The U.K. financial regulator is proposing to speed up payouts to customers with deposits in failed banks to one week, with costs of the plan for lenders estimated to be as much as 892 million pounds ($1.3 billion).
A consultation paper published today by the Financial Services Authority presents simplified procedures for the Financial Services Compensation Scheme, the U.K.’s deposit guarantee program. In addition to recommending quicker payments, the FSA proposes making all savers and small entities eligible for the program, it said today in a statement.
The guarantee program is funded retroactively by annual levies on regulated banks and lenders. Its limits have come under mounting scrutiny from politicians and the public since Britain had to nationalize Northern Rock Plc and Bradford & Bingley Plc in 2008. The compensation threshold was increased to 50,000 pounds from 35,000 pounds in October as public worry about the safety of savings rose.
“Experience in the last year has highlighted how essential compensation is and that it is imperative consumers understand and trust that they will be reimbursed if a bank, building society or credit union fails,” said Hector Sants, the FSA’s chief executive officer, in an e-mailed statement.
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