Is my money safe? Moneyextra.com savings help

In recent times many non-UK banks have topped the best buy tables with very competitive rates for savers. However with the recent events in Europe with Icesave Iceland, ING Direct Holland and on this side of the water with HBOS, Halifax and Barnsley BS, to name but a few! it is not surprising savers are becoming concerned whether to put their hard earned cash into such accounts which until now they may never have heard of.

In general these 'foreign' banks accounts are covered in exactly the same way as UK banks or building societies are with the Financial Services Compensation Scheme FSCS. The FSCS is an independent body and covers firms authorised by the Financial Services Authority.

In the event of a bank going bust the FSCS scheme protects the first £50,000 you have saved per financial institution.

It is worth mentioning there are a few rules with the FSCS scheme;
-the limit is doubled for a joint account,
-any debts with the same institution are subtracted from your savings
-the protection is per institution and not per account

The last point above is really important to bear in mind as some banks trade under different brands, for example HSBC and First Direct - so any accounts you have with these will only be protected up to £50,000 in total. For a full list see Martin Lewis' Moneysaving Expert Site

Foreign banks covered by the FSCS scheme include FirstSave, ICICI and Kaupthing Edge.

Do all foreign banks offer the same protection as banks in the UK?

For some European banks, there is also a 'passport scheme'. This allows them to use their home country compensation scheme first with the difference toped up by the FSCS. Then any amount not covered is topped up to £50,000 by the UK scheme.

For example, if £25,000 was covered by the bank's home country scheme then you could claim up to £25,000 through the FSCS.

The thing to bear in mind here is that in the event a European bank is covered by the 'passport scheme' your first claim for compensation is from a foreign country which may be more tricky and time consuming.

Banks at the time of writing covered by the 'passport scheme' are Akbank, Anglo-Irish Bank, Icesave and ING Direct. For a full list see Martin Lewis' Moneysaving Expert Site

Top Tips to protect your cash!

Spread your savings. The UK government only guarantees the first £50,000 per person per institution, so if you have more than this in one Bank then you need to spread it around. To search the whole market and latest rates available follow this link Safer Savings

Check your bank is UK registered!

Check if your Bank is registered in the UK if its not then your money could be at risk!

To check that your bank is registered follow this link Money Made Clear

How do you get your money back?

If you are saving with one of the Banks that is in trouble then The Financial Services Compensation Scheme's website can help you, follow FSCS

Moneyextra.com recommends you take independent financial advice before acting on any article

2008-10-23 14:10:46 © Moneyextra.com