Which? has criticised the FSA's plans to allow temporary increases to compensation thresholds for bank balances - saying that not all cases are covered by the proposals.
Improvements need to be made to the financial regulator's deposit compensation investigation, a consumer group claimed today.
Which? said that the Financial Services Authority (FSA) probe should result in greater "transparency" over savings protection. A policy adviser for the group added that there were currently anomalies in the new compensation scheme proposed by the watchdog.
Currently, the first £50,000 of people's account balances are protected by the FSA - and stand to be repaid in full if the depositor's bank goes bust. Concerns over the stability of financial firms have been raised over recent months, following the credit crunch-induced nationalisations of Northern Rock and Bradford & Bingley and the general turbulence in the financial markets.
The FSA investigation, announced last week, is looking into protecting depositors at times when their balances temporarily rise above the compensation limit, such as when they sell their home. It proposes increasing the threshold "for a limited period" in such circumstances.
Commenting, Vera Cottrell, principal policy adviser for Which?, said: "Our key concern is that the current [FSA] proposal is not very transparent in terms of consumers understanding when they will be protected and when they will not and this may result in consumers getting into serious financial difficulties due to a lack of protection."
Specifically, Which? cited the example of home building insurance payouts - which it claims are not covered by the proposed FSA scheme.
