Question to the HM Treasury:

To ask Her Majesty’s Government whether they will explain why they agreed to a European directive tying the United Kingdom's bank deposit protection scheme to the euro-sterling value which has resulted in a £10,000 reduction in the level of protection for United Kingdom depositors from next year; and what action they intend to take to address this anomaly.

The Deposit Guarantee Scheme Directive (DGSD) updates existing EU legislation designed to harmonise the level of deposit protection provided across the European Economic Area (EEA).

This is necessary to ensure that depositors are entitled to the same level of protection wherever they deposit their money, and that UK firms are not competitively disadvantaged in relation to firms in other EEA jurisdictions.

As a result of the current strength of the pound in relation to the euro, it has been necessary for the Prudential Regulation Authority to review the sterling coverage limit. However, the Government has taken action to ensure that UK depositors are not exposed to a sudden reduction in the level of protection they receive.

HM Treasury has laid a statutory instrument to ensure that depositors who are currently entitled to £85,000 of protection from the Financial Services Compensation Scheme will continue to be until 31 December 2015.

This will ensure that there is sufficient time available for depositors to be made aware of the changes, and to take such steps as they feel necessary to manage their financial affairs appropriately in light of this change.