Is my money safe in the bank? How to check whether you’re covered by FSCS protection

Fearne Cotton Saving Story – FSCS Protected

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Whether it’s a deliberate nest egg or surplus savings from lifestyle changes during lockdown, having a substantial sum of money set aside in case of an emergency can be a comfort. Understandably though, the safety of a person’s hard-earned money is sure to be a priority.

From windfalls to regular savings, keeping cash secure is something many will want to do – sparking some to ask whether their money is safe.

Many may already be familiar with the name FSCS – which stands for Financial Services Compensation Scheme.

The FSCS is an independent and free to use service which exists to protect customers of financial services firms that have failed.

If a person uses a firm which then goes out of business and can’t pay their claim, it may be FSCS can step in to pay compensation.

In 2018-2019, the scheme paid out £473million to 425,760 customers of failed firms.

If a person holds money with a UK-authorised bank, building society or credit union that fails after January 1, 2017, the FSCS will automatically compensate customers.

There is a limit on this amount – up to £85,000 per eligible person, per bank, building society or credit union.

It’s up to £170,000 for joint accounts.

There are instances when substantially higher sums of money are protected for a period of time under the scheme.

The FSCS will protect certain qualifying temporary high balances up to £1million for six months from when the amount was first deposited – the full eligibility criteria can be found on its website.

There are other compensation limits for different financial products which FSCS protects.

With so much to protect, some savers may want to ensure all of their money is covered.

It could be important to do this as some banks share a banking licence, hence the £85,000 or £170,000 limits apply across the accounts.

“Where you hold your money could affect how much compensation you’re entitled to,” the FSCS website explains.

“If you have money in multiple accounts with banks that are part of the same banking group (and share a banking licence) we have to treat them as one bank.

“This means that our compensation limit applies to the total amount you hold across all these accounts, not to each separate account.”

The guidance adds: “For our compensation limit to apply to each individual account, you’d need to hold money with different banks that don’t share a licence.”

Website users can access the official FSCS Bank & savings protection checker to check their money is protected.

The tool enables them to add the accounts – and it’s possible to add more than one for each bank, building society or credit union.

They can then check how much of the money is protected.

It will also state how much money is at risk, if any, as well as where it’s at risk.

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