Savings Protection Guide
How safe are your savings?
There are two main elements to the security of your savings that is the risk of insolvency at the bank or building society where you keep your savings and whether you are eligible for protection with the Financial Services Compensation Scheme.
Insolvency | FSCS | Subsidiaries | International Banks | Structured products
Credit ratings and capital | Credit rating and capital example
Insolvency
If the bank or building society where you save is unable to repay you your money then it would be considered insolvent. For most conventional savings accounts you would be covered in this event by the Financial Services Compensation Scheme (FSCS).
The risk of a bank or building society becoming insolvent is sometimes referred to as ‘counterparty risk’.
FSCS The FSCS deposit protection scheme is designed to provide a guarantee to savers – up to a set limit – that they can get back their money if an authorised institution (bank or building society) is unable to meet its financial commitments. You are covered up to £85,000 per authorised institution by the FSCS in the case of accounts with banks or building societies. (The same limit applies to accounts with credit unions). You can check with the Financial Services Authority (FSA) to find out if an institution is authorised. |
Trading names or subsidiaries of banking groups or building societies are not covered separately. For example, Birmingham Midshires is part of the Bank of Scotland so you would be covered in total up to £85,000 for any accounts you had with Bank of Scotland and any its subsidiaries (which also includes Halifax). Although Bank of Scotland is part of the Lloyds Banking Group, it is authorised as a standalone entity.
The key is to read the small print of any savings account you are considering or currently hold to see which authorised institution your money is held with, if you are concerned about exceeding your compensation limit with one institution.
Visit the FSCS website for more information about the FSCS.
Authorised financial firms in the European Economic Area (EEA) are listed by the FSA, and are likely to have comparable deposit protection cover but may be covered by different compensation arrangements.
If bank is outside of the EEA but its British-based business is authorised by the FSA deposits with that bank may be eligible for the FSCS.
See the tables below for examples of savings accounts currently available:
Provider | Account | Interest Rate (AER) | Term | Apply |
---|---|---|---|---|
RCI Bank » | Freedom Savings Account | 1.30% | Instant Access | More Info > |
MARKET LEADING. Earn 1.30% gross/AER. Instant Access. No notice periods. Unlimited payments and withdrawals. Pay in from £100. RCI Bank are protected up to a total of €100,000 by the FGDR, the French deposit protection scheme. Manage account online. | ||||
Ford Money » | Flexible Saver | 1.22% | Instant Access | More Info > |
Earn 1.22% AER variable interest. Interest can be paid monthly or annually. Open an account singly or jointly. Minimum deposit £1. Unlimited deposits and withdrawals permitted. FSCS Protected | ||||
AA Savings » | Easy Saver | 1.15% | Easy Access | More Info > |
1.15% gross/AER. Instant Access. Free withdrawals and no notice period. Deposit from £100. Includes a fixed bonus of 0.95% gross fixed for the first 12 months. Quick and easy online application |
Gross is the interest you will receive before tax is deducted.
AER stands for the Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year.
Provider | Account | Interest Rate (AER) | Term | Apply |
---|---|---|---|---|
The Access Bank UK » | 3 Year Fixed Rate | 2.20% per annum | £5,000 | Apply Now > |
Earn 2.20% fixed interest - 3 year term - Minimum deposit £5,000 - No withdrawals permitted. FSCS Protected | ||||
The Access Bank UK » | 2 Year Fixed Rate | 2.02% per annum | £5,000 | Apply Now > |
Earn 2.02% fixed interest - 2 year term - Minimum deposit £5,000 - No withdrawals permitted. FSCS Protected | ||||
Vanquis Bank » | 4 Year Fixed Rate Bond | 2.40% per annum | £1,000 | Apply Now > |
Earn 2.40% gross/AER fixed for 4 years. Save £1,000 - £250,000. No withdrawals during the term. Individual or joint accounts available. Annual or monthly interest. FSCS Protected |
Structured products known as structured deposits have capital protection similar to a savings account. The original capital deposited may be eligible for the FSCS savings protection. The details of a plan should state which authorised institution the deposit is held with and whether it is eligible for FSCS cover.
Capital is at risk in a structured deposit if the counterparty or deposit taker for the plan becomes insolvent.
