Are my savings protected?

Q: Can you please clarify whether Lloyds TSB, Halifax and Bank of Scotland come under one umbrella regarding compensation if anything should go wrong in the future?

I've been advised by a member of staff at one of the banks that they are run separately, so if I had money invested in each bank, these sums would be treated independently. However, I was under the impression that with 'groups' you are only entitled to one amount of compensation up to £50,000 per person. 

This has left me rather confused. Can you help, please?

Patrick Connolly is a certified financial planner for AWD Chase de Vere

A: UK-regulated current or savings accounts in banks and building societies are protected by the Financial Services Compensation Scheme. This provides up to £50,000 of compensation per person, per financial institution. From 31 December, this will rise to the sterling equivalent of €100,000 (£80,000).

It's important to understand that your protection is per institution and not per account or per bank. Whether institutions are grouped together will depend on their banking licence and how they are authorised.

Two of the banks you mention, Halifax and Bank of Scotland, are authorised as HBOS, so you would only be entitled to £50,000 compensation for all accounts with these organisations.

However, 'sister' companies are not always linked together. For example, the HBOS companies form part of the larger Lloyds Banking Group, but Lloyds intends to keep these separate and has no plans to merge licences, so if you also save with Lloyds TSB, you will be covered for an additional £50,000.

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Your Comments

It would be useful to have information regarding other institutions in which savers might have their deposits.
What about Santander, Abbey, Alliance and Leicester and Bradford and Bingley?

Financial Services Compensation Scheme increase from 31.12.10.
I have been advised that this has not as yet been ratified by the FSA nor agreed by the several dozen country's involved in ageeing it.

Ann Baxter

How about post office accounts over £50,000 - are they guaranteed ?