The European Union has unleashed new rules that will protect investors that lose money in investment schemes that are fraudulent and account holders that have money in banks that later collapse. The European Commission stated that the new rules aim to help restore consumer confidence in the midst of the financial crisis and fraud scandals.
The commission plans to minimize risk by offering minimum compensation to those who lose money due to operational errors, fraud, or administrative malpractice. The compensation has been increased up to €50,000 from €20,000.
In the case that a bank collapses account holders will receive their money back within seven days. It has also been proposed that the national deposit guarantee is raised up to €100,000 in all countries that are members of the EU.
The new rule would standardize national rules and would allow almost 95% of all account holders in Europe to get their savings back in the case of bank collapse. The EU first moved to raise the amount that was covered during the 2008-2009 crises. Next year the commission is proposing to double that amount again.
It also plans to harmonize the European guarantee schemes for bank deposits as there are now 40 separate programmes in existence across the 27 nations that make up the European Union.
The new rules are yet to be cleared by the European parliament and the EU states although both have been called upon to quickly approve the package.