PART 1 Introductory Provisions

Citation and commencement

1. —(1) These Regulations may be cited as the Deposit Guarantee Scheme Regulations 2015.

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

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

Interpretation

2. —(1) In these Regulations—

^M3 “ compensation scheme rules ” means rules made under section 213 of FSMA ;

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

“ credit union ” means—

[^F2 “deposit” means—

^M7 “ 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 ;

[^F3 “eligible deposit” has the meaning given in section 70A(7) of the Banking Act 2009 ^F3]

^M8 “ FSMA ” means the Financial Services and Markets Act 2000 ;

^F4 ...

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

(a) any expression used in these Regulations which is defined in Article 2 (definitions) of the deposit guarantee schemes directive has the meaning given by that Article;

(b) any other expression used in these Regulations which is defined in section 417 (definitions) of FSMA has the meaning given by that section.

Meaning of “compensation scheme member”

3. —(1) In these Regulations “ compensation scheme member ” means an institution that—

^F5 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) falls into one of the categories of institution specified in paragraph (2).

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

(a) an institution that—

(i) is incorporated in or formed under the law of any part of the United Kingdom;

(ii) is not an insurer; and

(iii) ^M9 has permission under Part 4A of FSMA to carry on the regulated activity of accepting deposits;

(b) ^M10 a building society within the meaning of section 119 of the Building Societies Act 1986 ;

(c) a credit union; or

(d) an institution that—

(i) has its head office outside the United Kingdom;

(ii) ^F6 is not ... an insurer; and

(iii) has permission under Part 4A of FSMA to carry on the regulated activity of accepting deposits.

(3) For the purposes of this regulation—

^F7 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) “ insurer ” means an institution which is authorised under Part 4A of FSMA to carry on the regulated activity of effecting or carrying out contracts of insurance as principal.

PART 2 The compensation scheme

Designation of competent authority and designated authority

^F8 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notification to the scheme manager of problems with a compensation scheme member

^M11,M12 5. The PRA must notify the scheme manager in writing as soon as reasonably practicable if the PRA becomes aware that a compensation scheme member has financial difficulties which are likely to require the intervention of the scheme manager under compensation scheme rules in respect of eligible deposits .

Time limit for determining that a compensation scheme member is unable to repay deposits

^M13 6. —(1) If the relevant administrative authority is satisfied that a compensation scheme member has failed to repay a deposit which is due and payable, the relevant administrative authority must [^F9 determine 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. ^F9]

(2) The determination must be notified in writing to—

(a) the compensation scheme member; and

(b) (i) the scheme manager, or

(ii) if the scheme manager is the relevant administrative authority, the PRA,

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.

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

(a) is the scheme manager in relation to a compensation scheme member that is a credit union; and

(b) is the PRA in relation to any other compensation scheme member.

Maximum compensation payable in respect of deposits held with a compensation scheme member

7. [^F10—(1)^F10] 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—

(a) in relation to categories of eligible deposit which fall within Article 6(2) of the deposit guarantee schemes directive; and

(b) in relation to all other categories of eligible deposit.

[^F11 (2) Compensation scheme rules made by the PRA in accordance with paragraph (1) are subject to regulation 7A. ^F11]

[^F12 Transitional maximum compensation level

7A. —(1) 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.

(2) 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.

(3) 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.

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

(a) were, or would have been, eligible for compensation under the compensation scheme before 3rd July 2015, and

(b) are eligible for compensation under the compensation scheme on 3rd July 2015 and after that date.

[^F13 (5) The amount referred to in paragraph (3) must be reviewed periodically by the PRA and at least once every five years.

(6) 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.

(7) 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).

(8) 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).

(9) 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.

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

(11) 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. ^F13,F12]]

[^F14 Determination by PRA whether contributions may be raised by the scheme manager

8. —(1) 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—

(a) repaying depositors in accordance with the compensation scheme; or

(b) contributing to the costs of the special resolution regime under section 214B of FSMA or section 61(2)(b) of the Banking Act 2009.

(2) The conditions are—

(a) the PRA has determined whether the scheme manager may raise contributions under the compensation scheme; and

(b) the PRA has notified that determination in writing to the scheme manager and the Treasury. ^F14]

Approval of increased levies for the purposes of the compensation scheme

9. If the PRA makes compensation scheme rules in respect of eligible deposits limiting the levy payable by a compensation scheme member in respect of a period specified in those compensation scheme rules, the PRA may on receiving a request in writing from the scheme manager approve a levy on a person that exceeds that limit.

Payment of compensation by the scheme manager on behalf of a non-UK scheme

^F15 10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notification of covered deposits and available financial means of the compensation scheme

^F16 11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notification of contents of co-operation agreements

^F17 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 3 Amendments of primary and secondary legislation

Amendment of FSMA

13. —(1) FSMA is amended as follows.

^M14 (2) In section 55Z2 (notification of EBA) 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. ” .

(3) 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) ^M15 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 ^M16 ;

“ building society ” has the meaning given in the Building Societies Act 1986 ^M17 ;

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

^M20 (4) In section 218A (regulators power to require information) , 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. ” .

Amendment of the Insolvency Act 1986

^M21 14. —(1) The Insolvency Act 1986 is amended as follows.

^M22 (2) In section 386 (categories of preferential debts) , in subsection (1), after “steel production” insert “ ; debts owed to the Financial Services Compensation Scheme ” .

(3) In Schedule 6 (the categories of preferential debts)—

(a) ^M23 after paragraph 15A insert—

“ Category 6A: Debts owed to the Financial Services Compensation Scheme

15AA. 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 ^M24 . ” ;

(b) ^M25 in the italic heading before paragraph 15C for “categories 7 and 8” substitute “ categories 6A, 7 and 8. ” ;

(c) in paragraph 15C, before sub-paragraph (1) insert—

“ (A1) In paragraph 15AA “ the scheme manager ” has the meaning given in section 212(1) of the Financial Services and Markets Act 2000. ” .

Amendment of the Insolvency (Northern Ireland) Order 1989

^M26 15. —(1) The Insolvency (Northern Ireland) Order 1989 is amended as follows.

^M27 (2) In Article 346 (categories of preferential debts) , in paragraph (1), after “steel production” insert “ ; debts owed to the Financial Services Compensation Scheme ” .

(3) In Schedule 4 (categories of preferential debts)—

(a) after paragraph 17 insert—

“ Category 6A: Debts owed to the Financial Services Compensation Scheme

17A. 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. ” ;

(b) in the heading before paragraph 21, for “7 and 8” substitute “ 6A, 7 and 8 ” ;

(c) in paragraph 21, before sub-paragraph (1) insert—

“ (A1) In paragraph 17A “ the scheme manager ” has the meaning given in section 212(1) of the Financial Services and Markets Act 2000. ” .

Amendment of the Bankruptcy (Scotland) Act 1985

^M28 16. In Schedule 3 to the Bankruptcy (Scotland) Act 1985 —

(a) 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. ” ;

(b) 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. ” .

Credit Institutions (Protection of Depositors) Regulations 1995: revocation

^M29 17. Regulations 46 to 48 of the Credit Institutions (Protection of Depositors) Regulations 1995 are revoked.

PART 4 Review

Review

^F1 18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .