Beginner's guide to: Protecting your savings
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Your support makes all the difference.Are my savings safe?
The rescue by Nationwide and the Government of the Dunfermline, put the spotlight back on the stability of Britain's financial institutions. However, even if your bank or building society goes bust, your savings needn't be at risk. If your money is invested with an institution that is registered with the Financial Services Authority you will be covered by the Financial Services Compensation Scheme (FSCS).
What protection does the FSCS give?
Under the terms of the FSCS the first £50,000 (£100,000 for joint accounts) held with a bank or building society is 100 per cent guaranteed in the event of it collapsing. Therefore, as long as you don't have more than £50,000 invested, your money is totally safe. If you do have more than that in cash savings it is important to spread it around.
Is there anything I need to watch out for?
The £50,000 protection limit applies per institution, not per account. And make sure each provider has its own FSA registration. Some institutions have a single FSA registration but offer accounts under multiple brands. For example, Halifax, Bank of Scotland, Birmingham Midshires, Intelligent Finance, The AA and Saga all share the HBOS registration. So if you had a savings account with Halifax and one with Birmingham Midshires only £50,000 is protected. RBS and NatWest, on the other hand, have separate FSA registrations even though they are part of the same group.
What about overseas banks?
Some providers with foreign parent companies are FSA-registered giving you the same protection as any UK institution. Others offer UK savers protection but via the compensation scheme applicable in the bank's country of origin. For example, ING Direct customers are covered by the Dutch compensation scheme which guarantees the first €100,000 (about £95,000) so you actually have greater protection than under the UK scheme.
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