July and August are when we all go on holiday, and sometimes we miss stuff. The above quietly enacted change took place on July 3rd last. I have to say, it passed me by; and it seems to have passed everyone else I know by as well. But even the BBC reported it. However, one Slogger just got the above statement-stuffer from NatWest. It amounts to an almost exact 10% cut in the insured sum offered under the Financial Services Compensation Scheme (FSCS).

The rationale – you’ll love this – is ‘the amount will be reduced to £75,000, as a result of the strength of the pound’. They really do think we’re asleep, and sadly they’re right:

  1. Sterling has strengthened against the euro. It has weakened against the Dollar.
  2. The overwhelming majority of UK savers spend at most two weeks a year in the eurozone.
  3. Zirp has already slashed their income in savings. This is nothing more than a hidden rate cut.
  4. It’s the sort of action a sly Chancellor takes when he sees trouble ahead…not when he sees plain sailing into a gentle sunset.

Conservative MP Andrew Tyrie – who should know what he’s talking about, he being the Tory chairman of the Treasury Select Committee an’ all, said:

“It is absurd that the 16% depreciation of the euro largely brought about by the crisis in the eurozone in general, and the Greek crisis in particular, should be forcing a reduction in the level of protection available to UK depositors”

Being a Tory, Mr Tyrie daren’t be any ruder than that. But I can. What we’re seeing here is the thin end of the wedge being applied up the already hard-pressed bank customer’s unwilling sphincter. The changed exchange rate with one holiday currency is a risible excuse, simple as that.

But if you disagree with me, then I will offer you a bet, honouring all takers. I’ll give you 4-1 that if Sterling collapses against the euro, the FSCS ceiling will not be raised by an equivalent amount by our charming Chancellor.

For me, however, the point here is not that George Gideon Oswald Osborne is a sneaky little hooker-hag as mendacious as he is lascivious: we have, after all, known that for the best part of a decade. The point is that G-GOO is expecting the worst.

Why could that possibly be? Stay tuned for the next injection of Sloglobal markets reality later this morning.

Last night at The Slog: The raging bonfire of inanities

Hat tips to KF, ArchieX and Maybut for much of today’s Slogdata capture


  1. Too true TrT – insurance should be a choice for each individual. Guaranteed insurance produces riskier behaviour.

    (what makes me laugh – ads referring to uninsured drivers as “dangerous drivers” – if you had no car insurance, thus knew you would be on the hook yourself for any and all bills after an accident, would you drive more, or less, carefully???)


  2. I have to say that this has been reported on local radio a dozen times a day for a few weeks now, and that’s across the spectrum of ‘local’ radio, I know because I have it on quietly in the background all day long.


  3. Problem is that the probability of being involved in an accident or needing to make an insurance claim (either or your own making or of somebody else’s causation) irrespective of your personal insurance risk has to be directly related to the amount you are on the road (driving) or the levels of other traffic also there ( congestion) yet there is no account taken of this when any form of related insurance premiums are set. As to any need for insurance whilst the vehicle is not being used ?


  4. The story as told on the BBC was that the EU have a limit defined in Euros on the guarantee that a government can give to bank depositors. If true (and I don’t know whether it is or not), it would explain why the guarantee defined in pounds came down. Of course, as JW points out, the guarantee may not rise if sterling falls.

    Even more importantly, the assumption underlying the guarantee that only one bank would get into trouble is highly questionable given the systematic fragility of the banking system. If all UK banks failed, I doubt that the government could honour the guarantee. The question is whether deposits will be protected up to a smaller amount (say £25k) or whether the same percentage haircut will be applied to deposits whatever the size. Or a combination of the two.


  5. Actually it’s an 11.76% reduction not 10%
    Offshore limits don’t appear to have been cut. For example:
    Jersey have a depositor-protection scheme:
    This is largely in line with similar schemes in place in the UK, Guernsey and the Isle of Man. The main feature of the scheme is that personal depositors are covered for 100% of the first £50,000 of their savings with any one banking group. However, there are certain limitations applicable, including that the total payout is limited to £100 million in any five year period.


