People and businesses in Jersey are being asked for their views on issues relating to depositor protection, including aspects of the recently introduced Depositor Compensation Scheme (DCS).
A consultation paper has been prepared to give interested parties the opportunity to contribute their views on the proposed changes. Issues include the funding of the recurring administration costs of the DCS and whether depositors’ claims should have priority over the claims of other creditors in a bank insolvency.
In line with the commitment given by the Minister in November 2009, the paper proposes that Economic Development Department funding of the administration costs of the DCS should cease after December 2010. It is proposed that the independent board administering the DCS should be provided with an additional power to levy Jersey banks for its recurring administration costs.
Currently, in the unlikely event of a Jersey bank failing, depositors would be paid on an equal footing with all the other unsecured creditors of the failed bank. The consultation paper proposes that legislation could be introduced that ranks the claims of depositors in Jersey banks over the claims of other unsecured creditors.
Welcoming the consultation, Minister for Economic Development, Senator Alan Maclean, said: “The DCS gives people in Jersey protection for their deposits. We are now implementing the details. The effect of depositor priority depends on a wide variety of legal and economic factors. It is therefore important that the Department receives feedback from bank customers, the banking community in Jersey and people with knowledge of the potential effect on creditors of Jersey banks in order that a fully considered approach can be taken.”
The deadline for responses is Friday 2 July 2010. Copies of the consultation paper are available at: http://www.gov.je/