However, while it is impossible to say whether or not any other institutions will fall victim to the ongoing global economic crisis, it is possible to ensure your savings are totally protected just in case your provider goes bust.
The key is to keep an eye on your money and make sure, if you have more than £50,000 in cash savings, that it is spread between providers.
How to protect your cash
Under the terms of the Financial Services Compensation Scheme (FSCS) up to £50,000 (£100,000 if you have a joint account) is safe with any one financial institution that is registered with the City watchdog, the Financial Services Authority. So if you have less than £50,000 in savings you have nothing to worry about.
However, if you have more than £50,000 in savings you need to be careful. The FSCS protection cap applies to institutions and not to accounts. This means it's no good just spreading your money between different accounts with the same provider - you need to split it between different institutions. If you do this, you'll benefit from a greater level of protection and ensure that none of your money is at risk, regardless of which bank or building society you have entrusted it to.
But, there is an added level of complexity because some institutions offer savings accounts under a number of different brands, which means they share the same FSA registration. This means that you might think your money is spread between different providers, therefore giving you adequate protection, but in fact only £50,000 is guaranteed.
The HBOS brands are a good example of this - HBOS has one FSA registration yet its savings brands include Halifax, Bank of Scotland, Birmingham Midshires, Intelligent Finance, Saga and AA so if you had an account with Halifax and another with the AA only £50,000 is protected.
It gets even more complicated because of mergers and acquisitions. HBOS is now part of Lloyds Banking Group, following the merger with Lloyds TSB but Lloyds TSB has its own FSA registration, so you could have a Lloyds account and a Halifax account and £100,000 would be totally guaranteed.
It's not always straight forward to identify which providers are part of the same banking institution so we've compiled a table to make this easier. This is featured in our article 'Who owns who?'. The article also includes more detail about how to protect your savings.
Some institutions are perceived to be stronger, and more financially secure than others, a factor which may also influence your decision about where you invest your savings. If this is important to you, you may also be interested in reading our article 'How safe is your bank?'.
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