Smaller UK charities should be seeking to protect their reserves in these uncertain times. Deposits of up to £50,000 are protected under the Financial Services Compensation Scheme – meaning you can claim compensation if the bank you have placed money with goes bust.
The Autumn 2008 newsletter from the Charity Commission included the following advice:
‘The information provided by the FSCS about the Scheme does not specifically mention charities. However, it appears that charities are covered by the Scheme to the same extent as other organisations and individuals.
The FSA Handbook of rules and ./guidance sets out which claims will not be eligible for compensation. Many charities should be eligible to claim compensation but there appear to be a number of important exceptions. In the Commission’s view, the exceptions that are most likely to include charities are:
a company which has two or more of the following:
more than £6.5 million turnover;
more than £3.26 million balance sheet total;
more than 50 employees.
an unincorporated association which has assets of more than £1.4 million;
collective investment funds (these would include common investment funds).
If charities want more information about the FSCS, or wish to submit a claim, they should contact the FSCS directly at:
Customer Services Team: 020 7892 7300’
Charities with reserves in excess of £50,000 would do well to spread their funds around several banks to minimise risk. The days of great interest rates are over and security should now be the watchword. Some of the options we’ve been looking at recently are:
CAF Gold Account – paying 3.64% AER
Cater Allen – Reserve Account for Charities 2.68%AER
HSBC Business High Interest 2.63% AER
Triodos 1.85% AER
Triodos (a Dutch bank) is covered by a Dutch scheme which provides compensation up to Euro 100,000.
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