dances with sheeple Posted January 23, 2014 Share Posted January 23, 2014 Have to say, in the event of a large institution going Tango Uniform, I would not like to be waiting to see when the FSCS is gonna give me my money back. It could take ages, and in that time, who knows what might happen? In the USA the FDIC has $33Bn to cover $11,000 Bn (i.e. $11 Tr) of deposits. http://www.bankregdata.com/allDP.asp http://www.bloomberg...09-deficit.html I imagine we'd be printing straight away to cover anything like a big failure. Oh, but wait.. bail-in anyone? In all the scenarios it is the well off and rich that have the most to lose, hence the reason they "saved" the system this time around? Quote Link to comment Share on other sites More sharing options...
Ah-so Posted January 23, 2014 Share Posted January 23, 2014 Have to say, in the event of a large institution going Tango Uniform, I would not like to be waiting to see when the FSCS is gonna give me my money back. It could take ages, and in that time, who knows what might happen? In the USA the FDIC has $33Bn to cover $11,000 Bn (i.e. $11 Tr) of deposits. http://www.bankregdata.com/allDP.asp http://www.bloomberg.com/news/2013-04-11/fdic-deposit-insurance-fund-hits-33-billion-after-2009-deficit.html I imagine we'd be printing straight away to cover anything like a big failure. Oh, but wait.. bail-in anyone? It should happen in a week. There is no reason for it not to. Other than a massive IT failure, perhaps. The FDIC resolves banks almost weekly. People get their money straight away. Quote Link to comment Share on other sites More sharing options...
Ah-so Posted January 23, 2014 Share Posted January 23, 2014 So if the sheeple don`t have much money and are safe, and the smarter money knows to keep within limits and/or get some out of the system, who`s money exactly would be involved in a "bail in"? Bondholders and long term deposit holders who have accepted higher interest for higher risk. Quote Link to comment Share on other sites More sharing options...
Ah-so Posted January 23, 2014 Share Posted January 23, 2014 It's true-what the FSCS are now saying is that I can make a claim for compensation- which is different from having a guarantee- so the wording is more accurate- that's why it worries me. If, as you suggest- the over riding consideration is to prevent a bank run then a guarantee is what you need to be offering- not the chance to put in a claim for compensation. I agree that it's hard to imagine a scenario where the FSCS limit would be overidden, but then it was hard to imagine a scenario in which the banks would be bailed out by the government- until it happened. My feeling is that the change of lexicon is contingent- in place for the sake of completeness and the remote possibility that the FSCS limit may have to be sacrificed for the greater good. It will be marginally less difficult to justify a compensation scheme that falls short than a guarantee that fails. If I borrow a mug from you I cannot guarantee that it will not get broken. I can promise to compensate you with an identical one. The 'C' in FSCS stands for compensation and has been called that since it was founded. Quote Link to comment Share on other sites More sharing options...
Dames Posted January 23, 2014 Share Posted January 23, 2014 Had a 'Twadvert' today about FSCS, spooky. Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted January 23, 2014 Share Posted January 23, 2014 Bondholders and long term deposit holders who have accepted higher interest for higher risk. So the notion that HPC`ers who have significant STR funds will somehow get their money "taken", is just the raving fantasy of people who probably paid too much for their house? Quote Link to comment Share on other sites More sharing options...
wonderpup Posted January 23, 2014 Author Share Posted January 23, 2014 (edited) If I borrow a mug from you I cannot guarantee that it will not get broken. I can promise to compensate you with an identical one.The 'C' in FSCS stands for compensation and has been called that since it was founded. Is that a guarantee- or just a promise that I can put in a claim? Semantic pedantry? Probably- but a pedantry the FSCS seem to feel worth engaging in- why else take the trouble to re brand their deposit guarantee scheme as a compensation scheme? All I can say is that in 2010 I had a deposit guarantee- in 2014 I have the assurance I can make a claim for compensation- are these identical twins or are there subtle genetic differences between them? As I pointed out- a PPI claim shark who offered a guaranteed outcome for my compensation claim would probably be in breach of Ministry of justice rules- so should the MOJ be investigating the FSCS- who seem to be propagating the idea that their claims procedure offers just such a guaranteed outcome?-( while carefully avoiding the use of the word 'guarantee' of course.) Edited January 23, 2014 by wonderpup Quote Link to comment Share on other sites More sharing options...
