Banking Business (Depositors Compensation) (Amendment and Miscellaneous Provision) (Jersey) Regulations 2012

Arrangement

Regulation

1                 Interpretation. 3

2                 Amendment of Regulation 1. 3

3                 Amendment of Regulation 6. 4

4                 Amendment of Regulation 7. 4

5                 Amendment of Regulation 8. 4

6                 Insertion of Regulation 8A.. 4

7                 Amendment of Regulation 10. 5

8                 Amendment of Regulation 12. 5

9                 Amendment of Regulation 13. 6

10              Amendment of Regulation 14. 6

11              Amendment of Regulation 16. 6

12              Amendment of Regulation 17. 6

13              Substitution of Regulation 25 and cross-heading. 7

14              Amendment of Regulation 26. 10

15              Amendment of Regulation 27. 10

16              Amendment of Regulation 28. 10

17              Amendment of Regulation 29. 10

18              Amendment of Regulation 30. 11

19              Amendment of Regulation 31. 11

20              Substitution of Regulation 32. 11

21              Amendment of Regulation 33. 11

22              Amendment of Regulation 35. 12

23              Amendment of Public Finances (Depositors Compensation) (Jersey) Regulations 2009  12

24              Citation and commencement 12

 

 


Banking Business (Depositors Compensation) (Amendment and Miscellaneous Provision) (Jersey) Regulations 2012

Made                                                                   25th September 2012

Coming into force                            in accordance with Regulation 24

THE STATES, in pursuance of Article 37 of the Banking Business (Jersey) Law 1991[1] and Article 23 of the Public Finances (Jersey) Law 2005[2], have made the following Regulations –

1        Interpretation

In these Regulations “principal Regulations” means the Banking Business (Depositors Compensation) (Jersey) Regulations 2009[3].

2        Amendment of Regulation 1

In Regulation 1 of the principal Regulations –

(a)     the definition “administrative costs” is deleted;

(b)     after the definition “administrator” there is inserted the following definition –

“ ‘annual administration levy’ has the meaning given by Regulation 25 and includes any additional levy a bank is required to pay under Regulation 25B(5) in relation to such a levy;”;

(c)     the definition “bank liable to pay a levy” is deleted;

(d)     after the definition “compensation” there are inserted the following definitions –

“ ‘compensation fund’ means a fund established under Regulation 17;

‘compensation levy’ means a levy that a bank is liable to pay under Regulation 25A and includes any additional levy the bank is required to pay under Regulation 25B(5) in relation to such a levy;

‘default-related administrative costs’ has the meaning given by Regulation 17(4);”;

(e)     the definition “levy” is deleted and in its place there is inserted the following definition –

“ ‘recurring administrative costs’ means any costs of the Board that are neither compensation nor default-related administrative costs, but does not include any repayment under Regulation 32(2) or payment under Regulation 33(3);”.

3        Amendment of Regulation 6

In Regulation 6 of the principal Regulations –

(a)     in paragraphs (1) and (3), for the words “the levy and compensation” there are substituted the words “the annual administration levy, the compensation levy and the compensation”;

(b)     in paragraph (4), for the words “the levy” there are substituted the words “the compensation levy”.

4        Amendment of Regulation 7

In Regulation 7(2) of the principal Regulations, for the words “a levy” there are substituted the words “a compensation levy”.

5        Amendment of Regulation 8

In Regulation 8(1) of the principal Regulations the words “, to administer the bank depositors compensation scheme” are deleted.

6        Insertion of Regulation 8A

After Regulation 8 there is inserted the following Regulation –

“8A   Functions of the Board

(1)     The functions of the Board are –

(a)     generally to administer the bank depositors compensation scheme, including in particular –

(i)      establishing and maintaining arrangements in readiness for the possibility of a default, and

(ii)      administering compensation for any default; and

(b)     to arrange for the publication of information for the public on the operation of the scheme.

(2)     In the exercise of its functions the Board must ensure that –

(a)     the Board and the scheme are administered in a prudent and economical manner; and

(b)     the resources of the Board are used efficiently and effectively.

(3)     The Board may do anything reasonably necessary or expedient for or incidental to any of its functions, and may in particular, in the exercise of those functions –

(a)     borrow money, whether for a compensation fund or for any of its other functions;

(b)     invest money, whether standing to the credit of a compensation fund or otherwise;

(c)     insure against its liabilities, whether in connection with the administration of a compensation fund or with any of its other functions;

(d)     insure against such liabilities of its members, or indemnify its members in respect of those liabilities;

(e)     appoint an employee, agent or contractor to assist it in exercising any of its functions.

