Can you trust small banks with your savings?

Summary

The video script discusses the importance of evaluating smaller banks before entrusting them with your savings. It advises checking the Financial Conduct Authority's register for legitimacy and ensuring funds are protected under the Financial Services Compensation Scheme. Customer service, access methods, and ethical considerations are also highlighted as crucial factors. The script reassures viewers that smaller, authorized banks can offer competitive interest rates and quality service, urging them to use a provided checklist to make informed decisions.

Takeaways

• 🏦 Check the Financial Conduct Authority's register to verify if a bank is authorized and legitimate.
• 🔐 Authorized banks offer better protection and access to the Financial Ombudsman service for dispute resolution.
• 💼 The register provides genuine contact details and websites, reducing the risk of scams.
• 💵 Ensure your money is protected under the Financial Services Compensation Scheme, which covers up to £85,000.
• 🌐 Be aware that smaller or overseas banks might have different protection schemes, affecting your savings' security.
• 💬 Research customer service quality through online reviews and personal experiences.
• 📞 Consider the bank's preferred communication methods and whether they align with your needs.
• 🏢 Digital-only banks may not have physical branches, which could affect your banking preferences.
• 🌐 Ethical considerations are important; research the bank's funding practices to ensure they align with your values.
• 🔍 Use resources like Smart Ming and Best Buy tables to compare banks and make informed decisions.

Q & A

How can you verify if a bank is legitimate according to the script?

You can verify a bank's legitimacy by checking the register of the Financial Conduct Authority to see if it is authorized.

What benefits does putting your money with an authorized firm provide?

Putting your money with an authorized firm provides better protection if things go wrong and access to the Financial Ombudsman service.

How does the Financial Ombudsman service assist customers?

The Financial Ombudsman service is a free service that handles disputes between banks and customers, where you can escalate your complaint if you don't get an initial satisfactory response.

What does the financial services compensation scheme protect and up to how much?

The financial services compensation scheme protects up to £85,000 of your savings held with a bank, building society, or credit union.

What are the implications of a bank not being covered by the FSCS?

If a bank isn't covered by the FSCS, your money isn't protected under the scheme, and you might face issues like exchange rate problems and communication barriers if it's an overseas bank.

How does a digital-only bank ensure customer money is protected?

A digital-only bank, like an Electronic Money Institution (EMI), holds customer money in a separate, ring-fenced account, ensuring it's protected even if the provider fails.

What is the significance of a bank being backed by the government like NS&I?

A bank backed by the government, such as NS&I, ensures that your money is 100% secure even if it's not covered by the FSCS.

How can you gauge a bank's customer service for smaller or lesser-known banks?

For smaller or lesser-known banks, you can gauge customer service by checking Google reviews, reviewing feedback on financial service sites like Smart Money People, and testing the bank's contact methods.

What factors should you consider when evaluating a bank's accessibility for your money?

You should consider if the bank is digital-only or has physical branches, and whether their communication methods align with your preferences, such as phone, email, or online chat.

Why is it important to know about a bank's ethical stance when choosing where to save your money?

Knowing a bank's ethical stance is important to ensure that their funding practices align with your values, as some banks may invest in areas like fossil fuels or have headquarters in countries subject to boycotts.

What alternative options are available for ethical banking?

For ethical banking, you might consider banks with explicit ethical policies like Triodos, or Sharia-compliant banks like Al Rayan, which cannot invest in prohibited areas under Islamic law.

Outlines

00:00

🏦 Ensuring Legitimacy and Safety of Smaller Banks

The paragraph discusses the importance of verifying the legitimacy of smaller banks before entrusting them with your savings. It advises checking the Financial Conduct Authority's register to confirm if a bank is authorized, which ensures it can offer promised services and provides better protection in case of issues. The paragraph also highlights the benefits of being with an authorized firm, such as access to the Financial Ombudsman service for dispute resolution. It mentions the protection offered by the Financial Services Compensation Scheme (FSCS), which covers up to £85,000 of savings, and notes that not all smaller banks may be covered by FSCS, suggesting alternative protection methods such as overseas schemes or government backing. The paragraph also touches on the difficulty of locating smaller banks and the need to verify their contact details to avoid scams.

05:01

🌐 Ethical Considerations and Customer Service in Banking

This paragraph focuses on the ethical aspects of banking and the importance of aligning with personal values when choosing a bank. It points out that while some banks may offer high interest rates, they might be involved in controversial investments or headquartered in countries subject to boycotts. The paragraph suggests looking for ethical and sustainable banks, such as Triodos, which has ethical policies, or building societies like Nationwide that primarily lend to home buyers. It also mentions Sharia banks, which adhere to Islamic law and avoid investing in prohibited sectors. The paragraph concludes by emphasizing the reassurance of FSCS coverage for smaller banks, the potential for higher interest rates, and possibly better customer service. It advises viewers to use the provided checklist to evaluate smaller banks and mentions the availability of updated Best Buy tables on the be clever with your cash app.