Ah-so Posted January 23, 2014 Share Posted January 23, 2014 So the notion that HPC`ers who have significant STR funds will somehow get their money "taken", is just the raving fantasy of people who probably paid too much for their house? If you have over 85k with the bank, you are at risk. Otherwise it is a paranoid fantasy. In the UK at least where we can print the money. The attempted tax grab in Cyprus shows that in countries without the ability to print the risks are greater. However that failed for a good reason - it was politically impossible. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted January 23, 2014 Share Posted January 23, 2014 If you have over 85k with the bank, you are at risk. Otherwise it is a paranoid fantasy. In the UK at least where we can print the money. The attempted tax grab in Cyprus shows that in countries without the ability to print the risks are greater. However that failed for a good reason - it was politically impossible. Correct. The last thing TPTB want is another Northern Rock on their hands while everybody else stops spending altogether and starts hoarding cash at home. Quote Link to comment Share on other sites More sharing options...
DarkHorseWaits-NoMore Posted January 23, 2014 Share Posted January 23, 2014 The FSCS 'compensation' scheme is limited to 85k bank deposit, has it ever been revised? Eventually it will become worthless, more so if there's an inflation event. Quote Link to comment Share on other sites More sharing options...
billybong Posted January 23, 2014 Share Posted January 23, 2014 (edited) Does a Guarantee by the UK financial sector hold more value than the word Compensation? A lot of pension savers in some UK pension schemes would think not as some pension schemes had "Guaranteed" returns in their contracts but when it came to it the word Guarantee proved to be worthless. It turned out that in the UK financial sector the word Guarantee actually Guaranteed nothing. Equitable Life being one example. Edited January 23, 2014 by billybong Quote Link to comment Share on other sites More sharing options...
Ah-so Posted January 24, 2014 Share Posted January 24, 2014 The FSCS 'compensation' scheme is limited to 85k bank deposit, has it ever been revised? Eventually it will become worthless, more so if there's an inflation event. In answer to your question, yes it has. It was only £50k at the time of Northern Rock. Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted January 24, 2014 Share Posted January 24, 2014 Does a Guarantee by the UK financial sector hold more value than the word Compensation? A lot of pension savers in some UK pension schemes would think not as some pension schemes had "Guaranteed" returns in their contracts but when it came to it the word Guarantee proved to be worthless. It turned out that in the UK financial sector the word Guarantee actually Guaranteed nothing. Equitable Life being one example. Until a judge decides no one can really answer. Quote Link to comment Share on other sites More sharing options...
fancyusername Posted January 24, 2014 Share Posted January 24, 2014 Interesting- I didn't spot that in their news section. So they were using the term 'Guarantee' in their 2010 announcement- but have shifted to the term 'compensation' more recently. This does suggest to me that they are attempting to create a degree of wiggle room. Why that is I have no idea. I have decided to move my money out of Nat West as a direct result of them writing to tell me how safe it is - probably not the intended outcome. But I am mindful that there is an election coming up and Osborne seems to be capable of doing just about anything to win- I don't want to be a victim of some harebrained scheme to sell off Nat West with some kind of depositor funded debt reduction gimmick thrown in to attract buyers. Sounds unlikely I know- but so did the idea of a Tory government using taxpayer money to fund people's mortgage deposits. The more general observation here is that all this focus on increasing public awareness of a scheme that is supposedly automatic and at least-until recently- 'guaranteed' strongly suggests a desire to engineer a scenario in which any future bail in can be defended on the grounds of 'well- we did make you aware of the limits- so if you lost out it's your own fault'. After all- the bank knows how much of my money they hold- so why waste the time and resources to tell 98% of the population that the money they thought was 100% secure is in fact 100% secure? I'd say that whilst it's always good to be cautious, Nat West would be a safer option than many other banks because of the size of the government's stake in it. Quite simply the government will have to underpin the RBS group and its depositors until it can offload the shares. The key thing obviously is to have no more than 85k with the entire RBS group as anything over would go. Bear in mind that Coutts and Ulster Bank for example are also part of the RBS group. I'd be very wary of having money in say Santander - I know they say the UK branch is independent of its Spanish owner, but I'd be wary of European based banks. If push comes to shove the UK government can and will print money - much more difficult in Europe as we saw in Cyprus. Quote Link to comment Share on other sites More sharing options...
Ah-so Posted January 24, 2014 Share Posted January 24, 2014 I'd say that whilst it's always good to be cautious, Nat West would be a safer option than many other banks because of the size of the government's stake in it. Quite simply the government will have to underpin the RBS group and its depositors until it can offload the shares. The key thing obviously is to have no more than 85k with the entire RBS group as anything over would go. Bear in mind that Coutts and Ulster Bank for example are also part of the RBS group. I'd be very wary of having money in say Santander - I know they say the UK branch is independent of its Spanish owner, but I'd be wary of European based banks. If push comes to shove the UK government can and will print money - much more difficult in Europe as we saw in Cyprus. Santander in the UK is a separate subsidiary with its own financial resources. You get the same protection as at any UK bank. Quote Link to comment Share on other sites More sharing options...
zugzwang Posted January 24, 2014 Share Posted January 24, 2014 The FSCS 'compensation' scheme is limited to 85k bank deposit, has it ever been revised? Eventually it will become worthless, more so if there's an inflation event. If you're worried about an imminent inflation event why are you holding cash at all? Quote Link to comment Share on other sites More sharing options...
