Savings accounts compensation could be increased to £77,700

16 October 2008 / by Rachael Stiles
Legislation has been drafted by the European Commission to extend the level of protection for savings accounts to €100,000 (about £77,700), it has been reported.

The Prime Minister Gordon Brown has said that he is open to the proposal that all savers within the European Union would have their savings accounts guaranteed up to €100,000, five times higher than the current EU deposit guarantee of €20,000.

The current EU deposit guarantee is irrelevant in Britain because UK savers are protected up to £50,000, which was raised from £35,000 during the recent wave of economic turmoil. Joint accounts are eligible for compensation up to £100,000.

The proposal is part of a package of other measures that European governments are introducing in order to restore confidence to their financial systems, and to strengthen the confidence of Europeans in the security of their money saved in bank accounts.

Joining Gordon Brown, countries that already guarantee savers up to €100,000, such as Germany and Italy, are expected to support the proposal, but central and Eastern European countries, concerned about the costs to the state of such a high threshold of compensation, are expected to oppose it.


Once the scheme has been fully approved, it will be backdated from today to apply to the first €50,000, and will be raised to €100,000 within a year.

Governments are eager to calm savers' fears that their money is not secure in savings accounts after the collapse of Icelandic banks with savings arms in the UK, such as the popular online savings account provider Icesave, owned by the nationalised bank Landsbanki, and now 100 per cent guaranteed by the UK government.

Icelandic banks Kaupthing Edge and Heritable Bank were also nationalised; their UK customers' savings accounts have been transferred to ING Direct, the UK arm of the Dutch ING Group, and will have the same protection as ING Direct savings accounts, which come under the Dutch compensation scheme, already set at €100,000.

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