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    PRA Amends Rules on Identity Verification of Depositor Protection

    March 24, 2021

    PRA published the final policy statement PS4/21 on the timing of identity verification required for the eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS). It contains amendments to the depositor protection part of the PRA Rulebook and updates to the supervisory statement SS18/15 on depositor and dormant account protection. PS4/21 also provides feedback to responses to the consultation paper (CP3/21) on Identity verification. The changes outlined in PS4/21 will take effect on March 29, 2021.

    SS18/15 sets out the PRA expectations for deposit-takers with regard to the depositor protection rules. Areas covered include eligibility for deposit protection, disclosure, marking eligible deposits and transitional issues, temporary high balances, calculation of levies, single customer view, in-flight transactions, and continuity of access. The update added paragraph 2.10 to introduce a new expectation: In the event that identity verification has not been carried out in accordance with the relevant anti-money laundering requirements referred to in Depositor Protection 2.2(4)(f) ahead of the firm’s compensation date, PRA considers that Depositor Protection 2.2(4)(f) would allow the relevant insolvency practitioner appointed by the court to facilitate the identity verification for determining eligibility for FSCS protection. Minor changes have also been made to correct formatting errors and improve readability. PRA considers that the changes to the SS18/15 are not significant and will not materially alter the cost-benefit analysis presented in CP3/21. The changes have been made to enhance clarity and better reflect the policy intent of PRA. 

    PS4/21 is relevant to the FSCS, all PRA-authorized deposit takers, and insolvency practitioners. It contains no material of direct relevance to retail financial services consumers or consumer groups on which they might need to act. This policy statement is intended to be read in conjunction with the rules  in the Depositor Protection Part of the PRA Rulebook. By setting out PRA expectations on the depositor protection rules, this statement may help to minimize the adverse effect that the failure of a PRA-authorized firm could have on financial stability and enhance depositor confidence, thus contributing toward the safety and soundness of firms. The policy set out in PS4/21 has been designed in the context of the UK having left EU and the transition period having come to an end. Unless otherwise stated, any references to EU or EU-derived legislation refer to the version of the legislation that forms part of the retained EU law. PRA will keep the policy under review to assess whether any changes would be required due to changes in the regulatory framework in UK.


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    Effective Date: March 29, 2021

    Keywords: Europe, UK, Banking, Depositor Protection, Identity Verification, FSCS, PRA Rulebook, AML/CFT, PS4/21, SS18/15, PRA

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