More Protection for Savers’ Cash
Writes Dan Drage dan.drage@consumerchoices.co.uk
Chancellor Alistair Darling outlined new plans to protect saver’s money in the event of a banking collapse yesterday.
Designed to rebuild public confidence in the banking system, the threshold for guaranteed deposits is expected to rise from £35,000 to £50,000, with changes coming into affect during August 2009.
The changes are not set to cost banks anything up front; they will only be approached if difficulties arise.
Account holders called, en masse, for the existing deposit protection system to be overhauled after the collapse of Northern Rock (www.northernrock.co.uk) caused hysteria and long queues. Should a bank run into difficulties under the current scheme, it can take weeks or even months before savers get their money back.
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"There will be consultation on whether banks that receive a bail-out from the Bank of England would have to declare this immediately"
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On the subject of the proposed deposit protection system, Alistair Darling had the following to say:
“No system of regulation can or should prevent the failure of each and every institution, but we must do everything possible to prevent problems which could pose a wider threat to stability.”
There will be consultation on whether banks that receive a bail-out from the Bank of England would have to declare this immediately.
Jill Johnstone of the National Consumer Council welcomes the plan for speedier compensation payments:
“It is a lot better than the situation currently is. A bank account is so vital to everything we do in our life.”
On the other hand, Chris Eagle, Commercial Manager at Credit Choices, thinks the updated scheme is long overdue:
“The deposit protection scheme should have been looked at directly after the Northern Rock fallout, and a proposed implementation date of August 2009 seems a long way off to me.”
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