Savers set to get more protection
The government is to outline its plans to revamp the system of compensation for savers if their bank goes bust, following the run on the Northern Rock.
Chancellor Alistair Darling will make a statement on the changes to the House of Commons later.
Earlier this month, he raised from £2,000 to £35,000 the amount that has 100% protection from the Financial Services Compensation Scheme (FSCS).
It is widely expected that he will consult on raising that to £100,000.
The authorities are convinced that one reason for the run on the Northern Rock, the first in living memory, is that savers were not reassured by the current protection scheme, even though they were told repeatedly that the bank was in fact solvent.
The Treasury, the Bank of England and the Financial Services Authority - the so-called tri-partite authorities - are thought to be interested in copying the system of compensation that operates in the USA.
That offers 100% compensation for savings of at least $100,000 (£50,000), with the money being drawn from a fund run by the Federal Deposit Insurance Corporation (FDIC) that is currently worth £25bn.
The FDIC aims to send out cheques to savers within days of a bank going bust if new buyers for the insolvent bank cannot be found.
Source: bbc.co.uk
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