The Senate yesterday approved plans for an insurance scheme providing a safety net for people if a bank fails.

The One Bermuda Alliance gave its support to the Deposit Insurance Act, which gives insurance coverage to depositors in banks and credit unions in the light of global financial turmoil.

OBA Senate leader Michael Dunkley noted the scheme would be funded by its members and said it would have an impact on the rate of return enjoyed by customers. Senator Dunkley said the legislation, which creates Bermuda Deposit Insurance Corporation to administer the scheme, is a good start, but a lot more needs to be done to ensure it is successful.

Progressive Labour Party Senator Jonathan Smith said the legislation, which brings a maximum threshold for compensation of $25,000, gives important protection to young people as they start to make savings, and to older people who are reaching the end of their savings.

Junior Finance Minister David Burt, who presented the bill to the Upper House, said the target date of the scheme’s launch is April 1, 2012.