Jersey’s Depositor Compensation Scheme

Draft regulations were published in June for the establishment of a depositor compensation scheme for accounts held in banks in Jersey. The draft Banking Business (Depositors Compensation) (Jersey) Regulations 200- and various supplemental regulations are expected to come into force this summer. The stated aim of the proposed scheme is to provide depositors with compensation quickly in the unlikely event of a bank failure and thus to minimise hardship by enabling depositors to carry on with their everyday economic activities.

The regulations provide for the establishment of a permanent, standalone scheme administered by an independent board. The scheme will be activated in the event that a Jersey bank becomes bankrupt. The overall liability of the scheme will be capped at £100 million over each five year period and will be funded by capped levies on the banks in Jersey that hold eligible deposits at the time that the bank in default became bankrupt. The States of