How safe are my cash savings?

Tue 06 Mar 2018 // #Saving

How safe are my cash savings?

(Reading time: 4.6 minutes)

The last thing you want to happen is to lose your savings. You’ve (probably) worked hard for them, maybe have plans for them and to lose them could be totally devastating. Luckily, your savings are somewhat protected for a disaster scenario.

As a general rule of thumb, savers are protected for cash amounts up to the £85k limit held at each regulated financial institution or bank. This is thanks to the Financial Services Compensation Scheme, which covers all UK-regulated current or savings accounts as well as cash held in ISAs or SIPPs.

This is important: it’s £85k compensation limit per regulated institution, not £85k per account. So, for example, holding £170k split across two different accounts at PotentiallyRiskyBank Ltd is no good. If PotentiallyRiskyBank Ltd goes bust, then you’ll only be protected and compensated for £85k. However, if you had £85k in an account at PotentiallyRiskyBank Ltd and had another £85k at DefinitelyRiskyBank Ltd, you would be able to recover 100% of your savings if both banks go bust.

The tricky bit is knowing what banks are actually a part of the same authorised financial institution. Because if DefinitelyRiskyBank Ltd from the example above is actually a subsidiary of PotentiallyRiskyBank Ltd, and they are regulated under the same authorisation, then you’d only be able to recover the compensation limit of £85k from the FSCS. And it’s not always immediately obvious that banks are part of the same institution just from their name. A real life example is if you held £85k in an account at Halifax and another £85k at Bank of Scotland, you are only protected for £85k, as the banks are part of the same financial institution. As a quick guide, we’ve compiled a list below of the banks which are covered by the FSCS and a summary of which banks are linked together as part of an institution for FSCS compensation limits purposes.

What if I have less than £85,000?

Even if you don’t have savings in excess of £85k, it may be prudent to spread your savings across two different banks, as if a bank collapses, you may have a period of time where your savings are completely inaccessible.

What if I have a joint account?

Cash in joint accounts are treated as being protected for £85k compensation per person. So together, the joint account is protected for up to a £170k limit.

What if my savings are invested, as opposed to sat in cash?

Whenever you open a stocks and shares account it's prudent to read the details on the provider's website about how safe your money is. Importantly, make sure you use a reputable provider. Many investment accounts will hold your funds in segregated accounts, which means that even if the account provider fails, your money will still be intact (although it may take a little while to get your money back). In a really bad scenario the Financial Services Compensation Scheme will cover you for compensation claims of up to £50,000 against each financial institution. We will write about this in detail in a later post.

List of banks covered by FSCS & a summary of banks linked for FSCS compensation limits purposes

The following shows the regulated institution plus the brands associated with it. Remember: If you have multiple accounts within the same group of institutions, you will only be protected by the FSCS for £85,000 in compensation in total.

AIB (UK) PLC:

• First Trust Bank
• AIB GB

Arbuthnot Latham & Co Limited:

• Gilliat Financial Solutions
• Arbuthnot Latham & Co Limited

Bank of Ireland (UK) plc:

• Post Office
• Bank of Ireland

Bank of Scotland plc:

• The AA
• Bank of Scotland
• Birmingham Midshires
• Capital Bank
• Halifax
• Intelligent Finance
• Saga
• St James's Place Bank

Barclays Bank plc:

• Barclays Direct
• Barclays Bank

Charter Court Financial Services Ltd:

• Charter Savings Bank
• Precise Mortgages
• Exact Mortgage Experts

Clydesdale Bank plc:

• Clydesdale Bank
• Yorkshire Bank

The Co-operative Bank plc:

• Britannia
• The Co-operative Bank
• Smile

GE Capital Bank Limited:

• GE Capital Direct
• GE Capital Bank Limited

HSBC Bank plc:

• HSBC
• HSBC UK
• First Direct

Julian Hodge Bank Limited:

• Julian Hodge Bank
• Hodge Lifetime

Lloyds Bank Plc:

• Cheltenham & Gloucester
• Lloyds Bank

Paragon Bank Plc:

• Mortgage Trust
• Paragon Bank Plc
• Paragon Car Finance
• Paragon Personal Finance
• Paragon Mortgages

The Royal Bank of Scotland plc:

• Child & Co
• Direct Line
• Drummonds Bank
• Holt's
• The One Account
• MINT
• Royal Bank of Scotland

Santander UK plc:

• Santander
• Cahoot
• Santander UK Corporate Bank

Yorkshire Building Society:

• Egg
• Chelsea Building Society
• Norwich & Peterborough Building Society
• Yorkshire Building Society
• Yorkshire Shareplan

The following brands are regulated as their own entities, so accounts will be protected at each of these institutions up to the maximum £85,000 limit per person.

• Adam & Co
• Airdrie Savings Bank
• Al Rayan Bank PLC
• Aldermore Bank plc
• Alliance Trust Savings Limited
• Bank and Clients Limited
• Bira Bank
• Brown Shipley & Co Ltd
• Butterfield Bank (UK) Ltd
• C.Hoare & Co
• CAF Bank Ltd
• Cambridge and Counties Bank Limited
• Cater Allen
• Charity Bank Limited
• Citibank
• Close Brothers Limited
• Consolidated Credits Bank Ltd
• Coutts
• Crown Agents Bank Limited
• Danske Bank
• Duncan Lawrie Limited
• EFG Private Bank Limited
• FCE Bank plc
• Hampden & Co Plc
• Hampshire Trust plc
• Harrods Bank Ltd
• HSBC Private Bank (UK) Ltd
• HSBC Trust Company
• Investec Bank
• Kingdom Bank Ltd
• Kleinwort Benson Bank Ltd
• KRBS
• Marks & Spencer Bank
• Masthaven Bank Ltd
• Methodist Chapel Aid Limited
• Metro Bank plc
• Monzo Bank Ltd
• NatWest
• NM Rothschild & Sons Ltd
• OakNorth Bank
• Private & Commercial Bank Ltd
• R Raphael & Sons plc
• Rathbone Investment Management Limited
• Reliance Bank Ltd
• Sainsbury's Bank Plc
• Schroder & Co Ltd
• Scottish Widows Bank
• Secure Trust Bank plc
• Shawbrook Bank Limited
• Smith & Williamson Investment Services Limited
• Standard Chartered
• Starling Bank Limited
• Tandem Bank
• Tesco Bank
• TSB Bank
• Ulster Bank
• United Trust Bank Limited
• Unity Trust Bank
• Vanquis Bank Limited
• Virgin Money
• Weatherbys Bank Limited
• Wesleyan Bank Limited
• Wyelands Bank Plc

This list is correct as at December 2017. You can learn more from the Bank of England’s website.