On 3 July 2023, the Prudential Regulation Authority (PRA) published Policy Statement 7/23: Depositor Protection (PS7/23), which implements the final rules following Consultation Paper 9/22: Depositor Protection (CP9/22), issued in September 2022. The PRA notes that work is ongoing to consider whether further changes are needed to the depositor protection scheme, including in light of lessons learned from recent market events.

As well as providing the PRA’s response to the final part of the representation to CP9/22, PS7/23 also contains the:

  • PRA’s final rules concerning the relevant amendments to the Depositor Protection (DP) part of the PRA Rulebook.
  • Updated PRA Supervisory Statement (SS) 18/15 – Depositor and dormant account protection (SS18/15).
  • Updated PRA Statement of Policy (SoP) – Deposit Guarantee Scheme (SoP – DGS).
  • Updated PRA SoP – Calculating risk-based levies for the Financial Services Compensation Scheme (FSCS) deposits class (SoP –RBL).

The changes discussed in PS7/23 focus on temporary high balances (THBs), FSCS protection for firms in default, withdrawal rights on deposit transfer, and FSCS protection notification rights.

The PRA has made minor amendments to the rules relating to joint account and THBs so that they are clearer and easier to read. As a result:

  • The provisions concerning the extension of a surviving joint account holder’s FSCS protection for a period of six months have been moved from chapter 10 to chapter 4 of the DP Part.
  • A new rule, DP 10.1A, has been added to set out who is a ‘relevant person’ for the purposes of the THB regime.

In addition, the PRA has also made some changes to the SoP – DGS and SS18/15 following an internal review. The PRA does not consider these changes to be significant as they do not impact the policy intent. They have been made on the PRA’s own initiative, following a review of the final rules.

The amendments to the DP rules, SS18/15, SoP-DGS and SoP-RBL came into effect on 1 July 2023.