ABI urges government 'not to risk distorting savings market'

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The government should not risk causing confusion in the savings market by increasing the guarantee of deposits, according to the Association of British Insurers (ABI).

Discussing the government's decision to discuss the proposal with leaders in the financial sector, ABI director general Stephen Haddrill urged politicians not to increase the guaranteed limit from £35,000.

Mr Haddrill also said that the difficulties suffered by Northern Rock have brought protection of savings accounts into "very sharp focus."

He explained: "The new limit of £35,000 ensures that 98 per cent of people are fully protected. Anything beyond that could encourage reckless investing and be dangerous both for consumers and financial institutions.

"The ABI will strongly argue for the deposit account fully guaranteed limit to remain at £35,000, and urges the government to focus instead on enabling faster payouts from the Financial Services Compensation Scheme in the event of bank failure."

Established as an association to represent the interests of the insurance sector to the government and other regulatory bodies, the ABI has around 4,000 members across the UK.

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