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BoE proposes additional protection for consumers


The Bank of England (BoE) has today launched new proposals to protect savings, making it easier for consumers to get their cash back when banks fail. BoE has published four papers that propose changes to the banking system, making it safer for depositors.
Consumers who have put their money in a failing bank will, from 2016, be able to get their money back within 24 hours, for up to the £85,000 currently covered by the UK depositor protection scheme. This amount will be extended to £1 million in exceptional circumstances for a temporary period, such as if the depositor is purchasing a home. There will also be greater protection for holders of insurance plans if the insurer fails.
Andrew Bailey, deputy governor of the Bank of England and chief executive of the Prudential Regulation Authority said:

“Improving the resilience and resolvability of firms has been at the heart of international and domestic reforms since the financial crisis. Ring-fencing will improve banks’ resilience, by protecting them from shocks, and facilitate orderly resolution – both of which are needed for a stable financial system.

“These proposals will allow customers to have continuous access to the money in their bank account – or receive payment from the FSCS if this is not possible. Additionally, the increase in FSCS limits for certain types of insurance will mean policyholders who may find it difficult to obtain alternative cover, or who are locked into a product, have greater protection if their insurer fails. ”

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