Q&A: EU INVESTOR PROTECTIONS
Q.WHAT DO THE EU PROPOSALS TO BOLSTER PROTECTIONS COVER?
A.They will protect bank account holders and retail investors such as introducing faster and better protection of investors who face a run on their banks or have been the victims of fraud. A public consultation on improving the safeguards for insurance policy holders has also been opened.
Q.WHY WAS IT NECESSARY TO BOOST INVESTOR PROTECTION?
A.The EU plans are part of the wider efforts to learn from the financial crisis, in which the savings of millions were hit by extreme market volatility and some banks had to be rescued by taxpayers.
Q.WHAT WILL IT MEAN FOR BANK DEPOSITS?
A.It proposes increasing deposit guarantees to €100,000 (£83,000) per depositer per bank by the end of 2010, which covers 95 per cent of EU account holders. From the end of 2013 customers will get deposits back within seven days, compared to three months currently.
Q.WHAT DOES IT MEAN FOR RETAIL INVESTORS?
A.The Commission proposes changing 1997 law on compensation to include full or partial payouts within nine months compared with several years currently. Compensation could rise to €50,000 from €20,000 and consumers would no longer have to swallow the first 10 per cent of losses. It wants compensation schemes to be funded to a level of 0.5 per cent of the value of assets covered.