The upper compensation limit for savers seems likely to be raised in the new Banking Bill.
Savings accounts are to be guaranteed for balances of up to £100,000 under proposed new banking laws.
The terms of the upcoming Banking Bill, while still being decided on by legislators, are likely to see an increased upper limit imposed by the Financial Services Compensation Scheme (FSCS), the Press Association reports.
Prior to the Northern Rock crisis last summer - which customers queue outside branches of the apparently collapsed bank, fearful that their deposits were not safe - saw the 100 per cent guaranteed compensation limit raised from £2,000 to its current level of £35,000.
The further increase is anticipated to further reassure customers that their savings are safe, regardless of the status of their bank. To this end, other suggested reforms to banking laws include making it easier for savers to access their cash if their bank collapses, by having pay-outs made through bank records rather than through the FSCS.
In addition, a "special resolution regime" for troubled banks has also been proposed. This new system could make it easier for the government or the industry watchdog, the Financial Services Authority, to order the transfer of the firm's business to a rival institution.
Improved risk management practices from the regulator are also anticipated to be called for by the Banking Bill.
