New promise on £50,000 deposit guarantee
by Gill Montia
Story link: New promise on £50,000 deposit guarantee
The crisis in the banking sector has prompted Prime Minister Gordon Brown to hasten moves to raise the amount guaranteed in individual savings accounts from the current £35,000 to £50,000.
The proposed rise has been under discussion since the collapse of Northern Rock over a year ago and in July of this year, Chancellor of the Exchequer Alistair Darling confirmed plans to revise the Financial Services Compensation Scheme (FSCS).
Speaking to the BBC yesterday, the Prime Minister indicated that a change was imminent and would form part of his “whatever it takes” pledge to the nation.
However, the UK will not follow the Irish Republic, which yesterday implemented a 100% guarantee for deposits across six banks and buildings societies, for two years.
Under current UK rules, the first £35,000 of an individual’s savings is guaranteed by the Government should a bank collapse but consumers should be aware that if they have savings and loans with the same financial institution, in the event of a collapse their savings could be offset against the outstanding debt to produce a net claim to the FSCS.
Prior to the Northern Rock crisis, savers were guaranteed 90% of their savings between £2,000 and £35,000 and nothing thereafter.
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