Eurozone crisis raises fears over cash held outside the British safety net

The safety of their money is once more weighing heavily on the minds of savers as the world’s banking system struggles to accommodate the write-offs announced in last week’s do-or-die eurozone deal. ....
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There are also dangers closer to home. ‘Offshore’ savings providers, typically divisions of mainstream UK firms based in the Channel Islands or the Isle of Man, are not covered by Britain’s Financial Services Compensation Scheme. Instead they must rely on local schemes that tend to be more complex, less generous and, possibly, less reliable.

The Jersey and Guernsey schemes, for example, cover deposits up to £50,000. But a complex overall ‘cap’ of £100 million, which cannot be exceeded in any five-year period, applies on top of a saver’s £50,000 limit. The Isle of Man applies a higher, £200 million cap. Theoretically, these caps could reduce savers’ compensation to nothing.

On the £50,000 limit, a spokesman for the Jersey scheme says: ‘We will move to a higher limit if Guernsey and the Isle of Man move, but we do not believe in differing standards between finance centres.’