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Are Your Investments and Savings Safe

16 December 2015 No Comment

canstockphoto1696497No matter if you have your investments with an investment company or a savings account in a bank you need to be sure your money is safe in the event the investment company or bank becomes insolvent. Here is the definition of the FSCS also known as the Financial Services Compensation Scheme that will compensate you in the event an investment company or bank fails.
Deposits in Banks and Building Societies
For individuals that have accounts with either building societies or banks that fail the FSCS will contact them. According to the FSCS single accounts up to $90,000 and accounts with more than one individual up to $190,000 are protected. For people that have more than one savings account with several different banks that are all under the same group their accounts are protected up to $90.000 total of all the accounts with banks under the same group.
Deposits with Credit Unions
The FSCS will compensate any customer that has an account with a credit union up to $90,000 should the credit union become insolvent. Customers will automatically receive their payments from the FSCS so they don’t need to contact them. Most customers usually receive their payments in 7 days or less.
Investments
When an investment company declares they are insolvent, they are automatically investigated by the FSCS. Each member is then paid by the FSCS up to $60,000 which is for each member for each investment company. The types of investments that are protected are unit trusts, stocks, and other forms of investments including futures and options. The protection only goes into effect when an investment company goes into default, a product goes under or there is a loss that is the result of poor judgment or advice.
Exchanges that are traded or investments or shares are not protected by the FSCS unless it is found that bad advice was given.
Investments that have been made in a SIPP are normally protected and are usually not affected when an investment company fails.
Deposits in Banks Overseas
Three years ago all countries in Europe increased their payments to customers to $100,000. So any bank that is not a regulated bank in Europe is protected by the UK Scheme of the FSCS. Any bank that is outside of the area is not protected such as the Isle of Man and the Chanel Islands.
The FSCS covers and protects all types of financial institutions however the amount that is protected depends on the financial institution and whether it is a single or joint account. For additional information on the FSCS and what types of accounts and financial institutions that are covered just search online under “the Financial Services Compensation Scheme”. If you would like additional information on the scheme that is used in Europe including countries in the UK you can search online under “the European Financial Services Compensation Scheme” or “the FSCS European Scheme” for any information you need. You can also visit the FSCS website to read more about who is covered and the level of compensation.

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