  6. The banks are private corporations, What business has the Govt insuring such private businesses to the tune of £75k per deposit, using the taxpayer as a backstop.
    This is another freebie for the banksters.
    I do not see a similr insurance scheme ever being extended to other industries. But then on retirement from Govt, the soft cushioned ,well remunerated Directors sinecure awaits in one of the City Banks for these political troughers.


  7. Does this £75,000 limit apply to saving in National Savings and Investments (NS&I)? I believe 100% of your deposit is guaranteed.


  8. I think this just highlights how much the EU is running things, after the Bank Of Ireland debacle the EU I am sure didn’t want any more capital washing around looking for safety. Therefore now they are making sure the playing field is level for all concerned. Of course the BBC failed to examine this aspect of the debate.


  9. An old friend of mine – a retired police sergeant – once told me that he reckoned the safest driver on the road was a mother on the school run with her kids and several others in a Morris 1000 Traveller with bald tyres and dodgy brakes. Their skill, alertness and care was unequalled apparently. Mind you, his ideas about reducing traffic accidents to almost zero overnight included the removal of unnecessary safety features such as seatbelts and airbags, and the mandatory fixing of a six inch sharpened spike to the centre of every steering wheel in the land. :-)


  10. I think there is also a drive to do away with cash. Removing protection to say £2k would encourage the reverse.

    As for the £85K to £75K reduction – as others have pointed out this is due to EU imposed €100K limit – however there is no reason the government could not have kept it at £85K – the €100K is a minimum.


  11. As a tax payer I accept this as a necessary evil. I have savings, not much, but some tucked away for a rainy day. I dont want to keep it under the bed because the probability that it will be stolen or destroyed in a fire is more likely then a bank collapsing – so I put it in the bank.

    If there was no Deposit Protection Scheme (‘DPS’) in place then every time the banks looked a bit shakey I would pull my money out for the short term and lock my doors and make sure the gas is off. But I won’t be the only one, and so there would be constant bank runs which would only get worse as banks struggle behind a feedback-loop: bank looks iffy, bank run, bank makes short-term fix, deposits go back, bank cant catch from cash flow squeeze caused by previous run, confidence in banking system reduced, bank gets shakey, bank run … ad nauseam.

    Yes, to avoid this there could be capital controls, restricting withdrawals Greek style. But that would only spread the pain over weeks or months, as evidenced in Greece. The capital controls would also make depositors more reluctant to re-deposit on the basis that illiquid cash is useless so better to keep it under the bed. So the banks slowly starve.

    Lastly, if a bank or banks did fail without a DPS the carnage would be unthinkable. Families unable to pay their mortgages or rent would be evicted and become homeless and probably unemployed, there would be starvation as they could no longer afford food, energy deprivation issues. And where would the burden for this fall? Yup, right back on the taxpayer. Only this time you would have thousands of desperate families seeking to survive in whatever way they could. The weak would succumb to the ruthless and when the weak had been culled, the ruthless would turn on you and yours, either in the street on your way home from the shops, or at 2am in your own home.

    So before you let the ‘greed mist’ cloud you eyes, try to think ahead – becuse it’s short-term, myopic, selfishness that has turned modern society into the shitpile it is.


  12. There is a certain nostalgic naivety in this. Imagining we still live in an age where the banks use monies saved to use as loan equity. The print key on a PC changed all that.


  13. Partly through listening to views on this blog I have diversified my banking arrangements to include an account with Handelsbanken, a Swedish bank with UK branches which is allegedly the 20th safest bank in the world and has not been highlighted as a criminal enterprise like HSBC the only other allegedly strong UK bank. Handelsbanken is covered by the Swedish government DPS at 100,000 euros per account. It occurred to me a couple of months ago that the former protection of £85,000 has effectively fallen to £70,000, with the £ strengthening against the euro and I have acted accordingly. Caveat emptor and I also agree with everything Peterloo said.


  14. Peterloo.Agreed.
    If I recall during 2007/8 someone said let biggest bank offenders go to wall & then reimburse ordinary a/c holders up to £85k directly, with various provisos. Now that sounds like a haircut !!


  15. Why should I have to take out my own insurance to protect my cash in an ordinary deposit account. The only reason it is in danger is because of the actions of bankers mixing my deposits with their investment banking casino because regulators (i.e. government) knowingly allowed this to happen and removed the checks and balances which in the past prevented this behavior.



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