Banks compensation scheme

[Lazylobster]

Morning all, with the doom n gloom around us and the rumor that other UK banks are in need of capital, I have a question.

The FSCS will cover personal savings up to the 50K limit. But, what would happen in the event that a bank crashed with which you had a business account and funds contained within?

Would there be any compensation scheme for business account holders?

Opinions?

Ta
LL

[DimPrawn]

My understanding is that business accounts are covered up to £50K too.

If you have more than £50K in the business you can of course open multiple accounts in the business name with different institutions.

[Andy2]

I have 100k in my cater allen account
Should I open a company saving account with another bank or is it current account?

[Archangel]

Deposits are safe for "small" companies.

I've ensured that MyCO does not have > £50k in a single institution (by getting married and having children!)

[Sysman]

Moneyweek article Are your savings safe? Full guide to protect your cash

Note that it ain't dated, and says updated monthly.

See the section Is the FSCS big enough to cope? if yu really want to get worried. It's set up so that there isn't actually an existing reserve pot, the idea being that surviving banks are tapped in the event of one going down.

What if the FSCS didn’t have enough money?

The FSCS has a cap on how much cash it can levy per year from financial institutions; from 1 April 2008 the overall capacity was set at just over £4 billion. Yet in the FSA’s review document (page 77), it admits that £4 billion wouldn’t even cover the twenty-fifth biggest UK deposit taker, so it's nowhere near enough for the big banks!

I think that merits an Oh Dear™

[DimPrawn]

Moneyweek article Are your savings safe? Full guide to protect your cash

Note that it ain't dated, and says updated monthly.

See the section Is the FSCS big enough to cope? if yu really want to get worried. It's set up so that there isn't actually an existing reserve pot, the idea being that surviving banks are tapped in the event of one going down.



I think that merits an Oh Dear™

Yes, Nationwide had to chip in billions towards the rescue of that Iclandic bank going bankrupt, and yet, they themselves are cautious and risk averse bank.

I think they hinted that if any more dodgy, risk taking banks go, they might not pay up as it is unfair to their customers to pay for fly-by-night bankers.

[Cyberman]

I have 100k in my cater allen account
Should I open a company saving account with another bank or is it current account?

That is risky IMO. Cater Allen are owned by Bank of Santander now, and with Spain hitting the buffers I would not automatically assume that they are secure. I would be tempted to only keep up to 35K with any one bank.

[Cheshire Cat]

take it all out and stick it under the mattress.

better still, if it's an option for you, transfer to an offset mortgage.
you'll still have access to your savings, shoudl you need to draw on them, but you'll geta reasnoable interest rate, and in the event that your bank goes bust, at least your "net" debt will be transferred elsewhere, so your savings won't just go up in smoke.

alternatively, buy a load of gold, and a big, heavy safe, and bury it in the garden.

[Chugnut]

take it all out and stick it under the mattress.

better still, if it's an option for you, transfer to an offset mortgage.
you'll still have access to your savings, shoudl you need to draw on them, but you'll geta reasnoable interest rate, and in the event that your bank goes bust, at least your "net" debt will be transferred elsewhere, so your savings won't just go up in smoke.

alternatively, buy a load of gold, and a big, heavy safe, and bury it in the garden.

Unless your company name is on the mortage deeds, how can you transfer it all to an offset mortgage? It's the company's money, not yours.

If you draw 50k all out to use against your own mortgage, there will be unnecessarily incurred taxes, even if you hadn't paid yourself any salary this year so far (unless you're income splitting).

[Cyberman]

Unless your company name is on the mortage deeds, how can you transfer it all to an offset mortgage? It's the company's money, not yours.

If you draw 50k all out to use against your own mortgage, there will be unnecessarily incurred taxes, even if you hadn't paid yourself any salary this year so far (unless you're income splitting).

That's very true but it is better to pay taxes than lose the money in a bank failure though.