Customers are being warned of the dangers of having their loan and savings with the same bank in a new report that has been published by the Treasury, the Bank of England and the Financial Services Authority. The report voices concerns over the Financial Services Compensation Scheme, warning customers that they face a liquidity crisis of their own if the savings they have with a bank are worth less than their mortgage .
The Financial Services Compensation Scheme enables customers whose UK regulated bank fails to make a claim of up to £35,000. Whilst customers must presently deduct any outstanding debts before claiming under the FSCS, any customer with borrowings that exceed their savings may become ineligible for compensation if their bank fails.
In the wake of the Northern Rock saga, no bank should fall into similar difficulties following changes to the banking system which brings the UK in line with other countries and should preclude the chances of a run on a bank occurring.
Customers Warned of Dangers of Having Loans and Savings with Same Bank
Fri, 22 Feb 2008
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