The States Assembly has approved the principle that a Depositor Compensation Scheme (DCS) will be brought into law in Jersey.
The House voted unanimously for the principle of a permanent, standalone DCS that will be activated in the unlikely event that a Jersey-registered bank failed. The aim of the scheme is to provide depositors with compensation quickly, minimising hardship by enabling depositors to carry on with their everyday economic activities.
It will provide full protection for private individuals up to a maximum of £50,000 per person, per Jersey banking group, whether or not the depositor is resident in Jersey.
The details of the legislation will now be scrutinised, and will be brought back to the House later this year for a full debate.
The key features of the proposed DCS are that:
- It will provide compensation of up to £50,000 per person, per Jersey-licensed banking group, wherever they live
- It will deliver protection to individuals holding joint accounts, the £50,000 limit will apply per person, so a £100,000 deposit held by two people would be completely covered.
- It will be operated by a board that will be independent from Ministers, the States of Jersey and the Jersey Financial Services Commission.
The scheme was drawn up after the findings of independent consultants Oxera’s economic analysis of all the options for depositor protection in Jersey specifically tailored to Jersey’s banking industry.
The Minister for Economic Development, Senator Alan Maclean, has welcomed the States decision to approve the scheme in principle: “We still maintain that the best protection for depositors lies in the strength of Jersey's banks, all of which are in the top 500 banking groups in the world. While the political guarantee for islanders remains in force for the time being, we realise how important it is to provide depositors with the extra reassurance of a statutory scheme.
“I am pleased the House has approved the scheme in principle, and am confident that when it comes into force, the scheme will provide an appropriate level of protection for depositors, which is in line with current international practice.”
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