A happy Tuesday to you!
It is, if you’re a banker. The US is trying to approve a £400bn “Britney Spears” fund (oops! I did it again…) to basically cover intransigent bank loans.
The thing is, I agree with all this. Regular readers will know that I’m an ardent free-marketer. The cost of the bailout is way less than the overall benefit we’ve all had from over a decade of light-touch regulation and massive fiscal expansion. It’s done us very nicely, thank you, and we’re just paying what will be seen in years to come as a necessary but hardly draconian price.
I say that, despite the fact that I have no idea how safe MY OWN money is.
Like most small business owners, I have a personal account, savings and business account with the same bank. I’m starting to wonder if that should be rephrased as “I’ve got all my eggs in one basket”.
Personal money is fairly safe. The government is currently promising, through the Financial Services Compensation Scheme (FSCS) that it will cover 100% of all personal account cash up to £35,000 (and Tory boss David Cameron is lobbying for this to be increased to £50,000). This applies to each individual financial institution, so if you have £35,000 with Barclays and £35,000 with NatWest, both will be covered. If you have two accounts with Barclays, with £35,000 in each, only £35,000 will be covered. Similarly, if you have accounts with both NatWest and Coutts with £35,000 in each, only the first £35,000 will be covered, as both brands are part of the same institution.
The FSCS also protects £48,000 out of the first £50,000 of a wide range of qualifying investments, so popular schemes like ISAs are also fairly well protected.
But what about my business money? Because I’m fairly prudent, I have built up a slush fund of savings in my business account. It’s not just for a rainy day- it’s the sort of money that lets me take on bigger contracts and so expand the business. Despite diligent research, I can’t find anywhere that suggests business funds are afforded any protection whatsoever.
So, do we have any comebacks? I suspect not. And if that’s the case, should I split my business funds between different banks? All comments welcomed!
Filed under: current affairs, finance | Tagged: business, credit crunch, finance, financial security, financial services compensation scheme, FSCS, protection, regulation, start a business
