Depositor Protection Scheme and Your Savings
Each individual banking license is separately protected by the Financial Services Compensation Scheme (FSCS)’s Depositor Protection Scheme, but the separate trading styles within that license are not separately protected.
The FSCS provides protection up to £85,000 of deposits per person, per banking license, in the event that the Bank was unable to repay depositors. Joint accounts may therefore be covered to a maximum of £170,000 per banking license.
This means that for example, in the event that you had savings with both Lloyds TSB Bank & Cheltenham & Gloucester and they were both unable to repay your deposits, there would only be a single payout of £85,000 because both trading names are covered under one single banking license. The same would apply for example with Halifax and Saga. The list of banking groups and their respective licenses can be found on the FSCS website.
As well as individual deposits, small businesses’ savings may also be covered by the FSCS. Therefore if you are a sole trader business or you are in a partnership, remember that your individual £85,000 protection limit may also include monies held in your business accounts.
The FSCS is funded by way of a levy across the financial services authorised firms. For the depositor protection scheme, the first port of call for funding would come from similar deposit takers and then, if this did not provide enough cash, other sectors such as insurers, the fund managers and advisory firms would also have to contribute. In the event of contagion across a number of large banks, it is possible that these levies could put additional strain on surviving firms.
Deposit based savings advice is not regulated by the FSA.