Deposit Guarantee Schemes (South East Region Liberal Democrats)

South East Region Liberal Democrats <info@southeastlibdems.org.uk>

Deposit Guarantee Schemes

December 16, 2008 9:00 PM
By Sharon Bowles MEP in European Parliament
Originally published by Sharon Bowles MEP

All the institutions have been ambitious in this project.

The Commission has been ambitious in proposing a minimum guarantee of €100,000 and a payout term of 3 days.

Council has been ambitious in opting for maximum harmonisation.

Parliament has been ambitious to make sure it works for the citizen.

The original proposal to go, in one jump, from procedures that might not cope with the current 9 months allowed for paying out, to 3 days was, maybe, overambitious.

The final timeframe of up to 35 days is agreed, a little reluctantly because we would have preferred a shorter time. 35 days without access to funds still leaves citizens in a difficult position. This makes possibilities for emergency payouts important or better still arrangements for continuity of banking services.

Now, taking the bold step of maximum harmonisation does mean there are consequences that have to be addressed - making this the first stage of a work in progress - evidenced by the number of items that the Commission is asked to report upon by the end of next year.

One of the consequences is the need to have some exemptions and I welcome the grandfathering of some socially relevant higher balance provisions that were in place by the start of 2008.

However we have learned lessons since then - indeed that is what this entire directive is about - recent lessons, and it is regrettable that we could not obtain an unreserved commitment to allow higher protection for temporarily increased balances that occur, such as when houses are sold or pension fund lump sums paid out.

Following the collapse of the Icelandic banks, there have been unhappy losses in such circumstances, and this has put in train plans for special protection. People in long term possession of large funds to put on deposit can do so and make it safe by splitting it between institutions, but it is unrealistic to ask that payments be channelled that way.

The consequences of losses of lifetime funds is a lesson we do not need to learn again, so I hope the Commissioner will indicate enthusiasm to allow additional protection for special temporarily increased balances.