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Application provision

1.1 Unless otherwise stated, this Part applies to:

  1. (1) the FSCS;
  2. (2) UK banks;
  3. (3) credit unions;
  4. (4) Northern Ireland credit unions;
  5. (5) building societies; and
  6. (6) an overseas firm that:
    1. (a) is not an incoming firm; and
    2. (b) has a Part 4A permission that includes accepting deposits.

1.1

06/09/2016

Unless otherwise stated, this Part applies to:

  1. (1) the FSCS;
  2. (2) UK banks;
  3. (3) credit unions;
  4. (4) Northern Ireland credit unions;
  5. (5) building societies; and
  6. (6) an overseas firm that:
    1. (a) is not an incoming firm; and
    2. (b) has a Part 4A permission that includes accepting deposits.

1.2

03/07/2015

Chapter 23 applies to a UK branch of an incoming firm that is a credit institution.

1.3

03/07/2015

This Part also applies to a firm which used to have a Part 4A permission to accept deposits but which has ceased to have a Part 4A permission to accept new deposits, or which is subject to a requirement not to accept new deposits, and which is not a member of a non-UK scheme.

1.4

06/09/2016

Unless otherwise stated, in this Part, the following definitions shall apply:

available financial means

means cash, deposits and low-risk assets which can be liquidated within a period not exceeding seven business days.

[Note: Art. 2(1)(12) of the DGSD]

base costs

means management expenses which are not attributable to any particular class.

base costs levy

means a levy, forming part of the management expenses levy, to meet the base costs in the financial year of the compensation scheme to which the levy relates.

class

means one of the classes to which the FSCS allocates levies in accordance with the rules of the compensation scheme.

class A

means the class which consists of DGS members.

class A tariff base

has the meaning given in 43.1.

class J

has the meaning given in the Dormant Account Scheme Part.

claim

means a valid claim made in respect of a civil liability owed by a DGS member to the claimant.

compensation date

means the date on which a determination is made by the PRA, the FSCS or a judicial authority that deposits held by a DGS member are unavailable deposits such that the DGS member is in default.

compensation leaflet rules

means 23.7(2), 23.8(2) and 23.9.

compensation recipient

means the person to whom the FSCS is required to pay compensation, as set out in Chapter 6.

compensation scheme

means the Financial Services Compensation Scheme established under section 213 of FSMA.

compensation sticker and poster rules

means 23.4, 23.5, 23.6, 23.7(1) and 23.8(1).

continuity of access systems

means a firm’s systems for satisfying 13.4 to 13.9.

covered deposit

means the part of an eligible deposit that does not exceed the coverage levels set out in Chapter 4.

[Note: Art. 2(1)(5) of the DGSD]

credit union

has the meaning given in section 31 of the Credit Unions Act 1979.

DAS compensation costs

has the meaning given in the Dormant Account Scheme Part.

DAS specific costs

has the meaning given in the Dormant Account Scheme Part.

deferred share

means:

      1. (1) in relation to a credit union, any share of a class defined as a deferred share by section 31A of the Credit Unions Act 1979;
      2. (2) in relation to a building society, any share of a class defined as deferred shares for the purposes of section 119 of the Building Societies Act 1986.

deposit

means:

      1. (1) a credit balance which results from funds left in an account or from temporary situations deriving from normal banking transactions and which a credit institution is required to repay under the legal and contractual conditions applicable, including a fixed-term deposit and a savings deposit, but excluding a credit balance where:
        1. (a) its existence can only be proven by a financial instrument as defined in MiFID II, unless it is a savings product which is evidenced by a certificate of deposit made out to a named person and which exists in a Member State on 2 July 2014;
        2. (b) its principal is not repayable at par; or
        3. (c) its principal is only repayable at par under a particular guarantee or agreement provided by the credit institution or a third party;
      2. (2) a share in a building society, excluding a deferred share;
      3. (3) a share in a credit unionexcluding a deferred share; or
      4. (4) a share in a Northern Ireland credit union, excluding a deferred share.