(4)     The functions of the Board must be carried out by the Minister, and not by the Board, until such time as the Minister may determine by notice in writing to the Board that it should assume its functions.

(5)     The Minister may determine different times in relation to the assumption of different functions, and in particular may determine a time for the Board to assume the power to raise an annual administration levy even if that time is before any time determined in respect of any or all other functions.

(6)     Despite paragraphs (4) and (5), no annual administration levy may be raised –

(a)     by the Minister; or

(b)     by the Board in respect of any recurring administrative costs incurred by the Minister in carrying out under paragraph (4) any function of the Board.

(7)     The references in paragraphs (5) and (6) to raising an annual administration levy are to sending a notice under Regulation 25B(2)(b) in respect of such a levy.”.

7        Amendment of Regulation 10

In Regulation 10 of the principal Regulations, paragraphs (6) and (7) are deleted.

8        Amendment of Regulation 12

In Regulation 12 of the principal Regulations, paragraph (6) is deleted.

9        Amendment of Regulation 13

For Regulation 13(1)(e) of the principal Regulations, there is substituted the following sub-paragraph –

“(e)    a person appointed under Regulation 8A(3)(e); and”.

10      Amendment of Regulation 14

After Regulation 14(2) of the principal Regulations there is inserted the following paragraph –

“(2A) The Board’s accounts must deal with each compensation fund separately –

(a)     from any other compensation fund in respect of another bank in default; and

(b)     from any other money received, held or expended by the Board.”.

11      Amendment of Regulation 16

In Regulation 16 of the principal Regulations –

(a)     in the heading for the words “establish administrative arrangements” there are substituted the words “take preliminary steps in respect of default”;

(b)     in paragraph (3) for the words “the likely levy” there are substituted the words “the likely compensation levy”;

(c)     in paragraph (6) for the words “make such other arrangements as are necessary” there are substituted the words “make or activate such further arrangements as it considers expedient”.

12      Amendment of Regulation 17

In Regulation 17 of the principal Regulations –

(a)     in the heading for the words “a fund” there are substituted the words “a compensation fund”;

(b)     in paragraph (1) for the words “a fund in respect of a bank” there are substituted the words “a separate compensation fund in respect of each bank”;

(c)     in paragraph (2) after the words “in respect of the default” there are inserted the words “, whether by way of loan, compensation levy, shortfall payment under Regulation 30(6), subrogation under Regulation 33 or otherwise”;

(d)     for paragraph (3)(b) and (c) there are substituted the following sub-paragraphs –

“(b)    the Board’s default-related administrative costs in respect of that default;

(c)     any repayment under Regulation 32(2), or payment under Regulation 33(3), in respect of that default.”;

(e)     for paragraph (4) there are substituted the following paragraphs –

“(4)    In these Regulations ‘default-related administrative cost’ means any money paid out by the Board, other than as compensation, if the payment is, in the opinion of the Board, attributable to the operation of the scheme in relation to a particular bank in default, including –

(a)     repayments of borrowings paid into the compensation fund, and associated interest and costs;

(b)     repayment of any excess under Regulation 32 in respect of the bank in default;

(c)     costs of and related to insurance against the Board’s liabilities in respect of the compensation fund or the bank in default;

(d)     any expenses of the members of the Board that would not have been incurred but for the default; and

(e)     any increase, attributable to a default, in the amount of a payment that would have been made at a lower rate but for the default.

(5)     For the purpose of paragraph (4) but without prejudice to its generality, the following are not to be treated as attributable to the operation of the scheme in relation to a particular bank in default (and accordingly are recurring administrative costs) –

(a)     the remuneration of members of the Board, and any of their expenses not falling within paragraph (4)(d); and

(b)     the costs of insuring those members against risks that do not vary according to whether a bank is or has been in default.”.

13      Substitution of Regulation 25 and cross-heading

For Regulation 25 of the principal Regulations, and for the cross-heading before it, there are substituted the following cross-heading and Regulations –

“Levies on banks

25      Annual administration levy

(1)     An annual administration levy is a levy raised by the Board to enable it to meet its recurring administrative costs in a particular registration year.

(2)     The provisions of these Regulations on annual administration levies accordingly apply to any registration year irrespective of whether any bank becomes bankrupt in that year.

(3)     Before the end of each registration year the Board may, after reviewing whether it might need to raise an annual administration levy to meet its likely recurring administrative costs for that year, decide an amount to be raised as an annual administration levy for that year.

