Post Office savers covered up to £80k

[TrueBlueTerrier]

http://www.thisismoney.co.uk/news/artic ... _page_id=2

Post Office savers have been handed a safety net on their money of £80,000 - more than double that of other UK savers - thanks to a change in the Irish banking system.

The Post Office's savings scheme is run by Bank of Ireland and operates under the Irish compensation scheme, which has just been bolstered with the announcement that it will now cover savings up to €100,000.

This means that UK depositors with the Post Office will have a compensation limit of up to £79,600 (at today's exchange rates) - more than double the £35,000 covered by the British Financial Services Compensation Scheme.

Previously the Irish savings compensation limit was €20,000 (£10,112), meaning that UK Post Office savers would have had to claim this much in Ireland, which would then be topped up by the FSCS to the UK £35,000 limit.

However, the Irish government has announced it is to cover all its citizens' savings up to €100,000 (£79,600) for all banks and building societies, including the Post Office and Credit Unions. This is now among the highest in the EU.

The change also covers any UK savers with Post Office accounts. These savers are now the most comprehensively covered in the UK after those with National Savings & Investments and Northern Rock, the deposits of which are 100% covered by the UK Government.

The Irish minister for finance, Brian Lenihan, said: 'The Central Bank and Financial Regulator have stressed the soundness and stability of the Irish financial system. This measure provides additional reassurance to depositors in Ireland that their savings are safe.'

The move follows a proposal in July from Chancellor Alistair Darling that the compensation ceiling for UK savers be raised to £50,000 at the end of the year from the current maximum of £35,000. The Tories last week called for this to be carried out sooner.

Darling also suggested UK banking customers should receive compensation for their deposits within one week in the unlikely event of a bank collapse, following the fall of Northern Rock last year.

The Post Office operates under the controversial 'passport system', where customers are compensated by the host country of the financial institution and then further compensated by the FSCS.

The system came under scrutiny earlier this year when the stability of the Icelandic banking system fell into doubt. Some commentators, and even the FSCS, questioned whether it would take longer for savers to receive compensation when they effectively had to apply to two compensation schemes. Icelandic bank Icesave, which has a popular savings account in the UK, vehemently disagreed with this statement.

Now UK customers will only have to apply to one scheme, the Irish one, for the full amount.

Under European law, any banking customer must receive compensation for their deposits within three months of a financial institution's collapse.

The issue of savings compensation has become a hot topic recently with Lloyds TSB's rescue of HBOS through a merger deal, as well as continued concerns over the health of Bradford & Bingley.

[DGP1]

I use BOI so does that mean I'm covered up to £80,000 (I may have to transfer some money around accounts again )