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Banking: Iceland

Volume 703: debated on Monday 14 July 2008

asked Her Majesty's Government:

What are the total assets of the Icelandic Deposit Guarantees and Investor-Compensation Scheme which protects the first €20,887 of deposits by United Kingdom residents with United Kingdom branches of Icelandic banks; and what are the circumstances under which the United Kingdom Financial Services Compensation Scheme could be liable for that amount, as well as the excess up to £35,000. [HL4579]

Under the Deposit Guarantee Schemes Directive and the Investor Compensation Directive, all EEA member states are required to set up a scheme to protect depositors and also a scheme to protect investors in the circumstances laid down in the directives. The UK achieves this through the Financial Services Compensation Scheme (FSCS) which covers all Financial Services Authority (FSA) authorised banks and investment firms.

Firms passporting from an EEA state where the level and/or scope of coverage provided by their home state is lower or narrower than that provided by the FSCS, can opt to top-up into the FSCS to the level and/or scope of coverage provided by the FSCS. This means that the home state scheme is liable to pay the first tranche of compensation to the limits that apply in that state. The FSCS's liability is therefore restricted to the topped-up amount up to the UK limit of £35,000 for deposits.