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Are Your Savings Safe? Full guide to protecting your cash

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Don't let your savings go under

The panic over the collapse of Northern Rock, Bradford & Bingley, Icelandic banks and others may seem distant memories, yet every sensible saver needs to remember the lessons and ask "Are my savings safe?"

This is a regularly updated, account-by-account savings safety check-up, which shows what protection you have if the worst happens and how to maximise your savings.

Five facts everyone should know

Before we get to the nitty-gritty, if you only remember five things about this, make it these:

Number 1

Every UK-REGULATED account gets £85,000 protection

All UK-regulated current or savings accounts and cash ISAs in banks, building societies and credit unions are covered by the Government-backed Financial Services Compensation Scheme (FSCS). So if the bank fails, you'd get back up to £85,000 per person, per financial institution. The majority should get it within seven days.

Number 2

Not all UK savings are UK-regulated

Most banks, including foreign-owned ones like Spain's Santander, are UK-regulated. Yet a few EU-owned banks opt for a 'passport scheme' where you rely on protection primarily from their HOME government.

This includes Triodos and more. See the foreign banks list below for full details.

Number 3

The amount's double in joint accounts

Cash in joint accounts counts as half each, so together you've £170,000 protection.

If you've an individual account with the same bank, half the joint savings count for your total exposure, and any amount over £85,000 isn't protected. For more info, see the joint accounts protection below.

Number 4

An institution is NOT the same as a bank

The protection's per institution, not account. So four accounts with one bank still only get £85,000. The definition of 'institution' depends on a bank's licence and giant banking conglomerates make it complex.

For example, sister banks Halifax and Bank of Scotland's accounts are only covered up to £85k combined. RBS and NatWest are also sisters, but their £85k limits are SEPARATE. See the What Counts As A Bank? tool below.

Number 5

Spread savings to keep 'em safe

For perfect safety, save no more than £83,000 per institution (the extra £2,000 gives room for interest). Spreading can be worth it even if you've under £85,000; if your bank went bust, the money could be inaccessible for a spell. Using two accounts mitigates the risk.

For a full list of top accounts, see our Best Buy Savings guide. Or for how to save safely, including dealing with very big amounts, see 100% Safety below.

What does the FSCS cover?

The Financial Services Compensation Scheme (FSCS) only applies to organisations regulated by the Financial Conduct Authority (FCA). This was the big problem with failed Christmas savings scheme Farepak, as it had no protection whatsoever. When it went bust, the money was gone.

The main categories of protected savings are:

  • Bank and building society accounts

    All UK credit unions, bank or building society savings accounts, current accounts and small business accounts (read full details) are covered to some degree by the FSCS.

    Certain types of guaranteed equity bonds, 'deposit accounts' where the interest paid depends on the stock market's performance, may also count for 'savings' protection.
  • Any cash saved within a Sipp pension

    If you have a Self Invested Personal Pension and are keeping some of the money in cash savings there (as opposed to investment funds), then you get the full FSCS savings protection on that, separate to any investment protection (read full details).

    Sipp providers will tell you which banks are holding your cash, so you can check if it's linked to any others you have savings with (see linked banks table below).
  • Any cash ISA (or Toisa)

    These are simply tax-free savings accounts, so they have the same protection. If you have a Cash ISA or had one of its forerunners, the Tessa-Only ISA (Toisa), then you get exactly the same FSCS protection as in a savings account. Plus the ISA money will retain its tax-free status if the institution it's held in goes bust.

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How does the protection work?

Bank and economy collapse All UK-regulated deposits - including money saved and accumulated interest - in bank or building society savings products, are covered by the FSCS.

This is an independent fund set up by UK financial bodies and regulated by the FCA, which promises that, in the event of a bank collapsing, you get some of your money back, though it's likely you'll lose access to the cash while compensation is being dished out.

This applies to everyone, no matter their age (including children), or where they live. Provided the bank is registered in the UK, crucially:

100% of the first £85,000 you have saved, per financial institution, is protected.

The biggest issues here are what counts as an institution? and what's a UK-regulated institution? (see later for both). But they're not the only ones... (click to open/close)

What counts as a 'financial institution'?

There's no easy definition. Over the years, many banks have merged or been taken over, blurring the lines as to what counts. Technically, it's all about the company's registration at the regulator, the FCA.

This can leave some strange results - for example:

  • Put money in the Halifax, Bank of Scotland and BM Savings, all part of the same group, and the protection limit is combined. You'd only get £85,000 altogether.
  • Put money in the Royal Bank of Scotland, NatWest and Ulster, which are all part of the giant RBS conglomerate, and you get separate £85,000 protection for each of the three banks.

We checked the FCA registration number on each banks website. If an institution isn't listed it does not mean it is not protected. Last full update December 2013.

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What about bank takeovers?

If your bank's been taken over, your exact protection can depend on the date you opened a savings account. Here's a merger-by-merger guide:

What if my building society has merged with another?

