if you look into it, can't hope to cover everyone's funds in the event of one of the main stream banks you've chosen (makes sense to chose a decent large household name one doesn't it?) failing.
The biggest risk if you are confident , after all the shenanigans above, that your money is restored is that there is no guarantee when your digital balance is back and you can access your money again that it'll buy you the same or anywhere close to what it used to?
If we have enough we all do it, but it'd provide me with little comfort reassurance. This may read a bit tin foil hat, perhaps I've gone a bit hyperbolic? but what above is untrue......
Other countries have similar schemes and the European ones at least are broadly aligned in terms of limits. It might seem that there would be an advantage for UK banks to have uncapped compensation but that might not actually be a good thing.
LooneyTunes said:
Whilst correct that FSCS is unlikely to be seriously tested by a bank going under (they have to burn through significant capital first and would then almost certainly be subject to a buyout), the point you're perhaps missing is that FSCS compensation doesn't just apply to UK residents.
Other countries have similar schemes and the European ones at least are broadly aligned in terms of limits. It might seem that there would be an advantage for UK banks to have uncapped compensation but that might not actually be a good thing.
I'm simply saying even with other countries having similar systems, there is only so much cover that can be provided by an entity that's funded by a portion of monies coming from the profits of the organisations they are saying they are insuring you against the failure of?Other countries have similar schemes and the European ones at least are broadly aligned in terms of limits. It might seem that there would be an advantage for UK banks to have uncapped compensation but that might not actually be a good thing.
You do realise that banks have to hold significant equity as a buffer against potential losses? The amount a major bank needs to lose before there is a major issue is significant. Then you have scope for managed transfer and/or direct government intervention.
FSCS is really there as a last resort and to give normal depositors confidence to place their money in the UK banking system. It would be an astonishingly dark day indeed if you saw large numbers of banks calling upon it.
FSCS is really there as a last resort and to give normal depositors confidence to place their money in the UK banking system. It would be an astonishingly dark day indeed if you saw large numbers of banks calling upon it.
Yeah, the point of FSCS isn't to deal with the fallout from bank failures, but to deter the societal behaviour that (at least partly) precipitates them in the first place.
The level of cover and funding is irrelevant really, because if retail customers are going to lose anything - and options for forced buyouts etc as above have been exhausted - then the government is absolutely going to step in.
The level of cover and funding is irrelevant really, because if retail customers are going to lose anything - and options for forced buyouts etc as above have been exhausted - then the government is absolutely going to step in.
^ which is why FSCS should be entirely scrapped, and retail banking licences restructured.
Banking should be split into transactions and investments.
Transactions are cash, payments, debits, ATMs, etc. Banks are obliged to offer these services in order to have a licence. They can, and should, charge a fee for the services. Your money is held by the bank in ring-fenced trust type structures, and does not earn any interest. Bank goes bust ? No worries, the funds are separate and another business takes over their management. Government provides an uncapped compensation if any funds are stolen by the bank or there's some other theft from criminal activity. That gives everyone confidence they can stick their cash in any licensed institution.
Banks can also offer interest bearing accounts and services; the investment services. If you put money in them you are going risk-on with that bank's credit decisions. No compensation is payable if it all goes wrong - just like no comp is payable if you buy some dogmeat share or crypto nonsense. Why should other taxpayers bail you out for pursuing an investment return that goes wrong ? Bank having trouble raising enough deposits to fund its balance sheet ? Tough luck, better get out to the wholesale markets or start offering better rates, and if they can't make enough return then shareholders suffer not taxpayers.
Banking should be split into transactions and investments.
Transactions are cash, payments, debits, ATMs, etc. Banks are obliged to offer these services in order to have a licence. They can, and should, charge a fee for the services. Your money is held by the bank in ring-fenced trust type structures, and does not earn any interest. Bank goes bust ? No worries, the funds are separate and another business takes over their management. Government provides an uncapped compensation if any funds are stolen by the bank or there's some other theft from criminal activity. That gives everyone confidence they can stick their cash in any licensed institution.
Banks can also offer interest bearing accounts and services; the investment services. If you put money in them you are going risk-on with that bank's credit decisions. No compensation is payable if it all goes wrong - just like no comp is payable if you buy some dogmeat share or crypto nonsense. Why should other taxpayers bail you out for pursuing an investment return that goes wrong ? Bank having trouble raising enough deposits to fund its balance sheet ? Tough luck, better get out to the wholesale markets or start offering better rates, and if they can't make enough return then shareholders suffer not taxpayers.
LooneyTunes said:
You do realise that banks have to hold significant equity as a buffer against potential losses? The amount a major bank needs to lose before there is a major issue is significant. Then you have scope for managed transfer and/or direct government intervention.
