Reforms to protect savers are unveiledSavings up to £35,000 are now guaranteed

02 October 2007

 

Prime Minister Gordon Brown and Chancellor Alistair Darling have unveiled reforms designed to protect savers in the event of the collapse of a bank.

The Prime Minister said the recent turbulence in the financial world which culminated in the UK in the run on Northern Rock was a ‘wake-up call’, highlighting the need for both global and domestic reforms in the regulation of finance.

He said it was the ‘resilience’ and ‘flexibility’ of the British economy which allowed the UK to escape the recent turbulence without damage to its growth.

He promised the government would act with ‘calm vigilance’ to head off any dangers in the days and weeks ahead, but would avoid imposing ‘heavy-handed regulation’.

New laws

Mr Darling announced a new regime guaranteeing an individual's bank and building society savings up to £35,000. Previously only the first £2,000 of people's savings and 90% of the next £33,000 were guaranteed by the Financial Services Authority.

Mr Darling has said he wants up to £100,000 to be fully protected, but new laws are needed to raise the threshold that far.

The changes may ultimately have to be funded by the banking industry, he indicated.

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