A consultation document, Financial Stability and Depositer Protection, was published by the Treasury on the 1st July. According to this paper, the FSA (Financial Services Authority) is to propose increasing consumers deposit protection in Autumn of this year.
Deposit protection and the levels of these are something which mortgage advisors need to be aware of and are covered in the CeMAP exams.
This paper will now be discussed through further consultations and the resulting legislation will be introduced this autumn.
The FSA is expected to propose that the deposit protection is increased to £50,000 per consumer per bank. What this means is that if a bank got into trouble, then the first £50,000 that a consumer has deposited with that bank is protected and they will get it back.
This move is to strengthen the financial system’s stability, reduce the chances of banks facing difficulty and reducing the impact of those problems if they should occur for the majority of the general public, who do not usually have more than £50,000 in savings with a bank.
Chancellor Alistair Darling says: “No system of regulation can or should prevent the failure of each and every institution, but we must do everything possible to prevent problems which could pose a wider threat to stability. The challenge is to ensure that the authorities can act quickly and decisively where necessary to support financial institutions. These proposals will give the authorities the full range of powers they need. They do so by entrenching the model established a decade ago – the FSA responsible for individual institutions, the Bank of England for the stability of the financial system as a whole – but by providing each institution with new powers, and improving coordination between them.”
Callum McCarthy, chairman of the FSA, adds: “We are working closely with the Treasury and the Bank of England to strengthen the stability and resilience of the financial system and reduce the likelihood of banks failing. This legislation is one of the most important changes of the last decade and its influence will last for decades to come. We will consult later this year on the supervisory aspects of the new banking resolution regime and for changes to depositor compensation and will work with our tripartite partners to implement the new arrangement effectively.”
When changes such as these are made, your CeMAP syllabus remains the same until the ifs (Institute of Financial Services) updates the syllabus. This means that sometimes you will take your CeMAP exam using slightly out of date figures, such as this one, however, when you get into the exam room, you are given a table with tax rates and national insurance rates and bands so you do not have to remember every exact figure.
A good CeMAP training course will ensure that you are aware which figures you will have to remember (which are not too many so don’t worry) and which figures are provided on the examination day.