FSA Plans Increasing Temporary Deposit Guarantee to $714,000
Bank customers who inherit an estate, have an unexpected windfall or sell their home may have deposits temporarily guaranteed for as much as 500,000 pounds ($714,000) under a proposal by the U.K.’s financial regulator.
The Financial Services Authority published a consultation paper today proposing to increase Britain’s deposit-guarantee program to give people who temporarily exceed the current 50,000-pound threshold added security for six months.
The plan would “protect people who have little or no choice about holding a high balance for a limited period” over the current 50,000-pound limit, said Thomas Huertas, the FSA’s director of banking, in an e-mailed statement.
It’s the third time in six months that the London-based regulator has planned changes to the guarantee program. The consultation comes a day after the FSA amended compensation rules in the wake of the government’s bailout of Dunfermline Building Society. The FSA has been criticized by opposition lawmakers for its handling of Dunfermline.
Customers with accounts at Dunfermline and Nationwide Building Society, which is buying Dunfermline with government funding, will have both their accounts underwritten until September for up to 50,000 pounds, the FSA said yesterday.
The guarantee program is funded retroactively by annual levies on regulated lenders. The FSA in January proposed speeding up payouts to customers with deposits in failed banks to one week. It increased the threshold to 50,000 pounds from 35,000 pounds in October.
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