The Banking Act 1987 (Exempt Transactions) Regulations 1997

NOW THIS DEED WITNESSETH AND IT IS HEREBY DECLARED as follows:

6.—(1) A Participating Society shall for the purpose of this Deed and the Scheme hereby constituted become insolvent

(i) on the making of a winding up order against it; or

(ii) on the passing of a resolution for a creditors' voluntary winding up.

(2) Subject to the provisions of this Deed, if at any time a Participating Society becomes insolvent or is to be treated as insolvent by virtue of Clauses 10(1), 12(2) or 15(4) hereof the Union shall as soon as practicable pay out of the Fund to a depositor who has a protected Deposit with that Society an amount equal to ninety per centum of the protected Deposit, but so that such amount shall in no case exceed £18,000;

(3) Subject to the provisions of this Deed, a reference to a depositor’s protected Deposit is a reference to the total liability of the Participating Society to him, but limited in any event to a maximum of £20,000, in respect of the principal amounts of Deposits made to the Participating Society

PROVIDED THAT

(i) any such Deposit was not made after such society had ceased to be a Participating Society;

(ii) the principal amounts of Deposits shall only include any interest or premium which has been credited to the Deposit in question if such interest or premium has been so credited at the time such Society becomes insolvent so as to constitute an accretion to the principal;

(iii) in determining the total liability of such Society to a depositor for the purposes of this and the previous sub-clause, there shall be deducted the amount of any liability of the depositor to such Society—

(a) in respect of which a right of set-off or counter-claim against the Deposit (including in Scotland a right of retention or compensation) existed immediately before such Society became insolvent; or

(b) in respect of which such a right would then have existed if the Deposit in question had been repayable on demand and the liability in question had fallen due; and

(iv) the Union may in its absolute discretion decline to make any payment under this Scheme in respect of a Deposit to a person who, in the opinion of the Union, had any responsibility for, or may have profited directly or indirectly from, the circumstances, or some of the circumstances, giving rise to the financial difficulties of the Participating Society which had become insolvent.