Savings Explained
Regulation
Financial
Services Compensation Scheme
UK savings providers are regulated by the Financial Services Authority (FSA) and
any money you deposit with them (with the exception of offshore accounts) is protected
by the Financial Services Compensation Scheme (FSCS).
The FSCS offers protection in the event of a financial institution going bust. Under
the terms of the FSCS, the first £50,000 of an individual’s savings is fully protected.
If an account is in joint names, £100,000 is 100% guaranteed.
However, this applies per institution and not per account, so if you had two
savings accounts with the same provider, you would still only be protected up to
a limit of £50,000. If you have a large amount in savings it is therefore worth
spreading your money between different institutions. Beware though, some institutions
have the same parent company. For example Halifax, Bank of Scotland, Birmingham
Midshires, The AA, Saga and Intelligent Finance are all part of the HBOS group and
if you had a Halifax savings account and a AA savings account, only £50,000 would
be protected by the FSCS.
Click here
for more information about the protection offered by the FSCS.
Banking
Code
The first £50,000 of an individual’s savings is fully protected. If an account is
in joint names, £100,000 is 100% guaranteed
Most banks and building societies are signed up to the Banking Code. This is a code of conduct relating
to the way financial institutions treat their customers.
Under the terms of the Banking Code, banks and building societies must inform customers
when they change the interest rates on their accounts. However, they only have to
notify customers individually if the margin between the savings rate and the Bank
rate widens by more than 0.5 percentage points within any 12-month period.
Customers must also be notified personally if the margin widens by 0.26 points or
more following a single Bank rate increase or decrease. Any less, and the changes
need only be displayed in branches, newspapers and on the provider’s website.
Institutions are also under no obligation for them to inform customers about new
higher-paying accounts. You should therefore keep a close eye on your own rate,
as well as regularly checking what else is available to avoid missing out.
Institutions are also under no obligation to inform customers about new higher-paying
accounts. You should therefore keep a close eye on your own rate, as well as regularly
checking what else is available to avoid missing out
If you want to open a new account, or make a withdrawal from a branch, you will
have to provide proof of your identity. This is to prevent criminals using savings
accounts for money laundering purposes and to stop other types of fraud.
