Guernsey’s government has announced the introduction of its new Banking Deposit Compensation Scheme, which will protect retail deposits with immediate effect. The Scheme was prepared rapidly in response to the Commerce and Employment Department's urgent call for such a measure.
According to government information the scheme covers all individual retail depositors, regardless of their domicile and will provide compensation of up to GBP50,000 per person per licensed bank, no matter how many accounts they have with that bank. The scheme will pay compensation within three months of a bank failure. The maximum amount of compensation is capped at GBP100m in any 5 year period.
Taxpayers will not be responsible for funding the scheme; instead the scheme will be funded by a combination of insurance, and a levy on the banking industry in the event of a bank failure. The scheme will be operated by an independent board which will be separate from both the Guernsey Financial Services Commission and the States of Guernsey.
The scheme was developed by a technical working group which included representatives of the Association of Guernsey Banks. Several of the proposals in the scheme are innovations specifically suited to Guernsey’s diverse banking industry.
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