MP calls bank account compensation cut "absurd"
In a new revelation, it has been revealed that customers will now receive £10,000 less than what they would previously if their bank goes bust.
This news was greeted with criticism from Tory MP Andrew Tyrie. Mr Tyrie labelled the move as completely "absurd" and has announced that he will be contacting the chancellor to demand a change in policy.
Mr Tyrie said:
"It is absurd that the 16% depreciation of the euro largely brought about by the crisis in the eurozone in general, and the Greek crisis in particular, should be forcing a reduction in the level of protection available to UK depositors,"
This change has been brought about by a new European directive that has set the limit of protection to Ä100,000. This means that the amount protected in the UK can fluctuate depending on how strong the pound is against the euro.
The pound is now situated at a level of 1.4 against the euro which represents nearly its highest level since 2007.
It makes no sense to fix deposit guarantees....to a volatile variable like the exchange rate," said Mr Tyrie.
Several consumer rights groups have also reacted angrily to the change.
"This will be a massive blow to savers," said Anna Bowes, director of the independent website, Savings Champion.
"It will also be an administrative headache, as savers will need to find new homes for their money."
This change has apparently been delayed by the Treasury in order to allow members of the public to make any changes that may be necessary.
This new limit will reportedly still cover 95% of people, according to the FSCS.
The scheme covers anybody who was money saved in a bank, building society or credit union. Once changed in January 2016, the situation will not be reviewed again until 2016.
Which? have expressed concerns about how knowledgeable banking staff seem to be on the matter.
"We've consistently found bank staff have an extremely poor knowledge of the scheme so, with people's savings soon to have less protection, we expect all banks to ensure staff are properly trained," said Richard Lloyd, the executive director of Which?
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