Chancellor announces plan to increase protection for savers and guarantee their cash
The Financial Services Authority (FSA) will have more power to deal with failing banks under plans announced by chancellor Alistair Darling.
Darling told the Financial Times he wanted to let the regulator guard customers’ cash if their bank got into trouble.
When asked about how he planned to change protection for savers, he said he wanted "to make sure there is no doubt how much money is guaranteed [...] and also to make sure people can get out their money fairly quickly.”
He also wants to give the FSA power to make sure banks in difficulty had enough day-to-day cash to keep running.
Legislation is planned for May, after a three-month consultation.
Many withdrew savings from Northern Rock last September after it asked the Bank of England for emergency funding. It was the first run on a UK bank in more than a century.
The problems at Northern Rock and the continuing fallout from the sub-prime loans scandal in the US have hit consumer confidence and led to a series of profit warnings from housebuilders. Towards the end of last year Barratt, Taylor Wimpey and Bovis Homes all experienced falling sales.
Banking crises are currently dealt with by the FSA, the Bank of England and the chancellor. Darling said he wanted to make some changes to the system, but said there was “nothing fundamentally wrong” with it.