"Dear Skywalker, Thanks for your interest and concern but I have minimised my investment in the PO Online Savings Account already."

In that case you should be asking the politicians, or the lawyers acting for Brussels. Their silence is not so much deafening as they actually don't know. As anybody with a brain will tell you, the EU is badly conceived, badly led, and frankly if it was a Company would be in serious difficulty (oops, it already is).

Since you have already minimised your exposure to a safe level, I don't think there are any EU (non elected) pencil necks who will answer your pertinent questions.

Wrong forum my friend.

Dear Skywalker, Thanks for your interest and concern but I have minimised my investment in the PO Online Savings Account already. However you will see from my e-mail to HM Treasury that the £85,000 Protection (not £50,000) being promised has no substance due to the statement in the PO Deposit Protection Leaflet as follows "....as at 18 November 2010, this figure is STILL SUBJECT TO CONSULTATION AND MAY CHANGE AS A RESULT..." This can only be construed as a clause which undermines the figure of £85,000. However my main concern lies within your reference to the fact that it is always difficult to foresee the future (Exchange Rate fluctuations). You are thusly inferring that the £85,000 is NOT guaranteed which is one of my points. You are of course correct and no "Mystic Megs" have ever succeeded in forecasting exchange rates or for that matter the effects of collapse of an actual currency. I therefore ask again what protection is being offered if the Euro collapses and there is NO Euro currency to trade and against which any figure of a Deposit Guarantee may be restructured. (Please see para C, etc., of the PO Deposit Protection Leaflet details of which I have already quoted earlier.
Why cannot an unequivocal Deposit Guarantee be given by the British Government to the effect that it will guarantee to pay compensation up to £85,000 to an eligible Depositor irrespective of fluctuating Euro Exchange rates OR the collapse of the Euro currency rendering it as a no longer tradeable entity. This is not too difficult a request for an effective, valid Deposit Guarantee especially in the light of the daily doings at Brussels, Davos, etc. Why I must ask has none of the Authorities I have approached provided any comments whatsoever; to me their silence is worrying indeed as they have not even attempted to support the doubtful contents of the PO Deposit Protection Leaflet. I do not think this matter should be swept under the carpet as it does demand greater clarity as to what precisely is the Depositor's guarantee today and NOT the indecisive provision provided in November 2010. Regards, pedroelingles.

If you are so worried about this, why don't you dilute your holding in the post office account to below £50,000 (for 100% safety) so that the imminent 'restructuring' of the Euro will not effect you?

With exchange rate fluctuation, it is always difficult to foresee the future.

Dear Graeme and to all who may be interested,
The following is a copy of the e-mail I have sent to HM Treasury on 14th January 2012. Has any one with a Post Office Online Savings Account any comments. I have received two acknowledgments to this e-mail both promising a reply but none has been received to date. This fact increases my cause for concern. In fact no replies have been received from the FSA or the FSCS . Has anyone any thoughts please? Regards,, pedroelingles.


E-mail to HM Treasury, 14 January 2012

Dear Sir,
Post Office/Bank of Ireland (UK) PLC - Deposit Protection.

I am concerned about the Deposit Protection offered by the Post Office Online Savings Account I4 which has prompted me to send e-mails to various Authorities requesting clarification and to which I have received no replies. A number of telephone enquiries have also been made to which no informative replies have been given and were totally non-commital.
The "Information" Leaflet PL6350 entitled "Important Information Regarding Deposit Protection" and correct as at November 2010 is currently being issued by the Post Office. A photocopy is attached for your information and I wish to note in brief the following parts of its contents as follows:-
(a) "...the FSCS can pay compensation if a Bank is unable to meet its financial obligations....".
(b) "...with effect from 1 January 2011 the level opf protection provided will increase from £50,000 to the Sterling equivalent of 100,000 Euros.....".
(c) "...Accordingly an eligible depositor will be entitled to claim the equivalent of up to 100,000 Euros...".

However a further paragraph is cross-referenced with and is intended to apply to the conditions referred to at paras (a), (b) and (c) above and it states that:-
"In October 2010 the Financial Services Authority (FSA) proposed that the Sterling equivalent of 100,000Euros would be set at £85,000. As at 18 November 2010, this figure is STILL SUBJECT TO CONSULTATION AND MAY CHANGE AS RESULT".

