Article 19(6) of the Deposit Guarantee Schemes Directive (DGSD) requires the European Commission to submit to the European Parliament and to the Council a report on the progress towards the implementation of the DGSD. To support the Commission in meeting this obligation, the European Banking Authority (EBA) committed to drafting three opinions on the DGSD.

On 30 October 2019, the European Banking Authority (EBA) published its second opinion on deposit guarantee schemes (DGSs) payouts under the DGSD (for information on the first opinion, see previous blog here). The opinion proposes a number of changes to the EU legal framework to further strengthen depositor protection, improve depositor information, enhance financial stability and reinforce operational effectiveness of DGSs.

In its opinion, the EBA assesses nine different topics related to DGS payouts and sets out 30 proposals on how to improve the current EU legal framework. These topics include:

  • the unavailability of deposits;
  • DGS payouts where there are money laundering and terrorism financing concerns;
  • the payout process;
  • the paying out of sums in accounts when the depositor is not absolutely entitled to the sums held in the account;
  • home DGS reimbursing depositors in the host Member State;
  • passported services without having established branches;
  • the approach to temporary high balances;
  • the approach to the setting-off of liabilities fallen due; and
  • the cost of living payout.