Plans for more powers for Bank Depositors Compensation Board

Friday 16 August 2019

The Minister for External Relations has put forward proposals to give an independent board tasked with running a compensation scheme for depositors more power to obtain information from banks.

If accepted by the States Assembly, the new regulations will mean that those who fail to comply with their obligations to provide information, provide false information when applying for compensation or do not inform the Board of any events likely to reduce their compensation will be committing an offence.

Anyone not refunding the board after receiving other payments in compensation for their deposits or businesses which do not comply with requirements from the Board, or prevent an officer from entering their premises, would also be committing an offence and would therefore face fines and/or prison terms. 

The Bank Depositor Compensation Scheme was launched in 2009 to protect bank deposits in the event of bank failure.

The scheme is governed by the independent Jersey Bank Depositors Compensation Board, which currently does not have the power to ask banks for information on the deposits they hold or the people who have made them. 

 “The Scheme therefore has restricted knowledge of the make-up of the Jersey-based bank deposits that the Scheme exists to protect,” the Minister for External Relations, Senator Ian Gorst, wrote in a report outlining his proposals.

This “restricted knowledge”, the Minister warned, would lead to a “lengthy manual process” if the scheme ever has to come into action, causing a delay in returning the money to depositors.

Pictured: The External Relations Minister, Senator Ian Gorst, has put forward the proposals.

Senator Gorst is therefore proposing to give the Board powers to collect information about deposits held by local banks in a set format that will allow the Board to access the information any banks holds automatically, making it easier for it to compensate clients.

The amendments also give the Board powers to demand relevant information from various persons, as well as a new power to demand information from banks, at any time and in a specified format, about their total holdings of eligible deposits.

The Board will also be able to serve notice to banks to provide information or documents, to attend a meeting to answer questions or to provide verifications and to enter the premises of whichever bank it has issued a notice to.