What Are the Procedures to File a Claim for Deposit Protection?

To achieve its objectives, deposit protection is straightforward and the execution must take place within a realistic timeframe. A common ground for local deposit guarantee schemes is to ensure the constant flow of liquidity into the real economy and thus to safeguard the payment system. Disruption of the critical functions of society starts at micro economic and retail levels. The hazards of bank failure must be pinpointed at the initial stage to avoid spill over effects and systemic failure. The public interest doctrine prevails in matters of bank failure and deposit insurance. A mission critical part of this safety net is to secure payment to the correct creditor and avoid abuse.

Most financial institutions have both local account holders and international creditors. These customers may be individuals and companies. Customer risk profiles determine the classification of the financial institution. To ensure appropriate coverage levels and repayment of insured deposits to eligible account holders, the DGS administration must establish the best way to activate the fund, allow creditors to submit their claim and verify the eligibility.

Deposit protection schemes throughout the world allow account holders to submit their claim in three general ways. Some DGS schemes automatically inform eligible account holders of a payout event and instantly provide them with repayment. More common is that a claim form complemented by deposit evidence must be submitted in person at the DGS administration or any location designated by the administration. Another option is to submit the original claim form and its supporting evidence verified by affidavit to the DGS administration. The procedures for claim submission are laid down in the local frameworks and indicated by the DGS administration and the financial institution upon failure of the bank.

The paragraph above already clarifies some of the procedures for DGS claim submission. DGS claims are submitted by the account holder via a claim form. Only the account holder is able to receive a repayment. Claim evidence and a verifiable repayment instruction must be provided as well. Critical importance must be given to claim ownership for corporate accounts. The claim evidence for corporate account holders must avoid repayment to incorrect claimants. Therefore, recent documented evidence of the company structure and its ownership confirmed by corporate registries is needed to allow the DGS administration to verify its genuine purpose.