Keywords

💡Legitimate

Legitimate in the context of the video refers to the authenticity and legality of a bank or financial institution. It is crucial for consumers to ensure that the banks they choose to deposit their money with are authorized by regulatory bodies like the Financial Conduct Authority (FCA). Being legitimate means the bank can offer the services it promises and provides better protection to customers in case of any issues, as mentioned in the script: 'you can check this by looking on the register of the financial conduct authority to check whether it's authorized'.

💡Financial Conduct Authority (FCA)

The FCA is a regulatory body in the UK responsible for the financial conduct of regulated firms. In the video, it is mentioned as a key authority to verify the legitimacy of banks: 'you can check this by looking on the register of the financial conduct authority to check whether it's authorized'. The FCA's role is to ensure that financial institutions operate within the law and protect consumers' interests.

💡Financial Ombudsman Service

The Financial Ombudsman Service is an independent body in the UK that resolves disputes between consumers and financial service providers. The video highlights its importance: 'it gives you access to the financial Ombudsman service'. This service is free for consumers and is a recourse when complaints to the bank itself are not satisfactorily resolved.

💡Financial Services Compensation Scheme (FSCS)

The FSCS is a UK-based compensation fund that protects consumers' savings, investments, and insurance policies. The video discusses the importance of banks being covered by the FSCS: 'ideally you want your money covered under the financial services compensation scheme'. This protection ensures that up to £85,000 of an individual's savings are secure even if the bank fails.

💡Electronic Money Institution (EMI)

An EMI, like Plum mentioned in the video, is a type of financial institution that issues electronic money and provides payment services. The video explains how customer funds are safeguarded in a separate account: 'your money is held in a separate ring-fenced account'. This ring-fencing is a protective measure ensuring that in the event of the EMI's failure, customers' funds are safeguarded.

💡Customer Service

Customer service in the context of the video refers to the support and assistance provided by banks to their customers. The video emphasizes the importance of good customer service: 'you want to find out about the Bank's customer service'. It suggests checking online reviews and testing the responsiveness of the bank's customer service channels to ensure a satisfactory experience.

💡Digital-Only Banks

Digital-only banks are financial institutions that operate without physical branches, offering services entirely online or through mobile apps. The video mentions these banks as an option for customers: 'a lot of these smaller Banks might be digital only'. This model can be convenient for tech-savvy customers but may not suit those who prefer in-person banking services.

💡Ethical Banking

Ethical banking pertains to financial institutions that operate with a focus on social and environmental responsibility. The video touches on this concept: 'if this is a priority to you you'll want to know a bit more about the provider and what they're funding'. Ethical banks may refuse to invest in sectors like fossil fuels, aligning with customers who share similar values.

💡Sharia Banks

Sharia banks, such as Al Rayan and Bank of London and the Middle East mentioned in the video, operate under Islamic law, which prohibits the use of customer money for investments in activities like tobacco, arms, or gambling. These banks are highlighted as an option for customers who prefer their savings not to be used in ways that conflict with their religious or ethical beliefs.

💡National Savings and Investments (NS&I)

NS&I is a UK government-backed financial institution that offers savings and investment products. The video notes that while NS&I is not covered by the FSCS, it is 100% secure due to government backing: 'it's not covered by the fscs either however, it's backed by the government so your money is 100% secure'. This provides an additional layer of security for customers' funds.

Highlights

Best Buy savings tables feature lesser-known banks that are vetted for legitimacy.

Ensure bank legitimacy by checking the Financial Conduct Authority's register for authorization.

Authorized banks offer better protection and access to the Financial Ombudsman service.

The register provides genuine contact details and websites, reducing scam risks.

Inquire if the bank's money is protected under the Financial Services Compensation Scheme, covering up to £85,000.

Some banks may offer protection through foreign compensation schemes or partner banks.

Electronic Money Institutions hold money in a separate account, offering protection post-insolvency costs.

Consider government-backed banks for 100% secure deposits, even without FSCS coverage.

Research customer service quality through online reviews and personal experiences.

Check if the bank's communication methods align with your preferences, such as phone, email, or chat.

Assess the bank's accessibility, considering the convenience of digital-only services versus physical branches.

Ethical considerations are important; research the bank's funding practices to ensure they align with your values.

Some banks, like Triodos, have ethical policies, while others may invest in controversial areas.

Sharia banks, due to Islamic law, cannot invest in prohibited sectors like tobacco, arms, or gambling.

Smaller banks can offer higher interest rates and potentially better customer service than High Street banks.

Use the provided checklist to evaluate if a smaller bank meets your requirements for safety, service, and ethics.

Stay updated with Best Buy tables at becleverwithyourcash.app for the latest financial insights.

