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Ask Rachel
Working in the financial industry for over 30 years, Rachel Thrussell is the leading independent expert on UK savings products. Her views are constantly in demand from both the industry and the press.
I’m aware that the Financial Services Compensation Scheme (FSCS) covers deposits of up to £85,000, including interest, but I was wondering how this applies to banks such as Al Rayan that operate according to Sharia’a principles and pay expected profit rather than interest. Would the FSCS cover this ‘profit’ in the event of such a bank failing?
The FSCS offers financial protection in the event of a bank or building society failing. Under current rules, £85,000 is covered per person, per banking licence, which means that if you held no more than this amount with any provider, you’d be guaranteed to get your full balance returned to you if a bank went bust. This includes your initial deposit, as well as any accrued interest, provided the full amount doesn’t exceed the £85,000 limit.
This applies to banks operating under Islamic finance principles as well, whereby an expected profit rate is paid rather than interest. At its most basic of levels, the FSCS protection limit doesn’t differentiate between the initial savings pot and the interest/profit – provided the total amount is within the limit, everything’s covered. So, yes, the FSCS would cover any profit accrued in the event of a Sharia’a-compliant bank failing, but those savers with high balances would be wise to ensure that any interest or profit earned doesn’t send them over the limit.
This week's
average rates
| No Notice | 0.19% |
| Notice | 0.53% |
| Cash ISA | 0.58% |
| 1 Year Fixed Rate Bond | 0.78% |
| 2 Year Fixed Rate Bond | 0.86% |
| 3 Year Fixed Rate Bond | 1.08% |
| 4 Year Fixed Rate Bond | 1.26% |
| 5 Year Fixed Rate Bond | 1.27% |
| 12 October 2021 | |
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First-time investors purchasing gold as economic uncertainty continues
There has been a 719% increase in first-time investors purchasing physical gold bars and coins from The Pure Gold Company over a seven-day period this month, which the company believes is down to continued economic uncertainty, as well as recent lifetstyle changes. The Pure Gold Company also reveals that there has been an increase in investors selling gold investments, which is often due to financial changes created by the pandemic.
“The end of furlough, an on-going petrol crisis, HGV driver shortage and intermittent empty shelves are stoking fear of more chronic trade disruptions,” said Josh Saul, CEO of The Pure Gold Company. “Inflation is already above the Bank of England target and set to rise further, while the end of the furlough scheme could push unemployment levels up again. Our clients are looking for a safe-haven asset that will protect their wealth amid growing uncertainty.
“While some investors are buying into gold, we’ve also seen a 257% increase in clients selling physical gold bought over the last few years. They’re looking to provide liquidity for debt and bills that their depleted incomes won’t satisfy. Depending on how long they have held their gold for, some are enjoying growth of up to 50%, while others selling within a shorter time frame haven’t fared as well.
“Gold should be viewed as a long-term investment, where it rides out the inflationary pressures and economic peaks and troughs. But equally it is extremely liquid and, with a Buy Back Guarantee, can be quickly and easily converted into cash.
“One consequence of the pandemic lockdowns was a surge in divorces, and The Pure Gold Company has seen a 73% rise in recently divorced clients purchasing gold and silver since March 2020. Many have said that they want to ultimately purchase a house and start over but, until they are ready, they will not leave cash in the bank earning nothing. Nor do they want to expose it to the stock market, and instead choose to invest in precious metals.
“Our clients are not investing or purchasing gold for short-term growth. What they seek is an insurance policy that protects some of their wealth by providing a predictable hedge against the value of declining assets or depreciating currency as uncertainty increases. Clients are empowered with a Buy Back Guarantee and know they can convert their gold to cash within minutes. This allows them to view gold as a safer alternative to cash but without the inflationary pressures that loom ahead.”
More information about investing in gold can be found reading our how to invest in gold guide.
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