Merger cuts your savings safety net
SAVERS with Virgin Money, Yorkshire Bank and Clydesdale Bank face changes to their compensation limits later this year.
Clydesdale and Yorkshire Bank Group (CYBG) bought Virgin Money last year to create the UK’s sixth largest bank.
It plans to change the name to the betterknown Virgin Money brand, with its branches due to be renamed by October 2021.
But changes to the compensation savers will be entitled to may come a lot sooner.
Under the Financial Services Compensation Scheme (FSCS) savers are guaranteed to get the first £85,000 of their savings back (£170,000 for joint accounts) in the unlikely event their bank or building society collapses.
The limit covers all the money you have with that institution — easy-access accounts, fixed-rate bonds, cash Isas, notice accounts and even your current account. You get extra protection following a significant event, such as selling your home, receiving an inheritance, a big insurance policy payout or winning on the Premium Bonds or Lottery. Savers in this position benefit from a £1million limit per institution for up to six months
The most confusing part for many savers is what counts as an institution. This all comes down to its banking licence.
Many banks share a licence with others in the same group. Where they do, the FSCS treats them as if they were one bank.
Currently, CYBG has a licence and so does Virgin Money. It means you have £85,000 worth of cover with each bank — a total of £170,000. But once the group moves to share a licence, you will have only one lot of £85,000 protection for all your accounts with both.
A spokesman for Virgin Money told Money Mail: ‘We plan to move to a single banking licence before the end of 2019. We’ll communicate any changes to customers at the appropriate time.’
Other recent changes include RCI bank, owned by car manufacturer Renault Group.
It has operated in the UK since 2015, originally giving savers €100,000 of cover under the French Deposit Guarantee Scheme. But in March, it switched to a UK licence to ‘strengthen its roots in the UK’.
Beehive Savings (launched last month) is a trading name of the Nottingham Building Society and they share a single licence. So any money you have over both organisations will qualify for just one lot of compensation.
Others which share a licence include Halifax, Bank of Scotland, BM Savings and Saga, where Halifax is the official deposit taker.
However, some banks hold separate licences despite being part of the same group. NatWest and RBS, for example, are sister banks (both in the RBS group), but you get the full £85,000 cover with each.