FSCS is really there as a last resort and to give normal depositors confidence to place their money in the UK banking system. It would be an astonishingly dark day indeed if you saw large numbers of banks calling upon it.
hey it wasn't me that introduced the scheme, someone saw it as a risk worth mitigating against despite the facts you raise over their equity etc.FSCS is really there as a last resort and to give normal depositors confidence to place their money in the UK banking system. It would be an astonishingly dark day indeed if you saw large numbers of banks calling upon it.
No bank wants to go bust but from time to time they have/do, as you also say at extreme times the government steps in, but that would be with money it would either have used elsewhere or it makes/borrows into existence (using our collective money/future debt to repay to give it back to us?), which can lead to the money restored not being worth as much despite the same nominal value. The modern world still has a "too big to fail factor" where the potentially losses to others from one large bank failing 'could' create a domino effect despite their buffers, this is what happened in 2008 no? That would have been an extremely dark day. With us now looking at trillions and not billions these days are there no more dark days to come.
Of course it's extreme circumstances, but the loss of a regular depositors money, that they have simply over the years saved/put in the bank should be seen as an extreme circumstance, does it get more extreme life impacting than losing your money, or your monies worth.
NowWatchThisDrive said:
Yeah, the point of FSCS isn't to deal with the fallout from bank failures, but to deter the societal behaviour that (at least partly) precipitates them in the first place.
The level of cover and funding is irrelevant really, because if retail customers are going to lose anything - and options for forced buyouts etc as above have been exhausted - then the government is absolutely going to step in.
This is the paradox of it all to meThe level of cover and funding is irrelevant really, because if retail customers are going to lose anything - and options for forced buyouts etc as above have been exhausted - then the government is absolutely going to step in.
If people want their own deposits back when there is fear the banks are in trouble they are de facto to blame for the banks failure and the crashing of the system.
But if it does happen and things look really bad the government will step in.
But stepping in, is what, borrowing to get money to make things good?
Then everyone including depositors, their children are on the hook for the interest (at least) of the new debt, or the reduction in services, it's not free money there is a consequence to this route.
All that blame for just popping your money in the bank and wanting it back? What's really going on is speculation/risk taking with the government backstop, and the most innocent of all of those involved the humble/simple depositor being the one apparently to blame in a crisis!?
If there was a banking crisis tomorrow and the government had to inject £1 Trillion to make things good, and you had your £10K, £50K, £85K 'saved' then you haven't lost right, but where is the other side of that £1 Trillion debt the day after, somewhere someone hasn't incurred a loss they otherwise would have or had an asset value supported that otherwise would have been revalued down?
That new £1 Trillion is now out there somewhere, it hasn't gone to the depositors and lets hope it doesn't end up in their hands, what with their reckless, putting money in a bank and taking it back out practices, they will simply create the next crisis?
Newc said:
^ which is why FSCS should be entirely scrapped, and retail banking licences restructured.
Banking should be split into transactions and investments.
Transactions are cash, payments, debits, ATMs, etc. Banks are obliged to offer these services in order to have a licence. They can, and should, charge a fee for the services. Your money is held by the bank in ring-fenced trust type structures, and does not earn any interest. Bank goes bust ? No worries, the funds are separate and another business takes over their management. Government provides an uncapped compensation if any funds are stolen by the bank or there's some other theft from criminal activity. That gives everyone confidence they can stick their cash in any licensed institution.
Banks can also offer interest bearing accounts and services; the investment services. If you put money in them you are going risk-on with that bank's credit decisions. No compensation is payable if it all goes wrong - just like no comp is payable if you buy some dogmeat share or crypto nonsense. Why should other taxpayers bail you out for pursuing an investment return that goes wrong ? Bank having trouble raising enough deposits to fund its balance sheet ? Tough luck, better get out to the wholesale markets or start offering better rates, and if they can't make enough return then shareholders suffer not taxpayers.
I’ve seen some stupid ideas in my time and this is up there with the daftest. Banking should be split into transactions and investments.
Transactions are cash, payments, debits, ATMs, etc. Banks are obliged to offer these services in order to have a licence. They can, and should, charge a fee for the services. Your money is held by the bank in ring-fenced trust type structures, and does not earn any interest. Bank goes bust ? No worries, the funds are separate and another business takes over their management. Government provides an uncapped compensation if any funds are stolen by the bank or there's some other theft from criminal activity. That gives everyone confidence they can stick their cash in any licensed institution.
Banks can also offer interest bearing accounts and services; the investment services. If you put money in them you are going risk-on with that bank's credit decisions. No compensation is payable if it all goes wrong - just like no comp is payable if you buy some dogmeat share or crypto nonsense. Why should other taxpayers bail you out for pursuing an investment return that goes wrong ? Bank having trouble raising enough deposits to fund its balance sheet ? Tough luck, better get out to the wholesale markets or start offering better rates, and if they can't make enough return then shareholders suffer not taxpayers.
Newc said:
^ which is why FSCS should be entirely scrapped, and retail banking licences restructured.
Banking should be split into transactions and investments.
