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Home > Prudential Regulation Authority > Deposit protection limit – CP41/16
 

Deposit protection limit – CP41/16

21 November 2016

Background

This consultation paper (CP) sets out the Prudential Regulation Authority’s (PRA’s) proposals to reset the deposit protection limit at £85,000.

This CP is relevant to:

  • UK banks, building societies, UK credit unions, as well as to overseas firms with PRA deposit-taking permission (hereinafter ‘firms’) ;
  • dormant account fund operators;
  • the Financial Services Compensation Scheme (FSCS), as the administrator of the UK’s Deposit Guarantee Scheme (DGS) and Dormant Account Scheme (DAS); and
  • depositors.

The purpose of the proposals in this CP is to provide depositors with PRA-authorised firms commensurate protection to depositors with firms authorised by regulators in other EU Member States, as required by the recast Deposit Guarantee Schemes Directive (DGSD) which requires the United Kingdom to adjust the deposit protection limit following the occurrence of unforeseen events such as currency fluctuations.

Under the proposals depositors will be protected up to £85,000 as of 30 January 2017.

Between 31 December 2010 and 3 July 2015, the deposit protection limit was set at £85,000. On 3 July 2015 the DGSD became effective, and as required by the Directive the PRA reviewed the exchange rate on that date and set the deposit protection limit at £75,000 (see PS14/15 ‘Depositor and dormant account protection – the protection limit’ under Related Links). On 1 January 2016, the £75,000 deposit protection limit became applicable for all eligible depositors. 

Summary of proposals

The PRA proposes to:

  • reset the deposit protection limit to protect depositors up to £85,000 as of 30 January 2017;
  • provide a 5 month transitional period for firms to implement the new deposit protection limit;
  • require firms to notify the PRA if they are ready to implement the rule changes prior to 30 June 2017; and
  • update SS18/15 ‘Depositor and dormant account protection’ with the PRA’s expectations in relation to the above rule changes, correct references and delete expired text in the SS.

The proposed amendments to the Depositor Protection Part of the PRA Rulebook are contained in Appendix 1 and the amendments to SS18/15 are contained in Appendix 2.
Responses and next steps

This consultation closed on Friday 16 December 2016. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP41_16@bankofengland.co.uk.

Consultation paper

Deposit protection limit – CP41/16

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