You might want to investing a bit less than 35k (say 33K) since if the bank crashes and burns you might get your 35k from FSA back eventually but you would lose all your accrued interest..

I opened this A&L bond. It looked too good to miss. 3 days later they closed the issue (on 21 Jan 08) so the debate is a bit theoretical from now on.

However I had understood that A&L are one of those who oversold mortgages and were using this bond to bolster their cash flow, perhaps to the advantage of we investors. They obviously received a very good response and closed the issue 6 days after opening it !!!

I am very aware of this, as the bank I decided to place a deposit with told me ... I thought this was very commendable.

Also (correct me if I wrong), but I think that if you have two separate accounts with two banks from the same group, e.g. Bank of Scotland and Halifax plc, that only one account will be protected up to the 35K.

Has anyone noticed the small print wording that banks guarentee 35k safety "per customer", not "per account"?

If you have more than one account with the same bank, perhaps current, internet or ISA savings, amounting to more than 35k, what then?

Hi jdeez,

I considered the risk to be equal between both banks, went for the extra .5%, guess i'm just a rate tart

workflow:Hi, are Bonds covered by the investor guarantees?

Workflow .. I needed an answer to this as well, so I emailed the Financial Services Compensation Scheme.

They informed me that they do not hold information on the various financial products offered by the many finanancial institutions which may fall within their jurisdiction, should they cease trading. I was told I would need to confirm with the product provider exactly what the product is and as such, which limit it will fall under.

Apparently the best way to attain this information is to refer your query to the compliance department of the product provider.

Well the B&B rate is indeed now lower for a 1 year fixed rate bond, but at 6.2% is still very acceptable.

Old Shoe, you mentioned changing your mind about B&B, considering that your money would be safe with A&L up to the £35,000 limit. Im still considering the 6.2% fixed rate with B&B and was just wondering whether there was something you read or heard that made you contemplate the safety of your money with B&B, or have I misinterpreted the wording in your posting.

I was going to go to B&B first but then changed my mind after considering that my money would be safe with A&L up to the £35,000 limit. B&B were paying 6.5% for 1yr bond but said it was going to be withdrawn on 22/23 Jan and the new rate would be lower, 6.8% does look good but what will the rates be in 6mths time. With USA lowering their rate it's happening here now which makes me think that the A&L 7% looks a good deal. At the time i spotted a couple of 2yr deals around 6.3% with hindsite these might have been better.

Hi, are Bonds covered by the investor guarantees?

"Has there ever been a case of an institution folding and people not getting their £35K back?"

BCCI - there was a payment in 2005, 14 years after the bank folded, that brought the payout to creditors to be 84% of what they were owed.

First Solutions - not a bank but a money transfer service. I believe creditors are still waiting to see how much they will get but it is unlikely to be much.

Overseas banks and organisations that are not banks are not covered. You should not invest with anyone if you think that they might go out of business, however great the interest rate offered. The banks listed a couple of posts up were all changed from building societies to banks recently which was a huge step to take. If you invest with an organisation that has traded as a bank (or as a building society) successfully for centuries, then you wont go far wrong, particularly if you don't invest more than £35k or so in one account.

If you want to see whether an organisation is worth trusting with your savings, phone them up and say that you are looking for a 125% mortgage and your credit history is not too good. If they invite you in for a chat, don't trust them with your savings.

Well, this thread and some other threads I have read are painting a pretty gloomy picture, but have to say that all this info is hugely appreciated and I feel I am on a massive learning curve .... As mentioned previously, I have just entered the world of savings and invested my first 35K, but am now feeling unhappy about letting anybody else have the rest of my money ... Am I over-reacting???

Has there ever been a case of an institution folding and people not getting their £35K back?

Also, I was going to put my last 35K with the Bradford and Bingley as they have told me today that next week they will be introducing a 6 Month Bond Fixed at 6.80% Gross which I find attractive .. Should I be looking somewhere else?

The two banks' share prices that went into freefall as a result of the Northern Rock debacle were two mortgage banks called Alliance & Leicester and Bradford & Bingley.

I have authored and contributed to various 'financial' posts on this site as a result of detailed communications with the FSA. If an institution goes into adminstration a saver is simply another unsecured creditor who may or may not get his cash back. Mervyn King, Govenor of the B of E, is on record acknowledging this and saying it would have been unfair in the NR case.

If as is most likely you were covered by the '£35,000' you would receive your capital and interest to the date of going bust. The grey area is whether or not you would receive interest while it took up to six months to sort things out.

Thanks to you all for your advice, and it has helped me to decide today to spread the money around rather than putting all my eggs in one basket.

Old Shoe, I myself have taken the plunge today and put some money into the Alliance and Leicester. Bradford and Bingley seem to be the next best, so im going to see them tomorrow, and in the meantime i'm checking on the internet everyday to see if any other good deals turn up that I can take advantage of.

Changed my mind i have an appointment with them tomorrow, so i'm taking the plunge.

You can't just walk in off the street to open this bond, but they will try to sell you some other rubbish as well just tell them you're not interested.

Another point to bear in mind, jdeez, is that 0.1% of say £35,000 is £35. So if you find other accounts at 6.9% instead of 7.0% then the difference in your interest would be £35 per year before tax. Not a massive sum. So the advice you had about sprinkling your money around in several accounts is good, I would say. The downside is the paperwork -- proving that it didn't all come to you from some unnamed geezer in the Cayman Islands (or did it?!)