Deposit Insurance Bill 2010

Summary

This is a draft bill (Bermuda Deposit Insurance Act 2010) circulated by the Bermuda Monetary Authority for consultation, not yet confirmed as enacted law. It would establish a Bermuda Deposit Insurance Corporation (BDIC) to run a mandatory Deposit Insurance Scheme and Fund, protecting small depositors and compensating them promptly if a bank fails.

• Scope of membership: Every institution holding a banking licence or deposit companies licence under the Banks and Deposit Companies Act 1999 would automatically become a Scheme member, with a bracketed reference suggesting credit unions licensed under the Credit Union Act 2010 could also be included.
• Governance: BDIC would be run by a board including the BMA's Chief Executive Officer, the BMA officer responsible for bank supervision, the Financial Secretary, a Minister-appointed Chairman, and additional directors with banking or financial services experience.
• Premiums and Fund: Scheme members would pay premium contributions (and late payment fees) into a Deposit Insurance Fund, with rates and categories set by BDIC rules; additional contributions could be levied if the Fund is insufficient to pay compensation.
• Compensation: Insured depositors (individuals, certain charities, small companies, and others prescribed) would be entitled to compensation from the Fund on occurrence of specified precipitating events such as a Scheme member's failure, with computation rules for joint accounts and trust deposits.
• Information and inspection duties: Scheme members would be required to maintain books recording insured deposits, disclose to depositors whether products are insured, provide information and production of books to BDIC on request, and refrain from furnishing false information.
• Offences: The bill would create offences for false statements regarding membership or insured deposits, offences by officers, and a general penalty provision, plus offences by bodies corporate.

Because this is a bill text (with an explanatory memorandum still referring to a 2009 version) rather than a finalised statute, its provisions are proposals subject to change; commencement would occur on a date (or dates, for different provisions) later appointed by the Minister via Gazette notice, and no concrete transition deadlines are specified in this text.

Key obligations

• Every bank holding a licence under the Banks and Deposit Companies Act 1999 would automatically be a Scheme member and be bound by the Scheme's requirements
• Scheme members would be required to pay premium contributions (and any late payment fees) for each premium year in respect of insured deposits placed with them
• Scheme members would be required to disclose whether their financial products are insured deposits, in the manner prescribed by BDIC rules
• Scheme members would be required to maintain books recording particulars needed to compute insured deposits and provide information/production of books to BDIC on request
• Scheme members and their officers would be prohibited from furnishing false information to BDIC or making false statements regarding membership or insured deposits
• BDIC would be required to make prompt (and where appropriate interim) payments of compensation to insured depositors out of the Fund after determining eligibility

Applies to

banks, deposit companies, Scheme members (BDIC), insured depositors, credit unions (if included per bracketed text)

Deadlines

• such date as the Minister may appoint by notice published in the Gazette: Commencement of the Act (and potentially different provisions) is to be fixed by future Ministerial notice rather than a fixed date in the bill