Just in case you weren't aware...

[mrph]

There's been a lot of talk about the FSCS and the government's promise to protect savings if any UK banks collapse. Personally, I'm hoping that this is all rather hypothetical.

However, if you're one of the people who's seriously concerned about such things, there are a couple of clauses you might want to be aware of - specifically, amounts owed to the bank are considered before any compensation is paid.

This seems quite sensible for credit cards, loans etc. However, it also means that if you have savings and mortgage with the same bank, any savings will be counted against your mortgage debt, not simply returned under the guarantee...

Comments

[deliberateblank.livejournal.com]

I was aware of this, though it doesn't apply to me. I always wondered what it actually *meant*.

Ok, so you have some savings and the bank disappears. You are compensated up to the limit, the rest, should it exist, disappears. Poof!

You have some debt which is less than the savings, you are compensated up to the difference - or the compensation limit if that is less, the rest again disappears. Poof! Presumably your debt is wiped out by this operation, either way, right?

You have some debt which is greater than the savings. What happens to the difference? It disappears, poof, again? I don't believe that for a single second. Someone is going to buy up that debt and come after it. Please tell me if I'm wrong but I just can't ever see any such debt being written off in *favour* of the consumer.

So who gets it? And how is this two-facedness justified?

[dakiara.livejournal.com]

As far as I understand it they add savings to debt, yes. If the result is positive, this would be covered under the savings guarantee (up to the limit). If negative, the debt would be sold on and subject to the new terms of the purchaser of that debt.

Nationwide is at least still mutual so doesn't depend directly on the stockmarket.

In the middle of moving some savings here - I had Everything with one of the more wobbly banks (and still do until the end of next week) - not so bothered about savings being used to offset some of the mortgage, but being unable to access Anything to buy food with if the bank falls over made me a wee bit nervous.