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Savers offered dual protection in building society mergers

Savers in the UK have today received some good news from the Financial Services Authority which has announced that savers with accounts in both parties of a building society merger agreement will retain dual compensation rights on each account. This will see that savers are compensated up to £50,000 per account in the event of the merged entity failing.

This has been a bone of contention of late as many savers had little option but to go with mergers where one party was substantially weaker than the other and struggling to raise capital. Initially the financial services authority had refused to amend the rules but under pressure from the government and various consumer groups they have finally caved in. While there is very little chance that this rule change will be required in the future, the backbone of further security has been welcomed by savers around the UK.

However, the government has not gone as far as the Irish authorities did in guaranteeing all bank deposits just a short few weeks ago. It seems as though the size of the UK market is the main sticking point to such a guaranteed as it would potentially require massive funding in the event of a catastrophic failure of the UK banking system.

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