The UK’s scheme protects £85,000 in bank accounts in the event of the bank collapsing, but they are changing their rules in line with EU requirements to cover high temporary balances.
The new rules mean that if a bank goes down while a UK resident has a lot of money in their account temporarily because of a property transaction or a payout from compensation or insurance, then up to £1 million will be protected.
The proposals are being set up to try to discourage people from causing a “run” on a bank when it gets into trouble, which is what happened to Northern Rock in 2007, when savers queued outside of branches to withdraw their money fearing that they would lose their savings otherwise – hastening the bank’s downfall.
A spokesman for the Chief Minister’s department said that the deposit protection scheme was kept under close review, but that no changes were thought to be necessary.
The spokesman said: “All the Crown Dependencies have schemes that offer similar protection. The Jersey Bank Deposit Compensation Scheme offers £50,000 per account placed in Jersey in a Jersey regulated bank.
“This is the amount that the UK decided was an appropriate level of coverage during the recent financial crisis. The UK only amended its limit once the European Directive was passed. We are in regular dialogue with the other Crown Dependencies. Currently the prevailing view is that £50,000 is an appropriate amount of coverage in the Crown Dependencies.”