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Customers of failed UK banks could get their money back within a week under proposals outlined this week.The Financial Services Authority (FSA) has set out plans for speeding up the payment of compensation in a bid to help boost confidence in the banking system and make people feel their money is protected.
The critical importance of the Financial Services Compensation Scheme - the official safety net for customers of financial firms that have gone bust - in paying out redress to savers has been emphasised by the events of recent months, which have seen several banks go under. Customers of Icesave - the UK arm of Icelandic bank Landsbanki - only started getting their money back after six weeks. However, the FSA said it was proposing to change the rules "to make it possible for customers to get back their money within seven days if a bank fails".
The consultation paper also recommends that banks and building societies should proactively tell consumers which trading names are covered by a particular "authorisation". The compensation scheme covers the first £50,000 a saver holds with an individual bank, but if one bank is running two savings providers under the same banking licence, sometimes only one set of protection applies.
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