2018 has at times seemed like a year of change amongst banks and building societies, with a number of name changes, takeovers and the disappearance of some established brands from the savings market.
As a result of these changes, some savers could be worried about whether the Financial Services Compensation Scheme (FSCS) protection they used to have is still in place – have the acquisition or name changes also meant a change to their bank’s licence and therefore the FSCS protection that is applicable?
>> For more information about the FSCS, read our recent Ask Anna.
The easiest way to check whether your bank now shares its licence with another brand is to take a look at our handy FSCS tool – this will identify if your bank or building society has a shared licence and if it does who that licence is shared with.
>> Check whether your provider shares a banking licence
For example, a few years ago, the well-known Chelsea Building Society was acquired by the equally well known Yorkshire Building Society (YBS) and as a result, the FSCS licence was merged. Therefore, those who held funds with both providers may have found themselves holding more than £85,000 in total with the two providers.
In fact, Barnsley Building Society & Norwich & Peterborough Building Society (N&P) were also merged into the YBS licence – so there were at one stage four brand names contained in just one banking licence.
This situation is now slightly more straightforward as YBS got rid of first the Barnsley brand and then, earlier this year, N&P.
Luckily, most changes that have happened in 2018 have not affected the FSCS status for savers involved.
Bank of Cyprus UK, for example, was bought by Cynergy Capital Limited and rebranded as Cynergy Bank. But there was no change in terms of FSCS coverage.
Funds held with Cynergy Bank are still be covered by the FSCS following the sale - as they were with Bank of Cyprus UK - up to a limit of £85,000 per person. The bank remains a UK incorporated and authorised bank and importantly does not share a licence with anyone else.
Harrods Bank was another one that was bought out – this time by Tandem. But as the latter was a new bank, it did not have any savings accounts already, so Harrods Bank customers were not really affected.
Having said this, if savers had more than the FSCS limit because they trusted the Harrods brand, but were not as happy with Tandem, they were unable to withdraw funds from fixed rate bonds and had/have to hold them to fruition, regardless of the balance.
Similarly, a higher profile acquisition this year was the purchase of Virgin Money by Clydesdale and Yorkshire Banking Group (CYBG). In this situation, the Virgin brand has been kept and it still has a separate FSCS licence to CYBG – so it’s business as usual.
One to be aware of though is Holmesdale Building Society, which was bought by Skipton Building Society. The Holmesdale brand has disappeared and the FSCS licence with it, so any funds held with both brands will only be covered by the one banking licence.
If you hold larger amounts of cash, you may be perfectly happy to keep more than the £85,000 (£170,000 in joint names) limit with some providers, but it’s important to be aware of just how much is at risk in the unlikely event that one of your providers fails.
If you would like to find out more, check out our new guide covering the FSCS – which includes a list of all providers that share a banking licence, alongside other useful information.
Or call one of our savings experts on 0800 011 9705. We’d love to talk to you.
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