A financial crisis or bank panic can undermine consumer confidence. To maintain confidence in the financial system, central banks and other regulators control financial market participants. During times of uncertainty and possible bank failure, early intervention is essential to protect bank creditors, stakeholders and the public interest. Those affected by the closure of their bank can receive swift liquidity through local deposit protection schemes. This is in addition to often complex and lengthy resolution planning and traditional insolvency legislation.
Bank deposits held with approved credit institutions are generally insured up to a predefined level. The levels of deposit insurance, their applicability, terms and conditions are governed by local legislation. Sovereign states and their respective governments draft their own rules and therefore deposit protection schemes can vary from country to country.
Regulators step in when a bank fails or is likely to fail. They take action to protect the interests of depositors and other stakeholders and restrict access to account balances. This abrupt and unforeseen intervention often leaves customers and other creditors of the bank in uncertainty. Remedies to protect account balances, minimize risk and maximize repayment include several asset recovery strategies of which depositor protection is the fastest and safest measure.
Bank Deposit Protection
The business of banking is far from risk-free. Financial products and services that are offered to the public and institutional investors are based on trust and the principle of caveat emptor. As a result, customers must be aware of the risks a product or service entails. It therefore assumes that those seeking mainstream services always investigate the risks associated with the multinational counterpart. In reality, this is incorrect, and bank account holders and other creditors are often surprised when their bank fails and their assets remain frozen and banking facilities blocked.
The account holders of a credit institution that fails or is likely to fail are often unaware of the challenges the bank faces, and the regulatory consequences of a resolution decree. Preferred outcomes for bank management and shareholders, regulators and account holders often leads to a conflict of interest. Regulators want to prevent a bank run, maintain public confidence, and minimize taxpayer involvement in unnecessary public rescue missions. A troubled financial institution wants to protect its reputation, limit fines and penalties, and restart operations. All that account holders want is their assets or money returned, or their outstanding payments to be honored. Resolution planning, bank deposit protection and a comprehensive framework of corporate law can provide for answers for account holders.
How to Claim Your DGS Insured Bank Deposit…
Deposit insurance is often referred to deposit protection and organised by local Deposit Guarantee Schemes. Most Deposit Guarantee Schemes (DGS) are managed and administered by a financial regulator or Central Bank. The fund is open for claim submission for a limited period that is communicated by the fund administrator. The administrative claim filing process requires an examination and verification of the claim form and supporting documentation. The DGS administration must ensure that eligible deposits are expeditiously processed and funds paid directly to the claimant.
It may be necessary for the DGS administration to request all claimants of the applicable bank to submit their claim form in person. This is induced by the reason for resolution, the jurisdiction, general creditor profile, and activities of the insured credit institution. Alternatively, an administrative procedure can be followed to submit the claim form by courier. It must then be supported by a court approved affidavit, an original apostilled government issues and verifiable ID, and evidence of deposit ownership. Deviating from the norm is not a right and failure to comply with the terms and timeframe of the applicable DGS disqualifies a claimant for deposit protection. Correct claims forms (re)submitted after this timeframe are subordinated and made against the assets of the credit institution in case of liquidation. Payments are made on a pro rata basis as the assets of the closed credit institution are collected and realized.
Limitations to a Domestic DGS…
Creditors in bank failure must realize that the term deposit guarantee is insufficient and alleges that all bank deposits are protected up to the predefined level. This false assumption can bring account holders in difficulties when their DGS claim gets rejected. The objective of deposit protection is to promote and otherwise contribute to the stability of a local financial system by the provision of insurance for bank deposits held with credit institutions operating in the jurisdiction. Independent states differ economically and politically from each other. It is therefore imperative to tailor financial regulation and protect domestic financial systems. Deposit Guarantee Schemes therefore may differ from each other where it comes to levels of maximum protection, limitation to the eligible creditors, exclusions of organizations and industries and the claim filing procedures.
In every bank failure, several creditors fail to comply with opaque and difficult requirements for (partial) repayment of their account balance. The disqualification and rejection of a DGS claim could often have been avoided by following the rules and preparing for the filing procedures accordingly.
How We Help Bank Customers Like You to Reclaim Their Account Balance…
Deposit insurance follows a strict protocol. Compliance with local frameworks and applicable timeframes is for incidental claimants often difficult to achieve. Legal Floris LLC is experienced, and their staff members are internationally educated in the legal and financial industry. The firm provides asset and fund recovery services for account holders and general creditors in (offshore) bank failure. Recovery strategies seek to minimize creditor losses and maximize repayment and includes, among other things, claim filing for deposit protection.
Although it may sound absurd for account holders to prove the legitimacy of their claim, the recovery and repayment of bank account balances in matters of bank closure leaves no room for negotiations or mistakes. Rejections of a claim allow for reinspection upon the provision of supporting evidence, but still, disqualification remains often permanent. Over the years, Legal Floris LLC assisted hundreds of bank customers to regain access to their money. The majority of these customers required a combination of repayment options during the stages of statutory administration, deposit protection, and bank liquidation. International experience and a high success rate allows us to assist bank creditors with their claim filing procedure on the basis of No Cure No Pay. This however exclusively applies to the DGS claim filing process.