Views wanted on proposed savings protection scheme modernisation
- Published
Proposed changes are set to modernise the scheme, which protects Isle of Man savings
Companies, trusts and charities could receive greater protection for their savings if a bank on the Isle of Man collapses under new proposals.
The Manx depositors' compensation scheme (DCS) currently pays out up to £20,000 but that could rise to £50,000.
A consultation has been launched by the Financial Services Authority (FSA) to gather views on the modernisation of the scheme.
The FSA said the proposed updates would "safeguard" the island's reputation.
The authority has been working with the Treasury and the banking industry on a review, which could see compensation for companies, trusts and charities match the current level for individuals and sole traders.
While the FSA acknowledged the proposed greater compensation limits would increase the burden on participant banks, it would provide "consistent levels of cover across all areas".
The consultation notes views had been "divided equally" over the proposed increase, but some have suggested it may make banks more commercially attractive.
Customer deposits held by banks in the UK are protected up to £85,000.
Significant change
A system to gather data about depositors' bank account balances to allow for same-day calculations, which would be facilitated by a third party following the introduction of legislation, could also be introduced.
A single customer view (SCV) process, which is in place in Jersey and Guernsey, would allow for "smoother and faster pay-outs", the FSA said.
The proposed revised framework would also see pay-outs to customers made within seven to 14 days, to meet international standards.
Paul McAuley from the FSA said: "While bank failures are rare, the international banking environment has changed significantly over the last 12 months.
"Closely aligning our DCS with international standards will help to safeguard the island's reputation as a well-regulated and responsible jurisdiction".
Written feedback can be emailed to the FSA until 21 January 2024.
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