The Deposit Guarantee Scheme Regulations 2015

These Regulations may be cited as the Deposit Guarantee Scheme Regulations 2015.

Subject to paragraph (3), the provisions of these Regulations come into force on 26th March 2015.

Regulations 5 and 7 come into force on 3rd July 2015.

In these Regulations—

• “compensation scheme rules” means rules made under section 213 of FSMA M1;

• “the compensation scheme” has the meaning given in section 213(2) of FSMA;

• “credit union” means—

  1. (a)

     a registered society (within the meaning given by section 1 of the Co-operative and Community Benefit Societies Act 2014 M2) that is registered as a credit union; or

  2. (b)

     a society registered under the Credit Unions (Northern Ireland) Order 1985 M3 or a society registered under the Industrial and Provident Societies Act (Northern Ireland) 1969 M4 as a credit union;

• F1 “deposit” means—

  1. (a)

     a deposit within the meaning of point (23A) of Article 2(1) of Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012;

  2. (b)

     a share in a building society, as defined in section 119 of the Building Societies Act 1986, other than a share of a capital nature that is own funds, as defined in point (118) of Article 4.1 of Regulation No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012; or

  3. (c)

     a share in a credit union other than—

     1. (i)

        a deferred share within the meaning given by section 31A of the Credit Unions Act 1979; or

     2. (ii)

        a deferred share issued by 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;

• “deposit guarantee schemes directive” means Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes (recast), repealing directive 94/19/EC M5;

• F2“eligible deposit” has the meaning given in section 70A(7) of the Banking Act 2009

• “FSMA” means the Financial Services and Markets Act 2000 M6;

• F3...

Except as provided by paragraph (1) or article 3—

In these Regulations “compensation scheme member” means an institution that—

The categories of institution mentioned in paragraph (1)(b) are—

For the purposes of this regulation—

If the relevant administrative authority is satisfied that a compensation scheme member has failed to repay a deposit M1 which is due and payable, the relevant administrative authority must F1determine whether in its view the compensation scheme member appears unable for the time being, for reasons which are directly related to its financial circumstances, to repay the deposit and the compensation scheme member has no current prospect of being able to do so.

The determination must be notified in writing to—

as soon as reasonably practicable and in any event before the end of the period of five working days beginning with the day on which the relevant administrative authority becomes satisfied that the compensation scheme member has failed to repay a deposit which is due and payable.

For the purposes of this regulation the “relevant administrative authority”—

The PRA must make compensation scheme rules which specify the maximum compensation payable in respect of eligible deposits held by a person with a compensation scheme member—

Compensation scheme rules made by the PRA in accordance with paragraph (1) are subject to regulation 7A.

For the period from 3rd July 2015 to 31st December 2015, the maximum compensation payable in accordance with PRA compensation scheme rules in respect of eligible deposits held by a relevant person with a compensation scheme member is £85,000 (and no account shall be taken of any lower limit provided for in PRA compensation scheme rules), unless paragraph (2) applies.

This paragraph applies if additional compensation is payable to a relevant person under PRA compensation scheme rules made to give effect to Article 6.2 of the deposit guarantee schemes directive.

After 31st December 2015, the maximum compensation payable in respect of eligible deposits held by a relevant person with a compensation scheme member is the amount provided for by PRA compensation scheme rules.

For the purposes of this regulation, a person is a “relevant person” if deposits held by that person—

The amount referred to in paragraph (3) must be reviewed periodically by the PRA and at least once every five years.

Having reviewed the amount referred to in paragraph (3), the PRA may adjust the amount, taking account of matters the PRA considers relevant, including in particular, developments in the banking sector and the economic and monetary situation in the United Kingdom.

The first review carried out in accordance with paragraph (5) must be completed no later than five years after regulation 5 of the Deposit Guarantee Scheme and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 comes into force (in accordance with paragraph 1(1) of Schedule 5 to the European Union (Withdrawal Agreement) Act 2020).

The PRA may adjust the amount referred to in paragraph (3) in accordance with inflation in the United Kingdom during the period since the most recent alteration of the amount referred to in paragraph (3).

Any adjustment under paragraph (8) must be carried out on the basis of changes in the consumer prices index calculated and published by the Office for National Statistics or, where the index is not published for any year during the period, any substituted index or figures published by that Office.

The PRA is not required to carry out a review under paragraph (5) in order to exercise its power under paragraph (8).

The PRA must not adjust the amount referred to in paragraph (3) in accordance with paragraph (6) or (8) without the prior written approval of the Treasury.

This regulation specifies conditions which must be met before the scheme manager may request a loan under section 223B of FSMA for the purposes of—

The conditions are—

FSMA is amended as follows.

In section 55Z2 (notification of EBA) M1 after subsection (1) insert—

“(1A)

A notification given in accordance with paragraph (a) or (c) of subsection (1) must contain a statement to the effect that the compensation scheme makes provision for cases where the credit institution concerned is unable, or likely to be unable, to satisfy claims against it.”.

In section 215 (rights of the scheme in insolvency), after subsection (2) insert—

“(2A)

Any payment made by the scheme manager under section 214B(2) M2 in connection with the exercise of a stabilisation power in respect of a bank, building society or credit union is to be treated as a debt due to the scheme manager from that bank, building society or (as the case may be) credit union.

(2B)

In subsection (2)—

• “bank” has the meaning given in section 2 of the Banking Act 2009 M3;

• “building society” has the meaning given in the Building Societies Act 1986 M4;

• “credit union” means a credit union within the meaning of—

  1. (a)

     the Credit Unions Act 1979 M5; or

  2. (b)

     article 2 of the Credit Unions (Northern Ireland) Order 1985 M6.”.

In section 218A (regulators power to require information) M7, for subsection (1) substitute—

“(1)

Each regulator may make rules enabling that regulator to require authorised persons to—

(a)

provide information to the scheme manager on the request of that regulator or the scheme manager; or

(b)

provide information to that regulator, which may then be made available to the scheme manager by that regulator.”.

The Insolvency Act 1986 M1 is amended as follows.

In section 386 (categories of preferential debts) M2, in subsection (1), after “steel production” insert “ ; debts owed to the Financial Services Compensation Scheme ”.

In Schedule 6 (the categories of preferential debts)—

The Insolvency (Northern Ireland) Order 1989 M1 is amended as follows.

In Article 346 (categories of preferential debts) M2, in paragraph (1), after “steel production” insert “ ; debts owed to the Financial Services Compensation Scheme ”.

In Schedule 4 (categories of preferential debts)—

after paragraph 6A insert—

“Debts owed to the Financial Services Compensation Scheme

6AA

Any debt owed by the debtor to the scheme manager of the Financial Services Compensation Scheme under section 215(2A) of the Financial Services and Markets Act 2000.”;

after paragraph 9 insert—

“Meaning of scheme manager

9ZA

In paragraph 6AA “the scheme manager” has the meaning given in section 212(1) of the Financial Services and Markets Act 2000.”.