This paragraph appears to negate the contents of paras (a), (b) and (c) above and brings the contents of Post Office Leaflet PL6350 into doubt as there is clearly no firm existing commitment which offers an unequivocal basis for the calculation of the amount of Deposit Protection which could be claimed in Sterling.

The Exchange Rate of the Euro is highly volatile whilst many observers of the Eurozone problems do strongly express concern that the Euro is in danger of collapse in which case there would be NO EQUIVALENT OF A RATE OF EXCHANGE WHICH COULD BE APPLIED FOR COMPENSATORY PAYMENTS.

Can you please confirm:-
(a) Will the FSCS ON BEHALF OF THE BRITISH GOVERNMENT pay up to £85,000 to depositors in compensation in the event of the collapse of the Euro and, if so would such payments be made promptly as and when an eligible depositor requires?
(b) In view of the current wide fluctuations in the Euro may it be confirmed as to what the Euro/Sterling rate of exchange will be in the event of a Collapse of the Bank of Ireland and/or its subsiduary Bank of Ireland (UK) plc in view of the fact that the product of the rate (£85,000 = 100,000 Euros) agreed in October 2010 was at 18 November 2010 and still is today ... "Still subject to consultation and MAY CHANGE AS A RESULT"....

I would be grateful for an early reply especially in view of swiftly moving events within the Eurozone.
Yours sincerely,

Graema and others interested, I am just confirming that I have e-mailed H.M. Treasury on 14 January and received their acknowledgement of receipt on 17 January. On 16 January I also e-mailed The Financial Services Compensation Authority and The Financial Services Authority Apart from the Treasaury acknowledgement I have as yet received NO responses at all from the FSCS or the FSA. Frankly I find the lack of comment from any of these Authorities is a matter of concern especially as my enquiry deals with the Protection offered to Post Office Savings Accounts in the event of the collapse of the Euro. I shall await a few more days and will inform you of any results which may arrive in due course. Regards, pedroelingles

Graeme,

Many thanks for your advice and I have attempted to access the FSA Library website. However I have had three rebuffs telling me that the page is not available. In fact the Post Office Leaflet was sent to me at the commencement of January 2012 when I newly opened the PO Internet Savings Account. I note also on the Leaflet that their is a Reference "20231 001 01/2011" It also states "Information correct as at November 2010". The following is extracted as direct quotes from this Leaflet:-

(para 3) "...With effect from 1 January 2011, the level of protection provided by the FSCS will increase from £50,000 to the Sterling equivalent of 100,000 Euros* ....." (note the Star)

(para 4) "...Accordingly with effect from 1 January 2011, in respect of deposits, an eligible depositor will be entitled to claim the equivalent of up to 100,000 Euros*. For joint accounts, each account holder....etc.,..etc..." (again please note the Star)

(para 5) "....*In October 2010 the Financial Services Authority (FSA) proposed that the Sterling equivalent of 100,000 Euros would be set at £85,000. As at 18 November 2010, this figure is still subject to consultation and may change as a result ". (again note the Star)

Paras 3 and 4 are both "starred" and are then cross-linked to the "starred" para 5. with its qualifications which would infer that any Rate of Exchange remains unfixed and can change. As you say this could even offer an increase in the Sterling value BUT ONLY IF THE Euro weakens further OR still exists. It seems to me that this is somehow wide open and what I would like to know is what happens in the event that there is no Euro to use to make any calculation. This is my point and my concern has grown due to the utter lack of response to date from those relevant Authorities that I have approached. I would like to see some Authority giving Sterling protection without any reference whatsoever or any tie to the Euro which would then remove any potential anomolies and my concern. Very many thanks for your interest.

I have attempted to "cut & paste" a copy of the Leaflet but I do not seem to be able to get it into your mailbox doubtless due to the lack of my computer expertise. Regards, pedroelingles

Hi pedroe,

It would be great to hear what they have to say, but I think that Post Office leaflet is likely to be an old one - from before FSCS confirmation of the new £85,000 (100,000 euro equivalent) protection limit was announced on the 17 December 2010. It took effect onat midnight on the 31 December 2010. The full announcement can be found here: http://www.fsa.gov.uk/pages/Library/Communication/PR/2010/181.shtml

From the document:

"FSA/PN/181/2010
17 December 2010

The Financial Services Authority (FSA) has today confirmed that the new deposit compensation limit for the United Kingdom will increase from £50,000 to £85,000 per person, per authorised firm, from 31 December 2010.