(4)     A bank is liable to pay to the Board an annual administration levy in respect of a year if –

(a)     that year is a registration year for which the Board decides to raise a levy under paragraph (3); and

(b)     the bank is registered during any part of that year, irrespective of whether it is not registered during any other part of that year.

(5)     The Minister may, by notice to the Board, direct the Board not to raise more than a specified amount of annual administration levy for a specified registration year.

(6)     An amount specified under paragraph (5) applies to registration years subsequent to the specified year, unless the Minister withdraws or amends the notice.

(7)     For the purpose of this Regulation –

‘registered’ means registered as described in the definition ‘bank’ in Regulation 1;

‘registration year’ means –

(a)     the period (whether of one year or shorter) starting at the first time determined by the Minister under Regulation 8A(4) and ending on the next day on which registrations under the Banking Business (Jersey) Law 1991[4] expire by virtue of Article 9(2) of that Law; and

(b)     each subsequent period of 12 months ending on each day on which such registrations so expire.

25A   Compensation levy

(1)     This Regulation applies if a bank becomes bankrupt.

(2)     A bank that is not in default is liable to pay a compensation levy, in respect of the bank that is in default, if –

(a)     the Board publishes under Regulation 15 a notice specifying the relevant date in respect of the bank in default; and

(b)     the bank that is not in default held eligible deposits on that relevant date.

(3)     This Regulation is without prejudice to Regulation 7(2).

25B   Notice of levies

(1)     This Regulation applies to both annual administration levies and compensation levies, except as expressly otherwise provided.

(2)     The Board –

(a)     must calculate the levy to be paid by each bank liable to pay a levy; and

(b)     must, as soon as practicable and no later than the date specified in paragraph (3), send a written notice to each such bank, requiring it to pay the levy.

(3)     The date referred to in paragraph (2)(b) is –

(a)     in the case of an annual administration levy, one month after the Board decides to raise the levy, or the end of the registration year (as defined in Regulation 25) for that levy, whichever is sooner; or

(b)     in the case of a compensation levy, 6 months after the relevant date in respect of the bank in default.

(4)     The notice must specify –

(a)     the levy the bank is required to pay;

(b)     how the levy has been calculated; and

(c)     the date or dates on which the levy or any instalment of the levy becomes payable.

(5)     If, at any time, the Board is satisfied that it has become necessary to do so, it may, by written notice sent to each bank required to pay the levy, require each such bank to pay an additional levy.

(6)     The notice must specify –

(a)     the additional levy the bank is required to pay;

(b)     how the additional levy has been calculated; and

(c)     the date or dates on which the additional levy or any instalment of the levy becomes payable.

(7)     A bank to which a notice has been sent under this Regulation must pay the levy or any instalment of the levy within 15 working days of the date specified in the notice as the date when the amount of the levy or any instalment of the amount becomes payable.

(8)     A levy that has become payable is a debt due to the Board and therefore can be sued for accordingly.

25C   Amount of annual administration levy

(1)     To calculate the amount of annual administration levy to be paid by each bank liable to pay such a levy in a registration year, the Board must divide the amount decided under Regulation 25(3) by the number of banks so liable.

(2)     If the Board has accepted a payment from a bank towards the Board’s recurring administrative costs, other than as an annual administration levy, the Board must –

(a)     disregard the contribution in deciding the amount under Regulation 25(3), and give credit for the contribution against the amount calculated under paragraph (1) in respect of that bank; or

(b)     adjust the amounts calculated under paragraph (1) in respect of different banks in such other manner as the Board considers to be equitable in all the circumstances.”.

14      Amendment of Regulation 26

In Regulation 26 of the principal Regulations –

(a)     in the heading for the word “levies” there are substituted the words “compensation levies”;

(b)     for the words “the levies to be paid by the banks liable to pay a levy” there are substituted the words “the compensation levies to be paid by the banks liable to pay such a levy”;

(c)     in sub-paragraph (b) for the words “administrative costs” there are substituted the words “default-related administrative costs in that respect”.

15      Amendment of Regulation 27

In Regulation 27 of the principal Regulations –

(a)     for the word “levy”, in each place where it occurs, including in the heading, there are substituted the words “compensation levy”;

(b)     for the words “on that relevant date by way of eligible deposits” there are substituted the words “on that relevant date by way of such deposits”.

