Independent Financial Life Planners Bishop's Stortford: What are bonds? And how to protect your bonds

Friday, 26 August 2011

What are bonds? And how to protect your bonds

The UK's Financial Services Compensation Scheme (FSCS) now protects up to £85,000 per saver per institution if a bank goes under.

The UK cover roses to the sterling equivalent of the first 100,000 euros on 1 January 2011, with the Republic's "eligible liabilities guarantee" (ELG) covering sums above that until 30 June 2011.
The ELG protection may be extended beyond that date.

If you have a fixed term bond you might wonder how that is protected. If taken out before 11 January 2010, then the following bonds now benefit from the UK's 100% protection of the first £85,000 of savers' money:

Growth Bond
FiveYear Saver
Guaranteed Equity Bond
Guaranteed Capital Bond
Loyalty Bond
Fixed Rate
Cash ISA
Exclusive Saver
Online Bond
Guaranteed Capital Bond Cash ISA

Things are different for the following fixed-term bonds opened between 11 January 2010 and 30 June 2011.
Growth Bond
Loyalty Bond
Fixed Rate Cash ISA
Online Bond

From 1 January 2011 the FSCS cover was increased to 100% of the first £85,000 (100,000 euros) while the ELG will guarantee investments above that level.

There is some complexity to these rules. Experts like Enable Independent tend to advise consumers to spread their savings over various institutions - especially if they have significant sums. But Independent Financial Advisers can help talk you through the complexities to find the right place for you to have your investments.

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IFA Bishop's Stortford

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