Transactions are cash, payments, debits, ATMs, etc. Banks are obliged to offer these services in order to have a licence. They can, and should, charge a fee for the services. Your money is held by the bank in ring-fenced trust type structures, and does not earn any interest. Bank goes bust ? No worries, the funds are separate and another business takes over their management. Government provides an uncapped compensation if any funds are stolen by the bank or there's some other theft from criminal activity. That gives everyone confidence they can stick their cash in any licensed institution.
Banks can also offer interest bearing accounts and services; the investment services. If you put money in them you are going risk-on with that bank's credit decisions. No compensation is payable if it all goes wrong - just like no comp is payable if you buy some dogmeat share or crypto nonsense. Why should other taxpayers bail you out for pursuing an investment return that goes wrong ? Bank having trouble raising enough deposits to fund its balance sheet ? Tough luck, better get out to the wholesale markets or start offering better rates, and if they can't make enough return then shareholders suffer not taxpayers.
This sounds like late 09 again…Banking should be split into transactions and investments.
Transactions are cash, payments, debits, ATMs, etc. Banks are obliged to offer these services in order to have a licence. They can, and should, charge a fee for the services. Your money is held by the bank in ring-fenced trust type structures, and does not earn any interest. Bank goes bust ? No worries, the funds are separate and another business takes over their management. Government provides an uncapped compensation if any funds are stolen by the bank or there's some other theft from criminal activity. That gives everyone confidence they can stick their cash in any licensed institution.
Banks can also offer interest bearing accounts and services; the investment services. If you put money in them you are going risk-on with that bank's credit decisions. No compensation is payable if it all goes wrong - just like no comp is payable if you buy some dogmeat share or crypto nonsense. Why should other taxpayers bail you out for pursuing an investment return that goes wrong ? Bank having trouble raising enough deposits to fund its balance sheet ? Tough luck, better get out to the wholesale markets or start offering better rates, and if they can't make enough return then shareholders suffer not taxpayers.
But for all the talk it never happened. Investors like messing with depositors money.
Newc said:
Dingu said:
I’ve seen some stupid ideas in my time and this is up there with the daftest.
Solid rebuttal, with compelling arguments.
ks who gave us 2008 with all our savings and no safety net. Great idea. 10/10. No issues here. Then to boot let’s charge for the banking services that are essential these days and kick the poorer that way too.
You live in la la land.
Dingu - your talents are wasted here. There must be a top job in City finance or at the Bank of England where your skills can be put to good use.
In the meantime, HM Government will probably want to continue to ensure the financial system has sufficient safeguards that Mr & Mrs Smith don't get the impression it's safer to stick their cash under the mattress than to deposit it at the bank. The Government will similarly want to avoid "run on the bank" situations where depositors lose their money long before there's any impact on the bank's shareholders.
It's also worth remembering the FSCS protection isn't on a full indemnity basis. You get your capital back but not any unpaid interest. It may also take a year to get your money back and it earns no interest during that time.
In the meantime, HM Government will probably want to continue to ensure the financial system has sufficient safeguards that Mr & Mrs Smith don't get the impression it's safer to stick their cash under the mattress than to deposit it at the bank. The Government will similarly want to avoid "run on the bank" situations where depositors lose their money long before there's any impact on the bank's shareholders.
It's also worth remembering the FSCS protection isn't on a full indemnity basis. You get your capital back but not any unpaid interest. It may also take a year to get your money back and it earns no interest during that time.
Panamax said:
Dingu - your talents are wasted here. There must be a top job in City finance or at the Bank of England where your skills can be put to good use.
I know this is a reaction to the "greedy......." comment but there is definitely a disconnect between the regular person and high finance and I sympathise with it. The fact you can't take your money and put it under the mattress without financial armageddon is a strange concept to regular people, it's "bank run" 101 to those of high finance but if you put yourself into the mind of someone who just works and saves some of their money it sounds like complete nonsense, or at least shouldn't be the case. The most simple thing 'should' be that the money everyone puts in the bank they can then get back out again, regardless of what others are doing at the same time.
They certainly cannot be blamed for creating a financial crisis, those with top city jobs or those in the Bank of England etc are more to blame, they have to be be, no? these smart people at the very least didn't do enough with their influence, why put the brakes on when everyone is making money and the system is coping?
Systemic irresponsible lending, leverage, excessive risk, this is not something an individual can do on any scale, if they do it personally then they know they stand to lose everything,
So if the little man learns that his and his peers money isn't extractable that would be problematic, so it's "guaranteed", the plebs are then happy and the system can continue to work........it's not really setup to work for the little guy if they can't access their money when they might most need it, so who is the system set up to benefit for?
Well, if well run it benefits us all by the lending for worthy things, infrastructure and other things that generate benefits for society as a whole, it just seems to have lacked some restraint over a number of decades now and nest feathering and self interest crept in, a debt/money free for all, and no consequences a monetary utopia the perfect system, no one loses we all win right............until we actually need that money of 'ours' that's in the bank.
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