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| Deposit protection plans proposed | Deposit protection plans proposed |
| (19 minutes later) | |
| Chancellor Alistair Darling is proposing new measures to protect savers in the event of a bank getting into financial difficulty. | Chancellor Alistair Darling is proposing 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. |
| As part of the plans, the threshold for guaranteed deposits is expected to rise from £35,000 to £50,000. | As part of the plans, the threshold for guaranteed deposits is expected to rise from £35,000 to £50,000. |
| The measures will not cost banks any cash up-front, only if problems occur. | The measures will not cost banks any cash up-front, only if problems occur. |
| At this stage, the consultation paper is expected to propose as the lead option an increase in the compensation limit for protected deposits to £50,000, on a per person per bank basis Treasury report Experts view: Are your savings safe? | |
| The chancellor is due to present his proposals to the House of Commons later this afternoon. | |
| 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. |
| Need for speed | |
| Calls increased for the current deposit protection system to be changed after the problems at Northern Rock led to a run on the lender with customers queuing to withdraw their savings. | |
| Should a bank run into difficulties, the terms of the current scheme mean that it can take weeks or even months before savers get their money back. | |
| FROM THE TODAY PROGRAMME More from Today programme | |
| Despite saying that banks would not have to immediately put cash into a compensation fund, the Treasury is keeping its options open. | |
| However, the British Bankers Association (BBA) argue that up front payments of money into a compensation fund would tie up capital and would be an additional drain on liquidity already stretched by the credit crunch. | |
| "It is important that people can get to their cash quickly," Angela Knight, of the BBA, told the Today programme. | |
| Ms Knight said that banks had always, and would continue, to pick up the cost of the scheme. | |
| She added that there was a very strong banking sector in the UK, but that the repayment of deposits should be given priority if a bank went under. | |
| In his proposals, the chancellor said the government was committed to savers getting to at least a "proportion of their funds" in seven days of a bank hitting trouble. | |
| Do you have savings? Will the Chancellor's proposals increase your confidence in the banking system? Send us your comments and experiences using the form below. | |