Depositor Protection

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.

1.2

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

1.3

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

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]

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 union, excluding 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

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

2.1

This Chapter applies to the FSCS and firms.

2.2

The provisions in this rule determine whether a deposit is an eligible deposit:

1. (1) A deposit is an eligible deposit only if it is held by:
1. (a) a UK establishment of a DGS member; or
2. (b) a branch of a DGS member established in another EEA State under an EEA Right.
2. (2) A deposit is held by a UK establishment or a branch if it is assigned by the firm to an account of that UK establishment or that branch.
3. (3) A deposit is, subject to the other rules in this Chapter, an eligible deposit if it is held by a firm which:
1. (a) had a Part 4A permission to accept such deposits at the time the deposit was accepted but no longer has permission to accept eligible deposits, or is subject to a requirement preventing it from doing so; and
2. (b) is not now a member of a non-UK scheme which protects such deposits.
4. (4) The following are not eligible deposits:
1. (a) a deposit made by another credit institution;
2. (b) own funds;
3. (c) a deposit arising out of a transaction in connection with which there has been a criminal conviction for money laundering;
4. (d) a deposit by a financial institution;
5. (e) a deposit by an investment firm;
6. (f) a deposit the holder and any beneficial owner (as defined in regulation 6 of the Money Laundering Regulations 2007) of which have not, at the compensation date had their identity verified in accordance with regulation 9 of the Money Laundering Regulations 2007 (or equivalent EEA requirements)
7. (g) a deposit by an insurance undertaking or a reinsurance undertaking;
8. (h) a deposit by a collective investment undertaking;
9. (i) a deposit by a pension or retirement fund (but excluding deposits by personal pension schemes, stakeholder pension schemes and occupational pension schemes of micro, small and medium-sized enterprises);
10. (j) a deposit by a public authority, unless it is a small local authority;
11. (k) a debt security issued by the DGS member and any liabilities arising out of own acceptances and promissory notes.

[Note: Art. 4(3), 4(6), 5(1), 5(2)(a) and 14(1) of the DGSD]

2.3

A firm, must at least annually, take reasonable steps to confirm that a depositor that it has classified as a small local authority continues to be a small local authority, using the exchange rate prevailing on the 3 July immediately preceding the date on which any confirmation is undertaken.

3.1

This Chapter applies only to the FSCS.

3.2

The FSCS must pay compensation in accordance with this Part in respect of an eligible deposit if it is satisfied that the eligible deposit is a deposit with either:

1. (1) a DGS member which is in default; or
2. (2) a firm which is in default and which:
1. (a) had a Part 4A permission to accept such deposits at the time the deposit was accepted but no longer has permission to accept eligible deposits, or is subject to a requirement preventing it from doing so; and
2. (b) is not a member of a non-UK scheme which covers such deposits.

4.1

This Chapter applies only to the FSCS.

4.2

The maximum compensation sum payable for the aggregate eligible deposits of each depositor is £75,000, save that additional compensation may be payable in cases to which 4.3 applies.

[Note: Art. 6(1) of the DGSD]

[Note: Regulation 7A of the deposit guarantee scheme regulations provides for a transitional maximum compensation level of £85,000 until 31 December 2015 for depositors who were, or would have been, eligible for compensation before 3 July 2015 and are eligible for compensation on and after 3 July 2015.]

4.3

The maximum compensation sum payable for a temporary high balance is £1,000,000, save that no limit shall apply to the compensation payable for a temporary high balance arising from a payment in connection with personal injury or incapacity.

[Note: Art. 6(2) of the DGSD]

5.1

This Chapter applies only to the FSCS.

5.2

Compensation shall be calculated by reference to eligible deposits held on the compensation date.

[Note: Art. 7(4) of the DGSD]

5.3

The limit provided for in 4.2 applies to the aggregate eligible deposits placed by a depositor with the same credit institution, irrespective of the number of accounts, the currency, or the location within the EEA.

[Note: Art. 7(1) of the DGSD]

5.4

The share of each depositor of a joint account shall be considered separately in calculating the limits provided for in 4.2 and 4.3, except where 5.5 applies. In the absence of contrary provision, the joint account shall be divided equally among the depositors to the nearest penny.

[Note: Art. 7(2) of the DGSD]

5.5

Deposits in an account to which two or more persons are entitled as members of a business partnership, association or grouping of a similar nature, without legal personality, must be aggregated and treated as if made by a single depositor for the purpose of calculating the limits provided for in 4.2 and 4.3.

[Note: Art. 7(2) of the DGSD]

5.6

Where several persons are absolutely entitled to a beneficial interest in a deposit, the share of each, under the arrangements subject to which the deposit is managed, shall be considered separately in calculating the amount payable to each of them.

[Note: Art. 7(3) of the DGSD]

5.7

Where several persons are absolutely entitled to a beneficial interest in a deposit, and some of them are persons whose own deposits would not be eligible deposits, the FSCS must adjust the amount of the overall deposit to eliminate the part of it which, in the FSCS’s view, relates to those beneficiaries’ interest in the overall deposit.

5.8

Liabilities of the depositor against the DGS member shall not be taken into account when calculating the compensation sum.

[Note: Art. 7(4) of the DGSD]

5.9

Except where the compensation sum arises from a temporary high balance, the FSCS shall reimburse interest owed on eligible deposits which had accrued, but has not been credited, at the compensation date. The limit provided for in 4.2 shall not be exceeded by the payment of any such interest.

[Note: Art. 7(7) of the DGSD]

6.1

This Chapter applies to the FSCS.

6.2

The FSCS must pay any compensation to the depositor, with the following exceptions:

1. (1) where the FSCS is required to make payments on behalf of a non-UK scheme in accordance with the deposit guarantee scheme regulations;
2. (2) where the FSCS must instruct a non-UK scheme to make payments on its behalf in accordance with 27.3;
3. (3) where the FSCS is required to make payments to a person other than the depositor in accordance with section 214B or section 214D of FSMA or section 61 of the Banking Act 2009;
4. (4) where the depositor directs that any compensation be paid to another person, the FSCS may pay the compensation as directed by the depositor;
5. (5) where the account holder is not absolutely entitled to the eligible deposit:
1. (a) if another person (A) is absolutely entitled to the eligible deposit, A is the person entitled to compensation in respect of the deposit, and accordingly the FSCS must pay any compensation to A (or, where A (or a person who has authority to act on behalf of A) directs that any compensation be paid to another person, the FSCS may pay the compensation as directed by A (or a person who has authority to act on behalf of A), provided that A has been identified or is identifiable before the compensation date; and
2. (b) if no person is absolutely entitled to the eligible deposit, the FSCS must pay any compensation in accordance with such of 6.3, 6.4, 6.5 and 6.6 as applies.

[Note: Art. 7(3) of the DGSD]

6.3

If a person is:

1. (1) a trustee (other than a bare trustee); or
2. (2) the operator of, or the person carrying on the regulated activity of winding up, a stakeholder pension scheme (which is not an occupational pension scheme) or personal pension scheme,

the FSCS must treat that person’s entitlement to compensation in this capacity as separate from the entitlement to compensation in any other capacity, as if the two entitlements were held by different persons.

