The Financial Services Compensation Scheme guarantees up to £35,000 of savings with each firm that is authorised by the Financial Services Authority as a bank or building society, i.e. the firm has permission from FSA to undertake ‘Deposit Taking’. You can check this on FSA’s register http://www.fsa.gov.uk/register/home.do .
When institutions merge, sometimes they keep separate banking licences and sometimes they consolidate into one. For example Bank of Scotland,
Halifax
, Birmingham Midshires, AA, Intelligent Finance and SAGA are all covered under the Bank of Scotland banking licence. This means that if you had £35,000 with each of them, should they all have problems repaying your money, you would only receive £35,000 back from the FSCS, not £210,000. However, the Sainsbury Bank brand which is part of the HBOS group has a separate licence. The HBOS/Lloyds merger doesn’t affect this position.
The situation varies from institution to institution. NatWest, Royal Bank of Scotland, Tesco
Personal Finance
, Ulster Bank and Coutts & Co are all part of the same group, but all have separate licences. Thus, if your money was with each of them, you would receive up to the full £35,000 back from each company.
Just to give the full picture regarding Santander, Abbey and Alliance & Leicester; although Alliance & Leicester shareholders have voted for the merger to go ahead, the takeover has not yet been confirmed so until such time the Compensation Scheme still covers Abbey and Alliance & Leicester individually. When this does go ahead it will depend the Banking Licence obtained, whether
Santander
will hold a licence for both or whether they decide to continue under separate licences.
If you have over £35,000 of savings with HBOS, and £35,000 with Lloyds TSB, then you should keep tabs on whether the two firms consolidate their licences as this will determine whether your savings are guaranteed under the Compensation Scheme.
To see who owns which bank and operates under which banking licence please read our guide.
