John Perry (Sligo-Leitrim, Fine Gael)
Link to this: Individually | In context

Question 232: To ask the Minister for Finance the level of guaranteed deposit savings protection available to customers of licensed banks operating here; the extent of the protection afforded by such guaranteed schemes in the event that customers need to rely on the guarantee; the manner in which these guarantee schemes are funded and administered; and if he will make a statement on the matter. [36147/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The Deposit Protection Scheme is a system to compensate depositors in the event of the failure of a credit institution. The European Communities (Deposit Guarantee Schemes) Regulations, 1995, which came into effect on 1 July 1995, set out the terms and conditions governing deposit protection in Ireland. Responsibility for funding the Irish deposit protection scheme rests with participating credit institutions, which are authorised by the Central Bank & Financial Services Authority of Ireland. The system is administered by the Central Bank & Financial Services Authority of Ireland. Deposits with credit institutions authorised in another European Economic Area (EEA) country and operating in Ireland on a branch basis are covered under that country's system.

The level of contribution required from each credit institution is 0.2% of deposits held at all branches of the credit institution in the EEA (EU member-states, Norway, Iceland and Liechtenstein). A minimum contribution of €25,400 is required. Each contribution is maintained in a Deposit Protection Account at the Central Bank & Financial Services Authority of Ireland. The maximum amount payable to any depositor is 90% of the aggregate deposits held by that depositor subject to a maximum compensation payment of €20,000. Thus, a depositor with a deposit account totalling €5,000 would receive compensation of €4,500 while a depositor with deposits of €22,222 or more would receive the maximum compensation of €20,000.

The Central Bank & Financial Services Authority of Ireland (or liquidator, where one has been appointed) is expected to pay compensation to depositors within three months of a determination by the Central Bank & Financial Services Authority of Ireland that deposits are unavailable, or of a ruling by the court (subject to the terms and conditions set out in the Regulations).

John Perry (Sligo-Leitrim, Fine Gael)
Link to this: Individually | In context

Question 233: To ask the Minister for Finance if his attention has been drawn to the recent evidence provided to the Joint Committee on Finance and Public Service suggesting that members of credit unions have less protection in regards their savings in the absence of admittance to a State guaranteed savings guarantee scheme; his views on whether members of credit unions should be given access to the guarantee scheme currently operated by the financial regulator for savings held by licensed banks operating here; if his further attention has been drawn to the fact that such a development has occurred in England and Wales; and his views on whether it would be desirable here; and if he will make a statement on the matter. [36148/06]

John Perry (Sligo-Leitrim, Fine Gael)
Link to this: Individually | In context

Question 234: To ask the Minister for Finance his policy in relation to the provision of a State backed savings guarantee to savers with credit unions; his views on whether credit union savers are to be afforded the same statutory protection as savers with banks and building societies; and his further views on whether Government backed explicit limited deposit protection is a fundamental requirement in underpinning the financial stability of the credit union sector. [36149/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I propose to take Questions Nos. 233 and 234 together.

There is no State savings guarantee for savers with Irish credit institutions generally. There is, however, a deposit protection scheme funded by credit institutions (other than credit unions) which are authorised by the Central Bank and Financial Services Authority of Ireland. The Deputy should note that a key principle underlining the operation of the deposit protection scheme is that the full cost of financing the scheme must be borne by the participating credit institutions. The level of contribution required from each credit institution is 0.2% of deposits held at all branches of the credit institution in the EEA, including deposits on current accounts and share accounts with a building society (but excluding certain other specified deposits). Contributions are maintained in a Deposit Protection Account at the Central Bank and Financial Services Authority of Ireland. The European Communities (Deposit Guarantee Schemes) Regulations, 1995 set out the terms and conditions governing deposit protection in Ireland.

In the case of credit unions the Irish League of Credit Unions operates a separate Savings Protection Scheme (SPS). The SPS aims to protect the individual savings of members by making sure that the credit unions are financially and administratively sound and by providing remedial help to any participating credit union which shows signs of weakness in these areas. Savings of individual credit union members are also protected. The operation of the credit union SPS is consistent with the specific regulatory approach adopted for credit unions under the Credit Union Act, 1997 which is differentiated from that applying to mainstream commercial financial institutions on account of the unique ethos and philosophy of the credit union movement. In this context, the 32 county all-island basis of the current SPS is valuable and one that it is important to maintain. In May 2006 the Financial Regulator agreed to examine proposals for the reform of the existing Savings Protection Scheme for credit unions.