6.4

If a deposit is held:

1. (1) for the trustees of a small self-administered scheme, an occupational pension scheme of micro, small and medium sized enterprise, or the trustee or operator of, or the person carrying on the regulated activity of winding up, a stakeholder pension scheme (which is not an occupational pension scheme) or personal pension scheme;
2. (2) for one or more members of a pension scheme (or, where relevant, the beneficiary of any member) whose benefits are money-purchase benefits,

the FSCS must treat the member or members (or, where relevant, the beneficiary of any member) separately as persons entitled to receive compensation.

6.5

If any group of persons are:

1. (1) co-trustees (other than bare co-trustees); or
2. (2) operators of, or persons carrying on the regulated activity of winding up, a stakeholder pension scheme (which is not an occupational pension scheme) or a personal pension scheme

(or any combination thereof), the FSCS must treat them as a single and continuing person distinct from the person who may from time to time be the trustees, or the operators or persons winding up the relevant pension scheme.

6.6

Where the same person is:

1. (1) trustee for different trusts or for different stakeholder pension schemes (which are not occupational pension schemes) or personal pension schemes; or
2. (2) the operator of, or the person carrying on the regulated activity of winding up, different stakeholder pension schemes (which are not occupational pension schemes) or personal pension schemes,

the FSCS shall treat that person’s entitlement to compensation in respect of each of these trusts or schemes as if they were entitlements of a different person.

6.7

Where any of the provisions of 6.3, 6.5 or 6.6 apply, the FSCS must try to ensure that any amount paid to:

1. (1) the trustee; or
2. (2) the operator of, or the person carrying on the regulated activity of winding up, a stakeholder pension scheme (which is not an occupational pension scheme) or personal pension scheme
3. is, in each case:
4. (3) for the benefit of members or beneficiaries whose own deposits would be eligible deposits; and
5. (4) no more than the amount of the loss suffered by those members or beneficiaries.

6.8

Where a person holds a deposit as the personal representative of another or on behalf of another, the FSCS must treat the personal representative or the person acting on behalf of another in respect of that deposit as if they were standing in the shoes of that other person.

6.9

In applying this Chapter to deposits held with a branch outside the UK of a DGS member, the FSCS must interpret references to:

1. (1) persons entitled as personal representatives, trustees, bare trustees, operators of pension schemes or persons carrying on the regulated activity of winding up pension schemes; or
2. (2) persons having a joint account or joint interest in a deposit or carrying on business in partnership,

as references to persons entitled, under the law of the relevant country or territory, in a capacity appearing to the FSCS to correspond as nearly as may be to that capacity.

6.10

7.1

This Chapter applies only to the FSCS.

7.2

The FSCS may pay compensation in any form and by any method (or any combination of them) that it determines is appropriate including, without limitation:

1. (1) by paying the compensation (on such terms as the FSCS considers appropriate) to a DGS member or an incoming firm which agrees to become liable to the compensation recipient in a like sum;
2. (2) by paying compensation directly into an existing deposit account of (or for the benefit of) the compensation recipient, with a DGS member or an incoming firm (but before doing so the FSCS must take such steps as it considers appropriate to verify the existence of such an account and to give notice to the depositor of its intention to exercise this power);
3. (3) where two or more persons are absolutely entitled to a deposit, by accepting communications from and/or paying compensation to any one of those persons where this is in accordance with the terms and conditions for communications and withdrawals of the eligible deposit.

7.3

This Chapter is subject to:

1. (1) Chapter 6;
2. (2) section 214B and section 214D of FSMA; and
3. (3) section 61 of the Banking Act 2009.

8.1

This Chapter applies only to the FSCS.

8.2

Subject to 8.3, the FSCS must make compensation payments in respect of eligible deposits in pounds sterling. Where the account in which the eligible deposit was held was maintained in a different currency, the FSCS must use the exchange rate applying on the compensation date.

8.3

Where the FSCS is instructing a non-UK scheme to make a payment under 27.3, the FSCS must instruct the relevant non-UK scheme to make such payments in the currency of that host Member State.

[Note: Art. 6(4) of the DGSD]

9.1

This Chapter applies only to the FSCS.

9.2

The FSCS must pay compensation in respect of eligible deposits within the applicable time period and as soon as reasonably practicable after:

1. (1) it is satisfied that the conditions in 3.2 have been met; and
2. (2) it has calculated the amount of compensation due to the compensation recipient.

9.3

The applicable time period referred to in 9.2 is the period starting on the day following the compensation date and ending:

1. (1) until 31 December 2018: twenty business days later;
2. (2) from 1 January 2019 until 31 December 2020: fifteen business days later;
3. (3) from 1 January 2021 until 31 December 2023: ten business days later;
4. (4) from 1 January 2024: seven business days later;

unless 6.2(5) applies, or the FSCS reasonably believes that it may, in which case it ends three months later.

[Note: Art. 8(1), (2) and (3) of the DGSD]

9.4

The FSCS may decide to defer the payment of compensation beyond the time period set out in 9.3 where:

1. (1) it is uncertain whether a person is entitled to receive compensation;
2. (2) the deposit is subject to a legal dispute;
3. (3) the deposit is subject to restrictive measures imposed by national governments or international bodies;
4. (4) there has been no transaction on the account within the last 24 months;
5. (5) the amount to be repaid is deemed to be part of a temporary high balance, in which case 10.8 applies;
6. (6) the amount to be repaid is to be paid out by the host state scheme; or
7. (7) the depositor or the compensation recipient has been charged with an offence arising out of or in relation to money laundering.

[Note: Art. 8(5) and (8) of the DGSD]

9.5

The FSCS may decide not to pay compensation where there has been no transaction on the account in which the deposit is held within the 24 months prior to the compensation date and the amount of the deposit is lower than the administrative costs that would be incurred by the FSCS in paying compensation.

[Note: Art. 8(9) of the DGSD]

9.6

1. (1) From 1 June 2016 until 31 December 2023, in cases to which 9.3 applies, where the FSCS cannot pay compensation within seven business days starting on the day following the compensation date, the FSCS shall, provided it receives sufficient information to enable it to make a payment, ensure that within five business days of receipt of a request from a depositor:
1. (a) the depositor who is an individual, has access to an appropriate amount of their covered deposits to cover the cost of living; and
2. (b) the depositor which is not an individual or a large company, has access to an appropriate amount of their covered deposits to cover necessary business expenses or operating costs.
2. [Note: Art 8(4) of the DGSD]
3. (2) From 3 July 2015 until 1 December 2016, in cases to which 9.3 applies the FSCS shall ensure that a depositor which is a large company has access to their covered deposits within fifteen business days of receipt of a request from the depositor which contains sufficient information to enable the FSCS to make a payment.
4. (2A) From 3 July 2015 until 1 June 2016, in cases to which 9.3 applies, the FSCS shall ensure that a depositor which is a small local authority has access to their covered deposits within fifteen business days of receipt of a request from the depositor which contains sufficient information to enable the FSCS to make a payment.
5. (3) In 9.6 the following definition shall apply:
1. large company
2. means a body corporate which does not qualify as a small company under section 382 of the Companies Act 2006.

10.1

This Chapter applies only to the FSCS.

