Bank of England wants savers’ first £1m deposit to be protected
Deposits of up to £1m should be guaranteed under the government-backed scheme to reassure savers their money is safe, the Bank of England proposed yesterday.
Currently, the first £85,000 with any bank or building society is protected under the Financial Services Compensation Scheme.
It was extended to that level during the financial crisis, as worries over the stability of Northern Rock led to the first run on a bank in over a century.
But the Bank of England wants it extended again for limited time periods – larger savings should be protected, it proposes, for the first six months after the deposit is made.
The aim is to protect those with large sums in their accounts for short periods of time, such as those who have just sold a house or received a large inheritance.
The Treasury Select Committee of MPs will be taking evidence on the planned changes.
“I have been raising this issue with regulators for a number of years,” said chairman Andrew Tyrie, welcoming the change.
“Of course, there is much detail to be scrutinised, including the limits on compensation, the period over which a deposit is protected and the authorities’ eligibility criteria. Nor will protection come free.”