Panel to review £50k bank failure payouts

The panel said cases of banks going out of business were "rare"

A government panel will review the amount of compensation customers of failed banks get in Jersey.

Customers are currently able to claim up to £50,000 for each eligible account if their bank becomes insolvent, compared to £85,000 in the UK.

Jersey's maximum payout has not increased since 2009 when compensation was introduced "despite inflation increasing by 67%", the Economic and International Affairs Scrutiny Panel said.

The panel said it was "disappointed" the figure had not been reviewed as part of a recent proposed update to the law.

The review will consider the potential impacts of increasing the limit.

Deputy Montfort Tadier, chair of the panel, said some people had argued the limit was in line with Guernsey and the Isle of Man.

However he said other small jurisdictions like Gibraltar had compensation up to €100,000 which was "more on a par" with the UK.

"We feel this leaves savers in Jersey at a disadvantage over their counterparts in other jurisdictions and feel that further consultation on the limit would have been useful in this matter," Tadier said.

A spokesperson said the panel wanted to hear from finance professionals as well as islanders, "especially those with savings of £50,000" or more.

The review comes ahead of a proposed change in the banking law, to be debated in September, which would transfer oversight of the scheme to the Jersey Resolution Authority.