Understanding The FSCS Temporary High Balance

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Did you know the FSCS protects temporary high balances in your bank account, building society account or credit union account of up to £1 million for six months?

In this article, Finura Chartered Financial Planner, Glen Bastick, dispels the myth about the impact of having multiple bank accounts.

We sometimes find ourselves in a situation which prompts us to reevaluate our banking strategies. Life events such as inheritance, sale of property or business and other windfalls can lead us to believe that we need to spread our funds between banks with no more than £85,000 deposited per bank. 

This can be more complex when we realise that several bank and building society brands are owned by the same banking group and operate under the same UK banking licence. For example, RBS operate under the NatWest banking licence, just as Halifax (previously known as Halifax Building Society) is a British banking brand operating as a trading division of Bank of Scotland, itself a wholly owned subsidiary of Lloyds Banking Group. Therefore, in both instances you are eligible for one FSCS limit. This can often lead to panic and confusion when in fact financial manoeuvring is not required at all. 

The lesser known FSCS temporary high balance rule is a crucial safety net. Depositors are protected up to £1m for a period of 6 months, with the protection beginning from the date the temporary high balance is credited to an individual depositor’s account.

Rather than having to succumb to panic and sometimes create financial complexities, the 6-month window allows us to look at our finances through a clearer lens. Furthermore, we can take time to seek advice and make informed decisions which are aligned to our long-term financial goals.

At Finura we use lifestyle and cashflow modelling to help Clients create context of their financial plan, stress test scenarios and ultimately ensure decisions made today are of benefit in both the short, medium and long-term.         

If you would like to discuss the above in more detail, please contact a Finura planner here.

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