Published on 20 May 2015
Depositor and dormant account protection – further amendments - PS9/15
This policy statement (PS) provides feedback to responses to CP15/15 ‘Depositor and dormant account protection – further amendments’. It sets out final rules intended to reduce the adverse effects the failure of firms could be expected to have on the stability of the UK financial system and enhance depositor confidence and therefore advance the PRA’s general objective of promoting the safety and soundness of firms.
This PS follows PS6/15 ‘Depositor and dormant account protection’ which included depositor protection and dormant account scheme rules, supervisory statement SS18/15 ‘Depositor protection’, and statements of policy. Amendments to the Depositor Protection and Dormant Account Scheme rules and an updated version of SS18/15 are published alongside this policy statement, reflecting the amendments consulted upon in CP15/15.
The policy statement is relevant to:
- UK banks, building societies and credit unions, as well as to overseas firms with a deposit-taking permission, UK branches of European Economic Area (EEA) credit institutions;
- the Financial Services Compensation Scheme, as the UK’s Deposit Guarantee Scheme (DGS);
- depositors, as beneficiaries of deposit protection;
- dormant account fund holders; and
- dormant account fund operators.
Summary of content
The appendices to the PS set out:
- amendments to the Depositor Protection Part and Dormant Account Scheme Part of the PRA Rulebook; and
- an updated version of supervisory statement SS18/15 setting out the PRA’s expectations in respect of Depositor Protection Part and the Dormant Account Scheme Part of the PRA Rulebook.
Firms should note that in response to queries to the Depositor Protection rules published in PS6/15 ‘Depositor and dormant account protection’ in April 2015, the PRA will undertake a further short consultation in H1 2015 of limited scope, focussing on clarifications and administrative amendments.
Published on 1 April 2015
Depositor and dormant account protection - further amendments - CP15/15
This consultation paper (CP) sets out proposals for new rules in the Prudential Regulation Authority (PRA) Rulebook that arise as a result of rules proposed in CP20/14 Depositor protection and CP4/15 Depositor, dormant account and policyholder protection - amendments published in October 2014 and January 2015 respectively. Feedback to responses received to CP20/14 and CP4/15 is set out in PS6/15. PS6/15 includes final depositor protection and dormant account scheme rules, a supervisory statement, and statements of policy.
The package of measures across the PRA’s consultations supports the orderly resolution of deposit-takers and the effective compensation or continuity of access to Financial Services Compensation Scheme (FSCS) covered deposits to depositors.
The consultation is relevant to:
- UK banks, building societies and credit unions as well as to overseas firms with PRA deposit-taking permission and UK branches of European Economic Area (EEA) credit institutions;
- the FSCS, as the administrator of the UK’s Deposit Guarantee Scheme (DGS) and Dormant Account Scheme (DAS);
- depositors; and
- dormant account fund operators.
This CP proposes:
- extending deposit protection to deposits held by local authorities with an annual budget of up to €500,000;
- a definition of public authority;
- a new requirement for firms to inform depositors of deposits, categories of deposit and instruments no longer covered by a DGS from 3 July 2015 (eg certain certificates of deposit);
- extending continuity of access rules in relation of overdrawn accounts; and
- a new requirement on deposit-takers to provide the FSCS (at their or the PRA’s request) with information held on dormant accounts that have been transferred to a dormant account fund operator and which is necessary to enable the FSCS to prepare for the payment of compensation.
The PRA has also set out additional draft expectations to support the above proposals which, subject to feedback, it intends to issue in a supervisory statement.
The consultation closed on Friday 1 May 2015.