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Savings guarantee to be £50,000 Savings guarantee to be £50,000
(about 1 hour later)
The Financial Services Authority (FSA) has raised the limit to the amount of deposits that are guaranteed should a bank go bust to £50,000.The Financial Services Authority (FSA) has raised the limit to the amount of deposits that are guaranteed should a bank go bust to £50,000.
The new limit will come into effect on Tuesday 7 October. Previously, the first £35,000 of savers' deposits had been protected.The new limit will come into effect on Tuesday 7 October. Previously, the first £35,000 of savers' deposits had been protected.
The FSA will now consult on whether the limit should be raised even higher.The FSA will now consult on whether the limit should be raised even higher.
Ireland introduced an unlimited guarantee covering bank deposits earlier in the week.Ireland introduced an unlimited guarantee covering bank deposits earlier in the week.
It is appropriate given the consolidation that has taken place in the banking sector Hector Sants, chief executive, FSA Q&A: Deposit protection plansIt is appropriate given the consolidation that has taken place in the banking sector Hector Sants, chief executive, FSA Q&A: Deposit protection plans
The limit is for each customer so joint accounts will be guaranteed up to £100,000.The limit is for each customer so joint accounts will be guaranteed up to £100,000.
Payments will be made through the Financial Services Compensation Scheme and the FSA has said that it is to look into reforms that will allow compensation to be paid faster. Payments will be made through the Financial Services Compensation Scheme (FSCS) and the FSA has said that it is to look into reforms that will allow compensation to be paid faster.
It is also to consider whether accounts with different banks that are owned by the same parent company should be covered. Banks covered
The FSCS covers all UK banks, building societies and credit unions.
Banks from outside Europe also contribute to the scheme and so their depositors are also protected.
European banks may be covered by their own schemes and customers may be covered for only 20,000 euros (£15,600).
The FSA is also to consider whether accounts with different banks that are owned by the same parent company should be covered.
At the moment, customers are only covered for one account under each banking licence so if you have two accounts with banks that are owned by the same parent company you will only have a total of £50,000 guaranteed.At the moment, customers are only covered for one account under each banking licence so if you have two accounts with banks that are owned by the same parent company you will only have a total of £50,000 guaranteed.
"This change ties in with the introduction of the government's Banking Bill in Parliament, which is due next week," said FSA chief executive Hector Sants."This change ties in with the introduction of the government's Banking Bill in Parliament, which is due next week," said FSA chief executive Hector Sants.
"It is also appropriate given the consolidation that has taken place in the banking sector.""It is also appropriate given the consolidation that has taken place in the banking sector."