FSCS Bank depositor protection can disappear without notice - Ros Altmann

    Ros is a leading authority on later life issues, including pensions,
    social care and retirement policy. Numerous major awards have recognised
    her work to demystify finance and make pensions work better for people.
    She was the UK Pensions Minister from 2015 – 16 and is a member
    of the House of Lords where she sits as Baroness Altmann of Tottenham.

  • Ros Altmann

    Ros Altmann

    FSCS Bank depositor protection can disappear without notice

    FSCS Bank depositor protection can disappear without notice

    Fsa Protection – Here One Minute, Gone the Next!
    Isn’t It Time The Fsa Acted To Protect Consumers Properly?

    by Dr. Ros Altmann

    (All material on this page is subject to copyright and must not be reproduced without the author’s permission.)

    16th February 2009

    Did you know that the FSA protection scheme may not actually protect your money after all? Savers have been struggling to find a safe home for their hard-earned money. One of the things they are told to watch out for when shopping around for the best savings accounts is to ensure they are covered by the FSA protection scheme (where the Government effectively protects the first £50,000 of depositors’ money).

    It has emerged, however, that even if you do put your money with one of the institutions currently under the FSA scheme, it may turn out not to be protected by it at all.

    Disgracefully, there is nothing to stop an institution from pulling out of the FSA scheme and, from that moment on, savers are no longer covered. So if you took out a 3 month deposit or 12 month bond with a bank in good faith, expecting to be protected by the FSA, you could find that cover disappears. Even worse, the FSA says the institution can refuse to allow you to transfer your money to another bank that is covered, so your money will be stuck without FSA protection!

    Why has the FSA kept so quiet about this? Most people are completely unaware of this risk. FSA regulation is not up to the job and is failing to protect consumers properly. Surely, at the very least, the FSA should ensure that anyone saving in a bank currently under its protection can retain that protection for the lifetime of their fixed term.

    The public has a right to expect far better from the Regulator, especially in the current environment. If British savers want protection from the UK scheme, it should not be snatched away from them and the FSA must rectify this loophole immediately. Don’t just wait for a problem to arise, why not pre-empt it?!

    What we need is simple:

    Anyone who invests with a bank under the FSA protection scheme must be assured that the scheme will continue to cover them for the whole term of any fixed deposit.

    Ordinary consumers rely on the authorities to protect them. Yet the FSA is allowing them to be misled about the security of its protection scheme. It must urgently ensure that the rules are changed to protect innocent savers who invested in good faith.

    Dr. Ros Altmann
    07799 404747


    1. The FSA has confirmed that if an institution withdraws from its protection scheme, savers with fixed deposits will not longer be protected until the end of their term.
    2. The FSA has confirmed that it cannot force institutions who choose to withdraw from its protection scheme to allow investors to transfer out before the end of any fixed term deposit.
    3. Several institutions have recently pulled out of the FSA scheme, including Allied Irish Bank, the Post Office and Kaupthing Edge. Depositors in those banks have lost their protection.

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