Don't have an offset mortgage, but heard on Moneybox the other day that if your bank goes under, they take the savings and offset it against your loan. so if your loan is £100k and your savings are £30k, those savings aren't protected under the usual £35k legislation, and will be absorbed into reducing your liability.
We have an offset because we are both freelance and we need to have some cash to fall back on if necessary. While you wouldn't lose out because the savings would pay off part of the mortgage if the bank went bust, it rather defeats the object of having savings in the first place.
I think moving some out is sensible given the climate and also given that offsets are not protected by the 35k rule
Wow, I never knew that. we have offset mortgage with Coventry Building Soc and didn't realise that savings were not guaranteed. I guess you don't exactly lose it cos it goes against your mortgage, but that is our savings in case DH is not working. Must look into it further.