Post Office savings set to enjoy FSCS cover Bank of Ireland applies to set up UK subsidiary

06 September 2010

Post Office logo

Bank of Ireland, which provides savings accounts for the Post Office, has announced plans to transfer part of its banking business to a new UK subsidiary, Bank of Ireland (UK) plc. This will affect the cover available to savers should the bank go bust.

The new subsidiary will be authorised and regulated by the Financial Services Authority (FSA). The transfer will be carried out under the Financial Services and Markets Act 2000, and is subject to approval by the High Court of Justice. If the Court approves the transfer, it is expected to take effect on 1st November 2010.

Is my Post Office savings account affected by the transfer?

Bank of Ireland has written to customers who will be affected by the proposed change. This includes holders of a range of Post Office savings, credit card, Travel Money Card and mortgage products.

What does the change mean for my savings account?

The interest rate and terms and conditions of your savings account won't change. What will change is the cover you would have under the (and its Irish equivalent) if Bank of Ireland went bust.

Currently, your savings and deposits with Bank of Ireland are protected by the Irish Deposit Guarantee Scheme, which covers deposits up to a limit of €100,000 (around £83,000). In addition, deposits in excess of €100,000 are further protected by an Irish government top-up guarantee scheme until that scheme expires. For most savings accounts, this is 31 December 2010.

Following the transfer on 1st November 2010, the first £50,000 of any deposits you hold with Bank of Ireland (UK) plc will be protected under the UK (FSCS), in line with most other UK banks and building societies.

In addition to the FSCS, the following guarantees will apply:

  • Any account balances over £50,000 held in an 'on demand' deposit account will continue to be fully guaranteed under the Irish government scheme until 31st December 2010. This applies to the following
    accounts: Instant Saver, Reward Saver, Easy Saver, Variable Rate Cash Isa.
  • For fixed-term deposit accounts opened between 11th January 2010 and 31st December 2010 with a term of up to five years (or if you had a fixed term deposit that was opened before 11th January 2010 that has since then been ‘rolled over’ into a new fixed term product with Bank of Ireland after 11th January 2010 for a term of up to five years), any amount above £50,000 held with Bank of Ireland (UK) plc after the transfer will continue to be fully protected by the Irish Government top-up guarantee scheme until your deposit matures. This applies to the following products: Growth Bond, Loyalty Bond, Fixed Rate Cash Isa.

Protect your savings with Which? Best Rate savings accounts

We consider the safety of savers’ money of primary importance when selecting Best Rates, even before interest rate. To be a Which? Best Rate account, banks have to be:

  • signed up to the UK Banking Code
  • authorised by the Financial Services Authority and
  • fully covered by the Financial Services Compensation Scheme (FSCS)

We exclude any bank which isn’t fully authorised by the FSA and fully covered by the FSCS, even if it is covered by another country's compensation scheme. This followed the Icesave collapse, when it became clear that the Icelandic compensation scheme did not have the funds to pay out to Icesave’s savers.

If the Post Office's savings products do come under the cover offered by the FSCS from 1 November, we will include them in our Best Rate analysis. If they are competitive, they may be Best Rate accounts.

For more information regarding the Financial Services Compensation Scheme (FSCS) and how to ensure your savings are safe, read the Which? guide.

Which? Best Rate savings accounts

Which? compares savings accounts based on stringent criteria in order to help you make the most of your money. We look at standard savings accounts as well as fixed rate savings accounts and cash Isas.

For more information on savings accounts and how to choose the right one for you, read the Which? advice guide.

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