FSA Compensation revisited.

[empip]

I know we have skirted this... But I was amazed to read the following.

Regarding Financial Services Compensation Scheme (FSCS).

Pay-as-you-go
Since the FSCS started though, no bank in the UK has actually been asked to pay an annual levy at all - which could have been as much as 0.3% of their depositors' money.
That is because the money the FSCS inherited from the Deposit Protection Board was reckoned to be enough for the time being.
Currently there is about £4.4m in the pot for banks and other deposit takers...

Ah ha says I - artisitic licence from the Beeb - a piddling £4.4m !!... Until I looked further.
http://www.fscs.org.uk/consumer/key_facts/limitations_of_the_scheme/

...The FSA's proposals for reviewing the funding of the FSCS will increase the financial capacity of FSCS. But it is still possible to conceive of a default (or a combination of defaults) so big as to be beyond FSCS's ability to pay compensation up to our limits...

Oh, that's because £4.4m wouldn't be enough I guess... There was talk of far more dosh at stake in the old Crock...

Ah but of course here we find the 'levy amounts'
http://www.fscs.org.uk/industry/funding/levy_information/levy_amounts/

2007/08 initial levy - £94.5m
Deposit takers (A1): £nil.

2006/07
Accepting Deposits: £nil. (FSCS holds sufficient funds to cover anticipated compensation payments and management expenses for this Sub-scheme).

2005/06
Accepting Deposits: £nil.

Nothing levied at all on Banks since FSCS took on the current compensatory role 2001.

 

[JohnD]

which explains why the trade reps don't want compensation increased to £100k

they'd have to put their hands in their pockets

what a dreadful thought.

Lucky they are able to lobby the government to say it would be a bad idea.

I wonder how many hours a week the PM and the Chancellor spend with reps of big business, and how many they spend with representatives of consumers' and citizens' interests.

 

[empip]

You know the old saying 'If it looks right, it usually is just that..'
Our compo scheme never quite looked right to me...

Contrast with the USA
http://www.fdic.gov/deposit/insurance/initiative/index.html#hi

...Federal Deposit Insurance Corporation (FDIC) repays at least the first $100,000 (roughly £50,000) of savers' money.
To pay for this, banks and other institutions pay insurance premiums to the scheme, which is backed by US government bonds currently amounting to $51.2bn, roughly £25bn...

...In the USA, bank collapses have been common - 1,600 went under between 1986 and 1992.
Thus many people are aware of the FDIC and how it operates.
Its typical plan is to quietly line up a buyer which takes over the insolvent bank over a weekend - lock, stock and barrel.
What if that fails?
"We close it on a Friday and send out cheques on the Monday to depositors, if we cannot find a buyer," said FDIC spokesman David Barr.
"They see the smooth, seamless way the troubled bank is handled, so it's been a while since we have had a run on a bank in the USA," he added.