Santander Esaver (Issue 4)

[anonguest]

I have noted the eSaver (Issue 4) instant access savings account from Santander (yeah yeah I know Santander, etc etc) - paying over 3%.

NOT because I am uber paranoid about catastrophic loss occuring (although some here would no doubt say in the current circumstances some paranoia is justified?) I just want to double check that this particular product IS covered by the FSCS scheme (limit £85K). There does not appeasr to any mention of it on the Santander website that I can yet see.

On another point.....IF these types of savings accounts are genuinely instant access and without penalty then they are in effect pretty much the same as a current account - minus the chequebook (who uses those anymore?) and the debit card. OK there are other services one can use on their current account, such as standing orders, direct debits, etc - and these will 'cost' something to administer. Nevertheless, why cant they all offer similar such rates on regular current accounts (albeit slightly lower to account for costs of maintaining the account)? It will still be better than the rates typically offered on most current accounts.

[We’re all in this together]

I have noted the eSaver (Issue 4) instant access savings account from Santander (yeah yeah I know Santander, etc etc) - paying over 3%.

NOT because I am uber paranoid about catastrophic loss occuring (although some here would no doubt say in the current circumstances some paranoia is justified?) I just want to double check that this particular product IS covered by the FSCS scheme (limit £85K). There does not appeasr to any mention of it on the Santander website that I can yet see.

On another point.....IF these types of savings accounts are genuinely instant access and without penalty then they are in effect pretty much the same as a current account - minus the chequebook (who uses those anymore?) and the debit card. OK there are other services one can use on their current account, such as standing orders, direct debits, etc - and these will 'cost' something to administer. Nevertheless, why cant they all offer similar such rates on regular current accounts (albeit slightly lower to account for costs of maintaining the account)? It will still be better than the rates typically offered on most current accounts.

I think your concerns are valid. There are interesting semantic differences between the previous and present governments' stance:

In 2008 Chief Secretary to the Treasury Yvette Cooper said, in a statement responding to persistent questioning by Martin Lewis:

"In the unlikely event a major bank became insolvent the Government would ensure that the FSCS has access to enough immediate funding to pay out depositors in a timely manner, through borrowing from the Government or Bank of England. The FSCS could then levy up to £4 billion per year from the financial services industry to cover the costs of compensation"

So government policy was to underwrite FSCS "obligations" (the FSCS website states: "If a firm becomes insolvent or ceases trading we may be able to pay compensation to its customers." (my italics).

Question is, does Ms Cooper's statement place the current government under the same obligation? And if so, do you think they would honour it?

Update: I wrote to Yvette Cooper’s successor, Danny Alexander, asking if the coalition was bound by her guarantee. I got the following reply a couple of days ago:

“The FSCS was created as a compensation fund of last resort for customers of authorised financial services firms that become insolvent or cease trading. The FSCS is independent from the government and the financial industry, and was set up on 1 December 2001 under the Financial Services and Markets Act 2000.

“The FSCS currently guarantees bank deposits up to £85,000. Further details on compensation can be found on the FSCS website via the following web link: http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/

“If, in the event of a bank failure, the FSCS did not have sufficient funds to pay out depositors, the Banking Act would allow the Government to lend funds to the FSCS over a number of years. (again my italics)

“The Financial Services Authority is responsible for the funding arrangements for the FSCS, and consulted with the industry before introducing the current funding rules in April 2008. These rules specify the levies that may be collected from firms in the financial industry. The FSCS is then responsible for setting levies on firms within these rules.

“There is a limit to the amount the FSCS can levy on the financial services industry. For depositor compensation, the limit is set at £1.84bn per year. Further information on levy limits can be found via the following web link: http://fsahandbook.info/FSA/html/handbook/FEES/6/Annex2”

[Tiger Woods?]

I think your concerns are valid. There are interesting semantic differences between the previous and present governments' stance:

In 2008 Chief Secretary to the Treasury Yvette Cooper said, in a statement responding to persistent questioning by Martin Lewis:

"In the unlikely event a major bank became insolvent the Government would ensure that the FSCS has access to enough immediate funding to pay out depositors in a timely manner, through borrowing from the Government or Bank of England. The FSCS could then levy up to £4 billion per year from the financial services industry to cover the costs of compensation"

So government policy was to underwrite FSCS "obligations" (the FSCS website states: "If a firm becomes insolvent or ceases trading we may be able to pay compensation to its customers." (my italics).

Question is, does Ms Cooper's statement place the current government under the same obligation? And if so, do you think they would honour it?

Update: I wrote to Yvette Cooper’s successor, Danny Alexander, asking if the coalition was bound by her guarantee. I got the following reply a couple of days ago:

“The FSCS was created as a compensation fund of last resort for customers of authorised financial services firms that become insolvent or cease trading. The FSCS is independent from the government and the financial industry, and was set up on 1 December 2001 under the Financial Services and Markets Act 2000.

