FSCS 85K limit , anyone just ignore it ?

[PM3]

How do people feel about the 85K limit on deposits within one organisation and ignoring it
Currently I have a couple of savings accounts where I am a bit over the compensation limit. For example my Marcus account I have a bit over 100k which I potentially need fairly fast access to in the next year or two .
I also have a larger amount ( same reason ) in NS&I but it really irks me the saving rate being lower that if the money does languish for a while it is quite a "loss" of interest compared to lust loading up the one or two accounts I have with a better rate . Sure the NS&I is secure ...but

Big name providers ( Marcus for example ) is worrying about lack of cover really just out there in the miniscule fractions of risk ?

I know, open other accounts blah blah ..... I very recently moved and this nonsense of proving who you are and address proof is a genuine issue at the moment . One provider asking originals ( who the F gets paper bills these days, I haven't had paper bill at my last address for 12 years )

[alscar]

The FCS are proposing an uplift to £110k per account / £220k joint which if accepted would become effective from 1 Dec.
To answer your question though it depends on your attitude to risk ,how much over the current limit you are , who the FI is and probably more important of all what do you rate their chances of failure as ?
I too have more with Marcus which doesn’t bother me in the slightest given who their parent is.
I suppose perhaps one of the more recent “ challenger “ banks might be of slightly more concern as such.

[C69]

Personally I don't ignore it, but then most of my savings are with newer challenger banks (because they usually pay the best rates). However, I hear what you're saying about how onerous the account-opening process is at some banks.

NS&I doesn't bother with the FSCS, because the Treasury effectively guarantees everything that customers deposit. So with NS&I there's no £85k limit.

[LooneyTunes]

Yes: pretty much ignore it completely.

Split my cash over a small number of institutions but follow a few rules:

1) Proper UK banking licenses only (no passported licenses);
2) Watch out for brands sharing licenses;
3) Nothing "special purpose" or with excessive sector focus: i.e. I won't deposit with the outfits that only focus on consumer car finance;
4) Must be either government owned/backed (e.g. NS&I) or have regulatory capital reports easily available (and sensible ratios).

Have a couple of accounts that don't meet those requirements but they are under the limit.

The chances of a UK regulated bank going pop and HMG not stepping in are pretty small. Almost non-existent.

ETA: it would be possible to spread it around more using one of the deposit aggregators, but I don't like the risk profile of those.

[scot_aln]

I'd used HL as I'd viewed them (rightly or wrongly) as a lower risk DA. I find the flexibility of being able to spread across multiple banks and duration of fixed rates to suit planned expenditure effortless vs having to provide ID to numerous banks.

https://www.hl.co.uk/savings/savings-account

Some background reading on DA risks

https://www.ukfinance.org.uk/news-and-insight/blog...

[AB]

Yes, completely ignore it.

As it stands I have £495,000 in Cahoot as they give a good interest rate up to £500,000.

I spread it around up to the max they'll pay a high rate on, rather than what's protected. I am of the opinion that if Santander fk off then there's more to worry about.

[NowWatchThisDrive]

Yep, at least when talking about "proper" (in my book: TBTF, or "systemically important" to use the proper term) banks.

Its main purpose is to deter the conditions that bring about bank failures, rather than deal with them once they've happened.

[Scootersp]

NowWatchThisDrive said:

Its main purpose is to deter the conditions that bring about bank failures, rather than deal with them once they've happened.

Indeed, they certainly can't cope with a few failures and we are told/know(?) that the big banks are intrinsically linked and so there would likely be contagion, which can't be allowed to happen.

The worse case banking crisis is more likely that your nominal amount is preserved/protected but that there is some currency event that means for a time you have limited access/capital controls to any of your funds, while they resolve the situation, which likely results in you losing via what you can end up buying with it once the dust settles. So they get to say that they haven't taken it away, but when you are allowed to transact again, what you had buys you far less.

It's a "we've got you" that works as long as this is enough to convince you that they have got you!

Lebanon recently people were holding up banks for their own money, the retire police/soldiers etc get the same pension they always had but it now cannot sustained them at all let alone in any sort of comfort.

Sobering reading, yes some would say is it's a poorly run tin pot country etc, but the point to me is the residents never saw it coming, even the bank manager, they paid into their pensions, saved their money like anywhere.

https://today.lorientlejour.com/article/1338076/i-...

[MattsCar]

A lot of investment companies split your holdings between numerous FCSC companies, so if things go pear shaped, they will be able to reclaim from multiple institutions.