Government stirs up debate over compensation limits

The government has formally opened discussions about whether the Financial Services Compensation Scheme (FSCS) should guarantee larger deposits in the event of a bank collapse following the first run on a bank in recent history. Queues outside branches of Northern Rock subsided only when the government offered a 100% guarantee on all deposits, and with that in mind the government wants to prevent a repeat of the events surrounding Northern Rock that threatened the financial stability of the UK banking industry.