Is Your School Bank Account Protected?

Jul 6, 2020 | Finance Posts

In these times of great uncertainty we are all concerned for the future on so many levels.  

Despite best efforts by Government and other bodies to set out guidance for the operation of Schools and Academies in the months ahead, the unpredictability cannot be removed.  

That is not a comfortable position.  

Planning priorities for schools

Much of the attention of Senior Leaders in Schools at this time, appropriately and understandably, is directed towards the logistics of getting pupils back into schools, so that their long-term education does not suffer.  

How to organise and prepare the school environment so they can do so safely are matters of priority.  Absorbing in the extreme. 

School funding protected

Throughout these challenging circumstances, the Government has communicated that there is no threat to funding for Schools and Academies.

Therefore monthly budget allocations will continue as per the agreed funding schedules. 

We do not suggest that is in question, and that does provide some security for planning. 

However, how safe is that funding when it arrives in the schools’ bank account?  How far can schools and academies go towards protecting those cash balances?

Security of school bank accounts

Many schools and academies have healthy reserves which can equate to large bank balances.  

Yet even those in deficit will, at times, have large sums sitting in their bank accounts pending salary and supplier payments – when the monthly grant payment is received, for example. 

In an uncertain economic climate it is important to consider security of bank account balances. To understand from the school’s bank the various protection and compensation schemes in place, and the school’s eligibility for those.

The FSCS and schools

The Financial Services Compensation Scheme (FSCS) is an independent compensation fund which may protect schools and academies in the event that their bank experiences difficulties.

Checking eligibility first is important. 

That said, the limit for compensation should anything go wrong is currently up to £85,000 of the combined eligible deposits. 

Whilst that might be considered little compensation for many given large bank balances at key points in the month, it is as important to check with the school’s bank the security measures, the compensation in place, as well as thinking about security of bank balances in general. 

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