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Deposit Protection Reduced

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The PRA is required by the European Deposit Guarantee Schemes Directive to recalculate the FSCS deposit protection limit every five years and set it at a sterling amount equivalent to EUR 100,000

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Just recieved email from Nat West staing that the protection has been reduced from £85,000 to £75,000. WTF?

Surely this type of thing should be inflationery? I mean house prices go up all the time. But no, it's gone down. I guess they are preparing for the bail-ins.

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Just recieved email from Nat West staing that the protection has been reduced from £85,000 to £75,000. WTF?

Surely this type of thing should be inflationery? I mean house prices go up all the time. But no, it's gone down. I guess they are preparing for the bail-ins.

Has been reduced, or will be on 1st January?

http://www.fscs.org.uk/what-we-cover/eligibility-rules/compensation-limits/

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I wonder if there isn't an element of trying to flush cash out of savings and into the great global economic casino?

Banks seem to get most of the funding from the Central Bank these days.....

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Bank of England, Working paper No. 529, May 2015:

"Depositors who deposit their money with a bank are therefore no longer the legal owners of this money, with the bank holding it in trust for them,

but rather they are one of the general creditors of the bank"

Just saying :P

Edited by Assume The Opposite

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Who actually pays out if a bank goes under? I couldn't work out from the FSCS website whether it is covered by other banks or just tax payers.

Much as I am fond of my limited savings, I have heard it argued that schemes like this let savers avoid doing due diligence before handing over their cash to banks.

Without such schemes might fewer savers bank with institutions who are over exposed to BTL risk?

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Who actually pays out if a bank goes under? I couldn't work out from the FSCS website whether it is covered by other banks or just tax payers.

Much as I am fond of my limited savings, I have heard it argued that schemes like this let savers avoid doing due diligence before handing over their cash to banks.

Without such schemes might fewer savers bank with institutions who are over exposed to BTL risk?

AFAIK the FSCS is supposed to be funded by its members (the financial organisations that benefit from the scheme). :D:D:D:D:D Though clearly it would ultimately be the taxpayer on the hook. I would expect things to move more towards 'bail ins' in the future though.

No way would the FSCS even have been able to cover the liabilities of Northern Rock when it was about to go bust, never mind a really major bank (or three), hence the government bailout.

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I did peek around the FSCS a while ago and it appeared that their assets probably wouldn't cover much in a crisis. Maybe one bank on it's own but that's it. I only looked quickly so don't quote me on anything.

Edited by Assume The Opposite

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So - can someone please explain how some people on here who are sitting on huge cash piles expect that cash to survive the mother of all HPC's so that they can then snap up a house in the fire-sale?

Unless you have it in physical for (cash/gold/gems) is it not all virtual, as the Greek population recently found out?

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So - can someone please explain how some people on here who are sitting on huge cash piles expect that cash to survive the mother of all HPC's so that they can then snap up a house in the fire-sale?

Unless you have it in physical for (cash/gold/gems) is it not all virtual, as the Greek population recently found out?

I expect that the government will ensure that deposits under the £85K (soon to be £75K) FCS guarantee limit will be repaid, regardless of the money in the scheme, even if they have to print the money to do it. There is never certainty in life, but that is what I expect will happen.

I am not waiting to "snap up a house in a fire-sale", I am waiting for this debt fuelled madness to end and for value to return to the market.

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So - can someone please explain how some people on here who are sitting on huge cash piles expect that cash to survive the mother of all HPC's so that they can then snap up a house in the fire-sale?

Unless you have it in physical for (cash/gold/gems) is it not all virtual, as the Greek population recently found out?

Shares in strategically important non-monopoly companies are probably the safest bet. You own them, and a trustworthy equity market is probably the most important institution to be protected in times of crisis. Without it, everything collapses.

If you don't want the exposure to market moves, you could hedge them, with an equivalent short CFD / futures position.

Edited by ManVsRecession

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As I lack the knowledge and confidence to even begin to look at investing elsewhere, all my circa £63k savings is protected under the FSCS scheme.

