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How to make your savings safer

All UK-regulated* bank accounts in banks, building societies are covered by the Government-backed Financial Services Compensation Scheme (FSCS). So if the bank fails, you’d get back up to £85,000 per person, per financial institution.  Joint accounts get double the coverage i.e. £170,000.


That’s good right? Who could oppose that?  Well I could and do. 


These guarantees appear to protect the customer, but they don’t.  In fact they just give the banks a free-hand to engage in any number of absurdly risky schemes.  And why should the customers care?  Their money is ‘safe’ right?  So there is absolutely no competitive pressure on any institution to act in a conservative or indeed a sane way.  But there is an enormous pressure to drive profits and engage in some really esoteric schemes.  Of course the more profitable something is, typically the more risky it is, but why would you care if you are a banker?  It’s not like the customer cares and anyway, he can always be forced to bail you out anyway, right?


Similarly, let’s make it explicitly clear that there will be no bailouts for any bank or financial institution ever again.  So if a large insurance company want to take on more credit default swaps than they can ever repay, let ‘em go bust and prosecute the directors for fraud.  At least then the positions can be liquidated and recovery can begin. 


So kitty-counters, are you prepared to join with me in the brave new world of thinking for yourself about the security of banks and not being raped for bailout cash for these vultures or are you happy to allow the clowns who have taken us to this point to do your thinking for you?



* Not every account is regulated so do the research for yourself.





  1. Laird says:

    I agree with you completely, SAoT. (And we have the same system in the US.) It’s called “moral hazard”. I’ve gone on at some length over at Samizdata about the problems with government-run deposit insurance, and don’t have the energy to repeat it here. But there are lots of problems with it, all of which would be cured by simply switching to (optional) private deposit insurance.

  2. Paul Lockett says:

    It’s a point I’ve made before and concur with.

    The main barrier to changing the approach at the current time is the EU. There is a directive requiring that all member states mandate deposit insurance of 100,000 Euros, hence the £85,000 level at which it is set in the UK.

    Even a return to the 90% coverage of deposits which was previously in place would return some incentive for “savers” to display a degree of caution.

  3. Single Acts of Tyranny says:

    “There is a directive requiring that all member states mandate deposit insurance of 100,000 Euros”

    Thanks for the tip, I didn’t know that.

  4. SadButMadLad says:

    If you want a risky investment but potentially good returns have a look at as featured on BankOfDave on CH4. No guarantees but good returns – you take your choice and chance.

  5. Paul Lockett says:

    No problem. If you want more detail, it’s directive 2009/14/EC:

  6. Lynne says:

    Bring back savings banks and let the City spivs gamble with their own money.

  7. Single Acts of Tyranny says:

    “let the City spivs gamble with their own money”

    Having them trade as partnerships would do just that. Currently it’s a ‘heads-I-win-tails-I-can’t-lose’ bet.

  8. jameshigham says:

    The Russians put a lot of store by shoeboxes on the top shelf of cupboards.

  9. RAB says:


    Well quite. The banks have privatised the profits and socialised the debts. To big to fail? Well let’s see eh? Let them fail. No more bailouts. Something has to break us all out of this Matrix madness.

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