What are the key features of the DCS?
- It provides protection of up to £50,000 for deposits placed in Jersey per person, per Jersey banking group, for local and international depositors, in line with international standards.
- Deposits held in the name of individuals and charities are covered along with accounts held by parents for the benefit of their children.
- The £50,000 limit will apply per person, so a £100,000 deposit held in a joint account by 2 people would be completely covered.
- The maximum liability of the DCS will be capped at £100 million in any 5 year period.
How will the DCS be funded?
The DCS will be funded primarily through an upfront loan from the States of Jersey. Then levies would be raised on Jersey banks, subject to certain caps, based on the proportion of protected deposits each bank holds to repay the loan.
In the event that the full £100 million liability of the DCS was called upon, banks would contribute about two thirds of funding with the States contributing about one third, which, in most circumstances based on historic recovery rates, would eventually be repaid from the recoveries from the failed bank.
Who runs the DCS?
The DCS will be operated by the Jersey Bank Depositors Compensation Board. The Board is an incorporated body and independent of Ministers and the States.
What is the maximum amount protected by the DCS?
Depositors are protected up to a maximum of £50,000 per depositor per Jersey banking group. The overall amount of compensation that the DCS can pay out will be limited to £100 million in each 5 year period.
Which deposits / depositors are protected?
Deposits held by private individuals (ie retail deposits) and charities with Jersey banks are protected. Depositor protection does not extend to corporations, SMEs, partnerships or trusts. Protection extends to deposits held by residents and non-residents and deposits in foreign currencies would also be protected. Deposits must be placed in an account in Jersey with banks regulated by the Jersey Financial Services Commission. Coverage does not extend to deposits placed in branches or subsidiaries of Jersey banking groups located outside Jersey i.e. those in other jurisdictions.
How will joint accounts be treated?
The compensation limit of up to £50,000 applies to each depositor for the total of their deposits with a Jersey banking group, regardless of how many accounts they hold or whether they are a single or joint account holder. Therefore, for a joint account in the name of 2 account holders, the limit would be up to £100,000.
Will deposits with Community Savings & Credit Limited be protected?
As a credit union, Community Savings & Credit takes members’ savings and deposits these with banks in Jersey. Should one of these banks fail, Community Savings & Credit will be able to claim up to a maximum of £50,000 from the DCS for each of its members.
If I had more than £50,000 in an account, does that mean I would lose money?
A depositor who has more than £50,000 with a failed bank would receive compensation from the DCS only up to the limit (ie £50,000). However, depositors with deposits above the limit may also receive a proportion of any higher balance from the liquidation of the failed bank. Depositors would have to wait until the liquidator had completed the liquidation to find out how much, if anything, they might receive in addition to the compensation paid by the DCS. Where a depositor’s rights are assigned to the DCS voluntarily or by statute then the DCS would repay any excess amount or assign rights back to the depositor.
Why is there a limit on the amount of compensation that can be claimed?
The limit matches the protection offered in Guernsey and the Isle of Man. It would provide protection for a significant proportion of depositors in Jersey, targeting protection in particular to the accounts of depositors who may face particular hardship in the event of loss.
What would happen if I owed money to a bank that failed?
Amounts owed to the failed bank (eg loans, mortgages, overdrafts or credit card debts) would not be taken into account before any compensation was paid, so the amount you could claim from the DCS would not be affected by the fact that you owed money to the same bank. However, any such debts owed by depositors to the bank would not be extinguished and you would still owe money to the bank.
How would I claim compensation?
To claim compensation you would need to apply to the DCS and provide proof of your deposit with the failed bank, which the DCS would then verify against the bank’s books and records. Clear, accurate records of deposits and transactions may help to speed up any payment of compensation. Should a bank fail, the DCS would ensure that instructions on how to make a claim were easily available.
How long would it take to process my claim?
If a bank were to fail, the States would provide upfront funding to the DCS with the aim of paying compensation to depositors as soon as is practicable. The regulations require for all claims to be paid within 3 months.