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Keeping savings safe through the FSCS

The FSCS or to give it its full title, the Financial Services Compensation Scheme, was introduced in 2001 and has helped millions of people recover billions of pounds from failed banks, building societies and credit unions.

The FSCS is an independent fund set up by Government to protect consumers against firms regulated by the FCA and PRA, going under. It also offers other financial protections.

It’s important you know about them – Paragon prides itself on transparency, and sharing knowledge and expertise with its customers.

If there is one thing in life no-one should have to worry about its ‘savings’.

If you have money in savings, including Cash ISAs, or Help to Buy ISAs, in a UK-regulated bank or building society the FSCS Deposit Guarantee Scheme covers you for up to £85,000, per person per institution/licence.

The per institution/licence bit is very important here!

If you are a super saver with more than £85,000 in an account you are only covered up to £85,000 - that much we have already established. Let’s say though you have over £100,000 in savings across two banks; if they share the same licence then you are only covered for up to £85,000. We could take this supposition further by increasing the savings spread across a number of banks. If they share the same licence then you are still only covered for £85,000.

For joint accounts the limit the FSCS covers is doubled to £170,000.

It is important to note that the level of cover provided by the FSCS Deposit Guarantee Scheme is typically reviewed every five years and fluctuates up and down. In 2016 the rate was actually reduced from £85,000 to £75,000 before returning to £85,000 the following year.

There are banks in Britain who are marketed separately but who actually belong to the same business and share a single licence.

Paragon doesn’t share its licence with any other brand, so any savings held can be managed, quite simply within the FSCS Limit and Paragon will remind you of that limit every year.

So, if you have savings across a number of banks it is vital to check and ensure that you are covered by the maximum benefit the FSCS provides. You can click here to check which bank brands are owned by which banks.

If you find that the FSCS coverage doesn’t protect all your savings then it might be sensible to move some of your money to another bank.

The FSCS also covers a number of other products such as insurance, investments, mortgages, pensions and endowments. A full list can be found on the FSCS website.

So, if there is one thing that you do this month it is to make sure all your savings are covered by the FSCS. It may mean you have to move some of your savings around, and you might be hesitant to do so, but in the end, what price do we put on peace of mind?

16 April 2018

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551