This is the Sterling equivalent of the €100,000 deposit compensation limit which comes into force in all European Economic Area (EEA) member states at the end of the year.

Further changes coming into effect on 31 December 2010 are:

• Fast payout rules, with a target of a seven day payout for the majority of claimants and the remainder within the required 20 days.
• Gross payout, which protects customers by ring fencing their deposits if they have savings and loans with the same firm. Currently, any outstanding loan or debt would be deducted from any compensation.
• This new pan European requirement replaces the existing UK arrangement which has been in place since 2009, and which allowed for separate compensation cover for customers with deposits in two merging building societies."

Me again: The main thing to remember here is that if the worst happened - and there's nothing to suggest that it would - you would receive the full protection of the FSCS: up to £85,000 - which is equivalent to 100,000 Euros (actually £82,600 so you actually have more protection than the current exchange rate!).

I hope that helps. It would be great to hear other opinions on this, too.

Graeme
Community Manager
graeme.delap@moneysupermarket.com

I have noted Huckster's comment but respectfully draw his attention to the Post Office Leaflet PL6350 entitled "Important Information Regarding Deposit Protection" which relates to the Post Office Online Savings Account I4. It should be noted that the guarantees referred to therein are all qualified by a (*) Clause, This Clause reads: ".. In October 2010 the Financial Services Authority (FSA) proposed that the Sterling equivalent of 100,000 Euros would be set at £85,000. As at 18 November 2010, this figure is still subject to Consultation and may change as a result..." I might ask what is the Exchange Rate Euro/GBP today?? - Certainly different than 14 months ago! Are the "Consultations" still going on and who are the Participants bearing in mind that we are talking here about the extreme difficulties of the Euro as a currency and Sovereign Debt (Ireland). Frankly my deposit is a very long way from even approaching the referred to £85,000 compensatory limit but I am not excited over depositing my meagre funds at an interest rate of less than half of the current Cost of Living and then possibly losing all or part of that Interest to the Eurozone and its more profligate members.

Further I have now sent e-mails to HM Treasury, the Financial Services Compensation Scheme (FSCS) and the Financial Services Authority (FSA). If anyone is interested then I will post any relevant and constructive responses. What do you think Graeme? Regards, pedroelingles

Dear Graeme and Erik, The following updates you on my experiences and information gathered regarding the Post Office Online Savings. I have sent a number of e-mails (and Hasteners) to a various Authorities including the FSCS, etc. None has replied apart from some acknowledgements of receipt and one e-mail from an operator in a Department which I wish not to reveal for obvious reasons. That (written) reply was prompted by my telephone call and it stated that despite attempting to obtain guidance to my question no advice had been forthcoming from supervisory staff and it was therefore not possible to assist me further with my enquiry. I can however offer two verbal results of numerous telephone calls I have made.

Firstly that the Post Office Online Savings Account does offer protection via the FSCS up to the STERLING EQUIVALENT of 100,000 EUROS. This "Equivalent" figure was set at the rate of Exchange in October 2010 (I repeat 2010) when the result was about £85,000; this of course bears no relationship to the current GBP/EURO rate !!!! Further it was confirmed that as matters stood currently the Protection offered remained related to the Euro and its exchange rate irrespective as to whether reference is made to the Bank of Ireland or the Bank of Ireland (UK)plc. It was made clear to me that if the Euro currency were to collapse then any form of Protection in Sterling would be very questionable and losses would likely be sustained by investors as mythical exchange rates would need to be assessed, etc. from the resulting chaos. As far as I am concerned the unreliability and possible collapse of the Euro is quite enough for me to withdraw from any Savings contact with the Post Office in view of the foregoing and the fact that the Savings scheme is being run on behalf of the Post Office by a Bank controlled and operated from within the jurisdiction of the monetary EUROZONE.

