PS2/23 – Depositor Protection

Following a corresponding consultation in September 2022 (CP9/22), the Prudential Regulation Authority (PRA) has published a new policy statement (PS2/23) as regards additional protective measures to safeguard funds of customers of e-money institutions, authorized payment institutions, small payment institutions, and credit unions.
Specifically, in the consultation, the PRA proposed changes to its Rulebook, to – among other things – safeguard customer deposits of such institutions in the event that a credit institution where such funds are deposited for custody purposes is failing. Specifically, such funds would come under the remit of the Financial Services Compensation Scheme (FSCS) and would enable the customer to recover his suffered losses in accordance with the compensation rules outlined in the consultation paper.
In its final policy statement now, the PRA states that it will proceed as proposed with some minor modifications for clarification and effectiveness purposes. Additionally, the PRA has published a number of questions that were raised by commenters to the consultation and corresponding PRA responses. These are depicted in below table:
Figure 1: Questions and Answers for Clarification Purposes

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Please note: In above noted consultation, several other issues were consulted on, all of which are NOT subject of this policy statement. Please refer to EventID 17591 for more information.