Deposit Guarantee Scheme Finland

Information Leaflet – A Deposit Guarantee Scheme Reimburses a Limited Amount to Compensate Account Holders Whose Bank in Finland Has Failed

Deposit Guarantee Scheme Finland: The Finnish Financial Stability Authority (Rahoitusvakausvirasto) protects bank depositors, investors and taxpayers from the effect and expenses of a financial crisis. As part of the Single Resolution Mechanism, the authority seeks to prevent financial crises and promote bail-ins, while securing the safety of bank deposits via the deposit guarantee fund.

Secured Deposit Limit: 100.000 euro per depositor per bank.

Additional Protection: Assets obtained from the sale of a residence are an exception to the main rule on the guaranteed amount. They are compensated, subject to a separate application, with no upper limit when the depositor can prove that the assets were obtained from the sale of a residence that was in the depositor’s own use and that the assets were deposited on the account no more than six months earlier and are intended for the purchase of a new residence for the depositor’s own use.

The Triggers and Procedures of a Payout Event: (1) A credit institution goes insolvent or bankrupt; (2)  The Financial Stability Authority makes a compensation decision; (3) Funds are reserved and payouts can begin within 7 working days; (4) The defunct financial institution shares the applicable customer data with the Financial Stability Authority; (5) The Financial Stability Authority, as being responsible for the Guarantee Fund, sends compensation decisions automatically to all depositors; (6) Compensation is paid to a new bank account at a supervised credit institution in Finland.

Claim Filing Procedure: For standard DGS claims, fully automated processing works well. Customer profiles and client information in the records of the bank in a large part determine claim eligibility. Deficient records therefore are a risk for claimants that must be taken into consideration.

Repayment Timeframe: In circumstances regarding compensation the FFSA obtains details of all accounts and depositors from the insolvent bank. The Authority processes the information and sends each depositor a decision regarding compensation. Depositors receive a notification of their balance(s) and the amount of compensation due, and instructions on what to do to receive the guarantee protection compensation. The Authority then pays the compensation by credit transfer into an account notified by the depositor within seven working days of making the compensation payment decision. This is possible because the payment of compensation is a highly automated process. Deposit guarantee compensation is paid by means of a bank transfer, which means the depositor can quickly access the compensation.

Repayment Conditions: Only the types of depositors that are specifically mentioned in the relevant legislation are not covered by the deposit guarantee scheme. The following categories of depositors are not within the scope of the deposit guarantee scheme:

  • Public authorities, including the State and its institutions, municipalities and joint municipal authorities and the Government of Åland;
  • Credit institutions, investment firms, fund management companies, alternative investment fund managers and financial institutions when the deposit is made on their own account (the client asset accounts of these types of depositors are covered by the deposit guarantee scheme);
  • Insurance companies, insurance associations, pension foundations and insurance funds.

If the identity of the owner of a deposit cannot be determined, deposit guarantee compensation cannot be paid.

DGS Claim Rejections: Prior to reimbursement can take place, claimants must ensure that their personal information in the records of the bank is correct. A negative or final decision from the Financial Stability Authority can be appealed or taken to court. Sufficient background information and evidence of claim eligibility must be presented to overturn the rejection and receive a DGS repayment.

Scheme Architecture: The fund is prepaid by its members. Members make annual contributions and pay risk-based premia to the fund. The fund currently has an estimated 1.3 Billion euros in reserves to ensure swift repayment to eligible account holders of a defunct credit institution. An external VTS Fund serves as the buffer fund for the Finnish deposit insurance scheme. The purpose of the Fund is to finance its member banks’ payment obligations towards the deposit insurance scheme.

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