As a result the Financial Services Authority has forbidden London & Scottish bank from taking further deposits and
has appointed Ernst and Young the administrator.
The move has triggered the Financial Services Compensation Scheme to safeguard retail deposits.
The FSCS is now putting arrangements in place to pay back customers and will provide further information for customers shortly. The chancellor has taken action to protect FSCS eligible retail depositors above the FSCS limits.
Eligible retail depositors will be compensated through the FSCS with HM Treasury protecting balances above the current UK deposit limit of £50,000. The FSCS will administer the full payout of deposits.
London Scottish Bank, based in Manchester, accepted deposits as well as mortgage business including ‘right-to-buy’ under local authority housing sales.
The bank has approximately 10,000 depositors.