Santander savers' FSCS protection could be halved

At present, anyone with money in Santander (consisting of the former Abbey and Bradford & Bingley brands) or its Cahoot brand has the usual £50,000 per person protection between the pair under the Financial Services Compensation Scheme were the Spanish giant to go bust.

Those two existing brands both fall under the Santander banking licence (see the Safe Savings guide).

Anyone with cash in Alliance & Leicester (A&L), which is part of Santander but will only be rebranded later this year, has a separate £50,000 per person protection as it has a separate banking licence.

But on or around 28 May, the A&L licence will disappear and the bank will fall under Santander's registration, meaning anyone with cash in any of the Santander brands will only have £50,000 protected, not the potential £100,000 now.

Thousands affected

Santander says around 10,000 of its 15 million savers currently have more than £50,000 between the two institutions. It says it will allow any of those customers to withdraw cash so they are fully protected, even if the money is locked away.

This halving of the compensation limit had always been planned following the announcement last year that Abbey, A&L and B&B would be rebranded as Santander. The Cahoot and Santander-owned Cater Allen brands will remain, as things stand.

The proposed date for the amended limits, subject to High Court approval, is 28 May, though this is not a fixed date. New and existing customers will only be affected when the change happens.

How to save safely

Dan Plant, MoneySavingExpert.com money analyst, says: "If you're saving over £50,000, spread it around institutions so more of it is protected.

"This is especially important if you have more than £50,000 between Santander and A&L in which case you should take action."

A Santander spokesman says: "Santander is one of the strongest banking groups in the world so it is unlikely we will be unable to repay savers but we understand people want their money fully protected."

Cater Allen has a separate banking licence which remains unaffected by the changes.

Update, 6 May. All the information in this article is correct. However, we had a warning for a few weeks, taken down today, that the 28 May date we said FSCS protection will change from was incorrect, and the true date is 31 December. We were given that updated information by Santander, which now accepts it made an error in issuing the correction and the original story was correct all along.

Further reading/Key links

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