The Savings Certificates (Amendment) Regulations 2012

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Savings Certificates Regulations 1991.

Regulation 3 inserts new definitions. A rolled-over certificate is a savings certificate purchased before 20th September 2012 for which a new term has begun at any time after that date. A term is defined as the period for which a rate of interest has been fixed.

Regulation 5 amends provision for the purchase and holding of certificates.

A certificate held on 20th September 2012 by a person under the age of 16 may not be rolled over into a new term unless the holder has reached that age by the date on which a new term is due to begin. A certificate held on 20th September 2012 by a friendly society or other body of persons may not be rolled over into a new term.

From 20th September 2012 a certificate may be purchased by—

(a) a person who is aged 16 or over or by two such persons jointly;

(b) a trustee or two or more trustees;

(c) a person or persons acting as a trustee on behalf of any person or persons aged 16 or over.

The approval of the Director of Savings is required for a purchase by a trustee if any beneficiary of the trust is a body of persons (whether or not it is incorporated).

Regulation 6 amends provision for maximum holding limits by omitting the requirement that a holder is to be treated as holding the full value of a jointly held certificate.

Regulation 7 inserts provision for the daily accrual of interest on rolled-over certificates and certificates purchased after 19th September 2012.

Regulation 8 inserts provision replacing, for certain certificates, the obligation to issue a replacement certificate following a partial repayment with an obligation to make a record available. The record must show the amount repaid, the value of the part retained, the annual rate of interest applying to the certificate and the date on which the current term will end.

Regulation 9 inserts provision for the imposition of a penalty where the holder of a rolled-over certificate or a certificate purchased after 19th September 2012 applies for repayment before the end of a term. The penalty is an amount equal to 90 days’ interest, and, if the certificate is index-linked, the loss of index-linking for the period of 12 months (starting on the date of purchase of the certificate or the last anniversary of that date) in which the application is made. In the case of a partial repayment, the interest component of the penalty is a proportionate amount. The penalty does not apply to specified descriptions of application or where the Director of Savings decides that it would be unjust to apply it in a particular case.

The effect of the amendments in regulation 10 is that payment of the amount repayable in respect of a savings certificate may not be made by uncrossed warrant.

The amendments in regulation 13 concern applications for payment of the amount repayable in respect of a rolled-over certificate or a certificate purchased after 19th September 2012 which is held in joint names. The joint holders, unless they hold the certificate in trust, may authorise one of themselves to apply for repayment on behalf of all of them. The joint holders may not authorise any other person to receive repayment on their behalf.

Regulation 17 inserts provision about the forfeiture of a rolled-over certificate or a certificate purchased after 19th September 2012. The Director of Savings may direct that a certificate be forfeited where the Director thinks fit. Where a certificate is forfeited, the Director of Savings must pay an amount equal to the purchase price to the holder and may also pay any other amount that was payable under the terms and conditions subject to which the certificate was held.

Regulation 19 revokes provision for the settlement of disputes. In consequence of the repeal of section 84 of the Friendly Societies Act 1992 (c.40.) disputes between the Director of Savings and the holder of a savings certificate can no longer be referred to an adjudicator appointed by the Treasury under that section.

Various amendments remove requirements relating to the issue of documents and for written communication between certificate holders and the Director of Savings, and make provision in connection with payment by electronic transfer.

An impact assessment has not been prepared for this instrument because no impact is foreseen on the costs of business or the voluntary sector.