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Whistleblower-System

special case: provider insolvency

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Bank insolvency

In the case of the insolvency of a bank, then there are two guarantee systems that may kick in: the deposit guarantee scheme and the investor compensation scheme.

In this instance the deposit guarantee scheme is triggered in the event of the bank’s insolvency. The level of deposit protection coverage is EUR 100,000 per credit institution and per depositor, whose identity has been verified. A deposit is deemed to have verified their identity, if they are able to prove their right to the credit balance. You can find more detailed information about deposit guarantee schemes here.

The securities in your securities account belong to you, with nothing changing in the event of an insolvency of the bank. In the event that for some reason your bank is unable to return your shares to you, then the investor compensation scheme takes effect.

The following are covered:

  • Shares, bonds, investment funds etc. which are not able to be handed over in the case of default,
  • Claims against the bank from trading in derivatives, equity swaps, futures and forwards contracts and money-market instruments,
  • and occupational provision fund business.

A maximum of EUR 20,000 is repaid per investor. The market value on the day on which the default occurs is relevant. For legal entities (e.g. companies) other arrangements apply.

The repayment must be applied for from the investor compensation scheme. From the announcement of the occurrence of the default event, you have one year’s time to assert your claims. The pay-out occurs within three months following eligibility being determined.

Please note that a number of exceptions exist – for example claims that are not eligible for reimbursement, that are denominated in a currency that is not the Euro, Swiss franc or the currency of an EEA signatory state.

Insolvency of an insurance company

In order to be able to honour obligations arising from life insurance contracts at all times, insurance companies are required to hold a cover pool reserve (Deckungsstock) in the amount of its obligations, and to manage this reserve separate to its other assets.

In the case of the insolvency of the insurance undertaking the assets contained in the cover pool reserve form a special fund and therefore are available for the preferential satisfying of claims of policyholders.

The FMA appoints a fiduciary to monitor the cover pool reserve, who checks that legal standards are conformed with. Assets may only be bought or sold subject to the written permission of the fiduciary.

Insolvency of the investment firm

Investment firms that offer portfolio management or the receiving and transmitting of orders in relation to financial instruments are required to belong to an investor compensation facility.

A compensation event may only then occur, where an investment firm exceeds the scope of its licence, and provides services which are only allowed to be provided where a banking licence is held: Taking of deposits and the taking of securities.

If an investment firm has exceeded the scope of its licence, and in the case of its insolvency is not in a position to pay your money back to you, or to hand over your securities, then the investor compensation facility is liable. Investor compensation is not triggered where advice, management or disclosure obligations are breached.

A maximum of EUR 20,000 is repaid per investor. The market value on the day on which the default occurs is relevant. For legal entities (e.g. companies) other arrangements apply.

The repayment must be applied for from the investor compensation scheme. From the announcement of the occurrence of the default event, you have one year’s time to assert your claims. The pay-out occurs within three months following eligibility being determined.

Investment firms and investment services providers that do not belong to a compensation facility, must advise their customers that this is the case at latest at the time of the contract being concluded.