10.2

In order to qualify as a temporary high balance, a part of an eligible deposit in excess of the coverage limit provided for in 4.2 must meet at least one of the following additional criteria:

1. (1) it comprises:
1. (a) monies deposited in preparation for the purchase of a private residential property (or an interest in a private residential property) by the depositor;
2. (b) monies which represent the proceeds of sale of a private residential property (or an interest in a private residential property) of the depositor; or
3. (c) monies which represent the proceeds of an equity release by the depositor in a private residential property;
2. (2) it comprises sums paid to the depositor in respect of:
1. (a) benefits payable under an insurance policy;
2. (b) a claim for compensation for personal (including criminal) injury;
3. (c) State benefits paid in respect of a disability or incapacity;
4. (d) a claim for compensation for wrongful conviction;
5. (e) a claim for compensation for unfair dismissal;
6. (f) their redundancy (whether voluntary or compulsory);
7. (g) their marriage or civil partnership;
8. (h) their divorce or dissolution of their civil partnership; or
9. (i) benefits payable on retirement;
3. (3) it comprises sums paid to the depositor in respect of:
1. (a) benefits payable on death;
2. (b) a claim for compensation in respect of a person’s death; or
3. (c) a legacy or other distribution from the estate of a deceased person;
4. (4) it is held in an account on behalf of the personal representatives of a deceased person for the purpose of realising and administering the deceased’s estate; or
5. (5) it otherwise serves a social purpose provided for, or of the type provided for, in the law of a part of the United Kingdom, which is linked to the marriage, civil partnership, divorce, dissolution of civil partnership, retirement, incapacity, death of an individual, or to the buying or selling of a depositor’s only or main residence that is not freehold, heritable or leasehold property.

10.3

Following the compensation date, the FSCS must review the single customer view of each depositor with the DGS member and provide written notice to an individual with aggregate eligible deposits in excess of the coverage levels set out in 4.2 of the following:

1. (1) that the depositor may be entitled to additional compensation if all or part of the eligible deposit in excess of the coverage levels provided for in 4.2 qualifies as a temporary high balance;
2. (2) that in order to claim such additional compensation, the depositor must provide the FSCS with a written application and evidence supporting the depositor’s claim that all or part of the eligible deposit in excess of the coverage levels provided for in 4.2 qualifies as a temporary high balance;
3. (3) that the depositor may make more than one claim for a temporary high balance if there are multiple events giving rise to a temporary high balance; and
4. (4) the date by which such written application and supporting evidence should be submitted to the FSCS.

10.4

The FSCS must pay compensation to a depositor in respect of a temporary high balance in accordance with 4.3 if it is satisfied that there is a sufficient link between an event giving rise to a temporary high balance and the part of the eligible deposit in excess of the coverage levels provided for in 4.2, taking into account the following considerations:

1. (1) the written application and evidence provided by the depositor under 10.3; and
2. (2) any other information that the FSCS considers relevant.

10.5

The FSCS must pay compensation to a depositor in accordance with 4.3 in respect of each temporary high balance that the depositor has with any one DGS member.

10.6

The FSCS may pay compensation in respect of a temporary high balance to a person who makes a claim on behalf of another person if the FSCS is satisfied that the person on whose behalf the claim is made would have been paid compensation by the FSCS in respect of that temporary high balance had the person been able to make the claim themselves, or to pursue their application for compensation further.

10.7

The protection for temporary high balances under 4.3 shall run for a period of six months from the later of:

1. (1) the first date on which a temporary high balance is credited to a depositor’s account, or to a client account on a person’s behalf; and
2. (2) the first date on which the temporary high balance becomes legally transferable to the depositor.

[Note: Art. 6(2) of the DGSD]

10.8

The FSCS must, within three months of the compensation date, pay to the depositor a sum representing the amount due to the depositor in respect of the temporary high balance unless one or more of 10.9 to 10.11 applies.

[Note: Art. 8(5)(d) of the DGSD]

10.9

The FSCS may defer payment in respect of a temporary high balance for a period in excess of the period specified in 10.8 where:

1. (1) the depositor provides the written application and evidence referred to in 10.3 to the FSCS more than two months following the date of the written notice from the FSCS under 10.3;
2. (2) the FSCS has informed the depositor that the FSCS is contacting a third party to ask for additional information necessary to determine the claim; or
3. (3) one or more of the circumstances set out in 9.4 (1)-(7) arise.

10.10

If the FSCS considers that the written application and evidence provided by a depositor under 10.3 does not demonstrate a sufficient link between an event giving rise to a temporary high balance and the eligible deposit being in excess of the coverage levels provided for in 4.2, the FSCS must write promptly to that depositor to:

1. (1) request any additional information that the FSCS considers necessary to determine the claim (within such time as the FSCS may specify); or
2. (2) confirm that the FSCS has determined that the deposit is not a temporary high balance and that it rejects the claim.

10.11

If the written application or evidence provided by the depositor under 10.3 contains any material inaccuracy or omission, the FSCS may reject the claim for compensation unless this is considered by the FSCS to be wholly unintentional.

10.12

Where all or part of a temporary high balance is transferred to another DGS member after the start of the coverage period referred to in 10.7, the FSCS must pay compensation if it considers that the transferred deposit is sufficiently linked to the temporary high balance. The coverage period in 10.7 shall be calculated by reference to the point at which the temporary high balance was credited to the first account.

10.13

Where the FSCS rejects a claim made under this Chapter, it must give:

1. (1) written reasons for its decision;
2. (2) a summary of any right to request an internal FSCS review of the decision; and
3. (3) a summary of any right to appeal the decision.

11.1

A firm must mark eligible deposits in a way that allows for the immediate identification of such deposits.

[Note: Art. 5(4) of the DGSD]

11.2

A firm must mark accounts (including client accounts and trust accounts) which are held on behalf of beneficiaries and which contain or may contain eligible deposits in a way that allows immediate identification of such accounts.

[Note: Art 5(4) and 7(3) of the DGSD]

11.3

A firm must be able to provide the FSCS with the aggregated amount of eligible deposits of every depositor.

11.4

Upon receipt of a request by the FSCS, a firm must provide the information in 11.3 to the FSCS.

[Note: Art 7(6) of the DGSD]

11.5

A firm must be able to provide the FSCS with all information necessary to enable the FSCS to prepare for the payment of compensation in accordance with this Part.

[Note: Art 4(8) and 8(6) of the DGSD]

11.6

Upon receipt of a request by the FSCS, a firm must provide the information in 11.5 so as to enable the FSCS to prepare for and pay compensation in accordance with this Part.

[Note: Art 4(8) and 8(6) of the DGSD]

11.7

A firm must take reasonable steps to ensure the accuracy of the data it holds to satisfy the requirements of this Chapter.

11.8

The information required by 11.1 and 11.2 must be electronically stored.

16.1

This Chapter does not apply to the FSCS.

16.2

A firm must:

1. (1) prepare an ‘information sheet’ and prepare an exclusions list;
2. (2) ensure that the information sheet is kept up-to-date;
3. (3) before entering into a contract on deposit-taking with the intending depositor:
1. (a) provide the exclusions list to;
2. (b) provide the information sheet to; and
3. (c) obtain an acknowledgement of receipt of the information sheet from,
4. each intending depositor.
5. (4) before entering into a contract on deposit-taking, inform each intending depositor of the exclusions from deposit guarantee scheme protection that fall within 2.2(4)(b) and 2.2(4)(k), if applicable.

[Note: Art. 16(1), (2), (3) and (4) and Art. 19(2) of the DGSD]

16.3

Where the depositor holds eligible deposits through a UK establishment, the information sheet must be in English, or, if different, in the language that was agreed between the depositor and the firm when the account was opened. A firm which accepts eligible deposits through a branch established in another EEA State may provide the information sheet in the official language of that EEA State.

