08:37 16 November 2013
The financial crisis of 2008 and what happened soon after was a great shock. It showed how banks could be affected by bankruptcies. Now consumers face the possibility of having their banks going into liquidation and wonder what will happen to their money.
To address this dilemma, The Financial Services Compensation Scheme (FSCS) has been re-evaluated and strengthened. Nevertheless, it is a must that investors and savers alike understand the implications.
Financial Services Compensation Scheme (FSCS)
The aim of FSCS is to provide both savers and investors a safeguard that will provide full protection for their savings and or investments if the financial institution with which they have invested goes bankrupt.
Presently, the amount that every individual is protected is up to £85,000 with any single financial institution. Meaning, if your account has more money than this amount and the financial institution went bankrupt, this is the maximum you can recover. You lose the excess amount. However, if you have a joint account with someone, then your protection will be doubled to £170,000.
Furthermore, if you have accounts with several banks but these banks are owned by only one institution, then, your accounts will be treated as only one. Thus your maximum protection is just £85,000.
What you can do to protect your savings?
Ways how you can ensure your savings are protected:
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