Britain's financial regulator said Friday it would raise its compensation limit for bank deposits to 50,000 pounds (US$88,500) per customer from 35,000 pounds (US$62,000) and indicated more protection may be coming, as it moved to assuage consumer concern about the global credit crisis.
The change announced by the Financial Services Authority, which comes into force on Tuesday, speeds up a promise from Prime Minister Gordon Brown that the limit would be raised. The move comes after the Irish government this week offered an unlimited guarantee on deposits at its domestically owned banks.
Banks and other savings institutions had reported that nervous British savers were flocking to Irish banks to take advantage of that offer, which the British Bankers' Association said was unfair competition.
The British government earlier this week nationalized its second bank this year, putting struggling mortgage lender Bradford & Bingley under its protective umbrella along with Northern Rock. B&B's savings business, including its entire retail branch network, was sold to Spain's Banco Santander, which also owns Britain's Abbey.
Hector Sants, the chief executive officer of the Financial Services Authority, said that the change to the British rules was aimed at "providing clarity" to savers after the extensive public debate about compensation levels.
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