Business News

Greater protection for savers

Proposals which would enable savers to receive greater compensation if their banks collapsed are set to come into force from 31st December 2010, following new European legislation.

As a result, the Financial Services Compensation Scheme (FSCS) will increase its claims limit for deposits from £50,000 to €100,000 (currently £85,000).

The limit was previously increased in October 2008 from £35,000 in response to the banking crisis, although savers have to wait three months to receive their money. Now, under the new legislation, all compensation payments will need to be made within 20 days.

The Financial Services Authority (FSA) will issue a consultation in October to decide the fixed sterling equivalent value for the limit, although this could then be reviewed if there are large scale fluctuations in the exchange rate.

According to the European Commission, harmonising the compensation limit across Europe will also eliminate any concerns about differences in protection from one country to another, enabling individuals to choose the most suitable savings product from any EU country.

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