Labour Euro MPs vote for tougher compensation regime for savers - 2012-02-16

Labour Euro MPs today voted to toughen up requirements on banks to strengthen protection for account holders in the event of a bank failure.

Vice President of the Economic and Monetary Affairs Committee, Euro MP Arlene McCarthy said: “We all remember the scenes in 2007 when hundreds of customers of Northern Rock queued to take their money out, with 1 billion GBP removed in one day, and panicking that the bank would collapse.

“It"s vital that we strengthen schemes to protect depositors' money.  We're calling on our governments to put in place 1.5% of their deposits on an upfront pre-fund to ensure, in the case of bankruptcy, that customers can get their money quickly.

“We have to draw the lesson from the financial crisis and make sure any further crisis is not financed by the taxpayer.

“That's why we are increasing the amount to be put in the guarantee deposit schemes, ensuring they are pre-funded (ex-ante) and calling for a faster full pay out, reducing it from the current 20 days, to 5 working days.

“It's disappointing that Conservative Euro MPs have tabled last minute amendments to dilute and weaken the scheme by allowing Member States the option of ditching the pre-funding and relieving banks of their responsibility to cover savers' deposits in advance.  This would leave consumers more vulnerable to losing deposits if a bank fails of forcing taxpayers to pick up the bill.”

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