Many of us will been targeted by a financial scammer asking us to click on a link to transfer money to them. Most scams are easily identified, but as the fraudsters get smarter, they get harder to spot. In the first six months of last year, scammers stole £616m from UK bank customers, according to UK Finance.  

So, where do you keep your cash safe?

If, like a significant proportion of the population, you keep your cash in a savings account, how do you prevent your ‘savings’ from becoming ‘losings’? I am referring to the growing gap between the interest you earn on your savings and the rate at which inflation is diminishing the real value of what you have.

National Savings & Investments (NS&I) is reducing the rate paid on its Direct Saver account from 1.00% to 0.15% pa from 24 November 2020. The rate on its Investment Account is dropping from 0.80% to 0.01% pa. This is enough to make anyone Google, ‘best savings interest rates’, and therein lies the problem. How do you know which websites and institutions you can trust? We have been told time and time again that if it feels too good to be true, it probably is, but how do you tell that to someone who has saved money all throughout their life, only for it to start shrinking in front of their eyes?

The Financial Services Compensation Scheme (FSCS) protects customers when authorised financial services firms fail. Your bank or building society must be authorised by the Prudential Regulation Authority in order for you to be entitled to compensation of up to £85,000 per account. It’s important to remember that while the name may be different, some banks can be part of the same banking group and this could affect your entitlement.

There is quite often a misconception that banks will refund money lost to fraudsters, but this is not necessarily the case. At present, the industry is only refunding £1 in every £14* lost to investment fraud and in order to get your money back, you need to prove that you were sufficiently diligent in the analysis of the potential provider.  This is where we can help.

Cash is an important part of any financial planning strategy and we can help you to make sure your cash is safe. This year has taught us that life can get turned upside down in the blink of an eye. We need to have a buffer, a safety net, so that when our income drops off or stops entirely, we are still able to provide for our families, however, we also need to make sure that this buffer is safe.

How we can help

There are options for your cash savings, and we are here to make sure that your money works hard for you (just like you worked hard to accumulate it!). Our advisers have a wide range of options open to them, which we have scrutinised and performed extensive due diligence on. We like to keep an eye on the solutions we recommend and with regular reviews of your circumstances, aspirations, and attitudes, so can you.

If this sounds like something which you would like to discuss further, please do not hesitate to get in touch with myself, a member of the Wealth team, or your usual Johnston Carmichael adviser.

*Source: The Times newspaper article, “Savers Lose as Scam Ads Stay on Google”  3 October 2020