EU plans to boost savings guarantee to €100,000
That is the maximum sum individual investors would be assured of getting back if their bank collapsed under new moves to step up protection for account holders.
Compensation would have to be paid out within seven days instead of the three months allowed under some schemes in operation in the EU.
The Commission said the increase means 95 per cent of bank account holders in the EU will get all their savings back if their bank fails.
Compensation coverage will extend to companies, as well as all currencies, although deposits held by "financial institutions and public authorities" are not included.
The UK depositor guarantee was raised from 35,000 to 50,000 by the Financial Services Authority in October 2008 in the midst of the banking crisis.
Customers with joint accounts became eligible to claim back up to 100,000 if their bank or building society failed.
The seven-day payout limit now being recommended by the Commission is about to come into force in the UK.
EU internal market and financial services commissioner Michel Barnier said the help for small investors was part of the ongoing job of creating a safer and sounder financial system, which included restoring consumer confidence.
His package of measures extends to new guarantees for investors if their investment company defaults due to "fraud, administrative malpractice or operational errors".
In those cases — but not for losses caused by the inherent risks of investment speculation — investors' guaranteed level of compensation will rise from €20,000 (16,730) to €50,000 (41,820).
The payout deadline would be set at nine months — necessary, says the commission, to allow financial authorities to investigate such cases.
Mr Barnier said his plans, which now need approval from MEPs and EU finance ministers, marked the commission's latest step towards bringing transparency and responsibility to Europe's financial system to help prevent and manage future crises.
He said: "European consumers deserve better. They need reassurance that their savings, investments or insurance policies are protected, no matter where in Europe they are based.
Labour plea over tax change
LABOUR has called on the government to ensure banks do not beneft fromplanned cuts in corporation tax.
Labour former minister Chris Leslie last night demanded that Chancellor George Osborne exempt banking institutions from the tax "windfall", arguing that banks were the "source and cause" of the British defcit.
During a Commons debate on the committee stage of the Finance Bill, which enacts the Budget, Mr Leslie told MPs the public are "furious that they (the banks] were the source and cause ofmany of the problems of our national debt and the defcit situation that we are in today".
He said: "it appears as though the Chancellor press-released the fact that he was taking, in some bravemeasure, an amount of money from the banks in a banking levy, but failed to publicise that he was also then giving it back with the other hand through this reduction in the corporation tax change."
"To make this a reality, I now call upon the European Parliament and the Council [of Ministers] to make rapid progress in approving today's package."
As well as giving customers a higher level of deposit protection, the measures would free them to choose "the best savings product in any EU country without worrying about differences in protection", Mr Barnier said.
Banks would also benefit, because they could offer competitive products throughout the EU without being hampered by national guarantee differences.
If agreed promptly by member states, the changes could be in place by the end of 2012.
The Commission yesterday also launched a "consultation" on how to improve protection for insurance policy holders, including setting up insurance guarantee schemes in all member states.