Isle of Man’s Depositors’ Compensation Scheme ("DCS")

The Isle of Man has a depositors’ compensation scheme ("DCS"). The DCS partially compensates you if a bank in which you have deposited money fails. To pay compensation, a DCS fund is created (when needed) from contributions made by other banks in the Isle of Man.

A summary of the cover provided by the DCS is as follows:

• The DCS compensates people who have money in current and deposit accounts in the Isle of Man with 75% of up to £20,000 of net deposits* per depositor per bank, if the bank fails.

  This means maximum compensation payable is £15,000 per depositor – this amount would be paid to someone with £20,000 or more.

  * Net deposits: Loans may be netted off against deposits you have with the same bank. Eg if you have a total of £32,000 in current and deposit accounts, but a mortgage of £18,000, your net deposits are £14,000. The DCS would pay you 75% (or ¾ ) of £14,000 in compensation, ie £10,500. If there are sufficient funds on liquidation of the failed bank, the remaining £3,500 would be paid from the liquidation proceeds.

• The DCS covers individuals, companies and trusts who have bank accounts in the Isle of Man, whichever country they are resident in. (A few categories of people are excluded eg shareholders, directors and managers of the bank).
• Payment is per depositor, not per account, therefore each person who shares a joint account can receive compensation, but if you have more than one account you won’t receive more than one compensation payment.
• Compensation is paid out of levies collected from other banks in the Isle of Man. Levies are collected at a maximum of £250,000 per bank per year. As there are a limited number of banks which pay levies, it may take many years for compensation to be paid to depositors. This period will also vary according to when liquidation proceeds are collected from the failed bank and how much is recovered. There is no "standing fund" of compensation (i.e. money is not collected before a bank failure).
• All banks in the Isle of Man that are licensed to take deposits are members of the DCS. Some banks, which do not take deposits, are not members of the DCS.
• Your deposits with each banking licenceholder (i.e. bank that is licensed in the Isle of Man) are covered separately, even if they are part of the same group. A list of all the banks which are licensed in the Isle of Man is on the FSC’s website at: http://www.fsc.gov.im/licence/search.aspx?id=1&searchtext=&selection=Banks&submit1=Submit.
• Building societies: Share and deposits accounts with building societies in the Isle of Man are not covered by the DCS.
• Deposit compensation schemes in the UK, Ireland or elsewhere do not cover deposits with banks or building societies in the Isle of Man.
• The legislation for the Isle of Man’s depositors’ compensation scheme can be found on the FSC’s website at: http://www.gov.im/lib/docs/fsc/handbooks/guides/Banking/bankingappendixc1.pdf.
• In order to claim compensation you will have to assign your rights to the whole deposit to the DCS manager and you will be charged interest on the amount of your claim.
• The FSC administers the DCS as the Scheme Manager.

Isle of Man’s Authorised Collective Investment Schemes’ Compensation Scheme ("ACISCS")

The Isle of Man also has a scheme to compensate investors in authorised collective investment schemes. A summary of the cover provided by the ACISCS is as follows:

• The ACISCS partially compensates you if an authorised collective investment scheme in which you have invested fails to pay you when money is due to you.
• Compensation may be due to you if a manager or trustee of an authorised collective investment scheme fails to repay you when required by the terms of the scheme.
• Compensation payable is as follows : 100% of the first £ 30,000 90% of the next £ 20,000 with a MAXIMUM Compensation of £48,000
• Compensation is paid out of levies collected from other authorised scheme managers and trustees ("authorised persons") in the Isle of Man. There is no "standing fund" of compensation (i.e. money is not collected in advance).
• All authorised persons in the Isle of Man are members of the ACISCS. A list of these is on the FSC’s website at: http://www.fsc.gov.im/licence/search.aspx?id=2&searchtext=&selection=Authorised+Collective+Investment+Schemes&submit2=Submit.
• The legislation for the Isle of Man’s authorised collective investment schemes’ compensation scheme can be found on the FSC’s website at: http://www.gov.im/fsc/handbooks/guides/Cis/pdf/CIS%20-%20Appendix%20B3.pdf

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