[Note: Art. 2(1)(3) of the DGSD]

deposit guarantee scheme

means the compensation scheme for compensating persons in respect of deposits.

deposit guarantee scheme regulations

means the Deposit Guarantee Scheme Regulations 2015 (SI 2015/486).

depositor

means the holder or, in the case of a joint account, each of the holders, of a deposit.

[Note: Art. 2(1)(6) of the DGSD]

DGS base costs levy

means a base costs levy imposed by the FSCS on DGS members.

DGS compensation costs

means the costs incurred:

      1. (1) in paying compensation under the deposit guarantee scheme;
      2. (2) under section 214B or section 214D of FSMA; or
      3. (3) by virtue of section 61 of the Banking Act 2009;

(including the costs of paying interest, principal and other costs of borrowing to pay such costs).

DGS compensation costs levy

means a levy imposed by the FSCS on DGS members to meet DGS compensation costs.

DGS levy

means a DGS compensation costs levy, a DGS management expenses levy or a legacy costs levy.

DGS management expenses levy

means a levy imposed by the FSCS on DGS members to meet management expenses and which is made up of one or more of a DGS base costs levy and a DGS specific costs levy.

DGS member

means:

      1. (1) a UK bank;
      2. (2) a building society;
      3. (3) a credit union;
      4. (4) a Northern Ireland credit union; or
      5. (5) an overseas firm that is not an incoming firm and has a Part 4A permission that includes accepting deposits.

DGS specific costs

means management expenses attributable to the deposit guarantee scheme other than base costs, which the FSCS has incurred or expects to incur.

DGS specific costs levy

means a levy, forming part of the DGS management expenses levy, to meet the DGS specific costs in the financial year of the deposit guarantee scheme to which the levy relates.

DGSD

means Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes (recast).

dormant account

has the meaning given in section 10 of the Dormant Bank and Building Society Accounts Act 2008.

EEA right

means the entitlement of a person to establish a branch or provide services in an EEA State other than that in which they have their relevant office in accordance with the Treaty as applied in the European Economic Area; and subject to the conditions of the CRR and CRD.

euro firm

means an incoming firm that is a credit institution of an EEA State that has adopted the euro or that does not convert into their national currency the amount referred to in Article 6(1) of the DGSD, pursuant to Article 6(5) DGSD.

exclusions view

means a single, consistent view of:

      1. (1) an account holder’s aggregate deposits with a firm limited to accounts that contain or may contain eligible deposits to which the account holder is not absolutely entitled; or
      2. (2) a depositor’s aggregate eligible deposits with a firm limited to accounts that are not active

and which contains the information required by 12.9.

exclusions list

means:

      1. (1) up to and including 31 December 2016, a list in the form set out in Section A of Annex 3 to this Part; and
      2. (2) from 1 January 2017, a list in the form set out in Section B of Annex 3 to this Part.

European Economic Area

means the area established by the EEA agreement.

home state scheme

means a scheme or arrangement (including the deposit guarantee scheme) for the payment of compensation in respect of eligible deposits, which was established in the EEA State which is, with regard to a particular institution, the home Member State.

host state scheme

means a scheme or arrangement (including the deposit guarantee scheme) for the payment of compensation in respect of eligible deposits, which was established in the EEA State which is, with regard to a particular institution, the host Member State.

in default

describes the status of a firm following a determination that its deposits are unavailable deposits.

information sheet

means an information sheet containing the categories of information set out in the template in Annex 1 to this Part.

investment

has the meaning given in section 22(4) of FSMA.

legacy costs

means the costs incurred prior to 3 July 2015 by the FSCS:

      1. (1) in paying compensation; or
      2. (2) under section 214B or section 214D of FSMA; or
      3. (3) by virtue of section 61 of the Banking Act 2009;

(including the costs of paying interest, principal and other costs of borrowing to pay such costs).

legacy costs levy

means a levy imposed by the FSCS to meet legacy costs.

local authority

means

      1. (1) in England and Wales, a local authority within the meaning of the Local Government Act 1972, the Greater London Authority, the Common Council of the City of London or the Council of the Isles of Scilly;
      2. (2) in Scotland, a council within the meaning of the Local Government etc. (Scotland) Act 1994;
      3. (3) in Northern Ireland, a district council within the meaning of The Local Government Act (Northern Ireland) 1972;
      4. (4) an authority equivalent to (1), (2) or (3) located in a country outside the UK.

low-risk assets

means items falling into the first or second category of Table 1 of Article 336 of the CRR.

