economonkey

In the UK the government has a system called the Financial Services Compensation Scheme designed to protect savers’ deposits in the event of a bank collapsing, which seems to be happening every other week at the moment. If a bank, building society or credit union goes bust, the government will refund your money within certain limits:

If you had up to £50,000 of savings with the bank, you will get a 100% refund of your money. This figure applies per person, so if you had a joint savings account with your partner you will be entitled to up to £100,000 compensation. This was recently raised from £35,000 per person and applies to banks that go bust on or after 7 October 2008.

The scheme also protects your investments, including stocks and shares; unit trusts; futures and options; personal pension plans and long-term investments such as mortgage endowments, up to the value of £48,000 per person.

The compensation scheme only applies to customers of banks which have been authorised by the Financial Services Authority. Pretty much all major banks operating in the UK should be authorised by the FSA, but if you’re not sure you should check with both your bank and the FSA.

Although the scheme says it aims to process all claims within six months, it doesn’t seem to have any obligation to do so. While we’ve got no reason to doubt that the scheme is capable of hitting this target, it’s worth bearing in mind that circumstances might arise in which it could take longer than this to claim compensation.

You can get more information from the official website: www.fscs.org.uk