DarkHorseWaits-NoMore Posted January 31, 2014 Share Posted January 31, 2014 If you're worried about an imminent inflation event why are you holding cash at all? Good point, sadly I spent all the cash just recently, now the bank (tax payer ) has the worry. Previously glad that I stayed in cash for the duration, as any panic into paper instruments for Precious Metals would have cost dearly and more so with physical (over the past couple of years). Just highlighting that the 85k compensation' scheme value has been left to erode for many years, worth ~25% less than at the time of Northern Rock. Quote Link to comment Share on other sites More sharing options...
Liquid Goldfish Posted January 31, 2014 Share Posted January 31, 2014 Just highlighting that the 85k compensation' scheme value has been left to erode for many years, worth ~25% less than at the time of Northern Rock. At the time of Northern Rock it was only £35K. Quote Link to comment Share on other sites More sharing options...
mrtickle Posted January 31, 2014 Share Posted January 31, 2014 At the time of Northern Rock it was only £35K. Indeed, and IIRC you didn't get all of that money either! Wasn't it something like * all of the first nK * 90% of the next money between nK and 35K * nothing above 35K ? Quote Link to comment Share on other sites More sharing options...
Ah-so Posted February 1, 2014 Share Posted February 1, 2014 Indeed, and IIRC you didn't get all of that money either! Wasn't it something like * all of the first nK * 90% of the next money between nK and 35K * nothing above 35K ? I think that the 90% thing was removed in about 2004. It the became all of 35k, before jumping up to 50k and then 85k. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 1, 2014 Share Posted February 1, 2014 I'd say that whilst it's always good to be cautious, Nat West would be a safer option than many other banks because of the size of the government's stake in it. Quite simply the government will have to underpin the RBS group and its depositors until it can offload the shares. The key thing obviously is to have no more than 85k with the entire RBS group as anything over would go. Bear in mind that Coutts and Ulster Bank for example are also part of the RBS group. I'd be very wary of having money in say Santander - I know they say the UK branch is independent of its Spanish owner, but I'd be wary of European based banks. If push comes to shove the UK government can and will print money - much more difficult in Europe as we saw in Cyprus. Illustrates the stupidity perfectly The savers in RBS, are protected by their own taxes in the event of a bust of the banks. This hows that there is only one source of wealth...that is the people....who pay for everything, cover all the credit and provide for the poor and sick. There is nobody else. Bankers and Politicians however think spending green pieces of paper can provide for all....it could if the pieces of paper actually represented some wealth. Quote Link to comment Share on other sites More sharing options...
DarkHorseWaits-NoMore Posted February 1, 2014 Share Posted February 1, 2014 I think that the 90% thing was removed in about 2004. It the became all of 35k, before jumping up to 50k and then 85k. Thanks guys n girls, it's annoying being wrong but I guess it happens LOL. New deposit guarantee limit to be £85,000, 17th December 2010 The Financial Services Authority (FSA) has confirmed that the new deposit compensation limit will increase from £50,000 to £85,000 per person, per authorised firm, from 31 December 2010. Quote Link to comment Share on other sites More sharing options...
BarnetBear Posted February 2, 2014 Share Posted February 2, 2014 I think that the 90% thing was removed in about 2004. It the became all of 35k, before jumping up to 50k and then 85k. I remember the 90% thing being in place when I sold to rent in 2007. Northern Rock had a 100% deposit guarantee, underwritten by the Treasury, in place from 17-9-07 to 24-5-10. FSCS retail deposit compensation amounts and dates below, taken from FSCS site here. For claims against firms declared in default before 1 October 2007, the maximum level of compensation is £31,700 (100% of the first £2,000 and 90% of the next £33,000). For claims against firms declared in default between 1 October 2007 and 6 October 2008, the maximum level of compensation is £35,000 (100% of the first £35,000). For claims against firms declared in default between 7 October 2008 and 29 June 2009, the maximum level of compensation is £50,000 (100% of the first £50,000). For claims against firms declared in default between 30 June 2009 to 30 December 2010, the deposit compensation limit is the higher of £50,000 or €50,000.* In the event of default, the Euro amount will be calculated by reference to the currency exchange rate on the day of default. From 31 December 2010, the deposit compensation limit is £85,000. Quote Link to comment Share on other sites More sharing options...
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