If your bank goes bust, the compensation scheme can now pay out a maximum of £50,000 instead of £35,000. This is welcome news but it doesn't go far enough.
We've written many times in recent weeks about the Financial Services Compensation Scheme. In a nutshell, it will compensate savers if your bank goes bust. However, the maximum compensation on offer until now has been £35,000.
Today the Financial Services Authority has announced that the maximum compensation will rise to £50,000 from Tuesday. In all other respects, the scheme hasn't changed. You can read more about the nuts and bolts of the scheme here.
Today's news is welcome. But it doesn't go far enough. At The Fool, we think that the government should guarantee all deposits at UK banks - as has happened in Ireland. It's a drastic measure but we believe it's the only way to restore full confidence to the UK banking sector. Read more about our view in this article by Cliff D'Arcy.