See the table below for examples of structured deposit plans:
Provider | Plan Name | Maximum Potential Return* | Term | More Info |
---|---|---|---|---|
FTSE 100 Kick Out Deposit Plan | 6% per annum | Up to 6 years | More Info > | |
Capital protected deposit plan with the potential to mature after years 3, 4, 5 and 6. If the plan matures early it will return 6% times the number of years the plan has been in force. Also available for Cash ISA and ISA transfer. |
Two of the key measures of how ‘safe’ an institution is, when it comes to your savings, is the overall credit rating it has and how much capital it holds. Both of these factors would be considered when looking at whether a company would be able to survive and repay savers if it is making losses and in trouble.
Independent agencies such as Standard & Poors and Moody’s provide credit ratings for banks and buildings societies. Company annual reports will show how much capital a firm holds , with this often presented as a percentage of its overall assets.
Credit rating and capital level exampleFor example, at May 2011 Nationwide Building Society had an A+ long-term issue credit rating from Standard & Poor’s, suggesting it has strong capacity to meet its commitments but in relative terms may be more susceptible to negative changes in circumstances and economic conditions. The highest possible rating is AAA.
In its preliminary results for the 2010/2011 financial year, the building society reported a core tier 1 capital ratio of 12.5 per cent.
Core tier 1 capital is defined as being equity (issued shares or common stock) in a company. In the case of a building society, which is a mutual organisation with members and does not have shareholders, this capital is reserves, also called retained earnings.
Savings Accounts Provider Reviews
- AA Savings
- Abbey Savings Accounts
- Access Bank Savings Accounts
- Alliance and Leicester Savings Accounts
- Bank of Scotland Savings Accounts
- Barclays Savings Accounts
- Barnsley Building Society Savings Accounts
- Bath Building Society Savings Accounts
- Birmingham Midshires Savings Accounts
- Bradford and Bingley Savings Accounts
- Britannia Building Society Savings Accounts
- Cahoot Savings Account
- Cambridge Building Society Savings Accounts
- Chelsea Building Society Savings Accounts
- Cheltenham and Gloucester Building Society Savings Accounts
- Cheshire Building Society Savings Accounts
- Clydesdale Bank Savings Accounts
- Co-operative Bank Savings Accounts
- Coventry Building Society Savings Accounts
- Darlington Building Society Savings Accounts
- Dunfermline Building Society Savings Accounts
- First Direct Savings Accounts
- FirstSave Savings Accounts
- Ford Money Savings Accounts
- Halifax Savings Account
- HBOS Savings Accounts
- HSBC Savings Accounts
- ICICI Savings Accounts
- Intelligent Finance Savings Accounts
- Investec Bank Savings Accounts
- Ipswich Building Society Savings Accounts
- Julian Hodge Bank Savings Accounts
- Kent Reliance Building Society Savings Accounts
- Leeds Building Society Savings Accounts
- Lloyds Savings Accounts
- Manchester Building Society Savings Accounts
- Marsden Building Society Savings Accounts
- Melton Mowbray Building Society Savings Accounts
- Metro Bank Savings Accounts
- Monmouthshire Building Society Savings Accounts
- National Counties Building Society Savings Accounts
- Nationwide Savings Accounts
- Natwest Savings Accounts
- Newbury Building Society Savings Accounts
- Newcastle Building Society Savings Accounts
- Northern Bank Savings Accounts
- Northern Rock Savings Accounts
- Norwich and Peterborough Building Society Savings Accounts
- Nottingham Building Society Savings Accounts
- Post Office Savings Accounts
- Principality Building Society Savings Accounts
- Progressive Building Society Savings Accounts
- RBS Savings Accounts
- RCI Bank Savings Accounts
- Royal Bank of Scotland Savings Accounts
- Saffron Building Society Savings Accounts
- Sainsbury's Bank Savings Account
- Santander Savings Accounts
- Scarborough Building Society Savings Accounts
- Scottish Building Society Savings Accounts
- Scottish Widows Bank Savings Accounts
- Skipton Building Society Savings Accounts
- Smile Savings Account
- Standard Life Bank Savings Accounts
- Stroud and Swindon Savings Accounts
- Teachers Building Society Savings Accounts
- Tesco Savings Accounts
- Vanquis Bank Savings Accounts
- Vernon Building Society Savings Accounts
- Wesleyan Bank Savings Accounts
- West Bromwich Building Society Savings
- Yorkshire Building Society Savings Accounts