ABI: Govt must not risk distorting the savings market

ABI: Govt must not risk distorting the savings market

ABI: Govt must not risk distorting the savings market

Commenting on today’s announcement from the Government that it is to consult the financial services industry over increasing the guarantee for deposits held in bank accounts, the ABI’s Director General, Stephen Haddrill, said:

“The Northern Rock crisis brought the whole issue of bank deposit protection into very sharp focus. But there is much more to the savings market than bank deposits. The new limit of £35,000 ensures that 98% of people are fully protected. Anything beyond that could encourage reckless investing and be dangerous both for consumers and financial institutions.

“As the Treasury’s discussion paper says, increasing the limit beyond that risks distorting the market for savings and investment products. Many investment products deliver higher returns for consumers than bank accounts, but a high guaranteed limit for deposits may mean that people will not even consider them. The ABI will strongly argue for the deposit account fully guaranteed limit to remain at £35,000, and urges the Government to focus instead on enabling faster payouts from the Financial Services Compensation Scheme in the event of bank failure.”

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Notes for Editors

1. Enquiries to:
Alan Leaman 020 7216 7440 (Mobile: 07957 482 330)
Jonathan French 020 7216 7392 (Mobile: 07958 330 480)
Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
Erfan Hussain 020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler 020 7216 7415 (Mobile: 07968 364 302)

2. The ABI is the trade association for Britain’s insurance industry. Its nearly 400 member companies provide over 94% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold up to a sixth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

3. An ISDN line is available for broadcasts.

Copies of all ABI news releases, together with other information from the Association, can be seen on our website http://www.abi.org.uk