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Bank collapse compensation changes set for 2011

The UK government and the Financial Services Authority (FSA) have today announced that various new regulations regarding bank collapses will come into play on 31 December 2010. This will see savers compensated within a seven-day period, if their bank collapses, and also afford protection to those who have loans with the same organisation.

This is all within the EU deposit guarantee schemes directive which ultimately states that all payments from collapsed banks must reach customers within 20 days, even though the UK government is targeting a seven-day turnaround. The various changes to the Financial Services Compensation Scheme (FSCS), which have been mentioned by the UK government over the last few months, will also come into play and see the first £50,000 covered if a saver holds money with a bank, building society or credit union which collapses.

While the UK regulators and the UK government appear to be trying to take the credit for these moves they are actually part of the EU directive on bank deposits. There is no doubt that slowly but surely the EU is taking a more hands-on approach to the UK economy and the UK banking sector as a whole. Whether this continues, and at what pace, very much depends upon the next government to be elected by UK voters.

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