[Note: Art. 2(1)(14) of the DGSD]

management expenses

has the meaning given in section 223(3) of FSMA.

mandatory contributions

means the mandatory contributions described in Article 10(4) of the DGSD.

micro, small and medium-sized enterprises

means micro, small and medium-sized enterprises as defined with regard to the annual turnover criterion referred to in Article 2(1) of the Annex to Commission Recommendation 2003/361/EC .

money laundering

has the meaning given in Article 1(2) of the money laundering directive.

money laundering directive

means Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing.

money-purchase benefits

means in relation to a member of a personal pension scheme or an occupational pension scheme or the widow or widower or surviving civil partner of a member of such a scheme, benefits the rate or amount of which is calculated solely by reference to the schemes assets which (because of the nature of the calculation) must necessarily suffice to provide the benefits which fall within section 181 of the Pensions Scheme Act 1993 and section 99 of the Pensions Act 2008, each as amended by section 29 of the Pensions Act 2011.

nominee company

means a body corporate whose business consists solely of acting as a nominee holder of investments or other property.

non-UK scheme

means a scheme established pursuant to the DGSD in an EEA State other than the UK.

Northern Ireland credit union

means a firm which is either a society registered under the Credit Unions (Northern Ireland) Order 1985 or a society registered under the Industrial and Provident Societies Act (Northern Ireland) 1969 as a credit union.

not active

an account is not active if it:

      1. (1) is a dormant account; or
      2. (2) is an account for which the firm has received formal notice of a legal dispute or competing claims to the proceeds of the account; or
      3. (3) is an account owned or controlled by a person whose name appears on the “Consolidated list of financial sanctions targets in the United Kingdom” that is maintained by HM Treasury or which is otherwise subject to restrictive measures imposed by national governments or international bodies.

occupational pension scheme

has the meaning given in article 3(1) of the Regulated Activities Order.

private residential property

means freehold, heritable or leasehold property (or the equivalent in another country), including land, which was, is, or is intended to become the depositor’s only or main residence.

public authority

includes a government, central administrative authority, provincial authority, regional authority, municipal authority or local authority.

single customer view

means a single, consistent view of a depositor’s aggregate eligible deposits with a firm which contains the information required by 12.9, but excludes from view those accounts included in the exclusions view.

SCV effectiveness report

means a report from a firm’s board of directors confirming that the firm’s SCV system satisfies the SCV requirements.

SCV requirements

means the requirements on firms set out in Chapter 12.

SCV system

means a firm’s system for satisfying the SCV requirements.

small local authority

means a local authority with an annual budget of up to EUR 500,000.

small self-administered scheme

means an occupational pension scheme of a kind described in article 4(4) and 4(5) of the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001 (SI 2001/1177).

statement of business

means the information required under 44.2.

target level

means the amount of available financial means which the deposit guarantee scheme is required to reach, which is 0.8% of the amount of covered deposits (excluding temporary high balances) of DGS members.

transferable eligible deposit

means the portion of an eligible deposit up to and including the coverage level provided for in 4.2, identified in accordance with Chapter 13 and 12.9.

unavailable deposit

means a deposit that is due and payable but has not been paid by a DGS member under the applicable legal or contractual conditions where either:

      1. (1) (in accordance with the deposit guarantee scheme regulations) the PRA, or the FSCS in the case of a credit union or a Northern Ireland credit union, has determined that in its view the DGS member appears to be unable for the time being, for reasons which are directly related to its financial circumstances, to repay the deposit and has no current prospect of being able to do so; or
      2. (2) a judicial authority has made a ruling for reasons which are directly related to the DGS member’s financial circumstances and the ruling has had the effect of suspending the rights of depositors to make claims against it.

[Note: Art. 2(1)(8) of the DGSD]

1.5

03/07/2015

Unless otherwise defined, any italicised expression used in this Part and in the CRR has the same meaning as in the CRR.