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Protect savers, Chancellor urged

Protect savers, Chancellor urged

The Government has been urged to increase the protection offered to savers in the wake of the collapse of the Lehman Brothers bank in the US.

Tory Shadow Chancellor George Osborne has written to Chancellor Alistair Darling supporting a proposed increase in the compensation to savers if a bank goes bust from £35,000 to £50,000.

He said: "Working together, we can pass the necessary legislation within days. The British public would know their savings are safe, even if the decision were made to let a financial institution fail."

He said this measure would give the UK authorities the same flexibility as the US ones have demonstrated in their handling of Bear Stearns, Lehman Brothers and Merrill Lynch.

In his third letter to Mr Darling offering support on the issue, he said: "The need for an effective depositor-protection regime is now more pressing than ever."

Kevin Mountford, head of savings at moneysupermarket.com, said: "We call upon the Government to take decisive action now and help give consumer confidence a boost - or there is a real danger many people will prefer to keep their savings under the mattress than in their bank!"