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| Deposit protection plans proposed | Deposit protection plans proposed |
| (about 1 hour later) | |
| Chancellor Alistair Darling is expected to propose new measures to protect savers in the event of a bank getting into financial difficulty. | Chancellor Alistair Darling is expected to propose new measures to protect savers in the event of a bank getting into financial difficulty. |
| The plans are intended to increase public confidence in the banking system in the wake of the near collapse of Northern Rock in September last year. | The plans are intended to increase public confidence in the banking system in the wake of the near collapse of Northern Rock in September last year. |
| The threshold for guaranteed deposits could rise from £35,000 to £50,000. | The threshold for guaranteed deposits could rise from £35,000 to £50,000. |
| A consultation period will begin after the proposals are made and any changes will come into effect in the autumn. | A consultation period will begin after the proposals are made and any changes will come into effect in the autumn. |
| The existing Financial Services Compensation Scheme guarantees all deposits up to £35,000. If more than one bank within a group failed, the maximum total amount that could be claimed per person would be £35,000 even though the customer may have separate accounts with different banks in that group British Bankers Association href="/1/hi/business/7408630.stm">Experts view: Are your savings safe? | |
| The chancellor is expected to raise this threshold to £50,000 or even higher. | The chancellor is expected to raise this threshold to £50,000 or even higher. |
| He may also require banks to pay into the scheme up front, so that savers could receive compensation immediately from a prepaid fund. | He may also require banks to pay into the scheme up front, so that savers could receive compensation immediately from a prepaid fund. |
| The current scheme can take weeks or even months before savers get their money back. | The current scheme can take weeks or even months before savers get their money back. |
| The banking industry, however, would prefer to pay compensation when it is needed. | The banking industry, however, would prefer to pay compensation when it is needed. |
| The British Bankers Association argue that up front payments would tie up capital and would be an additional drain on liquidity already stretched by the credit crunch. | The British Bankers Association argue that up front payments would tie up capital and would be an additional drain on liquidity already stretched by the credit crunch. |