Fast Payout Mechanism for Malta Depositor Compensation Schemes

Dr Cristina Maria Scerri | Published on 30 Apr 2012

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The Maltese Depositor Compensation Scheme which is based on the EU Directive 94/19/EC on deposit-guarantee schemes is a rescue fund which pays compensation to depositors of licensed credit institutions which are unable to meet their obligations towards depositors or has otherwise suspended payment.

On the 30th March 2012, the Management Committee of the Depositor Compensation Schemes issued a consultation document to elicit comments up to the 15th May 2012 of all stakeholders on measures and systems which the Scheme intends to implement over the next months.

The Management Committee of the Depositor Compensation Scheme is planning to introduce a reform to create a framework for fast payout of compensation to eligible depositors in the event of a bank failure. The pivotal reform which is being proposed is the creation of an electronic process in order to allow deposit taking credit institutions to transmit customers’ information to the Scheme in an efficient and secure manner. The main underlying objective is to provide for the timely payout of compensation to eligible depositors in the event of the failure of a credit institution and the MFSA’s determination in this respect. The internal electronic system which is to be developed is envisaged to serve as a hub for the collection of data on every depositor of a failed credit institution by means of standardised reporting criteria. The information to be reported by a credit institution on its customers is to be called Single Customer View (SCV) information. Upon determination of a credit institution’s failure, the failed credit institution would be obliged to transmit the SCV data to the Scheme by uploading its SCV file/s into the Scheme’s electronic system within a maximum of three working days.   

The planned SCV system is foreseen to be part of a holistic project, which will incorporate other plans related to funding requirements, compensation payment methods and the provision of information to depositors.

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