David Callister MLC urged the minister to increase the payments available under the Depositors' Compensation Scheme, insisting that in the light of the global credit crunch, there was 'considerable concern' among smaller savers.

The Island's Depositors' Compensation Scheme, launched following the collapse of the Savings and Investment Bank, pays out a sum equivalent to 75 per cent of deposits up to a maximum of £15,000 per depositor.

But Mr Callister said this compared unfavourably with the UK schemes which pay out compensation of up to £35,000 in the event of a banking collapse.

Investors in the Island were advised to put no more than £20,000 in any one financial institution in order to get maximum protection, he added.

'Is the minister aware of the considerable concern of smaller savers whose life savings are often in a single bank? A large proportion of savers will be at risk if something is not done.'

But Mr Bell stood by his decision not to upgrade the scheme but keep it under review.

He said this had taken into account the views of banks in a recent consultation and the fact that no final decisions had been taken in the UK and Channel Islands regarding their equivalent schemes.

Juan Watterson (Rushen) queried why Treasury had gone out to consultation when it had 'no intention of doing anything until our competitors jumped first?'.

Mr Bell replied that the issue was a 'highly sensitive' one which did not merit a knee-jerk reaction.

John Houghton (Douglas North) said the views of savers and not just the banks should considered.