GENERAL INFORMATION ABOUT THE DEPOSITOR AND INVESTOR
COMPENSATION SCHEMES
The Investor Compensation Scheme is a rescue fund for customers of member investment firms licensed by the Malta Financial Services Authority (MFSA), where such firms are unable or likely to be unable to meet their obligations.
The Scheme shall provide for the payment of compensation in respect of claims arising from a licence holder’s inability to meet its obligations. This includes circumstances where the licence holder is unable to:
- repay money owed to, or belonging to, investors and held on their behalf in connection with licensed business; or
- return financial instruments belonging to investors which are held, administered, or managed on their behalf in connection with licensed business. Where the return of such instruments is not possible, compensation shall be provided for their equivalent monetary value.
Furthermore, in line with Article 26(3)(e) of the Arbiter for Financial Services Act, the Scheme shall also settle judgments or arbitration awards relating to civil liability arising from licensed business, where a determination has been made.In such cases, the Scheme shall provide compensation of up to twenty thousand euro (€20,000) to the investor.The Scheme is based on the EU Directive 97/9 on investor-compensation schemes.
The Depositor Compensation Scheme is a rescue fund for depositors of failed banks which are licensed by the Malta Financial Services Authority (MFSA). We can only pay compensation if a bank is unable to meet its obligations towards depositors or has otherwise suspended payment. The Scheme is based on the EU Directive 2014/49/EU on deposit-guarantee schemes.
Each scheme is a separate and distinct entity from the other. However, both schemes are managed by a single Management Committee which is appointed by the MFSA.
This Committee is made up of persons representing the MFSA, the Central Bank of Malta, the Ministry for Finance, investment firms, the banks and customers.
Each Scheme is intended to promote confidence not only in licensed institutions, but more importantly, in the financial system as a whole. The two schemes are in fact financed by the banks and investment firms respectively. This means that the consumer will not be asked to contribute to these schemes.
These two schemes have been introduced as an additional layer of security within a regulatory and legal framework that is already sound and are not being implemented for any particular situation that has arisen in practice.
This website provides information on both the Depositor Compensation Scheme and the Investor Compensation Scheme. If you have a query and you have not found its answer on this site, please use our Feedback Form.
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