[Note: Art. 16(4) of the DGSD]

17.1

A firm must:

1. (1) confirm that deposits are eligible deposits (if that is the case) on a depositor’s statements of account;
2. (2) include a reference to the information sheet and a reference to the exclusions list on a depositor’s statement of account;
3. (3) at least annually:
1. (a) provide to the depositor:
1. (i) the information sheet; and
2. (ii) the exclusions list; and
2. (b) if applicable, inform the depositor of the exclusions from deposit guarantee scheme protection that fall within 2.2(4)(b) and 2.2(4)(k); and
4. (4) include the following information on a depositor’s statement of account:

[Note: Art. 16(1) and (3) of the DGSD]

17.2

If the depositor receives statements of account, the information set out in 17.1(3) must be provided in or with such a statement.

18.1

A firm must not, in advertising materials, provide any further information about the deposit guarantee scheme beyond referring to the fact that the product advertised is or is not covered by the deposit guarantee scheme, and to any further factual information required by law including by this Part.

[Note: Art. 16(5) of the DGSD]

19.1

In the case of a merger, conversion of subsidiaries into branches, transfer or similar operations, a firm must:

1. (1) inform depositors at least one month before the operation takes legal effect, save where the PRA allows a shorter deadline on grounds of commercial secrecy or financial stability; and
2. (2) give depositors a three month period following notification in accordance with (1), to withdraw or transfer to another institution, without incurring any penalty, such part of their eligible deposits, together with any accrued interest and other benefits, as exceed the coverage level pursuant to 4.2 (or, if applicable in the case of a non-UK scheme, other transposition of Article 6(1) of the DGSD) at the time of the operation.

[Note: Art. 16(6) of the DGSD]

20.1

A firm must inform depositors within one month if it withdraws from or is excluded from the deposit guarantee scheme or any non-UK scheme.

[Note: Art. 16(7) of the DGSD]

21.1

A firm may discharge all its information-providing obligations in this Part:

1. (1) to depositors who use internet banking facilities, by way of electronic communications;
2. (2) to depositors who receive only paper statements, in writing in paper form; and
3. (3) to depositors who neither receive paper statements nor use internet banking, in a way that brings it to the attention of the depositor,

but it must provide the information on paper if so requested by the depositor.

[Note: Art. 16(8) of the DGSD]

22.1

If a firm which is a DGS member intends to transfer to become a member of a non-UK scheme, and cease to be a DGS member, it shall give at least six months’ notice to the FSCS and the PRA of its intention to make such a transfer. During the six month period, the firm shall remain a DGS member.

[Note: Art. 14(4) of the DGSD]

23.1

This Chapter does not apply to the FSCS.

23.2

In this Chapter, references to “compensation sticker” and “compensation poster” are references to the sticker and poster set out in Annex 2 to this Part.

23.3

In this Chapter, references to “compensation leaflet” are:

1. (1) in the case of a DGS member, references to the FSCS’s standard leaflet with respect to its protection of deposits; and
2. (2) in the case of an incoming firm that it is a credit institution, references to a leaflet with respect to the protection of deposits by the compensation scheme of its home member state where such a leaflet is provided electronically and in English by the home state scheme or, where a leaflet is not available, a link to the home state scheme’s website.

23.4

A firm that accepts deposits under a single brand or trading name must prominently display the compensation sticker and compensation poster in each branch in the following ways:

1. (1) displaying the compensation sticker or compensation poster in the branch window; and
2. (2) displaying:
1. (a) the compensation sticker at each cashier window or desk; and
2. (b) the compensation poster inside the branch.

23.5

A firm that accepts deposits under multiple brands or trading names must prominently display the compensation sticker and compensation poster in each branch in the following ways:

1. (1) displaying the compensation poster in the branch window; and
2. (2) displaying:
1. (a) the compensation sticker at each cashier window or desk; and
2. (b) the compensation poster inside the branch.

23.6

Where the physical design of the branch means that it is not possible to comply with any of the requirements of 23.4 and 23.5, a firm must display the compensation sticker or the compensation poster in an alternative place in the branch that has equal prominence.

23.7

A firm that accepts deposits under a single brand or trading name must, in a way that best brings the information to depositors’ attention:

1. (1) display prominently (in electronic form) the compensation sticker; and
2. (2) provide from the compensation sticker an electronic link to the compensation leaflet.

23.8

A firm that accepts deposits under multiple brands or trading names must, in a way that best brings the information to depositors' attention:

1. (1) display prominently (in electronic form) the compensation poster; and
2. (2) provide from the compensation poster an electronic link to the compensation leaflet.

23.9

A firm must immediately provide the compensation leaflet to any person that requests further information about deposit protection.

23.10

A firm that accepts eligible deposits through a branch or branches established in other EEA States may provide the information required by this Chapter in the official language(s) of the EEA State (which may be either the compensation sticker, compensation poster or compensation leaflet in that language or the firm's own translation of that compensation sticker, compensation poster or compensation leaflet).

24.1

This Chapter applies to the FSCS.

24.2

The FSCS must administer the deposit guarantee scheme:

1. (1) in accordance with the rules in this Part and any other rules prescribed by law;
2. (2) in a manner that is procedurally fair; and
3. (3) in accordance with the European Convention on Human Rights.

24.3

The FSCS must publish for depositors on its website all necessary information:

1. (1) on the operation of the deposit guarantee scheme; and
2. (2) on the process, eligibility, exclusions from protection and conditions for payment of compensation,

including all information specified in the information sheet as being available on its website.

[Note: Art.16(1) and Art. 16(3) of the DGSD]

24.4

The FSCS may agree to pay the reasonable costs of a depositor bringing or continuing insolvency proceedings against a DGS member in respect of eligible deposits (whenever instituted), if the FSCS is satisfied that those proceedings would help it to discharge its functions under this Part.

24.5

The FSCS must have regard to the need to use its resources in an efficient and economic way in carrying out its functions under this Part.

24.6

The FSCS must perform stress tests of its systems relating to the payment of compensation in respect of eligible deposits at least once every three years and more frequently where the FSCS considers it necessary, with the first such stress test taking place by 3 July 2017.

[Note: Art. 4(10) of the DGSD]

24.7

The FSCS shall use the information necessary to perform stress tests of its systems relating to the payment of compensation in respect of eligible deposits only for the performance of those tests and shall keep such information no longer than is necessary for that purpose.

[Note: Art. 4(11) of the DGSD]

24.8

The FSCS must take appropriate steps to ensure that depositors are informed of the process for receiving compensation as soon as a possible after the compensation date.

24.9

The FSCS must inform the PRA immediately if it becomes aware of any instance of a firm not complying with its obligations as set out in this Part.

[Note: Art. 4(4) of the DGSD]

24.10

The FSCS must correspond with a depositor in any one of:

1. (1) English; or
2. (2) any other official Union language or Welsh if that language is used by the firm which holds the eligible deposit when communicating with that depositor.

[Note: Art. 8(7) of the DGSD]

24.11

The FSCS must have in place sound and transparent governance practices.

[Note: Art. 4(12) of the DGSD]

25.1

The FSCS must ensure that a person who would be, or considers that they would be, affected by an FSCS decision in relation to compensation, has an opportunity to make representations in respect of that potential decision before it is finalised.

25.2

The FSCS may provide that depositors may only submit claims for compensation in respect of deposits within a specified period of time (not less than three months) from the expiry of the applicable time period for payment of compensation as specified in 9.2 or the decision of the FSCS under 9.3 or 9.4.

