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A more “certain and protectionist” banking system is needed to minimise the chances of another Northern Rock fiasco, lawyers claim.
The comments follow the government’s decision to increase guaranteed bank saving deposits from £2,000 to £35,000.
Tom Morrison of Rollits Solicitors says it will take more than “calming words” from the chancellor to reassure sceptics.
“While the horse may have bolted somewhat for Northern Rock, there is a need for a more certain and protectionist scheme to be put in place to minimise the chances of a bank run happening on that scale again,” he says. “The scheme needs to be set in stone to communicate with the public in unequivocal terms and must guarantee the savings of the majority using a clear andswift mechanism.”
Meanwhile, the Association of British Insurers (ABI) wants the government to ensure that the fully guaranteed limit remains at £35,000 and to focus on enabling faster payouts from the Financial Services Compensation Scheme in the event of bank failure.
The ABI’s director general, Stephen Haddrill, says the government should not risk distorting the savings market by attempting to protect bank deposits when there are more aspects to consider. He adds that the new limit of £35,000 introduced will protect 98% of savers.
