Contact Us:
C/O Financial Services Commission
PO Box 940
Gibraltar
Tel:(+350) 200 40283
Fax:(+350) 200 40282
E-Mail:gicb@fsc.gi

Explanatory Information

Which Firms Are Covered By The Scheme?

The following firms are covered by the scheme:

• Firms authorised under the Financial Services Financial Services (Markets in Financial Instruments) Act incorporated in Gibraltar including their branches in the European Economic Area (EEA)
• Firms with a head office in a non-EEA state where equivalent protection to investors in Gibraltar is not offered by any investor compensation scheme.

How Do I Know If A Particular Firm Is A Member Of The Scheme?

The firm's own literature in relation to the Scheme will state to which scheme(s) the firm belongs. The Gibraltar Investor Compensation Board ("the Board") can also advise you if the firm participates in the Scheme.

What Limits Apply To The Scheme?

The Scheme covers 90% of a firm's total liability to an investor in respect of eligible investments held subject to a maximum payment to any one individual of Euro 20,000. A firm's total liability to an investor is the aggregate of all investments in the name of that investor, including the investor's share in an investment held jointly. Investments held jointly are divided equally between investors where there is no indication of the share of each holder in the investment.

Partnerships or similar associations will be treated as one claimant.

Investments held by trustees will be treated as one claimant unless each of the beneficiaries can be separately identified, and has a separate right under the trust before the date of the declaration by the Chief Executive Officer of the FSC.

The following will be deducted from the amounts payable under the Scheme:

• payments received from investor compensation schemes elsewhere;
• payments from any insurance policy taken out by the claimant in respect of the investment;
• payments from the liquidator or receiver; and
• any amounts which had a right of set-off at the date of declaration.

The limits shown above are those which will apply in the majority of cases. However, if an investment is made with the branch of a Gibraltar firm in a Member State or a Gibraltar branch of a European Authorised Institution, the limits may be higher than those shown above.

How Is The Scheme activated?

The Scheme is activated upon the occurrence of one of the criteria prescribed in section 9 of the Ordinance. The most likely of these events is a Court's decision to put the firm into liquidation. The Scheme will also be activated if the Chief Executive Officer of the FSC determines that a firm has been unable to meet its obligations to investors for reasons which are directly related to its financial circumstances, and has no current prospect of being able to do so.

How Are Claims Made Under The Scheme And How Are Payments Made?

If the Scheme is activated, the Board will obtain from the firm in default the name and address of each investor with eligible investments. The Board will then write to each investor enclosing a claim form. Full details of how to complete the form will be given at the time. In the normal course, investors need take no action until they have heard from the Board.

Each claim will need to be verified before payment can be made. This will usually involve the Board asking the liquidator or administrator to confirm the total amount of eligible investments, and to confirm that the investment is due and payable under the terms on which it was made and is not a type of investment which is excluded from protection.

If the firm has been placed in liquidation by the Gibraltar Courts, investors will need to lodge a proof of debt or a claim for repayment in the liquidation with the liquidator. This procedure will normally be notified to investors by the relevant liquidator. If a liquidator has not been appointed, investors will be asked to complete an appropriate form by the Board which the Board will be able to lodge on their behalf with a liquidator or administrator, if one is appointed at a later date.

All payments to investors will be made as soon as practical after an investment becomes due and payable. In a liquidation, all investments become due and payable immediately and therefore payments can be made as soon as a claim is verified. However, in other cases, investments normally continue to their original maturity date. Investors will therefore have to wait for a compensation payment until that maturity date is reached. Payments will be made by cheque in favour of the individual investor.

Before paying any compensation, the Board must receive confirmation from the claimant that:

• rights in respect of his investment will vest in the Board;
• he will assist the Board in exercising those rights;
• he will pay the Board any amounts he receives in respect of those rights, after deduction of any amount the Board may be required to repay him; and
• any prospect of recovering an amount in excess of the compensation payable will vest in the Board.

Any costs incurred by the Board directly in relation to that investment will be deducted from the amount of compensation paid, or payable to, the claimant.

A claimant who is dissatisfied with a decision of the Board relating to compensation may appeal to the Supreme Court who may direct the Board to take any action which the Board may take under the Act.

Further Information

The above is a summary of the terms of the Scheme and claims procedures and conditions that must be fulfilled before payments under the Scheme can be made. Reference should also be made to the original legislation for its full terms and effect.

 

Footnotes

1 The terms ‘firm’ and ‘investment firm’ are used as meaning those banks and firms carrying on investment business as set out in Schedule 1 to the Financial Services Financial Services (Markets in Financial Instruments) Act .