Saturday, January 5, 2008

Cowen-Could he become the Darling of Irish Depositors?

Yesterday the Chancellor of the Exchequer in the UK, Alistair Darling announced new measures that will increase the levels of protection for bank deposit holders from £35,000 to £50,000. This is in response to the crisis created by the near collapse of the Northern Rock (or Northern Wreck as it soon became known) in September and the sight of thousands of deposit holders queueing to withdraw their savings both in the UK and in Ireland. Thats very good news for savers in the UK, but what about here. The protection available to depositors here now falls well below the level which British consumers are entitled to, which in euro terms is just under €67,000. At present only €20,000 of depositors' savings are guaranteed here.

In October 2007 in response to Dáil questions (questions 98/122 October 16) the Tánaiste rambled on about a review at EU level and a report that will be published on the issue in mid 2008 which bore all the hallmarks of kicking this into touch. Our current scheme meets the minimum levels agreed by the EU member states, but there is no reason why Ireland cannot follow the UK example and greatly enhance the protection which savers have. As far as I am aware this doesn't even require legislation, it only requires amending the existing statutory instrument to reflect the new amounts. Of course there would have to be consultation with the banks who fund the scheme, but I am sure they would welcome anything that would maintain consumers confidence in the banking system and avoid a repeat of the scenes we saw outside Northern Rocks offices last year.

CAI will be writing to Brian Cowen calling on him to increase the levels in line with the UK.