Savers question the wisdom of Building Societies
As the dust starts to settle on the takeover the Cheshire and Derbyshire building societies by the much larger Nationwide Building Society it seems that all is not well with customers of the two smaller societies. Left with no choice they will now see their investments merged with Nationwide but unfortunately many will see the amount guaranteed by the Financial Service Protection Scheme (FSPS) fall.
Under the terms of the FSPS, the first £35,000 of any savings with a separate financial group is protected but with the two smaller societies being merged with the Nationwide they will now all be amalgamated. Someone who had £35,000 invested in the Nationwide, Derbyshire and Cheshire would have had protection for the full £105,000 but those funds will now be amalgamated and they will only have protection for £35,000 in total.
While in many ways this is irrelevant because a group with the power of the Nationwide should survive the current troubles intact, to many people it is a matter of principle and at the end of the day it is their investments.
Many are also unwilling to withdraw early from some of the attractive Derbyshire and Cheshire savings packages as there would be penalties incurred. While the fact they are now part of a larger group should give some comfort, the savers asking the questions do have a point.
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