Saturday, July 5, 2008
Nice little gotcha hidden in the government’s largess to savers
n addition to lifting the maximum compensation payment from its current level of 100 per cent of the first £35,000 per person lost to £50,000 per person, the Treasury proposes to discount any debts individuals may have to failed institutions when calculating compensation. At present, mortgages and other loans outstanding can be taken into account to offset compensation paid for deposits lost. So if you owe the bank more than you have in savings with it, you are not entitled to any compensation. Fair enough, so don't save with the bank you have a mortgage with is the message. Otherwise they can basically eat up your savings to pay off as much of the mortgage as they can when *they* go bust, even if you are making your payments. Nice.