The Financial Services Compensation Scheme’s £85,000 payout limit should apply to each company within the groups which own them, according to Shadow Treasury financial secretary Chris Leslie.
Currently the way the protection applies depends on the way a bank is licenced. With some affiliated banks, like Halifax and Bank of Scotland which are both owned by Lloyds Banking Group, the limit is divided between the companies. With others, like Royal Bank of Scotland and NatWest, the limit applies to each company separately.
Speaking to Money Marketing, Leslie says this should be simplified so consumers more easily understand what protection they are entitled to.
He says: “The FSCS’s limit should be applied to brands rather than the wider group. There are commercial benefits to marketing brand by brand and if you are branding in a certain way people will expect the guarantee to follow the brand.”
Discussions in Europe which will decide the future structure of protection for depositors under the FSCS are currently on hold. Negotiations between the European parliament, the European Commission and the European Council over the Deposit Guarantee Scheme Directive have stalled because the positions of the parliament and the council are too far apart.
No date has been set for the official negotiations between the three bodies or between officials to try and find a way forward.