Customers who have their loan and savings with the same bank or building society could soon be barred from receiving compensation if their bank goes bust.

Serious concerns about the Financial Services Compensation Scheme (FSCS) are outlined in a recent report published by the Treasury, the Bank of England and the Financial Services Authority.

The report warns customers could face their own “liquidity crisis” if the savings they hold in the bank are worth less than their mortgage.

Customers with a failed bank that is regulated in the UK can claim a maximum of £35,000 if their bank runs into difficulty.

However, before claiming under the FSCS customers must deduct any outstanding debts, such as mortgages, to the failed bank.

Where customers owe the bank more than they have in savings accounts, they are “ineligible” for any compensation.

The report states: “This makes it more complicated for depositors to understand their level of coverage and means that customers with both short-term deposits and illiquid long-term loans held at the same bank, for example, a mortgage, may suffer a loss of liquidity following a bank failure.”

While it is unlikely that any UK bank will become insolvent, banks are under pressure over their exposure to frozen credit markets.

Kevin Mountford of comparison site Moneysupermarket said: “This report is particularly concerning as some customers have their savings with one brand of a bank, and a mortgage with another brand. As a result, building up a portfolio of products with one provider might not be the best course of action.

“Consumers not only need to spread their savings around but also guard against having both their mortgage and savings with the same organisation.

“This scheme has been in existence for a number of years but post-Northern Rock it has become critical.”