Q&As about Deposits


1. What happens if I am a member of a credit union that fails?

You do not need to do anything and will not need to lift a finger. FSCS will automatically pay you back your savings according to the account information it receives from your credit union. You will receive your payment through the post within 7 days of the credit union being declared in default.

People with less than £1,000 will receive a letter to get cash over the counter at the Post Office. Please note that the letter you receive will be in an unmarked envelope and will not have FSCS details on it. Anyone with more than £1,000 will receive a cheque. This will also be sent to you in an unmarked envelope.

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2. How long will it take to process my claim?

The length of time a claim takes to process will depend upon a number of factors, like the type and complexity of a claim, and the level of information we need to gather from other sources. Some of these factors may be entirely outside our control, but we are still able to provide general guidelines for each claim type. However, we aim to pay compensation in the vast majority of cases within seven days of the failure of the company. We aim to pay the remaining claims, which are likely to be more complex, within 20 working days.

Deposit claims of UK customers will be paid in UK Pounds Sterling.

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3. If I have more than £85,000 in an account, does that mean I will lose money?

A depositor whose total deposits with a failed bank exceed the compensation limit will receive compensation for the amount of their deposit up to the limit of £85,000*.

Deposit claims of UK customers will be paid in UK Pounds Sterling.

Depositors with deposits above the limit may also receive additional funds in the form of a share of their savings following any distribution of assets as part of the insolvency process for their firm. How much they receive depends on the rate of recoveries (also known as the dividend rate) in the liquidation of the company.

The liquidation process can take a long time to complete. Depositors will have to wait until the liquidator has completed the process to find out how much more they might receive in total. There is no certainty that they will receive any further payments. This process is separate from the FSCS compensation process.

*From 3 July 2015, FSCS will provide a £1 million protection limit for temporary high balances held with your bank, building society or credit union if it fails. Read our Q&As about temporary high balances for more information.

Related information

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4. What is the position for people who have multiple accounts with banks that are subsidiaries of another bank?

For people who hold multiple accounts in banks that are part of a larger group, if each of the banks is separately authorised by the Prudential Regulation Authority:

If each of the banks is covered by a single authorisation:

  • FSCS would pay compensation up to the limit of £85,000* once, irrespective of how many different institutions a person held accounts with.

All deposit claims will be paid in UK Pounds Sterling.

If you have a question about how a bank or building society is authorised, please contact the Financial Conduct Authority Consumer Contact Centre on 0845 606 9966.

*From 3 July 2015, FSCS will provide a £1 million protection limit for temporary high balances held with your bank, building society or credit union if it fails. Read our Q&As about temporary high balances for more information.

 

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5. I have my money in a joint account in a High Street bank. How would FSCS pay compensation if the bank failed?

The compensation limit of £85,000* applies to each depositor for the total of their deposits with an organisation, regardless of how many accounts they hold. In the case of a joint account, the compensation limit is £170,000*.

Deposit claims of UK customers will be paid in UK Pounds Sterling.

*From 3 July 2015, FSCS will provide a £1 million protection limit for temporary high balances held with your bank, building society or credit union if it fails. Read our Q&As about temporary high balances for more information.

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6. What happens if I owe money to a bank, building society or credit union that fails?

In the event that your bank, building society or credit union fails, you are obliged to continue making repayments in accordance with the terms and conditions of your mortgage, loan, etc. Further information about how to make repayments will be available from the administrator of your bank / building society / credit union.

The FSCS will only consider accounts that have a credit balance for compensation.

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7. Will you compensate me for any interest I have earned on my account?

Interest owed to the depositor as at the date the bank is declared in default by the FSCS will be paid as part of the compensation amount.

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8. Are offshore deposits covered?

We do not cover deposits outside the European Economic Area (EEA), or in the Channel Islands or Isle of Man.

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9. Does the Scheme cover deposits made in different currencies?

Yes, however deposit claims of UK customers will be paid in UK Pounds Sterling.

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10. Are deposits held by nominee companies covered?

We cover deposits held in client accounts, for example by solicitors, and may cover deposits held by nominee companies. FSCS does not protect non-nominative deposits.

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11. Do you cover deposits made through solicitors and other professionals?

We generally cover client account arrangements (such as pooled accounts), which may be set up by solicitors, stockbrokers, landlords or other professionals, provided the deposit-taker (e.g. bank or building society) is authorised to accept deposits, which would normally be the case. The identities of the underlying clients and details of their respective entitlements to the deposit monies can be provided to the FSCS at the time a claim is made.

The Law Society has its own compensation scheme for its members' investment business, that only applies in the case of dishonesty of a solicitor. In those circumstances claims against solicitors in England and Wales should be referred to it. Claims against solicitors in Scotland should be referred to The Law Society of Scotland.

However, if the solicitor is holding your money in a client account with an authorised deposit-taker that fails, then your claim is against the deposit-taker and you should ask us to deal with it. The Law Society provides further guidance on this.

Claims against some other professionals can be made to us, but only if the claim arises on or after 1 December 2001. If your claim is for activities before this date, look at our Claiming compensation booklet for details of the organisations to contact.

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12. Is a business covered if the bank or building society it holds money with fails?

In general, all retail depositors and businesses are covered by Deposit Guarantee Schemes. Exceptions for certain deposits are stated on the website of the responsible Deposit Guarantee Scheme. Your bank, building society or credit union will also inform you of any exclusions from protection which may apply. If deposits are eligible, the bank, building society or credit union shall also confirm this on the statement of account

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13. How are offset mortgages dealt with?

An offset mortgage is a type of product which links your savings to your mortgage.

If your deposit account is separate from your mortgage account balance, the FSCS would not apply set-off and would pay compensation for the deposit account on a gross basis up to the compensation limit. However, the insolvency practitioner may seek to set-off any balance of the deposit above the compensation limit against the mortgage under insolvency law.

If your deposit account is combined with your mortgage account and effectively operated as one large overdraft, the FSCS would have to treat it as an overdraft and no compensation would be payable.

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The FCA

The Financial Conduct Authority website includes a searchable database of all firms authorised and regulated by the FCA and the Prudential Regulation Authority (PRA).

The FOS

The Financial Ombudsman Service is the official independent expert in settling complaints between consumers and financial businesses

Jargon Buster

Credit union

a financial co-operative which is owned and controlled by its members.

Deposits

money placed in a bank or similar institution to earn interest or for safe-keeping.

Deposit-taker

an organisation which accepts deposits, for example a bank or building society.

EEA

European Economic Area.

Eligible

qualifying for compensation under Scheme rules.