THE bank deposit guarantee for European savers will be set at €100,000 under European Commission plans unveiled yesterday.
That is the maximum sum individual investors would be assured of getting back if their bank collapsed under new moves to step up protection for account holders.
Compensation would have to be paid out within seven days instead of the three months allowed under some schemes in operation in the EU.
The commission said the increase means 95% of bank account holders in the EU will get all their savings back if their bank fails.
Compensation coverage will extend to companies, as well as all currencies, although deposits held by “financial institutions and public authorities” are not included.
A seven-day pay-out limit is being recommended by the commission.
EU internal market and financial services commissioner Michel Barnier said the help for small investors was part of the ongoing job of creating a safer and sounder financial system, which included restoring consumer confidence.
His package of measures extends to new guarantees for investors if their investment company defaults due to “fraud, administrative malpractice or operational errors”.
In those cases — but not for losses caused by the inherent risks of investment speculation — investors’ guaranteed level of compensation will rise from €20,000 to €50,000.
The pay-out deadline would be set at nine months — which the commission says is necessary to allow financial authorities to investigate such cases.
Mr Barnier said his plans, which now need approval from MEPs and EU finance ministers, marked the commission’s latest step towards bringing transparency and responsibility to Europe’s financial system to help prevent and manage future crises.
He said: “European consumers deserve better. They need reassurance that their savings, investments or insurance policies are protected no matter where in Europe they are based.
“To make this a reality, I now call upon the European Parliament and the Council (of Ministers) to make rapid progress in approving yesterday’s package.”
As well as giving customers a higher level of deposit protection, the measures would free them to choose “the best savings product in any EU country without worrying about differences in protection”, he said.
Banks would also benefit because they could offer competitive products throughout the EU without being hampered by national guarantee differences.
If agreed promptly by member states, the changes could be in place by the end of 2012.
The commission yesterday also launched a “consultation” on how to improve protection for insurance policy holders, including setting up insurance guarantee schemes in all member states.
Monique Goyens, director general of European consumers’ organisation BEUC, said: “Deposits must be safe everywhere in Europe, and whatever the nationality of a bank.
“The new rules presented by the commission are a step forward in the right direction, but additional measures need to be adopted in order to fully meet depositors’ needs.”
She said national authorities should be allowed to exceed the deposit guarantee level set out in the proposal “as best suits their national circumstances”.
And any new deposit guarantee scheme should ensure that customers holding several accounts at different “brands” of one-parent credit institution or bank should be protected separately under the scheme for each account, rather than restricted to a single compensation limit regardless of the number of accounts, she said.
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