Loans and Finance

Loans and Finance


News and information about loans, money, debt, finance and business issues.
Powered by

Tuesday, July 08, 2008

Treasury Plans For Depositors' Savings Attacked

Alistair Darling revealed last week that the Government was planning to increase its guarantee on depositors' savings from £35K to £50K.

However, banks have rounded on the plans saying that they are unrealistic.

The plans would see taxpayers initially foot the bill for paying out deposits, within the first week of a bank going under. The cost would then be recouped by selling the failed bank's assets, and imposing a levy on other banks.

However, banks warn that the government would need to develop a costly centralised database that would store the details of every account and was updated constantly.

Additionally they have warned that transferring customers between banks generally takes three to four weeks, a failing of the banks rather than the government, as such the seven day deadline would be unworkable.

Another fault line within the plan is that it represents a change in the order of creditors when a company goes bust. As such, it would require a large amount of secondary legislation.

The best laid plans of mice and men!

No comments:

Post a Comment