25.3

The FSCS must, if requested by the depositor and subject to other applicable laws, give reasons to the depositor for any decision not to pay compensation in relation to some or all of their deposits.

25.4

The procedure established by the FSCS under this Chapter must satisfy the minimum requirements of procedural fairness and comply with the European Convention on Human Rights for the handling of any complaints of maladministration relating to any aspect of the operation of the deposit guarantee scheme.

[Note: Art. 9(1) and (3) of the DGSD]

26.1

The FSCS must ensure the confidentiality and the protection of the data pertaining to depositors’ accounts. The processing of such data must be carried out in accordance with the Data Protection Act 1998.

[Note: Art. 4(9) of the DGSD]

26.2

The FSCS must exchange with host state schemes (in relation to a DGS member), information:

1. (1) relating to the DGS member’s compliance with this Part;
2. (2) necessary to prepare for a repayment of depositors, including markings made under Chapter 11;
3. (3) communicated to the FSCS by the PRA that the PRA has detected problems with a DGS member that are likely to give rise to the intervention of the deposit guarantee scheme.

[Note: Art. 14(4) of the DGSD]

26.3

The FSCS must have appropriate procedures in place to enable it to share information and communicate effectively with non-UK schemes, the members of such schemes, and bodies outside the UK. The FSCS shall inform the PRA of any cooperation agreement it enters into with a non-UK scheme.

[Note: Art. 14(6) of the DGSD]

26.4

In order to facilitate effective co-operation, the FSCS shall have written co-operation agreements in place with non-UK schemes. Such agreements shall take account of 26.1.

[Note: Art. 14(5) of the DGSD]

27.1

This Chapter applies only to the FSCS.

27.2

Where the FSCS is required under the deposit guarantee scheme regulations to pay compensation on behalf of a non-UK scheme, the FSCS must inform the depositors concerned that the relevant credit institution is in default and of their right to compensation on behalf of the non-UK scheme. The FSCS may receive correspondence from those depositors on behalf of the non-UK scheme.

[Note: Art. 14(2) of the DGSD]

27.3

Where the FSCS is required, under this Part, to pay compensation to a depositor in respect of deposits held with a branch of a DGS member in an EEA state other than the UK, the FSCS must instruct the relevant non-UK scheme to make such payments on its behalf. The FSCS must provide the necessary funding prior to payout by the non-UK scheme and must compensate the non-UK scheme for costs incurred by the non-UK scheme with regard to acts done by the non-UK scheme in accordance with the instructions given by the FSCS.

[Note: Art. 14(2) of the DGSD]

28.1

This Chapter applies to the FSCS.

28.2

The FSCS may determine that the payment of compensation by the FSCS shall have all or any of the following effects:

1. (1) the FSCS shall immediately and automatically be subrogated, subject to such conditions as the FSCS determines are appropriate, to all or any part (as determined by the FSCS) of the rights and claims in the UK and elsewhere of the compensation recipient against the DGS member and/or any third party (whether such rights are legal, equitable or of any other nature whatsoever and in whatever capacity the DGS member or third party is acting) in respect of or arising out of the compensation recipient’s deposits being unavailable;
2. (2) the FSCS may claim and take legal or any other proceedings or steps in the United Kingdom or elsewhere to enforce such rights in its own name or in the name of, and on behalf of, the compensation recipient or in both names against the relevant credit institution and/or any third party;
3. (3) the subrogated rights and claims conferred on the FSCS shall be rights of recovery and claims against the relevant credit institution and/or any third party which are equivalent (including as to amount and priority and whether or not the relevant DGS member is insolvent) to and not exceed the rights and claims that the compensation recipient would have had; and/or
4. (4) such rights and/or obligations (as determined by the FSCS) as between the firm and the compensation recipient arising out of the compensation recipient’s deposit being unavailable, shall be transferred to, and subsist between, another firm and the compensation recipient provided that the firm has consented (but the transferred rights and/or obligations shall be treated as existing between the firm and the FSCS to the extent of any subrogation, transfer or assignment for the purposes of (1) to (3) and 28.3).

[Note: Art. 9(2) of the DGSD]

28.3

1. (1) The FSCS may determine that, if it is necessary or desirable in conjunction with the exercise of the FSCS's powers under 28.2, that the compensation recipient shall be treated as having irrevocably and unconditionally appointed the chairman of the FSCS for the time being to be their attorney and agent and on their behalf and in their name or otherwise to do such things and execute such deeds and documents as may be required under such laws of the UK, another EEA State or any other state or law-country to create or give effect to such assignment or transfer or otherwise give full effect to those powers.
2. (2) The execution of any deed or document under (1) shall be as effective as if made in writing by the compensation recipient or by his agent lawfully authorised in writing or by will.

28.4

1. (1) The powers conferred on the FSCS in 28.2 and 28.3 to make a determination must be exercised in writing.
2. (2) An instrument by which the FSCS makes a determination must specify the provision under which it is made, the date and the time from which it takes effect and the DGS member and the eligible deposits or classes of eligible deposit in respect of which it applies.
3. (3) The FSCS must take appropriate steps to publish the determination as soon as possible after it is made. Such publication must be accompanied by a statement explaining the effect of 28.2 and the FSCS’s determination.
4. (4) Failure to comply with any requirement under this rule does not affect the validity of the determination.
5. (5) A determination by the FSCS under 28.2 may be amended, remade or revoked at any time and subject to the same conditions.

28.5

1. (1) The production of a copy of the determination purporting to be made by the FSCS under this Chapter:
1. (a) on which is endorsed a certificate, signed by a member of the FSCS’s staff authorised by it for that purpose; and
2. (b) which contains the required statements;
2. is evidence (or in Scotland sufficient evidence) of the facts stated in the certificate.
3. (2) The required statements are:
1. (a) that the determination was made by the FSCS; and
2. (b) that the copy is a true copy of the determination.
4. (3) A certificate purporting to be signed as mentioned in (1) is to be taken to have been properly signed unless the contrary is shown.
5. (4) A person who wishes in any legal proceedings to rely on a determination may require the FSCS to endorse a copy of the determination with a certificate of the kind mentioned in (1).

29.1

If the FSCS takes a transfer of rights from the compensation recipient or is otherwise subrogated to the rights of the compensation recipient, it must pursue all and only such recoveries as it considers are likely to be both reasonably possible and cost effective to pursue.

29.2

If the FSCS decides not to pursue such recoveries and a compensation recipient wishes to pursue those recoveries and so requests in writing, the FSCS must comply with that request and assign the rights back to the compensation recipient.

30.1

If the FSCS, in relation to a claim for eligible deposits, makes recoveries from the credit institution or any third party in respect of that eligible deposit, it must:

1. (1) retain from those recoveries a sum equal to the aggregate of:
1. (a) the sum paid by the FSCS as compensation;
2. (b) any amount paid or payable by a home state scheme to the compensation recipient; and
3. (c) any amount the FSCS determines is appropriate to cover all or part of its reasonable costs of recovery; and
2. (2) as soon as reasonably possible after it makes the recoveries, pay any remaining sum to the compensation recipient (or, if not the depositor, as directed by the depositor or to any person subrogated to the claim of the depositor against the credit institution or to the rights of the depositor under this Part or to any person otherwise entitled to any remaining sum).

31.1

This Chapter applies only to the FSCS.

31.2

The FSCS must have in place adequate systems to determine the potential liabilities of the deposit guarantee scheme and ensure that the available financial means of the deposit guarantee scheme are proportionate to those liabilities.

