These are my own thoughts. For guidance you should seek the advice of a finance professional.
40,000 TESCO accounts hacked
20,000 customers have lost money – but they'll be reimbursed in most cases. http://www.telegraph.co.uk/business/2016/11/07/tesco-bank-to-freeze-customer-transact ions-after-hacking-attack/
Incidentally, you probably know that your money is safe in a bank because it's backed by the Financial Services Compensation Scheme guarantee.
What you probably don't know is that the FSCS fund is not unlimited – that is, it does have a limit.
The FSCS reimbursement limit is currently £75,000 per customer per banking institution. That figure was cut from £85,000 in 2015.
So if the guarantee is that good and your money is that safe, WHY did they cut the maximum reimbursement limit?
Answer: Because the money to reimburse everyone simply doesn't exist. In 2013, the fund stood at £4 billon. http://www.fscs.org.uk/industry/funding/
That's four thousand million pounds – a lot of money but if you take say 35 million account holders that figure works out at just £114.28p per person sat in the compensation fund.
OK, not many people have £75k in the bank but in the event of a huge financial collapse and everyone wanting just their wages, mortgage money, gas bill money, shopping money reimbursed then the fund could let you down badly. Take into account that if the fund is squeezed really hard, people would possibly be reimbursed pro-rata, ie; you'd get back a percentage of what you had, some could be lucky to receive more than a few quid.
Let's say only 10% of the banks went bust (one in ten) and 3.5 million customers lost their savings/deposits. The fund of 4 billion could then pay out an average of just over a grand - a huge £1142.86 per person.
Do you STILL feel protected?
One or two last thoughts: If the FSCS money is in a bank (after all, they're not going to keep it in a suitcase or under the bed) what if THAT bank goes belly up?
As many people have an active overdraft, loan or other credit agreement ie; they owe the bank money, I'd imagine that amount would be deducted from any compensation they'd be entitled to receive for loss of savings.