Banks under stress

How much have you got in the bank?  An obvious thing for an accountant to ask.  When we ask our customers this question, we are not only interested in the business’s financial health.  We are also looking out for the security of our customers’ money.

The Financial Services Compensation Scheme covers UK banks, building societies and credit unions.  That doesn’t mean that the account holder has to live in the UK, but the entity must be UK authorised.

The level of cover depends on the kind of account you have.  The threshold is £85,000 per person.  If you run your business as a limited company or LLP, they are a separate legal ‘person’ and, as such, have their own £85,000 limit.  But if you work as a sole trader, your total cover for all accounts (personal and business) is still £85,000.  Plus even though joint account holders are usually entitled to make claims for £85,000 each, partners in a business are only entitled to a single claim of £85,000 for the business partnership (not one claim per business partner).

If you have more than £85,000, well done.  Also, make sure that you keep your money with banks who have separate banking groups as banks in the same group share a licence and the £85,000 cover works per licence not per “name” of bank.  For example the Halifax and Intelligent Finance are part of the Birmingham Midshires (BM Savings) brand and operate under the Bank of Scotland plc licence.  If you had accounts with both of those, you would only be covered to £85,000 in total.

We recommend to our clients that they check the list and spread their risk accordingly – here is where you can find more information and check your own accounts against the published list of licence holders: https://www.fscs.org.uk/