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Saving guarantee safety net increased

November 7, 2008 by admin  
Filed under News, News-Banking

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The government has recently announced that saving guarantee safety net in the UK is to be increased to £50,000. Previously the 100% guarantee on savings applied to only the first £35,000 of savings with most financial institutions, and this compensation comes from the Financial Services Compensation Scheme. Prior to the Northern Rock fiasco last year the savings guarantee was far lower.

The increases safety net came into effect this week, and the Chancellor of the Exchequer, Alistair Darling, said that the increased limit meant that around 98% of savers would have all of their money protected. In the meantime the Financial Services Authority is discussing whether the safety net needs to be increased further. Darling stated that the moved would “go a long way to assuring people that their deposits are safe”.

Following the announcement the Chief of the FSA, Hector Sants, stated: “There has been extensive debate about the compensation levels. In the interests of providing clarity over the minimum level for the long term we have now decided to implement the move to a £50,000 limit from Tuesday.”

He added: “This change ties in with the introduction of the government’s Banking Bill in Parliament, which is due next week. It is also appropriate given the consolidation that has taken place in the banking sector. In addition, the Chancellor has made clear that the Authorities will do whatever is necessary to maintain financial stability and protect depositors”

The announcement came after calls from industry groups for the UK government to provide a full guarantee on all savings, after a similar move by the Irish government.

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