The Depositor Compensation Scheme (Amendment) Regulations (the “DCS Regulations”), which set out the terms of the rescue fund for depositors of failed credit institutions licensed by the Malta Financial Services Authority (MFSA), have recently been amended by Parliament through Legal Notice 43/2019.
The main changes brought about are:
- One of the amendments relates to the scope of the same DCS Regulations wherein electronic money and funds received in exchange for electronic money were added to the list of non-eligible deposits.
- The new DCS Regulations, add inter alia the following provisos under such general rule, which state that:
- if the available financial means have been reduced to a level which is more than 2/3s of such target level, the regular contribution shall be set at a level, allowing such target level to be reached within four years;
- subject to other provisions of the DCS Regulations, where the available financial means of the Scheme have been reduced on account of the Scheme having paid compensation to depositors, the Scheme may provide in its absolute discretion that the payment of contributions by members be provided in whole or in part to the Scheme by means of a payment commitment.
- The DCS Regulations also amend the section relating to the compensation contribution. The legislative change is mainly a clarification with respect to regulation 10 which regulation namely states that any payment commitment shall become payable to the scheme on the scheme’s demand. Regulation 10 further states that the payment commitment of a member shall also become payable to the scheme whenever that member ceases to be licensed in Malta for any reason whatsoever. The DCS Regulations now also affirm that when a member ceases to be licensed on account of a merger with or acquisition by another member, the Scheme may, at its discretion, either:
- demand payment of the payment commitment; or
- require that the payment commitment is transferred to the other member which has acquired the member who has ceased to be licensed in Malta or with which the latter member has merged.