Irish savers given extra protection
The previous deposit protection scheme in Ireland only saw savers given a guarantee for €20,000 (approximately £15,894), but late last week the Irish government increased this to €100,000 in a bid to encourage consumer confidence in the banking system. The new guarantee level also applies to Post Office savers, as it is covered by the Irish scheme.
Brian Lenihan, minister for finance, says: “The government is confident about the strength and resilience of the Irish financial system… This measure provides additional reassurance to depositors in Ireland that their savings are safe.”
Ireland’s new guarantee level is now among the highest in the EU, and casts a shadow over the UK’s £35,000 limit.
The British government is currently considering proposals to give the deposit protection scheme an overhaul, with the Financial Services Authority recommending that the limit be increased to £50,000. The government is currently planning to introduce new laws to protect savers by the end of February 2009, with the exact details of how to achieve this decided at some point this autumn.
However, the Treasury Committee, which represents Parliament, last week said it saw no need for the deposit level to be increased, and instead called for more fundamental changes such as changing the scheme to protect per brand rather than per bank. For more of its proposals, click here.
Kevin Mountford, head of savings at moneysupermarket.com, says the changes in Ireland could pave the way for the deposit limit to be increased over here.
“The government needs to take decisive action to give consumers' confidence – it keeps saying British banks are safe so why not put its money where its mouth is and increase the limit?”
A year on from the run on Northern Rock, the banking crisis is still causing concern among savers. Mountford reports that last week, before and after the takeover deal between Lloyds TSB and HBOS was announced, moneysupermarket.com saw a massive jump in traffic with savers going online to move their money around.
“We saw a big increase in new saving account transactions, but I don’t think this is new money,” he says. “People are aware of the compensation scheme and are shifting their cash to reduce their exposure to any one bank.”