[Note: Art. 10(1)(first paragraph) of the DGSD]

31.3

The FSCS must primarily use the available financial means of the deposit guarantee scheme to repay depositors pursuant to the deposit guarantee scheme.

[Note: Art. 11(1) of the DGSD]

32.1

This Chapter applies only to the FSCS.

32.2

If the PRA determines, in accordance with the deposit guarantee scheme regulations, that the FSCS is unable to raise a DGS compensation costs levy from DGS members to meet the liabilities of the deposit guarantee scheme, the FSCS may borrow an amount equal to the amount of such mandatory contributions in order to meet the liabilities of the deposit guarantee scheme.

[Note: Art. 10(4) (third paragraph) of the DGSD]

32.3

The FSCS must impose a DGS compensation costs levy on DGS members sufficient to repay any amounts equal to mandatory contributions borrowed in accordance with Article 10 (4) of the DGSD within a reasonable time and in accordance with repayment deadlines under the applicable loan agreement and 34.3.

[Note: Art. 10(4) (third paragraph) and Article 10(2) (second paragraph) of the DGSD]

33.1

This Chapter applies only to the FSCS.

33.2

The FSCS may, at any time, impose on DGS members a:

1. (1) DGS compensation costs levy;
2. (2) DGS management expenses levy; or
3. (3) legacy costs levy.

33.3

The maximum aggregate amount of DGS compensation costs, legacy costs and DGS specific costs for which the FSCS can levy class A in any one financial year of the deposit guarantee scheme is limited to £1,500,000,000 less whatever DAS compensation costs and DAS specific costs the FSCS has imposed on class J in the same year.

33.4

The maximum amount of DGS compensation costs for which the FSCS can levy DGS members per calendar year must not exceed 0.5% of total covered deposits (excluding temporary high balances) of all DGS members. The FSCS may in exceptional circumstances and with the prior consent of the PRA impose higher levies.

[Note: Art. 10(8) of the DGSD]

34.1

This Chapter applies only to the FSCS.

34.2

The FSCS must raise available financial means by imposing a DGS compensation costs levy on DGS members at least once in each financial year for expenditure incurred or expected in the period of 12 months following 1 July in that year.

[Note: Art. 10(1)(second paragraph) of the DGSD]

34.3

1. (1) If, after the available financial means of the deposit guarantee scheme have reached the target level for the first time, the available financial means have been reduced to less than two-thirds of the target level, the FSCS must impose regular DGS compensation cost levies on DGS members at a level allowing the target level to be reached again within six years.
2. (2) The regular levies imposed under (1) shall take due account of the phase of the business cycle and the impact that procyclical contributions may have when setting annual contributions.

[Note: Art. 10(2) (third and fourth paragraphs) of the DGSD]

34.4

DGS compensation cost levies imposed on DGS members to raise the available financial means of the deposit guarantee scheme must be based on the amount of covered deposits (excluding temporary high balances) incurred by the respective DGS member.

[Note: Art. 13(1) of the DGSD]

34.5

The FSCS may decide that a DGS member must pay a minimum contribution under a DGS compensation costs levy, irrespective of the amount of its covered deposits.

[Note: Art. 13(1) (fifth paragraph) of the DGSD]

34.6

The FSCS may only impose a DGS compensation costs levy on DGS members if the FSCS has reasonable grounds for believing that the funds available to it to meet relevant expenses are, or will be, insufficient, taking into account expenditure already incurred, actual and expected recoveries and the level of the FSCS’s expected expenditure in respect of DGS compensation costs in the 12 months immediately following the levy.

34.7

The FSCS may include in a DGS compensation costs levy the costs of compensation paid by the FSCS in error, provided that the payout was not made in bad faith.

35.1

This Chapter applies only to the FSCS.

35.2

The FSCS may only impose a DGS management expenses levy on DGS members if it has reasonable grounds for believing that the funds available to it to meet relevant expenses are, or will be, insufficient, taking into account expenditure already incurred, actual and expected recoveries and the level of the FSCS’s expected expenditure in respect of those expenses in the financial year of the deposit guarantee scheme in relation to which the levy is imposed.

35.3

The FSCS must apply any amount collected from a DGS management expenses levy to the payment of management expenses and, as such, must not treat such funds as available financial means of the deposit guarantee scheme.

36.1

This Chapter applies only to the FSCS.

36.2

The FSCS must not impose a legacy costs levy on Northern Ireland credit unions in respect of legacy costs incurred before 31 March 2012.

36.3

The FSCS must apply any amount collected from a legacy costs levy to the payment of legacy costs and, as such, must not treat such funds as available financial means of the deposit guarantee scheme.

36.4

The FSCS must allocate any legacy costs levy to DGS members subject to the levy limit for class A under 33.3.

36.5

The FSCS must calculate each DGS member’s share of a legacy costs levy by:

1. (1) identifying the legacy costs allocated to class A;
2. (2) calculating the DGS member’s class A tariff base as a proportion of the total class A tariff base of all DGS members (excluding Northern Ireland credit unions), using the statement of business most recently supplied;
3. (3) applying the proportion calculated in (2) to the figure in (1).

36.6

Legacy cost levies must be based on the amount of covered deposits (excluding temporary high balances) incurred by the respective DGS member.

36.7

A firm which becomes a DGS member part way through a financial year of the deposit guarantee scheme will not be liable to pay a share of a legacy costs levy made in that year.

36.8

41.5 applies to the calculation of a DGS member’s legacy costs levy and its class A tariff base as it applies to the calculation of its DGS specific costs levy.

37.1

This Chapter applies only to the FSCS.

37.2

If the FSCS invests any available financial means of the deposit guarantee scheme, it must invest it in a low-risk and sufficiently diversified manner.

[Note: Art. 10(7) of the DGSD]

37.3

The FSCS must hold any amount collected from a DGS specific costs levy, DGS compensation costs levy or legacy costs levy to the credit of class A.

37.4

Interest earned by the FSCS in the management of funds held to the credit of class A must be credited to that class, and must be set off against the DGS management expenses, DGS compensation costs and legacy costs allocated to that class.

37.5

The FSCS must keep accounts which include:

1. (1) the funds held to the credit of class A; and
2. (2) the liabilities of class A.

38.1

This Chapter applies only to the FSCS.

38.2

If a DGS member’s share of a DGS levy or an additional administrative fee or interest under 45.3 would be so small that, in the opinion of the FSCS, the costs of collection would be disproportionate to the amount payable, the FSCS may treat the DGS member as if its share of the levy or additional administrative fee amounted to zero.

38.3

The calculation of DGS levies must take into account previous levies, where funds raised in anticipation of meeting liabilities prove either more or less than the amount actually required.

38.4

The FSCS may adjust the calculation of a DGS member’s share of any DGS levy to take proper account of:

1. (1) any excess, not already taken into account, between previous levies of that type imposed in relation to previous periods and the relevant costs actually incurred in that period; or
2. (2) amounts that the FSCS has not been able to recover from DGS members as a result of 33.3 or 33.4; or
3. (3) amounts that the FSCS has not been able to recover from DGS members after having taken reasonable steps; or
4. (4) payments deferred under 46.2, the calculation of levies after an acquisition of deposit business under Chapter 39 or Chapter 40, calculations under 41.6; or
5. (5) anything else that the FSCS believes on reasonable grounds should be taken into account.

