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News - 3 October 2008

Plans for extra protection to savers

It is expected that the upper limit on the amount of savings that will be safeguarded in the event of a bank or building society failing will rise from the current £35,000 to £50,000 under the Financial Services Compensation Scheme (FSCS). The Financial Services Authority (FSA) is set to begin negotiations with the banks to raise the threshold at which deposits are guaranteed to £50,000.

The Prime Minister, Gordon Brown, said that the government would do “whatever is necessary” to protect people’s savings.

It is thought that the present £35,000 ceiling covers 96 per cent of all deposits, while the proposed £50,000 limit would exclude just 2 per cent of savings accounts.

However, the UK government refused to follow the Irish government in guaranteeing 100% safety of all deposits in its major banks. The Irish pledge is believed to be in contravention of EU competition laws.

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