Debt management company comments on bank troubles
Released
on: October 10, 2008, 10:58 am
Press
Release Author: Gregory
Pennington Ltd
Industry:
Financial
Press
Release Summary: Saving is a key part of financial management,
says debt management company Gregory Pennington, and consumers
should realise how unlikely they are to lose their savings if
a bank fails.
Press
Release Body: Responding to recent troubles in the banking world,
debt management company Gregory
Pennington reminds consumers that
a bank’s issues do not actually put most people’s savings at risk.
“Some
may be tempted to keep a close eye on their bank’s finances, waiting
to withdraw all their money at the first sign of trouble,” said
a spokesperson for the debt
management company. “Of course it’s vital to protect your
investments, but it’s also important to understand the extent
of the protection offered to normal savers.”
“First
of all, troubled banks don’t necessarily ‘go bust’,
as some headlines may infer. In the case of Bradford and Bingley,
for example, their website informs visitors that ‘Bradford
& Bingley’s branches and savings customers are now part
of Abbey and Santander. One of the largest banking groups in the
world with more branches in the world than any other international
bank.’ For their customers, it’s ‘business as
usual’.
“Second,”
the spokesperson for the debt management company continued, “there’s
the Financial Services Compensation Scheme (FSCS), the UK’s
statutory fund of last resort for customers of authorised financial
services firms. The FSCS means that the first £35,000 of
each customer’s savings with a firm are guaranteed –
even if the company can no longer repay that money, it would be
refunded in full by the FSCS.”
Savers
with deposits over £35,000 may still receive some of their
remaining money, but that would not be guaranteed, and would depend
on how the insolvency process plays out.
Naturally,
many people with savings of over £35,000 may wish to keep
their money with various different banks. Someone with £70,000,
for example, could split it equally between two different banks
and have the entire sum guaranteed.
“Note,
however, that the FSCS compensates people ‘per authorised
institution’ – many banks are in fact subsidiaries
of other financial institutions, so someone who split £70,000
between two banks that share the same parent company would be
guaranteed only £35,000 of their money if that parent company
was declared insolvent.”
As
a debt management organisation, Gregory Pennington
focuses on helping people manage and clear their debts: “In
the vast majority of cases, it makes financial sense for borrowers
to get out of debt before they start saving, as debts tend to
gather much more interest than savings.”
The
company does, however, also provide advice aimed at helping people
stay out of debt in future. “While some people face debt problems because
they’ve financially over-committed themselves over a period of
time, others find themselves pushed into debt by a sudden change
in circumstances (sickness, for example, or unemployment). Without
some ‘rainy day’ money set aside, it’s all too easy to accumulate
small debts which grow into large debts as they struggle to fund
debt repayments at the same time as keeping up with their normal
financial commitments.
“Whether
it’s a few hundred pounds or many thousands, saving for
the future is one of the single most important things an individual
can do in order to safeguard their financial stability in the
future. Since we advise people to start saving as soon as they’ve
settled their debts, it’s worrying to think that the last
year’s events in the banking industry may have put some
people off the idea of saving. Aside from compensating people
whose banks run into trouble, the FSCS serves another vital function:
giving would-be savers the confidence that comes with knowing
their investment is protected.”
Web
Site: http://www.gregorypennington.com
Contact
Details: For more information, contact Melanie.Taylor@gregorypennington.com
(0845 056 6480) or visit the Gregory Pennington website at
http://www.gregorypennington.com/
2012
