First of all: I’m a fan of the single market, which means you can probably label me ‘pro-Europe’. Having sat through lectures on EU law and the law of the single market while at university, and argued a mock court case in front of a panel of judges from the European Court of Justice (I think it had something do to with chocolate), I have also garnered a little academic experience.

Very generally, I agree with the principle that all things should, eventually, be equal across the EU. I also agree with the principle that member states have a little leeway in implementing EU law; or as one would say in proper Eurospeak, a ‘margin of appreciation'.

As you know, the directive, the most powerful tool in EU lawmaking, somewhat reduces member states’ leeway. This is the problem that will be encountered by the UK, and more specifically the Financial Services Authority, as it attempts to bolster the protection for client accounts in the event of the collapse of a bank.

The enhanced protection of £500,000 proposed by the FSA (and for personal injury awards, the full whack) would provide a huge confidence boost for both clients and solicitors. Enhancing confidence in the legal sector is just as important as enhancing confidence in the banking sector (by throwing money at failed banks).

But under the recently amended Deposit Guarantee Schemes Directive, client account protection will be capped at €100,000 (about £90,000 as at today) across all EU states from the end of 2010.

There are two ways the FSA could get around this: firstly, by securing a derogation from the directive, so that UK client accounts have their own £500,000 compensation cap. Secondly, the government, the Law Society and other interested parties could persuade the European Commission that client accounts are of a special nature, and therefore require enhanced protection across all EU states – not just the UK.

Either route will be difficult. There are strong public policy reasons for the EU to cap compensation at a lower level; after all, this increase is just raising once again the amount European taxpayers will have to stump up to cover the banks.

The commission will decide what to do at the end of the year. Until then, it’s thumb twiddling I’m afraid.