Starting this November, customers with savings accounts through the Post Office will be Savers with accounts at the Post Office will be protected by the UK Financial Services Compensation Scheme in light of the concern revolving around how the Bank of Ireland is the Post Office’s current guarantor.
Up until the new date, savers using the Post Office for their financial needs, including savings accounts and ISA savings, had depended not on the UK FSCS but upon the Irish Deposit Guarantee Scheme, since the Bank of Ireland was the operating financial institution that handled the financial instruments, and by extension the Irish taxpayer.
After the recent failure in Iceland in regards to UK Icesave account holders and the lack of any compensation scheme, industry experts have issued warnings that any possible taxpayer bailout of a select number of Post Office accounts would come to depend on a similar foreign compensation scheme.
In direct answer to such criticism, the Bank of Ireland has set up a British division, to be capitalised separately, in order to allow its customers to avail themselves of the UK FSCS in the event of a persnoal or business bank account failure; the British protection scheme offers up to £50,000 in secured reimbursement. The new bank will fall under the authority and regulatory purview of the Financial Services Authority, but must first be approved by the courts, and barring any roadblocks the transfer of accounts to the UK entity is scheduled for the 1st of November. The Post Office has already begun a postal campaign to inform its customers of the pending change.
While the UK FSCS actually offers less compensation than its Irish counterpart (which offers €100,000, or around £83,000), concerns regarding the overall economic health of Ireland have led to savers clamouring for more security.