16      Amendment of Regulation 28

In Regulation 28 of the principal Regulations –

(a)     at the end of the heading there are added the following words “in relation to a default”;

(b)     in paragraph (1)(b) for the words “administrative costs” there are substituted the words “default-related administrative costs”.

17      Amendment of Regulation 29

In Regulation 29 of the principal Regulations –

(a)     in the heading and paragraph (1) for the word “levy” there are substituted the words “compensation levy”;

(b)     in paragraph (2) for the words “The maximum amount the Board may require a bank to pay by way of levy” there are substituted the words “The maximum amount for which a bank may be liable by way of compensation levy”;

(c)     in paragraph (3) for the words “The Board may not require a bank to pay by way of levy an amount exceeding” there are substituted the words “The maximum amount for which a bank may be liable by way of compensation levy in respect of one or more banks in default is”;

(d)     in paragraphs (4) and (5) for the word “levy” there are substituted the words “compensation levy”.

18      Amendment of Regulation 30

In Regulation 30 of the principal Regulations –

(a)     in paragraphs (1) and (3)(a), for the words “pay a levy are liable to pay by way of levy” there are substituted the words “pay a compensation levy are liable to pay by way of compensation levy”;

(b)     in paragraph (3)(b), for the words “administrative costs” there are substituted the words “default-related administrative costs”;

(c)     in paragraph (4)(a), for the words “Regulation 25(2)(b)” there are substituted the words “Regulation 25B(2)(b)”.

19      Amendment of Regulation 31

In Regulation 31 of the principal Regulations –

(a)     in paragraph (1) for the words “administrative costs” there are substituted the words “default-related administrative costs in that respect”;

(b)     in paragraph (2) for the words “pay the levy” there are substituted the words “pay a compensation levy”.

20      Substitution of Regulation 32

For Regulation 32 of the principal Regulations there is substituted the following Regulation –

“32    Repayment of overpaid compensation levy

(1)     This Regulation applies if, during or after a period of 5 years in relation to a default, the Board has in the compensation fund for that default more money than it requires to pay compensation and to meet its default-related administrative costs in relation to that default.

(2)     The Board must apply the excess firstly to repay any shortfall paid to the Board out of the consolidated fund under Regulation 30 in respect of the default and secondly to pay any remaining amount to the banks that paid a compensation levy to the Board in that respect in proportion to the amount of levy paid by each bank.”.

21      Amendment of Regulation 33

At the end of Regulation 33 of the principal Regulations there is added the following paragraph –

“(4)    The Board must pay any amount paid to it under paragraph (2)(a) or (c) into the compensation fund in respect of the bank in default to which the compensation relates.”.

22      Amendment of Regulation 35

In Regulation 35 of the principal Regulations –

(a)     in paragraph (2) for the words “requiring the bank to pay a levy” there are substituted the words “requiring the bank to pay an annual administration levy or a compensation levy”;

(b)     in paragraph (3) for the words “under Regulation 25” there are substituted the words “under Regulation 25B”;

(c)     after paragraph (6) there is added the following paragraph –

“(7)    A reference in this Regulation to miscalculation includes miscalculation by virtue of a decision, that is unreasonable having regard to all the circumstances of the case, to treat any costs as recurring administrative costs or as default-related administrative costs.”.

23      Amendment of Public Finances (Depositors Compensation) (Jersey) Regulations 2009

(1)     In Regulation 2(3) of the Public Finances (Depositors Compensation) (Jersey) Regulations 2009[5] for the words “to bridge a shortfall in the amount available to the Board to compensate creditors where that shortfall arises by virtue of the operation of Regulation 30(3) of the BBDC Regulations” there are substituted the words “to enable the Board to meet a temporary cash flow requirement of a compensation fund under the BBDC Regulations, whether that requirement arises from the operation of Regulation 29(3) of those Regulations or from any other cause”.

(2)     This Regulation comes into force on the coming into force of Regulation 2(3) of the Public Finances (Depositors Compensation) (Jersey) Regulations 2009[6].

24      Citation and commencement

These Regulations may be cited as the Banking Business (Depositors Compensation) (Amendment and Miscellaneous Provision) (Jersey) Regulations 2012 and, apart from Regulation 23, come into force 7 days after they are made.

a.h. harris

Deputy Greffier of the States

 


 



[1]                                    chapter 13.075

[2]                                    chapter 24.900

[3]                                    chapter 13.075.30

[4]                                    chapter 13.075

[5]                                    R&O.112/2009

[6]                                    R&O.112/2009


Page Last Updated: 27 Apr 2016