Alistair Darling has acted fast to allay fears that money saved with London Scottish Bank, which has collapsed, might be lost.
Around 10,000 people have savings totalling £250 million with London Scottish. But the Chancellor has confirmed that all retail deposits, including those above the £50,000 maximum limit for automatic compensation through the Financial Services Compensation Scheme (FSCS), will be protected.
The Manchester-based bank, which offers savings accounts and lends to people with poor credit histories, is the latest victim of the economic crisis. It called the administrators in after suffering a shortfall in regulatory capital, having recorded pre-tax loses of £7.4 million in six months to April 2008, and was unable to find a buyer in time.
Commenting on the bank’s demise, the FSA confirmed: ‘The FSCS is now putting arrangements in place to pay back customers and will provide further information for customers shortly. The Chancellor has taken action to protect FSCS-eligible retail depositors above the FSCS limits.’
For more information on the Financial Services Compensation Scheme, visit www.which.co.uk/advice/protecting-your-savings