Business bank account experts have recently reported that the Financial Services Authority wants more transparency in the nation’s financial services providers by forcing them to publish the amount of compensation its customers are entitled to in the event of a bank failure.
The regulatory body wants increased confidence in the nation’s savings accounts by raising the level of awareness in regards to the levels of protection savers have. New proposals would see each bank or building society in the UK authorised by the FSA to prominently state on websites and in branches that the British deposit protection scheme protects deposits up to a £85,000 maximum. Hector Sants, chief executive for the FSA, remarked that it is of the utmost importance that savers are confident in the nation’s banking system, which has prompted the regulator to display compensation information compulsory.
The new regulations will apply only to banks that are based within the UK. Those that are based primarily overseas but still operate inside the UK will need to clearly state the national scheme that protects deposits, such as the Netherlands-based ING Direct, and European Economic Area member banks have national compensation schemes that protect €100,000 worth of deposits.
The UK set targets this past January for ‘gross’ claimant payouts in seven days or less. Savings and loans originating from the same institution would be returned in one payment, the regulations state.
Mr Sants remarked that UK consumers need to know which compensation schemes they would rely on, how it works, and which country it is based in. However, industry experts point out that many UK lending institutions jointly grouped together under one banner offer protection across every account by the same institution that owns and operates all its subsidiaries.