![Risk.net](https://www.risk.net/sites/default/files/styles/print_logo/public/2018-09/print-logo.png?itok=1TpHrpuP)
FSA introduces deposit guarantee compensation rules
The UK regulator creates a scheme to hasten compensation payouts
![fsa068-low fsa068-low](/sites/default/files/styles/landscape_750_463/public/import/IMG/191/85191/fsamanwalkingin-580x358.gif.webp?itok=OLSGher6)
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.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
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. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Modernising compliance functions with regtech
Regtech addresses the complexities of regulatory requirements, offering innovative tools to modernise compliance functions, streamline processes and enhance efficiency. This article explores its role in compliance and reporting within the banking sector,…
For the Fed discount window, destigmatisation starts at home
US supervisors must change tack to encourage central bank liquidity utilisation
Study finds just 10 banks plan to apply for FRTB models
Research provides extra insight on reasons for decline in internal models
EU banks hedge net interest income to pass new IRRBB test
Would-be outliers look to cut sensitivity of cashflows to rate moves, but at what cost?
Banks cry foul over shock decision from Basel Committee
Asset and liability management professionals question severity of criteria in revised IRRBB tests
Fresh EU push for single securities supervisor to compete with US
But MEP expresses ‘concern’ EU nations will stall revival of capital markets union
Discord deepens over fund-linked trades in FRTB
More banks use punitive approach to capital treatment under new trading book regime, irking regulators
AI, quantum computing and tokenisation set to transform finance – Menon
But significant barriers remain preventing the technologies from unlocking their full potential