How protected are the contents of safe deposit boxes if a British bank
The FSCS, admittedly on a page that talks in baby language and has a
cartoon of giraffes, defines a "deposit" as
"money placed in a bank or similar institution to earn interest or for
I understand that banks are only looking after the contents of safe deposit
boxes on trust, but isn't that the same with deposits in bank accounts?
the customer deposits appear on it. To me, that means they aren't on trust. That's consistent with the reasoning that positive bank balances are noted as CR, because they represent creditors on the bank's balance sheet.
On the other hand, I'm not convinced that the bank would even have legal
ownership, so I think that both legal and beneficial ownership would
remain with you, and there would be no trust, but I could be wrong.
The typical case where you might have a trust situation with a bank is
where they were managing stock market investments for you, as a nominee.
You have quoted a paragraph of mine describing the handling of interest
bearing cash deposits. I believe my second paragraph, which was about
safety deposits, agrees with your position.
One probably ought to point out though that the chaos following a
collapse may mean that it is difficult to access the box or envelope
quickly, and one may be forced into extra costs in order to retrieve it
Vidcapper wrote in
Thanks David. You're absolutely right. Deposits in ordinary bank accounts
are loans to the bank, not assets held in trust. I should have remembered
Thanks alan_m and Vidcapper. You make it clear.
I'm wondering why many of the high street banks closed or greatly scaled
down their safe deposit box services at roughly the same time. Could it
be because they didn't want people who fear a bank collapse going in,
drawing their money out in cash, and putting it into safe boxes, without
leaving the building? Safe boxes seem safer than account deposits, even
if many banks do insist that if you want insurance it's up to you to get
it. Which is funny really given that in some banks you can hardly stand
in front of a cashier without them trying to sell you car or travel
I think the only major bank that offers safe boxes across the country at
the moment is Metrobank, which markets mostly at people who are in debt,
but where its safe boxes are concerned many of its clients are people of
Indian and other Asian origin who want somewhere to keep their gold
jewellery. I've never been in a branch, but the branches I've noticed
look a bit fly-by-night and I wouldn't be surprised if their safe deposit
boxes look a bit tasty from an armed robber's point of view too.
They are a regulated bank so there shouldn't be a problem with deposits
up to the compensation limits.
However a safe deposit box is not covered in the same way. The
Metrobank terms and conditions (and advertising) say the risk of loss is
your risk and you should fully insure the contents.
The Metrobanks I've seen are converted shops so the potential thief will
not have to dig into the cellar and then tunnel through metre thick
metal reinforced concrete with specialised cutting equipment to get into