The Credit Institutions (Protection of Depositors)Regulations 1995

Compensation payments to depositors

30.—(1) For subsections (1) and (2) of section 58 of the 1987 Act(1) (compensation payments to depositors) there shall be substituted the following subsections—

“(1) Subject to the provisions of this section, if at any time an institution to which this subsection applies becomes insolvent, the Board—

(a) shall as soon as practicable pay out of the Fund to depositors who have protected deposits with that institution which are due and payable amounts equal to nine-tenths of their protected deposits; and

(b) shall in any event secure that, before the end of the relevant period, it is in a position to make those payments as soon as they fall to be made.

(2) Subsection (1) above applies to an institution which—

(a) is a UK institution or participating institution;

(b) is a former UK institution or a former participating institution; or

(c) is a former authorised institution (not being a recognised bank or licensed institution excluded by an order under section 23(2) of the Banking Act 1979);

and if at any time such an institution ceases to be insolvent, subsection (1) above shall cease to apply in relation to that institution.

(2A) In subsection (1) above ‘the relevant period’ means—

(a) the period of three months beginning with the time when the institution becomes insolvent; or

(b) that period and such additional period or periods, being not more than three and of not more than three months each, as the Bank may in exceptional circumstances allow.

(2B) A person claiming to be entitled to a payment under subsection (1) above in respect of a protected deposit with a participating institution shall make his claim in such form, with such evidence proving it, and within such period, as the Board directs.

(2C) The amount of any payment which falls to be made under subsection (1) above in respect of a protected deposit made with an office of a UK institution in another EEA State shall not exceed such amount as the Board may determine is or would be payable, in respect of an equivalent deposit made with an institution authorised in that State, under any corresponding scheme for the protection of depositors or investors which is in force in that State.

(2D) Where, in the case of a participating EEA institution, the Board is satisfied that a depositor has received or is entitled to receive a payment in respect of his protected deposit under any home State scheme, the Board shall deduct an amount equal to that payment from the payment that would otherwise be made to the depositor under subsection (1) above.”

(2) In subsection (3) of that section—

(a) for the words from “Where” to “depositor” there shall be substituted the words “Where, in the case of a UK institution or participating non-EEA institution, the Board is satisfied that a depositor has received or will receive a payment”; and

(b) the words “or (2)” shall be omitted.

(3) In subsection (5) of that section, the words “or (2)” shall be omitted.

(4) For subsection (6) of that section there shall be substituted the following subsection—

“(6) There shall be deducted from any payment to be made by the Board under subsection (1) above in respect of a deposit any payment already made in respect of that deposit by a liquidator or administrator of the institution; and in this subsection, in relation to an institution formed under the law of a country or territory outside the United Kingdom, the reference to a liquidator or administrator includes a reference to a person whose functions appear to the Board to correspond as nearly as may be to those of a liquidator or administrator.”

(5) In subsection (7) of that section—

(a) for the words “subsections (1), (2) and (6)” there shall be substituted the words “subsection (1)”; and

(b) for the words “those subsections” there shall be substituted the words “that subsection”.

(6) In subsection (8) of that section—

(a) in paragraph (a), after the word “document” there shall be inserted the words “required to be sent to a creditor of the institution under Part II of the Insolvency Act 1986 or under Part III of the Insolvency (Northern Ireland) Order 1989, or”;

(b) in paragraph (b)(ii), for the words “section 301” there shall be substituted the words “section 26 or 301”; and

(c) in paragraph (b)(v), for the words “Article 274” there shall be substituted the words “Article 38 or 274”.

(7) For subsection (10) of that section there shall be substituted the following subsection—

“(10) References in this section and sections 59 and 60 below to a former authorised institution include references to an institution which—

(a) was formerly a European authorised institution which accepted deposits in the United Kingdom; and

(b) continues to have a liability in respect of any deposit for which it had a liability when it was such an institution;

and references in section 60 below to ceasing to be an authorised institution include references to ceasing to be a European authorised institution which accepted deposits in the United Kingdom.”

(1)

1987 c. 22; section 58 was amended by the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405) (N.I. 19), article 381(2) and Schedule 9, Part II, paragraph 50 and by the Banking Coordination (Second Council Directive) Regulations 1992 (S.I. 1992/3218), regulation 47 and Schedule 8, paragraph 15.