Why do you need to know which financial brand owns your bank? Because if you place too much of your cash in a single institution, you could lose some of it if your bank goes bust. The more you know…
We’ve previously found that even bank staff are unable to explain the Financial Services Compensation Scheme (FSCS) properly – so why should the general public be any different?
The FSCS currently protects up to £85,000 of your money – £170,000 for joint accounts – should your banking provider collapse. Since 2001, the scheme has helped more than 4.5 million people, paying out £26bn in compensation.
The FSCS now wants to increase awareness of its scheme from 63% to 70%. To do this, it has employed a number of celebrities, including Benedict Cumberbatch and Fearne Cotton (as you can see the following video):
Who owns who?
Although it’s good that your savings are protected, and for free, protection is offered per banking licence not per brand. That means if you have more than £85,000 stashed in two separate accounts which sit under the same banking licence (eg First Direct and HSBC), you’re still only protected for losses of up to £85,000.
So, if you’re lucky enough to have more than £85,000 in savings, it’s important to know who owns who in the current account market. You can then use this knowledge to spread your deposits between different financial institutions so that each chunk of your cash is covered separately.
Luckily we’ve created a handy tool to help you decipher who owns who. This is particularly important for those of you who may have just sold a house or received an inheritance.
Are you savings protected?
The last time I discussed the Financial Services Compensation Scheme here on Which? Convo there were some spirited responses from our regulars. William asked:
‘Why not just make it a condition of the licence that companies operating under the same licence share the same name? Or is that too simple?’
However, Malcolm R thought the scheme was easy enough to understand and told us that:
‘The savings account pages on the websites of my banks spell out the FSCS limits and associated banks names. Looking at account statements from my two banks, both spell out the FSCS limit and also all the trading names for the banks, so you should be are aware of the protection they give.’
Meanwhile, John Ward had an interesting suggestion as to how to clarify the situation:
‘I don’t think it would be that difficult for the banks and building societies to print an information notice on the statements as soon as the balance on an account gets close to the £85k FSCS full compensation limit.’
So what do you think? Should the FSCS go to the trouble of increasing our awareness of the compensation limits available when a bank goes down? Or is it a fairly simple scheme that people should be able to understand quite easily?