Secondly my enquiries have also pursued the question of time delays which exist between clearance of the transfer of funds in or out of the Post Office Online Savings Account. On 01 January 2012 the "Fast Payment Service" was introduced whereby electronic transfers must be conducted in a time factor of from 2 hours up to 24 hours. This "Service" appears to be the result of an European Union Instruction and must operate between members of the Clearing Banks system (at home and abroad). Others can elaborate on this as it is all clearly reported on the Internet. I have been informed, again verbally after much persuasion, that the Post Office was NOT operating in accordance with the "Fast Payment Service" but was continuing with the "3 to 5 Days" old system. The operator to whom I spoke was vague and inferred that the Post Office was not a member of the Clearing Bank system, which to me, would indicate that the Bank of Ireland or the Bank of Ireland (U K) are ignoring the new scheme. However my personal experience since 01 January 2012 is that transfers of funds are taking at least 5 days so the Post Office still has to celebrate the arrival of 2012 and for that matter the 21st Century.

The above two points have prompted me to withdraw from the Post Office Online Savings Account and move to less stressful pastures. However I am going to make one last effort and will approach The Treasury by e-mail later. I shall report the results if any in due course.

Good luck, Pedroelingles.

I have a feeling that if there was a substantial collapse of banks in the Eurozone, that the UK government would quickly put into action contingency measures to protect UK banks. They must have assessed the level of risk to UK bank customers of a Eurozone collapse and have made sure that UK banks can continue. There has already been some movement from Euros into Sterling, as the UK is seen as a bit of a safe haven.

There has been some planning according to reports, where the UK government will try to look after UK citizens living in Europe, as there will be pensioners living in Spain for example who might not be able to access their pensions and some may want to return.

In regard to accessing money held in accounts following a banks collapse, I am not sure there is any guaranteed timescale for the FSCS to refund the money. I suppose it depends on how bad the situation was. The last time there was a problem the government made funds available to banks within hours, so customers could continue withdrawing money.

Hi pedro & erik,

Your posts rang a bell with me as Clare's team here at MoneySupermarket wrote an article about this in October 2010 - which you may find useful: Post Office savers get FSCS protection.

Also the Financial Service Compensation (FSCS) changed its limits in January of 2011 - so that protection is now £85,000 - and across Europe the protection is guaranteed up to 100,000 Euros.

The 'How long will it take to receive a payout' question is really one for the FSA & FSCS. More information can be found here.

You can also check our popular article 'Who owns who' - which details which banking brand is owned by which organisation - useful info for deciding where to 'split' those larger savings sums to make sure you have maximum protection.

Hope that helps! Let us know what you decide to do.

Graeme
Community Manager
graeme.delap@moneysupermarket.com

I too have had the same concerns about Post Office accounts so I move all my saving out of the Post Office some time ago. I only lost a negligible interest rate of 0.2% which was worth it for peace of mind.

Update: 10am - as of 31 Dec 2010 compo was increased to £85000 (100,00- euro) and became covered by the FSA on 31 Oct 2010 so at the time of my Post Office account closure in early 2010 it was not covered by the FSA.

I am concerned about the Protection offered to my Post Office OnLine Savings Account. I understand that the FSA with the British Government guarantee deposits up to a maximum of £50000. This is fine and provides the necessary protection against the possible failure of the Bank of Ireland who operates for the Post Office through its British Registered subsiduary. My concern now is what happens in the event of the possible failure of the EURO currency itself. Ireland is in the Eurozone as is the Bank of Ireland. and a Euro collapse would be very rapid leaving a void which will take some time to refill probably with the adoption of the old currency (say the Irish Punt). What would be the rate of exchange between the dead Euro and the freshly adopted old currency and then what would be the rate applied to the GBP from where savings originated. There might be a considerable time delay whilst the calamity was sorted out across Europe and probably no interest paid and savers may well be lucky to get anything back. I am worried in view of the Post Office Savings' connection with the Bank of Ireland in the Eurozone and would like to see a clear guarantee from the British Government and FSA that savings in the Post Office are not only protected against a Bank failure but also against the failure of the Euro and its possible side-effects. Can anyone throw any light on this my concern please? Regards, pedroelingles.