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Original poster

HBOS - is money is savings secure if it goes under?

46 replies

PavlovtheCat · 16/09/2008 22:08

I am just wondering as I know nothing about money.

Mortgage wise, we are fine - not HBOS. No worries there. However we have an amount of money in savings. A good amount.

If HBOS would get into difficulties, could these savings be in jeopardy?

The 'experts' on the news keep saying 'even if' they get into difficulties, people will not lose deposits...firstly this makes me afraid as that means they will get into difficulties! Secondly, are these deposits shares, or savings?

Cos, if necessary I am happy to sleep on top of my cash!

OP posts:
purpleturtle · 16/09/2008 22:11

The first £35000 are underwritten by some government scheme.

Original poster
PavlovtheCat · 16/09/2008 22:12

and, anything over that is, potentially lost?

OP posts:
mrslurkalot · 16/09/2008 22:13

Hi there, if HBOS were to go belly up you are covered up to £35,000 by the Financial Services Compensation Scheme. If you are lucky enough to have more than this you may want to consider moving some to another organisation (make sure they don't have links with HBOS though).

mrslurkalot · 16/09/2008 22:16

Sorry, just to clarify, that's £35,000 per organisation so to be completely secure you need to make sure you don't have more than that with one organisation.

Original poster
PavlovtheCat · 16/09/2008 22:16

Mrslurkalot - my Dh has inheritance of a little over, which has only just been released and we had decided it was going onto the mortgage, but we had been considering our options with it and stalling. I guess it is safer on our mortgage and time for decisions are now.

Thank you. Blimey, I never thought any of this type of stuff would have any implications on us!

OP posts:
mrslurkalot · 16/09/2008 22:21

You are normally better to get rid of your debts unless you can earn more in interest than you are paying iyswim. I used to work for HBOS and I really don't think they are likely to get into difficulty, but if I was in your shoes I think I would rather be safe than sorry!

Slickbird · 16/09/2008 22:24

I work in an investment bank and although I'm no Fund Manager, I'm sure HBOS will be fine.

LadyMuck · 16/09/2008 22:42

"I work in an investment bank and although I'm no Fund Manager, I'm sure HBOS will be fine."

So what exactly do you do, and how are you regulated that lets you make such a statement publicly?

Original poster
PavlovtheCat · 16/09/2008 23:10

Mrslurkalot DH has said that perhaps we could get a savings % that is higher than our lower interest mortgage, but I am sure the interest on a mortgage is more complicated than that . Oh I think DH will go with the mortgage option, he said as much a few mins ago.

Maybe they will be fine, but look what happened to Northern Rock - within days of media scare mongering thousands and thousands of people stood outside their local branches taking out all their money, putting the nail in the coffin of NR. I don't know much about how it all happened, I guess they were doomed already, but I always suspected that the media had a helping hand....who is to say that wont happen to HBOS?

OP posts:
HollyGoHeavily · 16/09/2008 23:14

Good grief LadyMuck - Slickbird is giving her opinion - she doesn't need to justify herself to you.

I don't work in an investment bank, i'm not a fund manager, i'm not regulated in anyway and I also think HBOS will be fine.

Original poster
PavlovtheCat · 16/09/2008 23:15

slick dont worry I wont come sue you if I leave my money in and it all goes tits up!

OP posts:
LadyMuck · 17/09/2008 00:33

Holly, someone with a reasonable understanding of finance would know how to interpret Slick's opinion. However not everyone on the boards here would, and there may be some people who read "oh an investment banker is saying that I don't have to worry about how much money I have in HBOS". In reality, whilst the risk of losing money over the £35k cap may be low I can't think of anyone who is regulated who could come onto an internet forum and give such a blanket view without some sort of caveat or disclaimer and not be in breach of some code of practice or other.

There was a situation a couple of years back where one of the posters was passing him/herself off as a lawyer. Anyone with a legal background or training could see that she wasn't (for one thing lawyers don't give unsolicited advice without an awful lot of caveats and disclaimers, let alone there was some basic law that (s)he was getting wrong). A number of posters pointed this out but were shouted down. Unfortunately it was those posters with the least real-life legal experience who ended up trusting JudgeFlounce, and ended up trusting her inaccurate advice even though other qualified lawyers were pointing out that it was wrong. You will appreciate that given some MNers were getting wrong advice on issue around relationship breakup, custody etc it all got very messy.

Anyone can have an opionion on HBOS, but if someone is trying to give weight to their opionion because of their job, and in particular is not advising the OP to take a very basic and cheap method of reducing their risk, then I do feel uneasy. There is a disclaimer by MN at the top of each page, but even so.

Pavlov, in case it helps, the £35k limit is per depositor, so if you have a joint account then you are effectively covered up to £70k. See here. When your dh is comparing interest on savings and mortgage rates he should of course remember that mortgage interest is paid out of taxed income whilst savings interest will be taxed (unless ISAed say), so he need to ensure that he is comparing like with like.

