• Deborah

On October 28, the European Banking Authority (EBA) published an Opinion on the treatment of client funds under Deposit Guarantee Schemes Directive , after observing disparities in the protection of client funds placed with banks by entities such as payment institutions (PIs), e-money institutions (EMIs), investment firms (IFs) throughout the EU.


To address these discrepancies the EBA provides its recommendations to the EU Commission.


Coverage of client funds placed with credit institutions

- Clarified that clients' funds deposited with a credit institution by EMIs, PIs and IFs must be covered by the deposit guarantee schemes (DGS) in case the credit institutions fail. This must be applicable when the:

  • Funds are deposited on behalf of clients who are not themselves excluded from coverage under the Directive

  • Funds are deposited for the purpose of segregating them from the account holders’ own funds as required by law

  • Clients are identifiable

This clarification will enable a harmonized application of the rules across the EU.


Reimbursement of client funds

- Clarified, where national law allows, that DGSs are free to choose between 2 options:

  • Reimbursement of the client funds in beneficiary accounts directly to the ultimate beneficiaries

  • Reimbursement of the client funds to the beneficiary account of the account holder in another credit institution

In `exceptional circumstances' the DGS shall be prevented from repaying client funds directly and instead be required to repay to a beneficiary account of the account holder in another credit institution.


DGS contributions taking into account client funds

  • Client funds must be considered when calculating contributions to DGS funds, with details to be set out in a revision of the EBA Guidelines on methods for calculating contributions to DGSs

This Opinion follows the Commission request to the EBA to provide further technical advice on issues regarding the treatment of client funds placed with credit institutions by other credit institutions, PIs, EMIs, Ifs and other financial technology companies.


The Opinion serves as the final report to the Commission with the aim to inform the Commission’s proposals for a revised DGSD, which the Commission intends to publish in Q4 2021.

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