LONDON, May 28: Britain’s banks must post information in branches and on websites by September spelling out clearly who will reimburse customer deposits if the lender goes bust, the Financial Services Authority (FSA) said on Monday.
The regulator said the move is part of a long-term initiative to improve battered public confidence in banks.
Britain had to rescue several lenders in the 2007-09 financial crisis when the country saw its first bank run in over a century. Concerns have increased in recent weeks amid fears Greece may crash out of the euro zone and as Spain battles to stabilise its banking sector.
‘Customers need to feel confident about their money and to do this they need to know what the compensation limits are and which scheme would provide cover in the event of a bank, building society or credit union failure,’ Andrew Bailey, the FSA’s director of UK banks and building societies, said in a statement.
The terms of protection are unchanged.
Deposits held at Britain’s big high street banks like Barclays, HSBC, Lloyds and Royal Bank of Scotland are covered by the UK Financial Services Compensation Scheme (FSCS).
Spanish bank Santander’s UK based accounts are also covered by the British scheme.
If a bank goes bust, deposits up to 85,000 pounds are protected by the scheme, as required under European Union law.
The EU raised protection to this level in the wake of the 2007-09 financial crisis which saw governments having to bail out many banks.
Branches of banks from elsewhere in the European Economic Area – which includes EU countries and non-bloc states Norway, Iceland and Liechtenstein – must make it clear to customers in Britain whose national scheme will protect deposits up to 100,000 euros, the FSA said.
The FSCS said banks should go ‘the extra mile’ beyond the minimum information requirements outlined by the FSA.
‘The banking crisis shows how important it is for consumers to have clear information about FSCS protection,’ the scheme’s chief executive Mark Neale said.
The new FSA requirements were first aired in a consultation paper last December on raising consumer awareness on deposit protection.
The watchdog has already taken other steps, such as requiring banks to detail deposit protection information on statements twice a year.
The FSCS said it has helped more than 4.5 million people and paid out 26 billion pounds in compensation since 2001. The scheme is funded by the financial services industry through a levy.
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