RambleOn · 17/09/2008 00:55

FFS ladymuck - this is an anonymous internet forum. Anyone posting on here could be a 12yo child.

lljkk · 17/09/2008 02:48

Which includes you, RambleOn, and Ladymuck, too. Anyone else aware that There's a big fat disclaimer in italic text at the top of the page about the quality of advice on these pages...
For that matter, even investment bankers get it wrong (not that many of them actually have formal qualifications in anything, anyway). LM did well to provide a link to support her statements, at least.

Take it off the mortgage, OP, it's a secure reliable investment, unlike most of the alternatives (advising as just another anonymous person on the 'Net).

SqueakyPop · 17/09/2008 07:33

Interest on savings are taxed, so the real return is much lower than the headline return. You compare this lower number with your mortgage rate.

I don't think HBOS is at risk, but it would do no harm to move anything over 35k to a new account with a completely different institution. It doesn't cost you anything (except a bit of admin), but you would be a winner if the unthinkable were to happen. If you move some of your money, make sure that the bank is not part of the HBOS group.

LadyMuck · 17/09/2008 07:52

Rambleon, it isn't actually that anonymous. Some of us attend meet-ups. Many of us have exchanged email addresses and RL names and addresses for buying and selling, secret santa, Xmas gift etc. There are even meet-ups specifically for people working in the city. Once you know someone's name they are often google-able. In the case of JudgeFlounce the poster gave away enough information to be "identifiable" as a particular named barrister.

After watching vulnerable people getting hurt when someone comes on claiming professional or inside knowledge and gives poor advice then I think it is far enough to flag it up. In the case of investment banks not only is the bank itself regulated, but any individual within it whose opinion counts is also regulated at the very least by a professional body. Slickbird is entitled to give her opinion as is anyone else, but if she is putting forward as a "professional" opinion, then she has to do so within the regulations. Had slickbird advised Pavlov regarding the limits or at least asked her to consider her own view of risk, then I wouldn't have said anything. If Slickbird does say anything to clients in her bank then I suspect that she wouldn't just be saying "HBOS will be fine". Now loads of posters will realise that she wouldn't say that to a client in rl, but equally there are loads of people who aren't sure what an investment bank is, and may be swayed by the opinion.

MadameCastafiore · 17/09/2008 08:07

HBOS would have to be saved by the government - not in the Northern Rock way but in sort of loaning them money out of a special fund - as the UKs biggest mortgage lender it would do untold damage if it went under for everyone, including the government and the economy.

The very worst thing people can do at the moment is run out and take all of their money out of the banking system or one particular bank.

Dh is a fund manager and is certain that it was short selling that did for HBOS yesterday - I think that is the right term - I am a SAHM and have to concentrate hard when he starts talking economics.

And Slickbird - DH agrees with you totally.

WouldYouCouldYouWithAGoat · 17/09/2008 08:11

lol @ 'I am a SAHM and have to concentrate hard when he starts talking economics.' dh has to practically kick me under the table when we go to the bank to discuss mortgages or isa's as i start swinging on my chair and rolling my eyes.

i don't think there is anything to understand it is just a huge pyramid scheme that is falling around our ears.

MadameCastafiore · 17/09/2008 08:46

HBOS shared have rallied this morning and the FSA have said there is no problem with their funding - at least listen to the FSA if no one on here!

LadyMuck · 17/09/2008 09:12

Erm listen to the FSA if you want, but remember this statement from September last year?!

Obviously the people who got burnt by Northern Rock were the shareholders rather than savers, but of course as with any converted building society (including Halifax) there are a lot of savers who are also shareholders.

Just to be clear then, as I'm not sure that there is anybody on this thread who thinks that HBOS will (be allowed to) go under, is there anybody who thinks that if you had, say, £45k in a HBOS account that you shouldn't consider moving £10k to another unaffiliated institution?

LadyMuck · 17/09/2008 09:17

And just to be a bore, whilst the shares may have initially opened higher than yesterday's close they were at 91p 15 minutes ago, almost a tenth of their price this time last year. I think that they are going to have a very tough day or two, but I am not an investment banker.

MadameCastafiore · 17/09/2008 09:23

We have savings with Lloyds and DH has moved some of them to another lender - he reckons everyone should do it as a matter of course.

bossykate · 17/09/2008 09:27

I think the £35k limit is per banking licence? i have savings with BoS and savings with IF (division of Halifax). i've manipulated the situation so that there's less than £35k in each...

dh is now telling me to move all the money out but since one of the accounts is my company one and i've got a liability for CT i'm not sure it's even legal for me to clear out that account...

saltire · 17/09/2008 09:30

Surely though (and I know nothing about this) if HBOS go down then the country is in real trouble, as it's one of the biggest lenders in the UK, and I don't think it would be allowed to fail. Same if everyone takes out tehir money, surely then it would collapse.

MrsTittleMouse · 17/09/2008 09:30

There is a good article on how to make sure that your savings are safe here on the money saving expert site. It has a table with all the linked banks on it, so that you can make sure that you don't have more than £35,000 in each, and also some info on foreign banks.

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