Savers are demanding that authorities increase the level of compensation paid out in the event that a bank goes bust following the recent troubles of the UK’s fifth biggest lender, Northern Rock.
MoneyExpert.com has found that the collapse of the bank has shown savers the risks they run of losing their money should the worst happen.
Under the current Financial Services Compensation Scheme (FSCS), the government guarantees the first £2,000 of everyone’s savings in the event of a similar scare to the Northern Rock crisis. However, after that it will repay 90% of a saver’s first £33,000 but anyone with savings over this amount left with the same bank would stand to lose the remaining cash forever.
The study revealed that six out of 10 savers want this compensation increased and a further 44% of adults claim to no longer trust the Government, Financial Services Authority and Bank of England to protect their savings in the event of a similar financial fiasco.
Sean Gardner, Chief Executive of MoneyExpert.com, comments: "We are always told that savings accounts are risk-free but after Northern Rock many people are not too convinced about that.
"The Northern Rock crisis has been a massive shock to the system and has highlighted that the compensation scheme currently in place needs to be overhauled.
"Customers definitely agree that the authorities need to act on increasing the level of guarantees in the event of a bank crash. Northern Rock may have been a one-off but people believe it’s better to be safe than sorry. This poll shows many people are not convinced that the levels of protection currently in place are sufficient – which explains why so many people don’t trust the Government to guarantee their savings at all."
The survey also revealed that while 60 per cent of adults want the levels of compensation paid in the event of a bank crash increased, 46 per cent of adults were unaware of the FSCS protection measures already in place.
Sean Gardner adds: "The current compensation scheme encourages savers to spread their savings across many different providers. Anyone who has more than £33,000 in the same account must be wondering whether they should switch some of it to a different bank just to spread the risk.”
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