Charity money 'should be better protected'

Charities Aid Foundation calls for separate deposit class in the wake of Icelandic banking crisis

Charities should have their own deposit class to ensure donated money is not lost when a bank fails, the chief executive of the Charities Aid Foundation told a Treasury select committee inquiry into the Icelandic banking crisis.

John Low, chief executive of CAF, said that whereas wealthy private individuals received all their money back after the collapse of Icelandic banks, charities had received "very little support from the Government". He said the Government had refused even to provide interest-free lending to charities that had lost money.

"The Government was unwilling to treat charities any differently from other wholesale investors," he said. "It has chosen to bail out high-net-worth individuals rather than replace money held in trust for the public good."

To avoid a repeat of this situation, he said, he wanted charities to be put in a separate deposit class from private, government and commercial depositors, with higher levels of protection.

Low also told the committee that charities invested in Icelandic banks had been no less cautious than those investing in Britain. "Icelandic banks had an AA credit rating, the same as the Royal Bank of Scotland," he said. "Why should we be punished for investing in one failed bank but not the other?"

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