Savings account Guides

Safe savings – is my cash protected?

When deciding where to put your savings, how do you know which banks are safe and where your money is protected? (Updated 10/3/10)

Once upon a time, the chance of a bank collapsing seemed so unlikely that it wasn’t even worth considering when comparing accounts. However, since the credit crunch hit we have seen several banks bailed out and the safety of our money has become a major concern!

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There’s no need for great panic though, because as long as your money is in a UK regulated bank or building society, it’s covered by the Financial Services Compensation Scheme (FSCS). To ensure all your cash is protected, there’s only one rule to follow:

Don’t save more than £50,000 with each financial institution.

A fairly straightforward rule, but for those of you lucky enough to have more than £50,000 in savings, it’s definitely worth looking into what counts as a financial institution.

For joint accounts the FSCS protects up to £100,000.

Banks and building societies that share the same banking licence count as one financial institution. Which banks operate under the same registration isn’t always obvious, so here is a list of the biggest name savings providers that share a licence:

• HSBC, First Direct
• Royal Bank of Scotland, Direct Line, The One Account
• Lloyds TSB, Cheltenham & Gloucester
• Santander, Cahoot
• Nationwide, Cheshire BS, Derbyshire BS, Dunfermline BS
• Bank of Scotland, Halifax, Capital Bank, Intelligent Finance, Saga
• Co-operative Bank, Britannia, smile
• Yorkshire BS, Barnsley BS
• Clydesdale Bank, Yorkshire Bank

(To see which banking licences supermarkets operate under, see our expert's advice on supermarket savings accounts.)

In you have more than £50,000 in savings you should ensure it is split between these groups, otherwise you may find your money is not protected by the FSCS.

For example, if you save £30,000 with HSBC and £40,000 with First Direct you are only covered for the first £50,000 of the combined total (£70,000) in the event of a bank collapse.

So, for safe savings, spread them about!

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