With commentators now beginning to openly discuss the possibility of a collapse of another bank or financial institution, it is perhaps timely to consider what compensation  arrangements are in place for depositors and investors should this happen. For savers, there are only two homes for your money that are 100% safe and these are Northern Rock and National Savings and Investments as these are both owned by the government. For everything else, there are limits to the amount of compensation that is available. Compensation payments are managed under the Financial Services Compensation Scheme (FSCS),  and limits vary for deposits, investments. and insurance claims. Only institutions regulated by the FSA are eligible to be covered by the scheme, which only has £4bn per year to use for this purpose. Claims totalling in excess of £4bn would trigger meetings between the FCSC, the FSA and the Treasury to work out a solution.  As things stand currently, £35,000 of deposits per person per financial institution are covered and this doubles for accounts in joint names. For investment the figure is £48,000 with 100% for the first £30,000 and 90% for the remainder. But  the FSCS will only pay compensation up to the limit of £35,000 per person, per authorised institution. This means that a parent institution could be the authorised entity and depositors will only be eligible for one pay-out, even if they have other accounts in the parent’s subsidiaries.  So, it may be wise to spread your savings and investments across different authorised entities, but you will have to do your own research to find out who owns whom, which companies are authorised under a group registration and which are registered individually.

There is an inexorable trend towards holding data about people’s savings and investments online. Indeed, many of the best buy savings accounts are internet based. While providing undoubted benefits to consumers in terms of managing their accounts, holding this type of information on the web does come at a price. This is because we have to record and recall an ever-growing number of user names, dealing names, passwords, pin numbers, personal codes and memorable words. A typical investment account may require up to five of the above. And this is just one account. When internet banking and other savings or investment accounts are added, the names and number that need to be held begin to resemble a spy’s cipher book.

And we can’t always opt out of this brave new world and contact the provider in the good old way - over the telephone. Not only will this bring its own password scrutiny, but telephone enquiries may no longer be accepted. The poor punter is then reduced to writing in (with appropriate client details) to give his or her instructions.

Just like a spy’s notebook, all this account information is very valuable and could be very damaging if it fell into the wrong hands. So, the poor investor not only has the problem of inputting an ever-growing amount of his or her own client information, they also have the worry of keeping this information accessible but safe.

This situation has arisen because each provider has gone through the same process of screening client access. While it makes sense to do this on an individual account basis, collectively it is just storing up problems later on.

Surely, there must be a better way of handling this situation, but until one is found, it’s either the memory training course or the larger notebook.