
FSA introduces deposit guarantee compensation rules
Daily news headlines

LONDON - The UK Financial Services Authority (FSA) is introducing new rules for the Financial Services Compensation Scheme (FSCS) aimed at broadening the number of people protected and requiring banks, building societies and credit unions to pay out compensation more quickly if an institution defaults.
Consumers and small businesses will receive compensation within a target of seven days, and within a maximum period of 20 days, in compliance with the European Union's Deposit Guarantee Schemes Directive. The new rules will come into force on December 31, 2010.
The rules also mean that if a depositor has savings and loans with the same firm, an outstanding loan or debt cannot be deducted from the gross payment, which must now be paid in full, up to the maximum £50,000 depositor protection ceiling.
From January 1, 2010 banks and firms will also have to publish information on the FSCS and their compliance with it to customers, as well as having to disclose to customers additional trading names under which the firm operates.
"The FSA, along with HM Treasury and Bank of England, have set the FSCS a challenging target of delivering payout in seven days," said Hector Sants, chief executive of the FSA. "The systems requirements that the rules introduce for banks are crucial to enable the FSCS to deliver fast payout."
Other key requirements include that firms must keep up-to-date information on customers to allow quick processing of claims by the FSCS if needed, described as a "single customer view".
The regulator decided to extend, until December 30, 2010, interim rules to allow separate compensation cover for customers with deposits in two merging building societies, as well as for customers of a building society that merges with a subsidiary of another mutual society, and for customers whose deposits are transferred from a failed firm to another deposit taker with whom they already have an account.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
More EU banks will fail new IRRBB test as rates push upwards
Half of all EU banks could cross outlier threshold for new test of net interest income
Finra head recognises ‘challenges’ for bond transparency drive
Cook says regulators thinking about industry’s operational and liquidity concerns
Why central banks shouldn’t ignore stablecoins
Rapid growth of stablecoins could impair monetary policy transmission
Hedge funds doubt tall tales around UK short-selling review
FCA has never used powers to ban short-selling, but reporting tweaks would be welcome
Cost of bank bail-in rules lower than expected – EBA
MREL pricing manageable for most banks, though troubled firms may struggle to meet targets
Ice Clear Credit may face Esma review as euro CDSs migrate to US
Upgrade in systemic status would depend on extent of migration from UK-based Ice Clear Europe
EU takes steps to avoid India clearing house lockout
Other Asian regulators may also have concerns about extraterritorial reach of Emir 2.2
HKMA preparing prescriptive climate stress test for 2023
Regulator plans granular scenario specifications, considers Pillar 2 capital measures