Bank depositors will be compensated in full for the first £50,000 of their savings under a new protection scheme, but the banks have won their argument against putting up cash in advance. The banks had opposed a US-style fund for bailing out customers of failed banks that would have meant allocating billions of pounds against an event that might never happen. Chancellor Alistair Darling has reluctantly agreed that while other banks will have to provide compensation if one of their number fails, initially at least they won’t have to make an upfront contribution. At present, customers are guaranteed ro get only the first £35,000 of their deposits back in the event of a bank collapsing – and until changes made when Northern Rock hit trouble last September, they received only part of that £35,000. If the failed bank’s systems prevented such fast-track compensation, he would still want the scheme to make an interim payment within seven days. read more

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