“The FSCS currently guarantees bank deposits up to £85,000. Further details on compensation can be found on the FSCS website via the following web link: http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/

“If, in the event of a bank failure, the FSCS did not have sufficient funds to pay out depositors, the Banking Act would allow the Government to lend funds to the FSCS over a number of years. (again my italics)

“The Financial Services Authority is responsible for the funding arrangements for the FSCS, and consulted with the industry before introducing the current funding rules in April 2008. These rules specify the levies that may be collected from firms in the financial industry. The FSCS is then responsible for setting levies on firms within these rules.

“There is a limit to the amount the FSCS can levy on the financial services industry. For depositor compensation, the limit is set at £1.84bn per year. Further information on levy limits can be found via the following web link: http://fsahandbook.info/FSA/html/handbook/FEES/6/Annex2”

Oops. That doesn't sound good does it now? Having said that, if they didn't pay reasonable compensation by capping compensation at 1.84 billion a year upfront after bailing out the banks for huge sums, I suspect the spikes on Tower Bridge might come back into use. Thinking about it, it'd be worth every lost penny to see.

[Bruce Banner]

I opened one in November last year, must remember to move the money in a year when the interest drops to 0.5% or something like that.

I doubt that HMG would, in the event of a problem, let UK savers with up to the FSCS £85K limit, lose their money. My decision though and others may disagree.

Type FSCS into Santander's search box on their website and it links to lots about the FSCS guarantee.

[anonguest]

I opened one in November last year, must remember to move the money in a year when the interest drops to 0.5% or something like that.

I doubt that HMG would, in the event of a problem, let UK savers with up to the FSCS £85K limit, lose their money. My decision though and others may disagree.

Type FSCS into Santander's search box on their website and it links to lots about the FSCS guarantee.

Ta!

[HouseDog]

3.13% is available at: http://www.westbrom.co.uk/directbonusaccount3/

Although you only get 4 penalty free withdrawals and must invest a minimum of 10K

[sleepless]

FSCS guarantee is as good as another bank.

I can recommend this account as now you can transfer upto £100,000 to another account within hours.

I have my main account with Nationwide (reasonable od rates), a current account with Santander, liked to the savings account paying 3%.

I transfer large sums of money between accounts within hours.

Note that Santander OD rates are total rip-off and you must put at least £500/month into account (transfer it back out immediately if necessary).

Also Santander are aware of their recent bad customer relations are are trying to improve.

[inflating]

FSCS guarantee is as good as another bank.

I can recommend this account as now you can transfer upto £100,000 to another account within hours.

I have my main account with Nationwide (reasonable od rates), a current account with Santander, liked to the savings account paying 3%.

I transfer large sums of money between accounts within hours.

Note that Santander OD rates are total rip-off and you must put at least £500/month into account (transfer it back out immediately if necessary).

Also Santander are aware of their recent bad customer relations are are trying to improve.

I had a good experience with them by post when I had a problem, but on the phone beforehand there were issues of staff not being quite with it. Once I wrote to them however, all was sorted, absolutely fine

[Bruce Banner]

I had a good experience with them by post when I had a problem, but on the phone beforehand there were issues of staff not being quite with it. Once I wrote to them however, all was sorted, absolutely fine

My experience opening an account was not good, inefficient support staff not doing what they were supposed to meant it took weeks to open.

They ended up paying me a couple of hundred quid by way of an apology and compensation for loss of interest.

They said they have got a new CEO who is not happy with their customer service and is in the process of rectifying the situation, so it should be getting better.

[scrappycocco]

the whole private banking industry is a ponzi scheme anyway, its going to end sooner or later (most probably later because the people are keep in the dark about the banking business) so why not put your cash in a bank that pays the highest rate backed up by some stupid compensation scheme, its the best we've got on the high street i reckon..........if the banks do go tits up i reckon i won't be the only person camping outside a bankers/regulators/politicians/gordan browns mansion....

[24gray24]

I wouldn't put too much faith in a government guarantee if I were you. They can change it to zero overnight if they want to.

What are the chances that Santander would be the only bank going bust in that week?

If the answer is zero, and several banks fall in quick succession, the government won't pay you back by return, you can be sure of that.

Normally, I would expect small amounts to be paid first and quickly, then for larger amounts a long wait. Years.

However, since this is a Tory government, they will want to pay the largest depositors first, ...

If it comes to the crunch, your only good strategy is to get your money out first, when the first domino falls, several days before it reaches (and engulfs) Santander.

[inflating]

Issue 5 paying less

http://www.santander.co.uk/csgs/Satellite?appID=abbey.internet.Abbeycom&cid=1237848019094&leng=en_GB&pagename=Abbeycom%2FPage%2FWC_ACOM_TemplateW2