Reply to: The £75k bank guarantee thing????

[jamesbrown]

the governments will wash their hands.

Of power, perhaps.

These bail-in requirements have been well-telegraphed, even if the general public is broadly unaware. The FSCS continues to apply. For how much longer and in what form is debatable, as is its reliability, ultimately, when the **** hits the fan (in which case, assets more generally would be pretty worthless), but it is a reasonable promise that can be relied upon, barring an epic meltdown.

[Whysoserious]

Everyone is free to make their own opinion but in a time when Switzerland is voting to scrap fractional banking (good idea), the introduction of BRRD and downgrading of bank deposit guarantees. I think it would be wise to read between the lines and think about the reasons why financial institutions are making such moves extreme moves.

No government wants to fund another crash. The liability is slowly being transferred to account holders without much public press.

The next crash will come but this time the governments will wash their hands. Leaving the banks and depositors to bail the bank out.

[WordIsBond]

In that situation a shotgun is probably more useful...

Undoubtedly. But that's a safety device, not an investment. And hardly adequate, if you need to hold off a mob, you probably need something that's illegal to own. But you can always phone the police and they might arrive in time to chase off the looters and discover your dead body.

Is the value of gold ever going to crash? Is it much use in 2016?

It won't ever completely crash as long as scaremongers are telling people that you can't safely put any money in a bank.

[northernladuk]

Is the value of gold ever going to crash? Is it much use in 2016?

Blimey. You've not seen a historical chart for gold or something??

[PerfectStorm]

Is the value of gold ever going to crash? Is it much use in 2016?

[electronicfur]

And if the banking system collapses to such an extent that small savers (less than £75K) are not protected by the government, we'll all be in the soup. No insurance scheme, Coutts or otherwise, is likely to be worth anything. Nor is the money you've stashed in your safe, because in that scenario the government will print money on a massive scale and inflation will go crazy. The only safe investments in that scenario are gold bullion (if you can find anyone to buy it), property (people have to live somewhere, so property will always have at least some value), and food (people have to eat).

In that situation a shotgun is probably more useful...

An up-to-date source for which institution has what banking license is here:

Banking and savings brands - Financial Conduct Authority

[WordIsBond]

Yes, that's the part I was interested in. Guaranteed deposits are excluded from the bail-in requirements and thus cannot be used to bail out a failing bank. So the BRRD is irrelevant to the safety of deposits up to £75K -- but very relevant to deposits over that amount. So what you are saying only applies to deposits over the guaranteed amount. The £75K is safe as long as the government is solvent.

And if the banking system collapses to such an extent that small savers (less than £75K) are not protected by the government, we'll all be in the soup. No insurance scheme, Coutts or otherwise, is likely to be worth anything. Nor is the money you've stashed in your safe, because in that scenario the government will print money on a massive scale and inflation will go crazy. The only safe investments in that scenario are gold bullion (if you can find anyone to buy it), property (people have to live somewhere, so property will always have at least some value), and food (people have to eat).

[Whysoserious]

I'm sure you've read the BRRD and can cite the exact provisions by which these changes you've described are implemented. You'll also no doubt have memorised the provisions dealing with excluded securities / funds. So I'm sure you know exactly of what you are speaking.

Just curious, though, a couple questions.
1) Do you happen to own shares in a safe-installation company?
2) Can you suggest an insurance company (to cover my safe) that won't fold if what you described happens?

Absolutely.
1. No I don't.
2. Yes, i'd advise you speak to a Coutts Bank - Wealth Management Service. I can give you contact details if you wish.

Finally,

"Unless explicitly excluded from the bail-in requirements under Article 44(2), all liabilities of a BRRD entity are subject to the Article 55 contractual recognition of bail-in requirement. Article 44(2) excludes the following types of liability:
- ...
- ...
- "Deposit guarantee schemes arising from contributions under the Deposit Guarantee Scheme Directive, Directive 2013/36/EU.

The very same directive that is under consultation this very minute for changes to the nature of the deposit guarantee.

Your money is no longer safe in a bank.

[WordIsBond]

Clearly no one has heard about the Bank Recovery and Resolution Directive (BRRD) which applies European wide to all Banks from January 01st 2016.

In summary during the next financial crisis, if your bank fails the Government (taxpayer) won't bail them out. Instead every bank account holder in that bank will have their deposit funds taken to prop up the bank. Just like in Greece where they took 48% of all deposits (personal and business).

Also just to make you feel even better, the £75k 'guarantee' is currently being re-written to make it less of a guarantee and more of a 'we'll refund you if we can, but probably not likely' type of protection.

Buy a big safe, get it professionally installed/insured up to £100,000 and take your money from the bank.

I'm sure you've read the BRRD and can cite the exact provisions by which these changes you've described are implemented. You'll also no doubt have memorised the provisions dealing with excluded securities / funds. So I'm sure you know exactly of what you are speaking.

Just curious, though, a couple questions.
1) Do you happen to own shares in a safe-installation company?
2) Can you suggest an insurance company (to cover my safe) that won't fold if what you described happens?

[Whysoserious]

As of Jan 1st bank deposits are not safe - BRRD

Clearly no one has heard about the Bank Recovery and Resolution Directive (BRRD) which applies European wide to all Banks from January 01st 2016.

In summary during the next financial crisis, if your bank fails the Government (taxpayer) won't bail them out. Instead every bank account holder in that bank will have their deposit funds taken to prop up the bank. Just like in Greece where they took 48% of all deposits (personal and business).

Also just to make you feel even better, the £75k 'guarantee' is currently being re-written to make it less of a guarantee and more of a 'we'll refund you if we can, but probably not likely' type of protection.

Buy a big safe, get it professionally installed/insured up to £100,000 and take your money from the bank.

[SpontaneousOrder]

Don't keep that much cash in fiat.

[meridian]

Yes, that seems to be it. The documentation is clear that for joint personal account holders each gets the £75k, but there was nothing about business vs personal.

The branch manager was surprised at the question. Her exact words were "I don't think I've ever seen a company account with more than £75 so the question's never been asked", and it took three or four different phone calls to find someone in Head Office that would give an opinion.

Think I'll need to write to the Financial Ombudsman for a clear directive.

[jamesbrown]

It's definitely wrong. They may have interpreted the question as being w/r to a sole trader. In any case, they're wrong. The FSCS applies per legal person and per banking license. For example, see the Q&A (last one) here.

[handyandy]

[QUOTE=meridian;2202249] their head office customer management and confirmed that my business account was aggregated with my personal (!) which doesn't sound right at all/QUOTE]

I think you're gut feeling is correct - I'm also sure that's not right as the LTD company is a legally separate entity from a natural person - even if you are sole director of LTD you are not the same entity. You should definitely have two separate £75k's - one for personal and one for LTD.

I expect you have run in to the good old problem of asking the 'expert' in the bank who knows nothing and asks another 'expert' in head office who does;t know either and the query gets passed around till someone gives an opinion. The problem is it's like chinese whispers and you probably get back an answer to a question you never asked.

[meridian]

tulip I'm with Cater Allen and Santander - they're connected, does that mean on 75k job lot or two?

I've just been into Santander to ask about their 75k protection, their website states which entities the protection applies to - cahoot, Santander Corporate, and Commercial Bank are all aggregated (total of 75k across the 3).

The weird thing is, I asked about aggregation of my business account with my personal account. The manager got on the phone with their head office customer management and confirmed that my business account was aggregated with my personal (!) which doesn't sound right at all and puts me well in the hole.