Much has been made of Alistair Darling’s tentative plans to switch to US-style depositor protection in the wake of the Northern Rock debacle, with 100 per cent of the first $100,000 (£50,000) of any deposit completely guaranteed. The current UK cover is 100 per cent of the first £2,000 and 90 per cent of the next £33,000.

But the other crucially different aspect of the US system – a funded pot rather than a pay-as-you-go system – has been rather overlooked. UBS’s estimate yesterday that adopting the US system could cost British banks £3 billion a year, or 8 per cent of profits, will put the debate centre-stage.

At present the Financial Services Compensation Scheme hat goes round only when a bank fails, a mercifully rare event. By contrast, the US Federal Deposit Insurance Corporation has $49 billion in its coffers raised from past levies and ready to be disbursed the moment a bank fails.

Whatever the new UK scheme, the case for banks financing it is hard to argue with. Having a deposit-taking licence is a money-making privilege. It is fair that the industry, rather than taxpayers, should pay for the scheme that fosters the public confidence on which it so depends.

The case for a funded scheme is also strong. The moment when a financial institution goes wrong is usually going to be the worst time to ask its peers to dig deep. They themselves may be stretched too if the problem is industry-wide. The herd-like behaviour of banks suggests it may well be industry-wide.

The sad thing is that, after a 15-year golden era for retail banking profits, during which a levy would barely have been noticed, there is nothing in the kitty for a rainy day.

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