Are you worried about keeping hold of your money?
The takeover of HBOS by Lloyds TSB and rumours of other institutions in trouble has renewed concerns about how safe consumers savings are and the compensation available should another institution go under.
The Financial Services Compensation Scheme (FSCS) was set up in 2000 for just such an eventuality.
Are you concerned about how safe your savings are?
Is the current £35,000 limit for compensation in the event of a bank failure enough or should it be raised?
Do you trust your bank?
We asked for your comments, a selection of which are below. The debate is now closed.
MOST RECENT COMMENTS:
Government (the taxpayer) shouldn't underwrite savings. It should be a matter for insurance. Leave it up to each bank how much they insure for, and leave it to the market how much that insurance costs the bank. At last, there's a competitive advantage in prudence! Also require banks to advertise prominently what deposit protection they have in place when you apply for an account, etc.
Nick, West Devon
I was singularly unimpressed with the complacent attitude of the representative of FSCS who spoke on today's programme who refused to publish details of banking relationships on the FSCS website. There is clearly much confusion on the subject of which brands are owned by which banks and as your interviewer indicated it would be very useful if the FSCS were to publish this information. Ideally compensation should be by brand not bank. The whole system has clearly needed reform since Northern Rock went down a year ago but nothing has happened because we currently have a government that just sits on its hands and seems too paralysed to do anything about it.
I suspect that most small savers are now aware of the (up to) £35,000 security scheme for saved deposits with participating financial organisations (banks, building societies, etc.), but I certainly do not know which trading name belongs to which parent company. I would like to see each (parent and filial) organisation involved display prominently its relationship to any others. In particular in the context of the above mentioned £35,000 protection scheme.
Redgrave, Peter, Sudbury
The financial compensation scheme is in immediate need of reform and must be altered to be per bank brand, rather than per bank group. For example, the combined number of bank brands used by Lloyd's & HBOS is I believe eight, but yet if there was a failure, a depositor would receive only £35,000 rather than £280,000. If this isn't enacted immediately there will be a massive rush by depositors seeking to spread their funds elsewhere. This will be highly destabilising for the combined Lloyd's/HBOS group thereby creating another crisis. Get cracking please chancellor!
Get cracking please chancellor!
John Nash, Ealing
(Editor's note written on 22 September 2008: At present a depositor is protected up to £35,000 in the Lloyds group of brands and £35,000 in the HBOS group - so a total of up to £70,000. This is extended to £140,000 if the savings are in joint accounts.)
The purpose of savings compensation is to assure most depositors and thus prevent a run on the bank. It can therefore only be effective if it is adjusted to the level of the average account holder's savings.
Ken Knopfli, Zürich
There should be no upper limit for savings compensation. If a financial institution accepts a deposit into a savings product then by accepting that deposit the institution should have to guarantee that every penny will be repaid in the event of the institution failing; if the institution is not prepared to guarantee this, then they should not accept the deposit. This should only apply to savings products; it should not apply to investments, stocks and shares and the like, since these products are not savings but are effectively bets.
Tony Stockton, Warwick
Most people with ISAs accumulated over the last 10 years would have exceeded this limit - £35k is too little. It should go to 100k. More importantly, the law must be changed such that depositors are first in line after secured creditors. This would ensure the safety of the deposits.
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