Financial Services Compensation Scheme | Royal Bank of Scotland

Summary of key changes


• For individuals, small business depositors and Corporate & Commercial depositors (who were protected by FSCS prior to 3 July 2015 and from that date onwards), the change to the compensation limit will not take effect until 1 January 2016. This means that until 31 December 2015 these customers will continue to be protected up to £85,000.

• The change to the limit had immediate effect for large companies and small local authority depositors as these businesses are new to the scheme. These customers are therefore protected up to £75,000 from 3 July 2015 onwards.

• Until 31 December 2015, individuals,  small business depositors and Corporate & Commercial depositors (who were protected by FSCS prior to 3 July 2015 and from that date onwards) who have balances of more than £75,000 with the Royal Bank of Scotland will be able to reduce their balances by up to £10,000 without incurring an Early Closure Charge (including fixed rate products). For example, if your total balance across deposit holding products is: 

- £79,000 - you will be able to withdraw up to £4,000 without an Early Closure Charge 
   
- £85,000 - you will be able to withdraw up to £10,000 without an Early Closure Charge

- £115,000 - you will be able to withdraw up to £10,000 without an Early Closure Charge. Any further withdrawal will be subject to the Early Closure Charge associated with the relevant product(s).

- £74,999 or less – Customers wishing to access funds in one of our fixed rate products early would incur an Early Closure Charge in line with the terms of the account.

• The compensation limit, and the right to withdraw excess funds above the limit (free of Early Closure Charge or loss of interest) applies to money held in:

- All Current Accounts

- Eligible Business Savings accounts

- Eligible structured deposit accounts, for example Liquidity Notice & Treasury Reserve

 

What does this mean for me?


This change will not affect the overwhelming majority of customers. The new deposit protection limit will continue to protect more than 95% of all customers completely. 

Where your protection limit continues to provide cover of up to £85,000 until 31 December 2015, you will have time to adjust your balances to stay within the new limit, if you wish to do so. If you have more than the new limit from 1 January 2016, some of your money may be at risk if the bank fails.

What is the impact on newly eligible Corporate and Commercial customers?


Eligible deposits of large companies [1] and small local authorities [2] are eligible for FSCS protection from 3 July 2015 onwards. The £75,000 deposit protection limit will apply from 3 July 2015 since these deposits have not previously been protected.

[1] Large company means a body corporate which does not qualify as a small company under section 382 of the Companies Act 2006; [2] Small local authority means a local authority with an annual budget of up to EUR 500,000

 

 

How much can I withdraw due to the changes in the cover in the FSCS deposit scheme?


You can withdraw any monies you have in an instant access account i.e. current account, Instant Saver Account etc, to reduce your limit following the normal process. The only exception is where you wish to withdraw a balance held in a fixed term product i.e. Liquidity Notice or Treasury Reserve. In these cases you can withdraw up to a maximum of £10,000, depending on your balance in the account,  without incurring an Early Closure Charge. In these instances if you would like to review your total deposits and consider reducing monies held, please contact your local relationship management team. During the transitional period to the 31 December 2015, your local relationship management team  can help you  if required  make arrangements for early withdrawal and waiver of any fees or charges incurred as a consequence.

 


Example scenarios


Balance in a fixed term product are:


You can withdraw


Total balances
covered from 1/1/16

£79,000

Able to withdraw up to £4,000 with no Early Closure Charges

£75,000

£85,000

Able to withdraw up to £10,000 with no Early Closure Charges

£75,000

£115,000

Able to withdraw up to £10,000 with no Early Closure Charges and any further withdrawal will be subject to any Early Closure Charges associated with the relevant product(s).

£75,000

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Please note, as the limit for large corporate and small local authorities is not changing (it has been set at £75,000 from 3 July 2015 – the date when these depositors became eligible for FSCS protection) the ability to withdraw up to £10,000 of a fixed term deposit without incurring an Early Closure Charge does not apply.

How to withdraw funds if you have over £75,000 deposited with the Royal Bank of Scotland


• You can withdraw funds from an instant access account e.g. current account, Instant Saver Account at any time by simply visiting your local branch or logging into Online banking and transferring your funds to another bank or building society. If you want to withdraw the funds from a Royal Bank of Scotland savings account using Online banking you will need to transfer the funds into a Royal Bank of Scotland current account before transferring them to another bank or building Society or visit a local branch and withdraw cash.

• You can withdraw funds from a fixed rate account or limited access product (for example: Structured Deposit e.g. Liquidity Notice or Treasury Reserve) from 1 October 2015, by speaking to your Relationship manager or Local Business manager.

 

 

Structured Deposits

If you hold a structured deposit with us , you must call us and make the redemption request over the phone. You will not be charged any early redemption fees for redeeming part of your Bond. However, due to the nature of structured deposits, the amount that we will return to you will reflect current market conditions such as interest rates, level of index and index volatility.

When you originally took out your Bond, each sterling pound invested had a nominal value of £1. During the term of your Bond, the redemption value changes and may, at any time before maturity, be higher or lower than £1.  This means that, in order to reduce your FSCS exposure by up to £10,000, the amount of the partial redemption could be more or less than requested withdrawal, depending on the redemption value at that time.  When your Bond matures, the value will be at least £1 per £1 invested. 

If you decide to make a partial redemption, we will tell you what the current redemption value is, which could be impacted by locked-in interest and market volatility. The actual redemption value may be higher or lower than the indicative value we told you about and may result in you receiving less or more than you have anticipated.

If you decide to make a partial redemption from a Bond that is held in an ISA, then the monies redeemed will lose their tax-free status.  You may therefore want to consider transferring the partial redemption from your previous years’ ISA subscriptions to another ISA provider.

You can find out the latest redemption value by calling the number below. This may help you to decide what course of action to take, if any.  Please note that our staff cannot give you any advice.  If you need advice as to what you should do, please speak to an authorised Financial Adviser. If you don’t have an authorised Financial Adviser, you can search for one here: https://www.unbiased.co.uk/

If you hold a non-ISA Bond and you’re a UK tax-payer we’ll deduct income tax at the basic rate (20%) from any gross interest included in the redemption value. This means you’ll get back a net interest payment. Higher and additional rate taxpayers will need to declare this interest payment on their tax return.

If you hold deposit balances over £75,000, meet the conditions that the PRA have set and would like to make a partial redemption, please call us on 0345 600 8168 minicom (0800 015 0870). 

Other important information

FSCS Telephone 0800 678 1100

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