Fall-out from the Northern Rock banking crisis continues, with the life insurance industry to be affected by new rules from the Financial Services Authority (FSA).
Much-photographed queues appeared outside branches of the bank during the last week, reflecting customer worries that their savings might not be protected.
With this in mind, the FSA says that it is to re-think its current Financial Services Compensation Scheme, which guarantees savings of up to £35,000 to be re-payable to customers, no matter what happens to the bank in question.
Noting the apparent lack of consumer confidence shown by the long queues, chief executive Hector Sants said: "Investors are clearly aware of the limitations of the scheme and in the light of events it would be right to look at it again."
The likelihood of this shake-up spreading to other areas of compensation covered by the FSCS, including life insurance compensation if a fund goes bust, is unknown.
Currently, customers can claim all of the first lost £2,000 of life insurance and 90 per cent of the remainder, the BBC reports.
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