It has become known as the £31,700 question: what if Northern Rock actually went bust? Well, if the worst were to happen, savers would not lose all their cash.
Savings accounts, including those with Northern Rock, are protected by the Financial Services Compensation Scheme (FSCS). This is a safety-net funded by UK financial institutions. The idea is to refund savers if a bank or other financial institution goes under.
However, the level of compensation offered by the FSCS is tiered. This means that savers – particularly those with lots of money in their accounts – may only get part of their money back.
Savers are guaranteed to get 100 per cent of the first £2,000 of their money back. As for the next £33,000, the FSCS guarantees to refund 90 per cent of this money, making a guaranteed total of £31,700.
But what about people with more than £35,000? Whether or not they get all or just part of their money back is anyone's guess.Reuse content