In the aftermath of the financial crisis, a spate of building society takeovers peppered daily news broadcasts. Initially, the Government acted to protect savers who had money stashed in two different building societies that merged, but that ended in December 2010.

So, if you have money in more than one of the institutions contained within the following groups, you now only have £85,000 protection across that group.

  • Nationwide, Derbyshire, Cheshire and Dunfermline building societies
  • Skipton and Scarborough building societies
  • Co-operative Bank and Britannia
  • Nottingham and Shepshed buidling societies, trading as Nottingham BS
  • Coventry BS and Stroud & Swindon BS
  • Yorkshire, Chelsea, Barnsley, Norwich & Peterborough building societies, plus Egg.

What about saving with foreign banks?

There are lots of overseas-owned banks operating in Britain, including Santander, ICICI and Yorkshire Bank. Providing they're not 'offshore' accounts (which are very different), it's usually irrelevant who their parent company is. They're UK-regulated banks, so you get the same £85,000 per person protection. Yet there's a subtle extra dimension...

If a bank gets into trouble, it's to be hoped the UK government would arrange a bailout, so all your money's protected (though that of course isn't guaranteed). This hasn't just happened with UK-owned Northern Rock and Bradford & Bingley, but also with Iceland-owned (but UK-regulated) Kaupthing Edge (see more on the Icelandic Bank Collapse).

Where possible, always keep your cash within the £85,000 limit, as it's an aim but not a promise to bail out banks that fail. However, this is particularly true with non-European banks, as this has not been tested yet (and hopefully won't be!).

European flag

Some European banks may NOT be UK protected...

It is possible for a bank to be operating in the UK with the FCA's full approval, yet the protection you get is not provided by the UK government. It's not banks owned in far-flung countries you need to watch, but European-owned banks.

That's because banks from the European Economic Area are allowed to opt for a slightly different protection, called the 'passport' scheme, which means if they went bust, you'd have to claim money back from the bank's home country's compensation scheme.

Banks from outside Europe can't do this, and therefore if they operate here have full UK compensation.

Save with one of these, and all your savings safety depends on the stability and solvency of a foreign government.

Of course, some countries may be more financially stable than the UK, but remember you're then reliant on a government you don't have a vote for to actually choose to pay out.

On a positive note, since 2010 all European countries have been required to have a compensation limit of €100,000 (the UK uses £85,000 as we aren't in the euro). In the past, the amount protected varied depending on the home country of the bank, now this is no longer a factor.

If you have savings in a European bank that's currently fully covered by the FSCS, and it then decided to opt for the 'passport' scheme, it would have to inform you of the change.

One final note. Theoretically it's possible for a European bank to operate in the UK using only its home compensation scheme, even if that's lower than the UK scheme, so you'd be eligible only for that amount.

In this situation, the foreign bank will not be FCA-regulated, and no banks currently mentioned on this site work that way (we don't currently know of any that are). If you find any foreign banks not mentioned here, be vigilant and ask it how its compensation works.

Which banks does this apply to?

Here's a list of the big non-UK savings banks and smaller top payers that have been in our best buys over the past few years.

Overseas banks with savings accounts in the UK
Not covered by UK FSCS
(Passport-exempted)
100% protected by FSCS
(No passport exemption)
Anglo-Irish Bank / IBRC (see note below) Allied Irish Bank (UK) (Allied Irish)
Triodos Bank Asda (Santander)
Bank of Cyprus UK
Bank of Ireland UK
Citibank (Citigroup)
Clydesdale Bank (National Australia)
Firstsave (First Bank Nigeria)
Islamic Bank of Britain
ICICI
ING Direct (Barclays)
State Bank of India UK
Yorkshire Bank (National Australia)

Anglo-Irish Bank was merged with Irish Nationwide Building Society to form Irish Bank Resolution Corp after both were nationalised at the height of the banking crisis in Ireland.

Most accounts were transferred from Anglo-Irish to Allied Irish Bank. The few that remained should have been refunded by the Irish goverment's Desposit Guarantee Scheme when IRBC was forced into liquidation in February 2013.

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Will my bank or building society go bust?

Take a trip back a few years and this question would've been laughed out of school. Yet 2007 and 2008 saw such massive tremors - with Northern Rock, Bradford & Bingley, Icelandic banks and Wall Street giants Merrill Lynch and Goldman Sachs experiencing various degrees of catastrophe - that everyone started asking "Am I safe?"Man with a red head

For the moment, things appear to have calmed down, but you should take nothing for granted.

Bailouts more common than payout

It's right to focus on the FSCS compensation scheme, as that's guaranteed by the UK government, but actually it's the last line of defence.

With most of the banks that collapsed during the financial crisis, politicians stepped in with alternative remedies. Both Northern Rock and parts of Bradford & Bingley were nationalised, and Kaupthing Edge's savings business was transferred to ING Direct.

That could be seen as a huge statement of intent that politicians will take extreme action to avoid a bank going to the wall. Of course, since then we've had a change of government, so we don't know how it'd work now - but it's likely similar things would be tried.

