Once again we seem to have a lot of people that don't understand the goverment guarantee.
If the government removed the fscs cover, banks & insurers would be able to offer it as a retail product.
The government doesn't offer you free motor insurance, nor free home insurance, and as a result you purchase these from insurance companies.
So, who really benefits from the government guarantee? Joe public, not the banks, and not the insurance companies. The level of ignorance around this issue constantly amazes me, but never more so when its writ large on a site frequented by supposedly by financially aware people.