Flat owners generally pay regular amounts of money to management companies in respect of service charges and reserve funds used for the upkeep and maintenance of their properties. These funds can amount to millions of pounds. It is these sums that flat owners are understandably anxious to clarify will be protected.
Federation Chief Executive Robert Levene said: "We have received a number of calls from worried members as well as those with independent building owners or managing agents. Our Members have been receiving contradictory and confusing information from the banks and other sources. Even the Financial Services Authority (FSA) has failed to respond to us."
Federation Chairman Bob Smytherman said: "Small businesses (including most blocks of flats), have the same protection as individuals up to a maximum of £50,000.
"In addition, we understand that where monies are held in trust by a larger organisation (such as a building owner or managing agent) that does not qualify as a small business, protection is available provided that for each individual account held, the holder of the account writes to the bank advising them that monies are held on behalf of individuals and the bank acknowledges this."
The £50,000 limit applies to an individual so will include any other deposits that individuals may have with the same bank.
The FPRA has long campaigned for clear protection of flat owners’ funds.
It said that the current situation was a reminder of the need for flat owners’ money to be protected from not only defaulting banks but also from defaulting (or dishonest) agents, freeholders and others.
The FPRA is lobbying the Government to obtain the level of protection required.
Have your say on this story using the comment section below