Press Release Summary: The Britons can now feel safe regarding their savings as the Government is planning to offer compensation up to 50.000 pounds in case of banking system collapse.
Press Release Body: London (Shakespearefinance) July 05, 2008:The Government has planned to increase the maximum compensation for victims of bank collapses to 50,000 pounds. However,the banks will not have to pay money upfront into the deposit protection scheme for this extra coverage. According to the treasury it would be wrong for banks to pay more money when they are on the path of rebuilding their capital positions. There will be an increase in the compensation limit for protected deposits to 50,000 pounds. The limit is calculated on a per person per bank basis.
The ways for this compensation will be explored by the Financial Services Authority (FSA). The organisation is also entrusted with the the appropriate coverage for client accounts and similar arrangements. he expected limit of compensation is 50,000 pound. The banks were worried by the prospect that they might have to pay billions of pounds into the compensation scheme. There apprehensions were quite natural as their balance sheets are under strain because of the global credit crunch. However, government\'s decision to free them from any upfront cost will definitely offer the respite.
The compensation plans will come into effect later in the 2008. It will enable the customers to have up to 50,000 pounds of their deposits protected in the event of a bank failing. As the Bank of England gives a new statutory remit to protect financial stability under the proposed reforms, the road way will be clear.
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