| A recent new ruling announced by Alistair | | | | |
| Darling, the Chancellor of the Exchequer, | | | | "That is why in the current market |
| means savers with money in banks and building | | | | circumstances we are providing a guarantee |
| societies will have the first £35,000 of | | | | for Northern Rock's depositors. But for the |
| their deposits guaranteed, it has been | | | | future, we now need to put in place a better |
| revealed. | | | | regime." |
| | | | |
| Previously, savers would have had the first | | | | However, George Osborne, the shadow |
| £2,000 of their deposits absolutely | | | | chancellor, has criticised Mr Darling for |
| protected, but only 90 per cent of the next | | | | supposedly promising one thing and delivering |
| £33,000. The move can be seen as an | | | | another. |
| attempt by Mr Darling, who announced the | | | | |
| change alongside Alan Greenspan, former | | | | "Alistair Darling has piled confusion upon |
| chairman of the US Federal Reserve, to avoid | | | | confusion," he commented. |
| another Northern Rock-type crisis. | | | | |
| | | | "Why did he tell one newspaper that savings |
| He had hinted at the move just last week when | | | | would be guaranteed up to £100,000, only |
| he admitted he was considering adopting a | | | | to change his mind ten days later and offer |
| US-style system which would move deposits | | | | protection at a much lower level? What people |
| held in a collapsed bank into a specially | | | | want in a period of financial instability is |
| designed holding body before being paid back | | | | certainty, not fiddling." |
| to savers. | | | | |
| | | | Michael Fallon, a fellow Conservative who |
| However, this most recent development will | | | | serves on the Treasury Committee, echoed this |
| not do away with the need to carry out a | | | | view. |
| radical overhaul of the compensation system, | | | | |
| which is expected to take place in the next | | | | "Northern Rock has been given preferential |
| parliamentary session. According to Mr | | | | treatment throughout," he told the Times. |
| Darling, the changes are in recognition of | | | | |
| the fact that freedom from risk cannot be | | | | "The compensation scheme is chaotic. They are |
| guaranteed - and so consumers with | | | | making it up on the hoof. The amount keeps |
| investments in bank savings accounts need to | | | | changing. Is it going to go down to |
| be protected as far as possible. | | | | £10,000 in a week. I thought it was going |
| | | | to be £100,000 a week ago." |
| "If a problem does happen, we need to be able | | | | |
| to deal with it quickly to maintain stability | | | | An aide to Mr Darling has responded to these |
| and confidence," he said in his speech, | | | | accusations by saying that the announcement |
| delivered at the Reuters building in Canary | | | | is the first of many and that further |
| Wharf. | | | | developments will be forthcoming - including |
| | | | a consultation on the compensation system - |
| "Savers need to be sure that they can get | | | | in the near future. |
| their money out if they need to. | | | | |