38.5

The FSCS must not adjust the calculation of a DGS member’s share of any DGS levy under 38.4 on the grounds that it would be inequitable for that firm to pay that share or part of it or on the grounds that it would be inequitable for the FSCS to retain that share or part of it. Any such claim should be dealt with under Chapter 46.

39.1

This Chapter applies only to the FSCS.

39.2

If:

1. (1) a DGS member (A) assumes a liability to repay deposits held by another DGS member (B);
2. (2) B is no longer liable to pay a DGS levy to the FSCS; and
3. (3) the assumption of liability takes place after the date to which, or as of which, A's most recent statement of business is drawn up,

the FSCS must require A to pay an additional amount equal to the levy that would have been payable by B in relation to the relevant business and class A if the acquisition had not taken place and B had remained liable to pay DGS levies. The amount is based on the B’s most recent statement of business.

39.3

This Chapter only applies with respect to those financial years of the FSCS for which A's levies are calculated on the basis of a statement of business drawn up to a date, or as of a date, before the assumption of liability took place.

40.1

This Chapter applies only to the FSCS.

40.2

If a DGS member (A) assumes a liability to repay deposits held by a non-DGS member (B) and the assumption of liability takes place after the date to which, or as of which, A’s most recent statement of business is drawn up, the FSCS must not require A to pay an additional amount as a result of that acquisition.

40.3

This Chapter only applies with respect to those financial years of the FSCS for which A’s levies are calculated on the basis of a statement of business drawn up to a date, or as of a date, before the assumption of liability took place.

41.1

A DGS member’s share of a DGS management expenses levy consists of one or more of: (1) a share of a DGS base costs levy and (2) a share of a DGS specific costs levy.

41.2

The FSCS must ensure that each DGS member’s share of a DGS management expenses levy separately identifies the firm’s share of the DGS base costs levy and DGS specific costs levy.

41.3

The FSCS must allocate any DGS specific costs levy to class A up to the levy limit for class A under 33.3.

41.4

The FSCS must calculate a DGS member’s share of a DGS specific costs levy by:

1. (1) identifying DGS specific costs which the FSCS has incurred, or expects to incur, in the relevant financial year of the deposit guarantee scheme allocated to class A, but not yet levied;
2. (2) calculating the DGS member’s class A tariff base as a proportion of the total class A tariff base, using the statement of business most recently supplied; and
3. (3) applying the proportion calculated in (2) to the figure in (1).

41.5

The FSCS must not require a firm (A) which becomes a DGS member part way through a financial year of the deposit guarantee scheme to pay a share of a DGS specific costs levy until the financial year of the FSCS following the FSCS financial year in which A became a DGS member, at which time A’s share of a DGS specific costs levy must be calculated under 41.6.

41.6

1. (1) Unless otherwise provided in (2), A’s class A tariff base is calculated, where necessary, using a projected valuation of the business to which the tariff relates
2. (2)
1. (a) If A’s class A tariff base is calculated using data from a period that begins on or after it became a DGS member, that data must be used to calculate A’s class A tariff base
2. (b) If A’s class A tariff base satisfies the following conditions, it must be calculated under (c)
1. (i) A became a DGS member between 1 April and 31 December inclusive; and
2. (ii) A’s class A tariff base, but for this rule, is calculated by reference to the financial year ended in the calendar year ending 31 December or the twelve months ending 31 December before the FSCS financial year.
3. (c) If A satisfies the conditions in (b) it must calculate its class A tariff base as follows:
1. (i) it must use actual data in relation to the business to which the tariff relates rather than projected valuations;
2. (ii) the tariff is calculated by reference to the period beginning on the date it became a DGS member and ending on the 31 December before the start of the FSCS financial year; and
3. (iii) the figures are annualised by increasing them by the same proportion as the period of 12 months bears to the period starting from when the DGS member became a DGS member to the 31 December, as the case may be.
4. (d) Where A is required to use the method in (c) it must notify the FSCS of its intention to do so by the date specified in 44.2.
5. (e) Where A is required to use actual data under this rule, Chapter 43 is disapplied, to the extent it is incompatible, in relation to the calculation of that DGS member’s valuation date in its second financial year.

42.1

This Chapter applies only to the FSCS.

42.2

The FSCS must allocate any DGS compensation costs levy to DGS members in accordance with the amount of DGS compensation costs arising from, or expected to arise from claims in respect of covered deposits up to the levy limit of class A under 33.3.

42.3

The FSCS must calculate each DGS member’s share of a DGS compensation costs levy by:

1. (1) identifying the DGS compensation costs allocated to class A;
2. (2) calculating, in relation to class A, the DGS member’s tariff base as a proportion of the total tariff base of all DGS members in class A, using the statement of business most recently supplied;
3. (3) applying the proportion calculated in (2) to the figure in (1).

42.4

When calculating a DGS member’s share of a DGS compensation costs levy or DGS specific costs levy allocated to class A, the FSCS must use the class A tariff base.

42.5

A firm which becomes a DGS member part way through a financial year of the deposit guarantee scheme will not be liable to pay a share of a DGS compensation costs levy made in that year.

42.6

41.5 applies to the calculation of a DGS member’s DGS compensation costs levy and its tariff base as it applies to the calculation of its specific costs levy.

43.1

The Class A tariff base is:

1. (1) covered deposits (excluding temporary high balances) as at 31 December except that, where the covered deposit is a dormant account, the applicable tariff base is covered deposit multiplied by 0.2 as at 31 December; and
2. (2) the total balance of any deposits in any account which holds funds to which the account holder is not absolutely entitled but may exclude the value of any funds which the firm has confirmed are not covered deposits.

43.2

The class A tariff base calculation must be made on the basis of the information that the firm would have to include in its single customer views. The information must be of the extent and standard required if the firm was preparing the single customer view in accordance with the SCV requirements as at the valuation date for the tariff base.

44.1

This Chapter does not apply to the FSCS.

44.2

A firm must provide the FSCS by end of February each year (or, if it has become a DGS member part way through the financial year, by the date requested by the PRA) with a statement of the total amount of business (measured in accordance with the class A tariff base) which it conducted, in respect of the most recent valuation period ending before the relevant year in relation to class A.

The relevant year means the year in which the month of February (referred to above) falls.

The valuation period will be 31 December.

44.3

A new DGS member must calculate its class A tariff base in accordance with 41.6.

44.4

If a firm does not submit a complete statement of business by the date on which it is due in accordance with 44.2 and any prescribed submission procedures:

1. (1) The firm must pay an administrative fee of £250 (but not if it is already subject to an administrative fee by the PRA for the same financial year); and
2. (2) The DGS compensation costs levy and any DGS specific costs levy will be calculated using (where relevant) the valuation or valuations of business applicable to the previous period, multiplied by a factor of 1.10 (or if it has become a DGS member part way through a financial year, on the basis of the information provided to the PRA for the purposes of Fees 3.6 (1) or on any other reasonable basis, making such adjustments as seem appropriate in subsequent levies once the true figures are known).

45.1

This Chapter does not apply to the FSCS.

45.2

A firm must pay to the FSCS its share of each:

1. (1) DGS management expenses levy; and
2. (2) DGS compensation costs levy and legacy costs levy allocated to class A.

45.3

If a firm does not pay the total amount of its share of a DGS levy, before the end of the date on which it is due, it must pay an additional amount as follows:

1. (1) if the DGS levy was not paid in full before the end of the due date, an administrative fee of £250; and
2. (2) interest on any unpaid part of the DGS levy or administrative fee at the rate of 5% per annum above the Official Bank Rate from time to time in force, accruing on a daily basis from the date on which the amount concerned became due.

