Q I ponder in the event you may also help me. I’ll shortly obtain the proceeds from the sale of a second house and am involved that the funds is not going to be protected after they attain my checking account. The conveyancer will solely deposit the funds in a single account and it could take time to divvy up and ship the cash to totally different accounts. Might you supply any recommendation please?
A If the sale proceeds are greater than £85,000, the quantity over that restrict is not going to be lined by the Monetary Providers Compensation Scheme (FSCS), which protects deposits held in a financial institution, constructing society or credit score union account ought to the monetary establishment go underneath. Nonetheless, if the proceeds had come from the sale of your primary residence, you’ll have gotten the good thing about the safety of what the FSCS calls “non permanent excessive balances”. This extends FSCS safety to as much as £1m for six months and it applies not solely to cash from the sale of a house but in addition to different life occasions that may create massive sums equivalent to a payout for voluntary or obligatory redundancy, a divorce settlement or an inheritance, amongst others.
It could be time-consuming however if you wish to make sure that all of your cash is FSCS protected, you have to to divide the sale proceeds by 85,000 and use the outcome to find out what number of financial savings accounts you want to open. To permit for curiosity probably taking your financial savings over the £85,000 restrict at every establishment, I recommend that you simply put £80,000 into every account relatively than the complete £85,000.
It’s also value checking that you do not have greater than £85,000 in accounts inside a banking group that holds the “deposit-taking license”. That is as a result of the FSCS safety is restricted to £85,000 a license not per branded account. So, for instance, when you have multiple account with banks which are a part of Lloyds Banking Group – which incorporates the Financial institution of Scotland (which holds the license), Birmingham Midshires, Halifax and Clever Finance – safety might be restricted to £85,000 throughout all of the accounts. The identical is true of different members of Lloyds Banking Group – Cheltenham & Gloucester, Lloyds Financial institution Non-public Banking and Scottish Widows Financial institution – which all function underneath the license held by Lloyds Financial institution. Sure, it’s complicated however you will discover out extra on Moneyfacts’ who owns whom? pages.