10/06/2009 - Charities in dark over compensation
Only a quarter of charities know how much compensation they would be entitled to from a depositor protection scheme if they lost money through the collapse of a bank.
Some 25% of charities were confident about the level of funds protected by the Financial Services Compensation Scheme (FSCS), according to a Charities Aid Foundation survey.
In contrast, around 35% of charities said they were unclear about the level of protection the FSCS offered them.
The Charities Aid Foundation is in favour of charities being classed as a separate group under the FSCS, which currently only makes a distinction between retail depositors, namely individuals and small businesses, and wholesale deposits.
If charities qualify as a small business, for example if the have a turnover of £5.6m or less, or employ 50 or fewer people, the first £50,000 they have saved with a bank is covered by the scheme.
But none of the money they have saved with banks and building societies is protected if they are classed as wholesale depositors.
John Low, chief executive of the Charities Aid Foundation said: "There is confusion around the classification of wholesale and retail depositors, with charities unsure as to whether they are eligible for compensation or indeed the levels of compensation offered.
Copyright © Press Association 2009
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