New Depositor Compensation Scheme Regulations transposing Directive 2014/49/EU published
On 4 December 2015, Legal Notice 383 of 2015 has been published in the Government Gazette. This Legal Notice, which replaces Legal Notice 369 of 2003, transposes Directive 2014/49/EU, the Recast Depositor Guarantee Schemes Directive.
Click here for LN 383 of 2015.
Recast Directive on deposit guarantee schemes - Directive 2014/49/EU
On 12 June 2014, the new Directive 2014/49/EU on deposit guarantee schemes was published in the Official Journal of the European Union. Member States are required to transpose this directive into their respective laws by 4 July 2015.
Important features of this new directive:
- Deposits in all currencies will be covered up to €100,000, per person per bank.
- Some deposits (so-called temporary high deposit balance) – originating from real estate transactions (e.g. sale of a house) as well as from some specific life events (such as marriage, divorce, retirement, etc) – will enjoy higher coverage, i.e. beyond the standard coverage level of €100,000. However, such coverage will be limited in time (up to maximum 12 months).
- All deposits held by individuals and enterprises of whatever size, will be covered. Indeed, very few persons or entities will be excluded from compensation.
- In the event of a bank default, depositors will receive compensation within a shorter period, compared to the current payment deadline of 20 working days. This reduction will be made in three phases:
- Payment within 15 working days as from 1 January 2019;
- Payment within 10 working days as from 1 January 2021, and eventually
- Payment within 7 working days as from 1 January 2024.
- Interest will be taken into account when reimbursing deposits.
- Loans cannot be deducted any more from the amount to be reimbursed.
- Information will be improved to ensure that depositors are aware of the key aspects of protection of their deposits by the scheme. For example, while depositing money at a bank, depositors will countersign a standardised information sheet containing all relevant information about the coverage of the deposit by the responsible scheme. The updated standardised information sheet will be sent by banks to their customers at least once a year. Banks will be obliged to inform their depositors about the scheme’s protection of their deposits on the statements of account.
- There will also be some restrictions on advertising on deposit products, by limiting it to factual information, without referring to unlimited protection, etc.