Eligible bank deposits are secured via local Deposit Guarantee Schemes that are activated when a licensed credit institution fails or is likely to fail, and there is little chance of this situation being reversed. Deposit Guarantee Schemes are governed at a local level. Schemes can therefore vary in size, applicability and eligibility. Creditors of credit institutions in difficulties must consider the conditions for repayment and procedures for claim filing. Misunderstandings and errors may lead to claim rejection and disqualification. Account holders should better be safe than sorry and prepare their DGS claim accordingly.
Rejection and disqualification of a DGS claim is always possible. Terms and conditions are often indecipherable for incidental creditors but a lack of precision can turn out to be an expensive experience. To answer the question whether a DGS claim can be resubmitted, one should look further into the mechanics of deposit insurance and the parameters of a local DGS.
The objective of deposit insurance is to ensure a stable and trusted financial and payment system so corporations and consumers can maintain the real economy at all times. By providing general creditors with additional layers of protection and a bank account holders with a maximized amount of deposit insurance the objective is partially warranted. It is alleged that retail depositors and small businesses are less inclined to overreact, panic and eventually initiate a run on the bank because their deposits are secured.
Domestic deposit protection schemes follow their own principles. Fundamental principles include the financing arrangements of the scheme via premiums, claim eligibility and conditions for repayment, the applicable time constraints and limitations of the scheme, and the submission, verification, and settlement of DGS claims. Such standards are often laid down in directives, regulation or other binding frameworks. Definitions are crucial and eligibility of deposits for DGS protection outlined by the respective DGS administration.
The DGS administrators must protect and maintain confidence in and stability of the local financial system by ensuring repaid to the appropriate creditors. Incorrect and even fraudulent claim submission must be avoided to ensure that only eligible creditors are reimbursed. Administrative procedures for DGS claim submission limit timeframes and require claim forms to be supported by evidence of claim ownership and the appropriate identification. For international creditors, this is not always easy and therefore the DGS administration may ask creditors to file their claim in person at the premises of the DGS administration. For local creditors an affidavit complemented by the original claim form, certified customer identification documents, and a proof of debt is often sufficient to submit their claim.
Even though the procedures are outlined, these are not always easy to comprehend for uninformed creditors. Misunderstandings and mistakes are possible and the price for such misconceptions is high: rejection or disqualification of the DGS claim. The most common reasons for claim rejection are:
- Failure to file a DGS claim within the deadlines of the claim submission timeframe.
- Failure to comply with the claim filing requirements by submitting an incomplete claim without the appropriate supporting evidence.
- Exclusion or restrictions of coverage for the professional status or activities of the creditor.
Within the timeframe for DGS claim submissions, an initial rejection can be resubmitted for reinspection. Such resubmissions must be supported by sufficient evidence that allows the DGS administration to overturn their decision. It is for most creditors and unaware bank account holders and the novice not easy to provide the answers needed that allow the DGS administration to approve claims that were initially rejected. Therefore, feel free to contact Legal Floris LLC for assistance to resubmit your rejected DGS claim – under our No Win, No Fee conditions! Remember that such resubmission can only happen once and therefore must be handled with care.