To achieve fail-proof safety , save at the most £ 83,000 in every institution ( which gives you a safety allowance of £ 2,000 for interest growth ). Doing so will spread your money in perfect safety even if you stay below the £ 85,000 mark ; hence , in case your bank fails , your money will not be inaccessible for a certain period . Having two accounts will reduce such a risk .
What the FSCS protects
The Financial Services Compensation Scheme ( FSCS ) only covers organisations under the auspices of the Financial Conduct Authority ( FCA ). This led to the tragic failure of the Christmas savings scheme Farepak , which had no protection at all . Thus , when the scheme went caput , all the money disappeared .
The primary types of protected savings include the following : �
Bank and building society accounts
FSCS covers all UK bank , credit unions , or building society current and savings accounts ; and it also partially covers small business accounts .
Some forms of protected equity bonds , which are ' deposit accounts ' whose interest growth relies on the stock market ' s performance , may likewise qualify for ' savings ' protection .
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Any savings within a SIPP pension
For those who have a self-invested personal pension scheme and saved cash money there ( in contrast to investment funds ), FSCS provides complete protection for their money , separate from any other investment protection .
SIPP service-providers will help you determine the banks holding your money ; hence , you can find out if it is linked to others you where you also have savings .
Any cash ISA ( includes Help to Buy ISAs )
These refer to simple tax-free savings accounts , provided with FSCS protection like other savings accounts . Among those under this coverage is the cash ISA ' s forerunner , the Tessa-Only ISA ( Toisa ). Moreover , the ISA money does not lose its tax-free status in case the institution holding it fails .
Ask yourself these questions : Do I have protection for my investment in a company ? Does my insurance have protection in case the company fails ?
How protection works
FSCS covers all UK-regulated deposits – including money saved and accrued interests – that you have put into a bank or a building society savings instrument .
An independent government-sponsored fund regulated by the FCA , FSCS protects some of your money in the event of a bank collapse , although you will lose temporarily any access to your money during the period of compensation .
As long as the bank is UK-regulated , the following rule applies to all , whether children or adults , or wherever they may reside , as stipulated thus :
100 % of the first £ 85,000 in your savings , for each financial institution , is covered .
You may ask : What is considered an institution and what is a UK-regulated institution ? And other issues to consider , such as the following :
� A joint account has a limit that is doubled
� Rates were different prior to February 2017
� Savings are not considered along with debts
� Interests are part of the threshold
� Compensation will take time for release
� Offshore accounts are not often protected