The Gibraltar Deposit Guarantee Scheme.
We all have lots to think about when it comes to our money – budgeting for the perfect holiday, spending money on home improvements or buying the dream house, or even saving for a rainy day. Yet do you ever worry about what would happen to your money if your bank were to go out of business? Thankfully, that is one question you do not need to spend too much time thinking about as here in Gibraltar a Deposit Guarantee Scheme exists to keep your money safe.
Unfortunately, we live in a financially volatile world and, especially since the banking crisis, it has become extremely important to provide some security and protection to our money held in banks. You may be surprised, but a Deposit Guarantee Scheme has been in place in Gibraltar for a number of years so this is nothing new. The only change has been that there have been significant improvements to ensure your money is sufficiently protected. Deposit Guarantee Schemes are not just EU requirements but are globally accepted practices.
The Gibraltar Deposit Guarantee Scheme provides the automatic protection of your money, up to €100,000 or currency equivalent, in the unlikely event of your bank, one who is licensed by the Gibraltar Financial Services Commission, going out of business. All currency accounts are protected and would be converted at the relevant exchange rate on the compensation date. And guess what? It’s a free service! The scheme is funded by the banks in Gibraltar themselves, so you do not need to do anything to be part of it.
Who and what is covered by the scheme?
- Sole Traders
- Clubs, associations, schools and charities
- Money held in trust or in client accounts by professionals may be covered
- Money held in all currencies
- Small Self-Administered Pensions
- Temporary high balances e.g. when you have money from the sale of your house that is in excess of the maximum limit
What compensation is available?
The maximum compensation for each depositor per bank in Gibraltar is €100,000, irrespective of the number of accounts you have at that bank or the currencies these are held in. It is important to note that compensation is calculated per depositor i.e. per individual, company etc. and not per account. Even though the limit is in euros, compensation payments would be made in pounds sterling.
You actually do not have to be resident in Gibraltar to be entitled to the above protection. You could live anywhere in the world and, as long as you have money at a bank in Gibraltar and one that is licensed by the Gibraltar Financial Services Commission, you are covered. Any compensation payable on eligible balances will include any interest on an account that is due to you as at the compensation date and joint account balances would be divided equally between each account holder, unless you have another arrangement that is explicitly in place with your bank.
What do you need to do?
Generally nothing. In the unlikely event that your bank in Gibraltar were to go out of business, we will pay you your eligible compensation according to the account information received from your bank, subject to you meeting the necessary requirements. Any compensation will generally be made available without it being necessary for you to make a request. The timeframe for us to make compensation available to you is currently 20 working days, although a transitional timeframe is in place to eventually reduce this to 7 working days as from 1 January 2024. However, the length of time for repayment can often depend on a number of factors, some of which are entirely outside our control – the type and complexity of the claim and the level of extra information required following the receipt of initial account information.
There may be circumstances when compensation payment needs to be delayed e.g. for trust accounts, existence of temporary high balances (e.g. when you have money from selling your house), dormant accounts. However, until 31 December 2023, if we can’t make the compensation payable within 7 working days we will ensure that, upon request, within 5 working days you have access to an appropriate amount to cover the cost of living. This amount will then be deducted from the total compensation due to you.
How can we provide further help and information?
The Gibraltar Depositor Awareness Programme will be coming to you in September and October to raise awareness of the local scheme, so look out for our friendly team on the street and in the banks – ask questions, pick up some leaflets and, most importantly, be confident that your money is safe!
For more information, please visit our website: www.gdgb.gi.
BY PHILIPPA BALDWIN