Make sure you are protected from bank meltdown | Personal Finance | Finance

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Several Metro branches in west London were besieged last weekend after social media and messaging apps claimed the bank was no longer safe. Metro, which has 1.7 million customers, may have rejected the “false rumours”, but this has highlighted the value of the Financial Services Compensation Scheme (FSCS). The depositor protection scheme applies to UK-regulated banks, including the new breed of challengers such as Metro.

Confidence in Metro has been knocked by falling profits, an accounting black hole and attempts to tap up investors for new funds, but the bank insists it remains “well capitalised”.

Russ Mould, investment director at AJ Bell, said queuing customers revived unpleasant memories of the run on Northern Rock in 2007: “While Metro has done its best to reassure customers that their money is safe, the pictures are damaging to its reputation.”

Challenger banks typically dominate the best buy savings rate tables, as the big four high street names offer dismal rates.

At the time of writing, the top five easy access savings accounts were offered by challengers Virgin Money, Paragon, Sainsbury’s Bank, Shawbrook Bank and RCI Bank.

Aldermore, Al Rayan, Atom Bank, Charter Savings and Tandem also feature, as does Metro with a one-year bond paying 2 per cent.

MoneyComms.co.uk personal finance expert Andrew Hagger said deposits with any UK-regulated bank are protected up to £85,000 per person: “This gives you peace of mind if your bank goes bust.”

This figure is doubled for joint accounts, so couples effectively get £170,000.

If you have more savings you must spread them between different banks to ensure your full balances are protected, Hagger added.

David Black, banking specialist at DJB Research, said the £85,000 limit is per authorised institution. “If you have money with different banks make sure they aren’t all operating under the same overall licence.”

As an example, Bank of Scotland, Halifax, Intelligent Finance, Birmingham Midshires and St James’s Place Bank are marketed as distinct brands but operate under Lloyds Banking Group’s licence.

Black also says to ensure your balance is comfortably below £85,000: “That way any interest you earn will also be covered.”

Some foreign-owned banks are also FSCS members, including Qatari-owned Al Rayan, Bank of Cyprus and Nigeria’s FirstSave.

However, Ikano Bank is covered by the Swedish deposit insurance scheme, RCI Bank by the French and Triodos by the Dutch. These will cover up to €100,000, roughly £85,000, with funds reimbursed in sterling, but some may feel it adds uncertainty.

Visit Your Money online at www.express.co.uk/money



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