Banking on protection

FIVE-MINUTE GUIDE TO... FINANCIAL SERVICES COMPENSATION SCHEME (FSCS)

- By Harvey Jones

AS GLOBAL stock markets go haywire many people are seeking safety in cash, but they need to know exactly how secure their money is, and what protection they have if their bank or building society runs into trouble.

The Financial Services Compensation Scheme (FSCS) offers a safety net that most savers may have heard of, but don’t always fully understand.

The Government-backed FSCS protects your money if your bank, building society or credit union fails.

Cash balances up to £85,000 are covered, per person and per banking group. Couples get up to £170,000 protection in a joint savings account.

That term banking group is key. If two brands are part of the same financial group and they share a banking licence, then they count as one institution for FSCS purposes.

For example, if you have £85,000 in Bank A and £20,000 in Bank B, and they’re part of the same group, only the first £85,000 is protected.