The only UK savings bank that went into liquidation was Icesave. Unlike fellow Icelandic bank Kaupthing, its structure meant it was technically an Icelandic bank, not a UK one. Even then, the Government covered every penny, not just the £35,000 compensation limit (as it was back then).

Even with this though, while the Government's intention seems to be for no-one to lose any cash, regardless of the amount they save, that ISN'T guaranteed.

So it's important to think this way...

The UK government's intention is to protect all savers, but only the first £85,000 is guaranteed. So that needs to be the focus.

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How to save in 100% safety

There are a number of techniques for this, including some accounts that are 100% safe above and beyond the normal limits (see 100% safe savings below), but that can mean getting lower interest rates. So for most people, the golden rule is...

Spread your savings

Putting money into more than one account doesn't just mean more of your money is protected. It also follows the sensible old adage "don't have all your eggs in one basket", therefore mitigating risk.

The techniques you adopt depend on the amount of cash you want to save.

  • Under £85,000

    If you've less than £85,000, there's no problem in terms of protection. Yet if a bank went bust and you were to have to claim compensation this could take time (though the procedures have been sped up), and meanwhile you wouldn't have access to any cash. So it's still worth considering splitting money across more than one financial institution.
  • Over £85,000

    For those with bigger savings, in the unlikely event a bank or building society went bust, the golden rule is not to put more than £85,000 in any one financial institution. Spread your savings around a number of accounts.

    This a perfectly sensible strategy; just use the tool above to check they genuinely are separate institutions.
  • Very large amounts.

    For those with very large amounts of savings (for example, from a house sale) this could lead to so many accounts with £85,000 in each it becomes practically difficult to manage or you start sacrificing good interest rates to do so.

    In this case, you may need to forget the £85,000 limit and just spread your cash into three or four different accounts. While you're not fully protected, the act of spreading is at least mitigating a chunk of the risk.

There are usually nine or 10 very competitive accounts, meaning you can save well over £85,000 in perfect safety. To help, at least 10 top accounts are included in the Best Buy Savings Accounts guide, so pick the highest payer then work your way down.

100% safe ways to save money Plus any new best buys go in the weekly email.

100% safe ways to save

It's also possible to get 100% safety via using a variety of different techniques.

  • National Savings and Investments (NS&I)

    All money in the state-owned bank NS&I is fully backed by the Government, meaning money put in there is as near to 100% safe as you can get.

    Technically it doesn't have any more protection than any other institution, as ultimately the protection most banks have is that if they go bust, the Government will bail them out. Here it's Government-owned, so as it'd take the Government going bust for it to be in trouble it's as safe as it gets (if the UK went bust we'd all have bigger problems!)

    Its most popular product is Premium Bonds, though the returns on them aren't great (see the Premium Bond Probabililty Calculator) and you can only put £30,000 in there anyway.

    It does have other products, including normal savings accounts and cash ISAs, and at various times the rates are reasonable. Good ones will always be in Top Savings guide.
  • Repay your debts

    Most credit cards and loans cost a lot more in interest than you earn on your savings. So repay the debt with the savings and you're quids in. Once debts are gone, they're gone, so it's safe. See the Repay Debts with Savings guide.
  • Overpay on your mortgage

    Many mortgages let you pay off a bit a month, or even in big chunks. Paying off a mortgage, say at 6%, is a bit like earning that amount on savings after tax as DECREASING your costs is similar to EARNING cash.

    Plus, in a tough mortgage market, the less you borrow compared to the house's value, the better deals are available to you. So repaying now may lead to a better deal at remortgage time. Full info, including a special calculator, in the Should I Pay Off My Mortgage? guide.
  • Buy a tax certificate

    For those who are self-employed, one place to put money safely is to pay your tax early. You can do this by buying a tax certificate (you used to earn interest too, but sadly not any more).

    This system is best for those with larger tax bills, putting money aside that is likely to be due within the next year. By doing this, you're effectively saving cash with the Government.
  • Northern Rock is no longer 100% safe

    From 2007, when it was taken over by the Government, until May 2010, all savings in Northern Rock were 100% safe, as like NS&I it was a state-owned bank.

    Between May 2010 and 31 December 2011, it had the same protection as any other UK bank (£85,000) with the one exception of any fixed-rate savings set up before 24 February 2010, which retain their fully Government-backed status until they mature.

    On 1 January 2012, Virgin Money completed the purchase of the savings arm of Northern Rock. Virgin has now rebranded all Northern Rock accounts, so they now fall under the same lot of £85,000 FSCS protection.
  • Your money's not safer under your mattress.

    If you don't trust banks, you may want to stash cash under the mattress. But most home insurance policies only cover up to £750 cash if it's nicked. Plus - as a fireman told us - "Money under the mattress make a nice accelerant in house fires for us to deal with."

    So, all in all, it's probably better to find a decent savings account for your cash.

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