What is the maximum amount protected by the Depositors Compensation Scheme (DCS)?
Depositors are protected up to a maximum of £50,000 per depositor per Jersey banking group. The overall amount of compensation that the DCS can pay out will be limited to £100 million in each 5 year period.
Which deposits / depositors are protected?
Deposits held by private individuals (ie retail deposits) and charities with Jersey banks are protected. Depositor protection does not extend to corporations, SMEs, partnerships or trusts. In keeping with international standards, protection extends to deposits held by residents and non-residents and deposits in foreign currencies would also be protected. Deposits must be placed in an account in Jersey with banks regulated by the Jersey Financial Services Commission.
Banks covered by the Depositors Compensation Scheme
How will joint accounts be treated?
The compensation limit of up to £50,000 applies to each depositor for the total of their deposits with a Jersey bank, regardless of how many accounts they hold or whether they are a single or joint account holder. Therefore, for a joint account in the name of 2 account holders, the limit would be up to £100,000. The DCS would assume that the money in a joint account was split equally between the named account holders, unless evidence showed otherwise.
Will deposits with Community Savings & Credit Limited be protected?
As a credit union, Community Savings & Credit takes members’ savings and deposits these with banks in Jersey. Should one of these banks fail, Community Savings & Credit will be able to claim up to a maximum of £50,000 from the DCS for each of its members.
If I had more than £50,000 in an account, does that mean I would lose money?
A depositor who has more than £50,000 with a failed bank would receive compensation from the DCS only up to the limit (ie £50,000). However, depositors with deposits above the limit may also receive a proportion of any higher balance from the liquidation of the failed bank. Depositors would have to wait until the liquidator had completed the liquidation to find out how much, if anything, they might receive in addition to the compensation paid by the DCS.
Why is there a limit on the amount of compensation that can be claimed?
The limit matches the protection offered in Guernsey and the Isle of Man. It would provide protection for a significant proportion of depositors in Jersey, targeting protection in particular to the accounts of depositors that may face particular hardship in the event of loss. The limit will be reviewed should international standards change.
What would happen if I owed money to a bank that failed?
Amounts owed to the failed bank (eg loans, mortgages, overdrafts or credit card debts) would not be taken into account before any compensation was paid, so the amount you could claim from the DCS would not be affected by the fact that you owed money to the same bank. However, any such debts owed by depositors to the bank would not be extinguished and you would still owe money to the bank.
How would I claim compensation?
To claim compensation you would need to apply to the DCS and provide proof of your deposit with the failed bank, which the DCS would then verify against the bank’s books and records. Clear, accurate records of deposits and transactions may help to speed up any payment of compensation. Should a bank fail, the DCS would ensure that application forms and instructions on how to make a claim were easily available.
How long would it take to process my claim?
If a bank were to fail, the States would provide upfront funding to the DCS to make sure that it could pay out up to the first £5,000 of each claim within 7 working days. The regulations require the balance of all claims to be paid within 3 months.
I have already lost money in a failed bank, will I benefit from the DCS?
The DCS is not retrospective and only applies to banks regulated by the Jersey Financial Services Commission. None of the high-profile bank failures such as Kaupthing and Landsbanki fell into this category, and so depositors who have lost money with these banks will not benefit under the DCS.
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