Friday, 6 February 2009

Financial Services Compensation Scheme

The safety net when a bank goes bust is the Financial Services Compensation Scheme. This is what guarantees that savers are protected. It has been brought into use 5 times in the past year to protect depositors at Bradford & Bingley, Heritable Bank, Singer & Friedlander, Landsbanki and London Scottish Bank. The scheme requires a levy on all the other members of the banking system to meet the cost.
The FSA are demanding that Credit Unions bear their share of the cost at a rate of 0.05% of assets - that's just for the costs of the banks going into receivership - if we have to meet the principal of the debts, the rate will be much higher.
How can I go back to my small community credit union and tell the members that they have to bail out the clowns who ran their banks into the ground? And worse, that we are being treated the same as RBS or Lloyds who have received £Billions from the Treasury, which they can now use to pay their levy?
It's just not on. I accept Credit Unions have some privileges in their relationship to government. But we didn't cause this mess and we should not be expected to sort it out.

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