Martin Lewis has been appearing on a whole host of shows and broadcasting platforms in recent weeks, as the Money Saving Expert founder has done his best to share his financial expertise during the coronavirus crisis. During the COVID-19 pandemic, it seems that some have wondered whether their money is safe if it is stored in UK bank accounts.
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Having been asked the question via livestream on Good Morning Britain last month, Mr Lewis was on hand to reassure those at home.
It came as presenter Kate Garraway had explained that the viewer who had written in had reported people they know “clearing their bank accounts out and holding cash”.
They added that this was because “they’re so worried about it”.
“There’s a feeling that things are crashing,” she added.
Putting concerned savers at ease, Mr Lewis replied: “Things are certainly safer in your bank than they are being held in your home, where any home insurance is protecting you, you usually get up to £1,000 in cash protection.”
Mr Lewis went on to say that significant sums of money up to a certain amount are safer in banks, as he explained what Financial Services Compensation Scheme (FSCS) protection meant for members of the public.
“The rules in the UK are simple,” he said.
“UK regulated savings accounts – which almost every single one that anybody’s heard of are – you are protected up to £85,000 per person, per financial institution.
“That is backed-up by the Government, who I would be very surprised to see let a bank go bust at the moment because it’s so crucial.
“Even if it did, they would probably move the savings pot.”
While that may put some people’s minds at ease, others may wonder about what would happen in an even worse-case scenario: if the UK went bust.
Preempting the question, Mr Lewis continued: “If the state went bust, well we’d all have a bigger problem with our savings.
“So I would suggest up to £85,000 in any financial institution you are safe, yes.”
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FSCS was set up by parliament and is funded by the financial services industry.
A completely independent and free serivce, eligible savers can claim compensation should financial firms fail.
“You’ll keep all the compensation you are owed when you claim directly through us,” the website states.
The scheme offers protection for savers holding their money in a UK-authorised bank, building society of credit union account, should it fail after January 1, 2017.
If this does happen, then FSCS will automatically compensate them, up to a certain limit.
This is up to £85,000 per eligible person, per bank, building society or credit union, and up to £170,000 for joint accounts.
FSCS also protects certain qualifying temporary high balances of up to £1million for up to six months from when the amount was first deposited.
“You can easily see how much of your money is protected by using our protection checker,” the FSCS website states.
However, it’s important to be aware that these limits are per financial institution per person, and as such, where a person holds their money could have an impact on how much compensation they’re entitled to.
FSCS explains: “If you have money in multiple accounts with banks that are part of the same banking group (and share a banking licence) we have to treat them as one bank.
“This means that our compensation limit applies to the total amount you hold across all these accounts, not to each separate account.”
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