If the FSCS can't cover it, the government does.

To cover myself as much as possible, I have it in writing from the FSCS is 100% safe from a bank implosion. I also have it in writing from the BoE that deposits are safe from bail-in action.

BoE Quote from email:

"With respect to your question, the Financial Services (Banking Reform) Act 2013 provides for a bail-in stabilisation option. Bail-in was recommended by the Financial Stability Board and endorsed by the G20. Bail-in improves the resolution options available for large globally systemic banks and involves shareholders of a failing institution being divested of their shares and creditors of the institution having claims cancelled or reduced to the extent necessary to restore the institution to financial viability. These shares then can be transferred to affected creditors to provide compensation. Alternatively, if a suitable purchaser is identified, the shares can be transferred to them. Creditors would instead receive compensation in some other form. This tool will ensure that shareholders and creditors meet the costs of the failure and not the taxpayer. Bail-in may apply to banks, building societies, investment firms, and certain banking group companies but not to insurance companies. It is important to note that protected deposits– i.e. the deposit compensation limit £85,000 presently reducing to £75,000 are liabilities which are excluded from the scope of bail-in."

FSCS conversation started by a standard quote from their website pasted in to their reply, so I asked:

"You state that the FSCS 'can' provide the cover. 'Will' the FSCS provide the cover when called upon to protect diligent savers?

Plenty of bail out options exist for those who choose risk as the main part of their financial behaviour. Please confirm by reply that as a debt free saver my money IS 100% safe and WILL be paid back to me in the event of the UK regulated financial institution which holds my circa £63000 collapsing."

To which they responded:

"Yes I confirm that FSCS will provide the cover when called upon, if the money is a bank deposit and that firm is authorised and regulated by the PRA and the FCA."

Can't do much else.

Edited by Noallegiance

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I hope you are right - but 'all your money is protected upto 75k' is not IMHO incompatible with 'and to ensure that it stays that way, we're only going to let you withdraw 40 quid a day'...

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Sell one normal commonal garden home...how many bank accounts do you need to open to spread it around in?....bit of a joke, not that different to our financial system if you ask me.

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#Noallegiance.

Thanks for that. Much as I had thought and reassuring, particularly the bit about bail-ins from the BoE, which I suspected was the case but had not previously seen in writing.

Edited by Bruce Banner

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No worries. Hopefully it can at least settle some mild nerves for some folk.

I realise it could all change or be lies. But I'll deal with that if/when. Right now, there it is for all to see.

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The thing that spooks me most is all the radio adverts for the scheme. If someone sat next to you on the bus and out of nowhere said 'I am not going to hurt you' every five minutes would you feel more or less reassured?

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Sell one normal commonal garden home...how many bank accounts do you need to open to spread it around in?....bit of a joke, not that different to our financial system if you ask me.

£150K per couple, so 7 banks would cover £1M and there's also NS&I.

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The thing that spooks me most is all the radio adverts for the scheme. If someone sat next to you on the bus and out of nowhere said 'I am not going to hurt you' every five minutes would you feel more or less reassured?

Understand the sentiment but not quite the same.

This is more "We see what may worry you on this global economic bus, but I'll protect you at no cost up to a pre-ordained limit".

Whatever you read into it, I gotta take it.

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£150K per couple, so 7 banks would cover £1M and there's also NS&I.

Yeah but,......to get money out of ns&I...it has to pass through a regular bank account, I thought?....not many people hold joint accounts these days,just saying.

Edit to say.....all this is very confusing...... It should be made more clearly how people are protected, what they should do, and how much and how long it will take to get their money out......I talk for many that are confused with what is still very confusing.

Edited by winkie

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Yeah but,......to get money out of ns&I...it has to pass through a regular bank account, I thought?....not many people hold joint accounts these days,just saying.

Plenty of banking licenses.... http://www.bankofengland.co.uk/statistics/Pages/reporters/institutions/default.aspx

It doesn't have to be a joint account to get the £150K. Separate accounts in the same bank will do just as well.

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