OK, let's see what the brains on this forum make of this problem.You have an offset mortgage with a bank, on a residential property. The offset mortgage is for £750K. Your offset current account has £250K in it. The bank goes bust.What happens next? Do you owe a net position of £500K to whoever buys the debt from the collapsed bank? Or do you owe £750K and lose most of the £250K in your offset current account (the amount that isn't protected by the government)?

If a bank goes bust the economy goes bust. So it does not matter because your money is worth nothing.

Assuming you were using the Virgin One account, you would owe £500k to whoever bought the debt. This is because the net offset balance is treated as a single [very flexible] current account balance. If you were in credit at the time, you'd be protected up to the £30-odd k rules etc. With the £750k mortgage and £250k savings, you'd be treated as a debtor to the bank during the settlement process.This is just a first-pass answer - I don't have one of these accounts and only looked at the Virgin One website. However, there it states "The One account is a secured personal bank account from The Royal Bank of Scotland plc."