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Are your savings safe?

A lot of our customers have been asking us if their savings are 100% safe and are worried about which Financial Institution owns which savings companies and what level of protection the Government gives to savers in the unlikely event that a Financial Institution goes under.

As we reported last week in our article Northern Rock crisis - don't panic be savvy instead, Northern Rock's request for emergency funding from the Bank of England was attributable to the global credit squeeze. Because Northern Rock funds about 75% of its mortgage lending by borrowing money from the international money markets it had difficulty in meeting its day to day lending needs.

The Chancellor Alistair Darling announced last week that the Government and Bank of England would provide a guarantee to ensure that Northern Rock savers wouldn't loose a penny. This guarantee is on top of the existing protection given by the Financial Services Compensation Scheme.

Full details of the Government guarantee for Northern Rock savers can be found on the HM Treasury website. In summary the guarantee covers:

• All accounts existing at midnight on Wednesday 19 September for all future interest payments, movements of funds between existing accounts, and new deposits into existing accounts.
• All accounts re-opened in the future by those who closed them between Thursday 13 September and Wednesday 19 September, inclusive.
• The arrangements will not cover any new accounts set up after 19 September, other than re-opened accounts.

How your savings and investments are protected

Savers and investors are afforded with the following levels of protection:

• Deposit taking firm - 100% of the first £35,000 per individual
• Insurance firm - the first £2,000 of an insurance claim or policy is covered in full, plus 90% of the balance. Compulsory insurance claims are covered in full.
• Investment firm - the limit is £48,000 (100% of the first £30,000 and 90% of the next £20,000) per individual.
• Other EEA Banks and Building Societies (including deposits with UK branches of those institutions) - up to 90% of first €22,222 per individual
• Gibraltar Deposit Guarantee Scheme - the lesser of £18,000 (or the sterling equivalent of €22,222 whichever is the greater) or 90% of all qualifying deposits
• Isle of Man Banking Business (Compensation of Depositors) Regulations 1991 (Financial Supervision Act (IOM) 1988) - 75% of the first £20,000 per individual
• Jersey and Guernsey - no Depositor Protection Schemes

Who owns whom?

Our Savings Companies - who owns whom article, provides details of the each of the main savings companies together with details of which Financial Institutions own them.