U.K. Follows U.S. Move To Hike Deposit Insurance Ceiling

London, England (AHN) - Like the U.S. which hiked the maximum amount of deposits covered by insurance to $250,000 from $100,000, similar moves will take effect in Britain by Oct. 7.

The Financial Services Authority increased the maximum amount of deposit insurance coverage in the U.K. to $88,400 (50,000 pound) from $81,820 (35,000 pound). Joint accounts will have a higher insurance coverage cap of $176,800 (100,000 pound)

The move is expected to assuage fears of British depositors that what happened to Wall Street firms will not take place in U.K. after Bradford & Bingley was nationalized, while Lloyds TSB purchased the financially ailing Halifax Bank of Scotland.

Hector Sants, FSA chief executive, said the authority will consult Britons on further reforms needed by the country's banking system to provide depositors confidence that their money is safe. Among the amendments proposed would be to further raise the insurance deposit ceiling, speed up the payment and if the rules would also include legal entities.

The proposed changes coincides with the introduction next week of the government-sponsored Banking Bill at Parliament.