Members of the European Parliament voted overwhelmingly in favour of guaranteeing the first 100,000 euros of a customer’s savings in the event of an EU bank’s collapse.
A total of 556 MEPs supported the motion, which could come into force by the end of 2010. Just 21 MEPs opposed the change, with three abstaining.
EU bank customers currently have 20,000 euros worth of protection, although this is set to rise to 50,000 when new legislation comes into force in June 2009. It will also ensure that the pay-out period will be reduced from three months to 20 days.
The latest proposal was introduced to ‘bring some calm in the financial market’, an EU official said.
The EU proposal will require the approval of Member States in the Council of Minister before it passes into law. If validated the plan may require a change to the UK’s Financial Services Compensation Scheme, which currently provides £50,000 worth of protection to consumers with savings in banks that are authorised by the Financial Services Authority.
Which? personal finance campaigner Phil Jones said: ‘Consumers need certainty about the level of protection they will receive if their bank collapses, and it makes sense to have a common standard across Europe. Which? will also be campaigning for compensation to be per brand rather than bank licence, for gross rather than net pay-outs, and for temporary high balances to be protected.’
To find out whether your bank is licensed at brand or branch level, or authorised at group level see Protecting your savings. For more information on savings accounts see the Which? Best Buys.