Richard Willis
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One for the administration experts

One for the administration experts

Although the problem of bank failures seems to have gone away, for the time being at least, it has occurred to me that if one has both liabilities (mortgage) and savings in the same bank, and if that bank has the right of setoff somewhere in its small print could, in an administration, the administrators set ones savings off against the mortgage in contradiction of the savings guarantee?
Richard Willis

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14th Oct 2008 10:57

Yes
This was discussed on a recent edition of Moneybox (Radio 4) and they said that on the collapse of a bank (highly unlikely given the government's policy to do "what it takes" to prevent a bank going under) the £50K guarantee would apply to the net figure, so if you have a £50K borrowing and £70K in another account you would only have £20K guaranteed.

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