Transcripts

every week the Best Buy savings tables

are full of banks you've probably never

heard of now you don't have to worry

with the ones you see on our savings

Pages because we ensure that they're

legitimate so you know that you can

trust your money is safe but there are

other elements of banking that may be

important to you such as ethics customer

service account access those kind of

things so it's worth having a closer

look so if you're interested in putting

your money in one of these smaller Banks

here are the questions you should be

asking yourself so the first thing you

want to ask yourself is is the bank

legitimate and you can check this by

looking on the register of the financial

conduct authority to check whether it's

authorized now this means it can offer

you the services that it's promising

because it has the permission from the

regulator now it's really important to

go and put your money with an authorized

firm because you get better protection

if things go wrong and it gives you

access to the financial Ombudsman

service now this is a service it's free

and it handles disputes between Banks

and other financial services and its

customers and it's where you escalate

your complaint when you don't get a

initial satisfactory response this

register is also really useful because

it gives you the genuine contact details

and the website of the firm which

reduces the risk of dealing with a

cloned company that's trying to scam you

it can sometimes be a bit tricky to

locate these Banks as sometimes they

might be trading under different names

but if you're unsure it's probably

better to look elsewhere anyway you also

want to ask yourself how your money is

protected so ideally you want your money

covered under the financial servic

compensation scheme which protects up to

£85,000 of your savings held with a bank

Building Society or credit union you

might find that smaller Banks or

financial providers may be authorized

but aren't covered by the fscs which

means your money isn't protected under

the scheme however there may be other

ways that providers protect your money

so for example if you put your money

with an overseas Bank you may be

protected under the compensation scheme

of their country however if something

goes wrong you might face exchange rate

issues and potentially problems with

communication if you don't speak the

language if we look at electronic money

institutions your money is held in a

separate ring fenced account so an Emi

is a provider like Plum and in a case

where Plum or another provider fails you

would be paid out from The Ring fenced

account but only after insolvency cost

are settled so that's something to

consider or it may use a partner Bank to

hold funds and if this bank is covered

by the fscs your money will be too so if

we look at chip for example it doesn't

have its own fscs cover but all the

money is held with clear bank which does

if you look at nsni or national savings

and Investments you will see that it's

not covered by the fscs either however

it's backed by the government so your

money is 100% secure so next you want to

find out about the Bank's customer

service now this can be really hard to

know with smaller providers or ones that

you've never never heard of or kind of

the new ones that are popping up if you

look at the big Banks it's a lot easier

they have to publish their banking

satisfaction survey results every year

prominently in the branch and on the

website which shows you how they

compareed to other banks on the High

Street and how customers feel about them

you're also more likely to have friends

and family who use the bigger Banks and

they can tell you of their experience as

well so with smaller Banks the first

place to start is on Google so Google

the reviews find out what other

customers are saying about their

experience with the bank also check the

reviews on Smart Ming people our sister

site which is completely focused on the

financial services you can also check

the contact details on the website and

find out if that's the right mode of

communication that you prefer for

example I love a phone number and I

probably wouldn't use a bank that didn't

have a phone number because that's how I

want to be able to speak to customer

services and get any issues sorted out

but you might be comfortable with email

or online chat features but have a look

on the website and see what it's

offering and then test it give it a call

see how long it takes to answer the

phone if it has a phone number or how

long it takes to get back to you and see

if you're satisfied with that you also

want to ask yourself if you're happy

with the way that the bank allows you to

access your money so a lot of these

smaller Banks might be digital only

which means they've got no branches

which is fine if you're happy with that

way of managing your money having

branches doesn't make a bank any more

legitimate than one that doesn't but it

is all about your preference so I think

as well with these kind of digital only

banks they're kind of geared up to

provide a digital only service so

they're quite good at what they offer

and I think when it comes to savings a

lot of the time people aren't touching

them so you're not going to need that

much back and forth or that much by way

of kind of communication you know

especially if you've got some of the

longer term savings accounts such as you

know fix rate bonds but again it is up

to you and it's a consideration when you

are looking at these Banks and lastly

who is this bank this has more to do

with banking ethics and if this is a

priority to you you'll want to know a

bit more about the provider and what

they're funding to ensure that they

align with your values because it's not

always clear so for example you might

have noticed that Israel and Qatar have

been subject to boycotts in recent Years

yet your money might be sitting in banks

with headquarters there for example UTMB

which stands for Mahi teot bank is an

Israeli bank and it's a similar story

with qib which stands for Qatar Islamic

Bank both have offered top rates

recently and you might have seen them in

the Best Buy

tables however this isn't just a problem

with smaller Banks larger Banks aren't

particularly ethical either you might

find if you kind of dig deep they are

investing in fossil fuels and other

types of areas that you might not agree

with however there are some ethical

sustainable Banks out there that you can

find so for example some banks like

triodos they have ethical policies while

building societies such as Nationwide

must lend 75% of their funds to home

buyers meaning that they don't really

have that much cash to invest elsewhere

you might also be interested in Sharia

Banks such as Al Ryan and Bank of London

and the Middle East which that you might

often see them in the Best Buy tables as

well so these Banks because of Islamic

law they can't use customer money to

invest in things that go against it such

as tobacco arms or gambling and things

like that so should you put your money

with a smaller Bank I can understand why

people may feel concerned about these

smaller Banks but if they're covered by

the fscs they're just as safe as the

more established providers on the High

Street you'll get a much higher interest

rate than High Street Banks and maybe

even better customer service but do go

through the checklist above and see if

you're happy with what it's offering

Remember Me Andy and the team are

updating Our Best Buy tables twice a day

at be clever withy yourcash.app

thank you so much for watching check out

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