In the UK, the FSCS (Financial Services Compensation Scheme) covers savings in the event of a bank going out of business. It protects the first £85,000 of an individual’s savings (or £170,000 for joint savings), per UK-regulated financial institution.
The savings protection applies to current accounts, savings accounts, cash ISAs and small business accounts. You can check that your bank is protected at https://www.fscs.org.uk/check/check-your-money-is-protected/.
Although it is highly unlikely that a bank would go out of business in the UK, it is not impossible, and the golden rule is to spread any savings above £85,000 around a number of accounts, with different financial institutions.
Some banks or brands are owned by larger banks, and the limit applies per financial institution, so it is important to check. For example, if you held £50,000 in savings with Ulster Bank and £50,000 in savings with NatWest, you would only be covered for the first £85,000.
Temporary High Balance Protection
Savings of up to £1 million arising from a “life event”, such as selling your home, redundancy or a compensation payout may be protected for a six-month period under the Temporary High Balance Protection.
Further details can be viewed at https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/.
Please note that links will take you to FSCS websites and we are not responsible for their content.
We are always available to discuss any queries or concerns, so just call or drop us an e-mail.