UK savers are demanding that the authorities increase the level of compensation paid when a bank goes bust after the Northern Rock crisis highlighted the risks to cash in the event of a collapse, research by MoneyExpert.com revealed. Currently, the financial services compensation scheme guarantees only the first GBP31,700 of savers' deposits.
The research, which was conducted as the Northern Rock crisis unfolded and while the Bank of England and UK chancellor of the exchequer Alistair Darling launched rescue attempts involving guarantees to all savers, indicated that 44% of adults now do not trust the government, Financial Services Authority or Bank of England to protect their savings in the event of another Northern Rock-style ‘run on a bank.’
It also shows that 60% of adults want the levels of compensation paid in the event of a bank crash increased, and that nearly half of them do not trust the authorities to handle a crisis.
Sean Gardner, CEO of MoneyExpert.com, said: We are always told that savings accounts are risk-free but after Northern Rock many people are not too convinced about that. The Northern Rock crisis has been a massive shock to the system and has highlighted that the compensation scheme currently in place needs to be overhauled. Many Northern Rock savers had deposits of much more than GBP33,000 and would have suffered serious problems if the bank had gone under.