moneysupermarket.com: Report on Banking Reform

Commenting on the Treasury Committee report on Banking Reform, Kevin Mountford, head of banking at moneysupermarket.com, said: "From having little profile, the Financial Services Compensation Scheme and the role it plays has gained greater prominence since the run on Northern Rock just over a year ago. Suddenly the average saver is taking notice.

"The report makes clear its support for a level of pre-funding of the levy and that contributions should vary according to how risky the Financial Services Authority feels that particular institution is. This seems a dangerous route to go down - we saw earlier in the year how ill-founded rumours almost brought HBOS to its knees. So tarring a bank with the 'risky' brush could destroy consumer confidence in it, rather than going some way to repairing it.

"This leads to the question of on what basis the decision will be made relating to the 'Special Resolution Regime'. If a savings provider is deemed to be more risky, will the compensation scheme be enough to overcome the concerns of savers or will these brands be disadvantaged from the outset?

"The authorities need to clarify the situation and to boost the level of cover so that confidence is restored. There is confusion about the various clauses that this scheme carries. We agree with the report that consumers shouldn't have to rely on complex knowledge of European directives and foreign banking licences in order to determine whether or not they are protected.

"At moneysupermarket.com, we are increasingly seeing savers making sure they don't have more than £35k with any one provider. Pre-Northern Rock, the notion of a bank failing was unthinkable, whereas the events of the past 12 months, and indeed the past few days, have showed us that anything is possible."