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Welcome to the website of the Depositor Compensation Scheme and Investor Compensation Scheme in Malta
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New Regulations on depositor compensation in force

On 7 August 2009, LN227 of 2009 [Depositor Compensation Scheme (Amendment) Regulations 2009] was published, amending LN369 of 2003 (the Depositor Compensation Scheme Regulations). The consolidated version of the Legal Notice is available here.

Besides transposing Directive 2009/14/EC of 11 March 2009 amending Directive 94/19/EC on deposit-guarantee schemes, the Regulations improve the funding measures of the Scheme.

The following summarises key aspects of the amendment Regulations.

1. Depositor compensation
    Deposits are covered up to €100,000 and depositors will no longer have to bear the initial 10% of their losses.

2. Shortened pay-out period
    The payout period is reduced from three months to 20 working days that are reckoned from the date when the competent authorities determine that a credit institution is unable to repay its deposit liabilities – with a possible extension of 10 working days in exceptional circumstances.

3. Stress testing
    The scheme is required to perform regular stress testing of its ability to compensate depositors. The Regulations also provide that credit institutions must ensure that they have electronic information systems in place to enable the scheme to process claims for compensation by depositors.

4. Availability of information and advertising
    Credit institutions are required to be more transparent with regard to the information that they are obliged to provide to current or prospective depositors in connection with the scheme.  The information on the scheme contained in advertising by participants will be subject to certain restrictions in order to prevent adverse repercussions on the stability of the banking system or on depositor confidence.

5. Funding
    The regulations aim to gradually build up the Scheme’s available funding through a mix of pre and post funding mechanisms.
 

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General information about the depositor and investor compensation schemes

The Investor Compensation Scheme is a rescue fund for customers of failed investment firms which are licensed by the Malta Financial Services Authority (MFSA). We can only pay compensation if a licensed investment firm is unable or likely to be unable to pay claims against it. In general this is when the licensed firm stops trading or becomes insolvent. The Scheme is based on the EU Directive 97/9 on investor-compensation schemes.

The Depositor Compensation Scheme is a rescue fund for depositors of failed banks which are licensed by the Malta Financial Services Authority (MFSA). We can only pay compensation if a bank is unable to meet its obligations towards depositors or has otherwise suspended payment. The Scheme is based on the EU Directive 94/19 on deposit-guarantee schemes.

Each scheme is a separate and distinct entity from the other. However, both schemes are managed by a single Management Committee which is appointed by the MFSA. This Committee is made up of persons representing the MFSA, the Central Bank of Malta, investment firms, the banks and customers.

Each Scheme is intended to promote confidence not only in licensed institutions, but more importantly, in the financial system as a whole. The two schemes are in fact financed by the banks and investment firms respectively. This means that the consumer will not be asked to contribute to these schemes.

These two schemes have been introduced as an additional layer of security within a regulatory and legal framework that is already sound and are not being implemented for any particular situation that has arisen in practice.

This website provides information on both the Depositor Compensation Scheme and the Investor Compensation Scheme. If you have a query and you have not found its answer on this site, please use our Feedback Form.
 

Updated: 14 August 2009