46.1

The FSCS may reduce, remit or refund any overpaid amounts paid by a DGS member in respect of a particular period, due to a mistake of law or fact by the DGS member provided that the claim is made by the DGS member not more than two years after the beginning of the period to which the overpayment relates.

46.2

The PRA may defer, in whole or in part, a DGS member’s obligation to pay a DGS compensation costs levy or a legacy costs levy if the PRA considers that such contributions would jeopardise the liquidity or solvency of the firm. Such deferral shall not be granted for a longer period than six months but may be renewed upon request of the firm.

46.3

Any contributions deferred pursuant to 46.2 shall be paid when the payment no longer jeopardises the liquidity and solvency of the firm.

[Note: Art. 10(8) of the DGSD]

47.1

This Chapter does not apply to the FSCS.

47.2

A firm must pay its share of a DGS levy in one payment.

47.3

A firm’s share of a DGS levy is due on, and payable within, 30 days of the date when the invoice is issued.

47.4

A firm must pay its share of a DGS levy by either direct debit, credit transfer (e.g. BACS or CHAPS), cheque, Maestro, Visa Debit or by credit card (Visa/Mastercard/American Express only).

47.5

If a firm ceases to be a DGS member part way through a financial year of the deposit guarantee scheme:

1. (1) it will remain liable for any unpaid levies which the FSCS has already made on the firm; and
2. (2) the FSCS may make one or more levies upon it (which may be before or after the firm has ceased to be a DGS member but must be before it ceases to be a firm) for the costs which it would have been liable to pay had the FSCS made a levy on all DGS members in the financial year it ceased to be a DGS member.

48.1

This Chapter applies only to the FSCS.

48.2

If a firm ceases to be a DGS member and joins a non-UK scheme, the FSCS must transfer the contributions paid by that firm to the available financial means of the deposit guarantee scheme during the 12 months preceding the end of the membership to the relevant non-UK scheme.

48.3

48.2 does not apply if the firm has been excluded from the deposit guarantee scheme pursuant to Article 4(5) of the DGSD.

48.4

If some of the activities of a DGS member are transferred to another Member State and become subject to a non-UK scheme, the contributions paid by that firm during the 12 months preceding the transfer shall be transferred to the relevant non-UK scheme in proportion to the amount of covered deposits transferred.

[Note: Art. 14(3) of the DGSD]

49.1

This Chapter does not apply to the FSCS.

49.2

In this Chapter, the following definition shall apply:

marking effectiveness report

means a report from a firm’s governing body confirming that the firm satisfies the marking requirements and containing the information required by 49.7; and

marking requirements

means the requirements in 11.1 and 11.2.

49.3

A firm must provide the PRA with a marking effectiveness report within three months of receiving a Part 4A permission to accept deposits.

49.4

A firm must notify the PRA and FSCS of a material change in the firm’s systems to satisfy the marking requirements within 3 months of the change.

49.5

The notification in 49.4 must be accompanied by a statement signed on behalf of the firm’s governing body confirming that the firm’s systems satisfy the marking requirements.

49.6

A firm must provide a marking effectiveness report to the PRA or FSCS promptly upon request by the PRA or FSCS.

49.7

A firm’s marking effectiveness report must contain:

1. (1) a description of:
1. (a) the firm’s systems or to satisfy the marking requirements and how they have been implemented (the firm’s systems include any manual systems used by the firm and any code or keys used internally by the firm to mark eligible deposits and accounts which are held on behalf of beneficiaries and which contain or may contain eligible deposits);
2. (b) the testing undertaken with respect to the robustness of the firm’s systems;
3. (c) the number of marked accounts that contain eligible deposits;
4. (d) the firm’s plan for the ongoing maintenance of its systems;
5. (e) how the firm’s governing body will ensure that they remain satisfied that the firm’s systems continue to satisfy the marking requirements; and
6. (f) any other factors or dependencies relevant to the design and operation of the firm’s systems or to an assessment of whether the systems satisfy the marking requirements;
2. (2) a statement signed on behalf of the firm’s governing body confirming that the firm satisfies the marking requirements;
3. (3) a statement of whether the firm’s marking effectiveness report has been reviewed by external auditors, and if so, a statement of the findings of that review; and
4. (4) a statement of whether there has been a material change to the firm’s systems since the date of the firm’s previous marking effectiveness report.

50.1

This Chapter does not apply to the FSCS.

50.2

This Chapter does not apply in relation to an eligible deposit:

1. (1) of a large company;
2. (2) contained in an account that is not active;
3. (3) contained in an account that holds funds to which a depositor is not absolutely entitled; or
4. (4) of a small local authority.

50.3

In this Chapter, the following definitions shall apply:

large company

means a body corporate which does not qualify as a small company under section 382 of the Companies Act 2006

single customer view

means a single, consistent view of a depositor’s aggregate eligible deposits with a firm which contains the information required by 50.11;

50.4

A firm must be able to provide to the PRA or the FSCS its single customer view within 72 hours of a request being made by the PRA or FSCS.

50.5

A firm must be able to provide the single customer view by secure electronic transmission and in a format which is readily transferable to and compatible with the FSCS’s systems.

50.6

A firm must ensure that the electronic systems which produce the single customer view must:

1. (1) be capable of automatically identifying the amount of covered deposits payable to each depositor; and
2. (2) include a check facility which allows the firm to identify any portion of an eligible deposit that exceeds the coverage level provided for in 4.2.

50.7

A firm that operates fewer than 5,000 accounts which contain eligible deposits on 3 July 2015 may:

1. (1) elect that 50.5 and 50.6 do not apply; and
2. (2) revoke any such election.

50.8

A firm that revokes an election, may not make a further election under 50.7.

50.9

A firm that operates 5,000 or more accounts which contain eligible deposits on 3 July 2015 may not make an election under 50.7 if, on a future date, it operates less than 5,000 accounts which contain eligible deposits.

50.10

The election or revocation of the election takes effect only where the firm provides written notice to the PRA of the election or revocation.

50.11

A firm must ensure that a single customer view contains all the information set out in the table below.

50.12

Where a depositor holds more than one account, the section in the single customer view which sets out “Details of account(s)” must be completed for each account held.

50.13

The amount inserted into the single customer view as the account balance and aggregate balance across all accounts must be the total of the principal plus any interest or premium attributable up to the compensation date (or in the absence of a compensation date, the date on which the FSCS or PRA makes a request to the firm to provide the single customer view).

50.14

If the account is a structured deposit account where the return cannot be calculated until the maturity date because the return is based on growth of an index as determined at a future date, the figure inserted into the single customer view as the account balance must be the total of the principal, any attributable contractual minimum return and any interest accrued prior to the product start date.

50.15

A firm must take reasonable steps to ensure the accuracy of the data it holds to satisfy the requirements of this Chapter.

51.1

This Chapter does not apply in relation to an eligible deposit:

1. (1) of a large company;
2. (2) contained in an account that is not active; or
3. (3) contained in an account that holds funds to which a depositor is not absolutely entitled.

51.2

In this Chapter, the following definitions shall apply:

large company

means a body corporate which does not qualify as a small company under section 382 of the Companies Act 2006

SCV effectiveness report

means a report from a firm’s governing body confirming that the firm’s systems satisfy the requirements in Chapter 50 with respect to single customer views and containing the information required by 51.7.