FSCS pays out £21bn in 6 months to UK savers

UK savers suffering from a spate of bank collapses received more than £21
billion in compensation in just six months as the banking crisis deepened.

The Financial Services Compensation Scheme (FSCS), which pays out up to
£50,000 to savers if a bank goes under, said in its annual report this
evening that it paid out the astronomical sum in the six months following
the collapse of US investment bank Lehman Brothers in September, as the
global financial crisis started to hit UK savers. It had to compensate a
total of 3.5 million bank accounts.

In the previous seven years, the scheme, which is run by the Financial
Services Authority, had paid out just £1 billion.

Five banks were responsible for the majority of compensation: Bradford &
Bingley, now state-owned after problems with its mortgage book; Landsbanki
Islands' UK saving arm Icesave; Heritable Bank; Icelandic-backed Kaupthing
Singer & Friedlander Limited (KSF) and London Scottish Bank.

The number of enquiries to the FSCS tripled from 73,000 to 234,000 as worried
UK savers tried to protect their money.

Its money comes from the UK's financial services industry, and the £50,000
limit is per saver - so those with savings of more than £50,000 in different
banks will still only be able to claim £50,000 back.

The FSCS has recently announced that consumers will be compensated within
seven days of a bank or building society going bust. It can take up to six
weeks to get compensation at the moment. The new rules also mean that the
compensation cannot be used to pay-off outstanding debts owed to the same
financial institution.