John Greenway's dire warning at the Post Magazine Business Leaders Forum Parliamentary Reception on Tuesday evening that the Financial Services Compensation Scheme could be sending some large bills in the direction of insurance brokers, IFAs and insurers next year and the year after moves closer to reality every day.
Promises are being made by government as knee-jerk reactions to the unprecedented crisis that grips our banking system. It is simply a matter now of doing anything necessary to put out new fires before they engulf yet another institution that just weeks ago looked fireproof. Pledges to compensate those who put their money (foolishly?) into collapsed Icelandic banks are made without stopping to think who will pay or how. This all reaches far beyond what the FCSC was designed for or can reasonably be expected to cope with.
Fortunately, there will be an early opportunity for Parliament to survey this wreckage as the Banking Reform Bill is about to set off on its legislative passage. I expect the issue of who compensates the depositors and savers in failed banks to feature prominently in this debate and it may offer an opportunity for the insurance industry, especially the broker and IFA sectors, to lobby hard for some cast iron ringing fencing of banking liabilities.
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