Report calls for `safe haven` bank accounts

Monday, 14 June 2010 11:28

By myfinances.co.uk staff

Bank customers should be offered a new class of "safe haven" accounts that would provide a 100% guarantee for their capital and would only invest in safe assets, a review of the industry has said.

The recommendation is one of a number of proposals for the reform of the financial services industry put forward by the Future of Banking Commission, a panel convened by consumer group Which? and led by Conservative MP David Davies.

In its report, the commission said the safe haven accounts would give depositors greater protection, adding that it is "unacceptable" that their savings can currently be put at risk without their knowledge through the "misguided" actions of their bank.

The panel also called for the formal separation of investment advice and the execution of trading in the banking sector.

Furthermore, in order to address the issue of mis-selling, the report said banks should be barred from paying commission to frontline staff for increasing sales.

In related news, the BBC has reported that chancellor George Osborne will announce plans to hand "ultimate responsibility" for the supervision of financial services firms to the Bank of England later this week.

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