Don't Panic

The credit crunch continues to spring surprises, with no doubt more to follow the recent failure of Lehman Brothers and difficulties experienced by both Merrill Lynch and AIG in America, and HBOS in the UK.

Whilst investors in equity markets must accept short term volatility, the security of cash deposits has recently become a prime concern for many.

It is certainly an opportune time to consider the last resort protection offered by the Financial Services Compensation Scheme in the event of the failure of authorised UK Financial Services firms.

On the 1st October 2007, the compensation limit for deposits was increased to £35,000 per person for the total of accounts with a deposit taking firm. The limit does apply to each separately authorised institution but of course some banks are part of a larger group, potentially limiting protection, for example if accounts are held with both Halifax and Bank of Scotland, protection would be restricted to £35,000 per person.

Other investments benefit from protection of the first £30,000 and 90% of the next £20,000, a total of up to £48,000 per person, with long term insurance, including Life Assurance contracts and Pension plans benefiting from a limit of 100% of the first £2,000 and 90% of the remainder.

If a review of personal financial circumstances would be helpful, do contact an independent financial adviser at Lycetts.