You can save safely with Banks and Building Societies because of the UK governments savings safety net.
All British savers have the first £85,000 of cash protected in the event of their bank or building society going bust from the 1 January 2011.
This £85,000 limit is applied ‘per individual, per bank’, so if you have more money than this to make sure your savings are government backed put any cash that you have more than the £85,000 limit in to another bank or building society. Remember that joint account customers can get up to £170,000 refunded if their bank fails.
The savings compensation was brought in after the banking financial crisis a few years ago and basically means that If you’re bank or building society hits the walls you are protected. This means that savers can claim back up to £85,000 back from the Financial Services Compensation Scheme (FSCS) – £170,000 for a joint account.
The £85k and £170k (joint account) limits do not apply to money held with National Savings & Investments, where all of your money is 100% guaranteed by the Government.
As Building societies are mutuals, where each member is effectively a shareholder, all building societies are independently governed by their own boards and cannot be owned by another institution. So each of the nation’s building societies will be separately covered by the FSCS up to £85,000 for each member.
Building societies will tend to support each other if the worst happens and their self-protecting outlook means another society is likely to step in and merge with another that may be in trouble.