John Ward reports that some South African bank savers are now having their accounts raided to shore up a different bank, African Bank Investments Ltd. Even more disturbingly, the example he quotes is of a customer whose SA bank is part of the international Barclays group, so the link stretches back to the UK itself.
Almost exactly seven years ago, and over a year before the global banking crisis of 2008/9 hit us, I warned British readers that protection for their savings was limited. At that time (August 2007), you were guaranteed 100% of the first 2,000 in your account, and only 90% of the next £33,000. So the maximum compensation in the case of a bank wipeout, even if you had millions, was £31,700.
Now, and as a result of the crisis (and more importantly, to prevent a system-destroying general run on the banks) the “guarantee” has been increased to 100% of the first £85,000 per person (see FSCS here). That’s per bank group, so if you have more than one bank account make sure they’re not part of the same group.
But why is a guarantee needed in the first place? Surely the money you have deposited is yours, same as if you’d asked them to look after your house deeds.
Not at all. Here is the law as explained by Toby Baxendale on The Cobden Centre website in 2010:
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The Current State of the Law
