Emergence of a compensation event
If a deposit bank has not paid matured and undisputed compensable deposits, the depositor may notify the issue to the Financial Stability Authority.
If the Financial Stability Authority deems the payment difficulties permanent, or a court or another authority has ruled the deposit bank as insolvent, the Financial Stability Authority must, in cooperation with the Financial Supervisory Authority and the Bank of Finland, render a decision within five working days regarding compensation liability towards the banks' customers. Compensations to the depositors will be paid out of the Deposit Guarantee Fund.
Reform of the payout system
The Financial Stability Authority has completed a reform project of the deposit guarantee payment system, establishing data secure and automatic processes as well as requisite IT systems for the collection of information on deposits and for the fast payment of deposit guarantee compensations in a compensation event. The reform of the FFSA’s payment system was completed in spring 2019.
Fast payment means that the Financial Stability Authority has the capacity to pay deposit guarantee compensations to the depositors within seven working days from a decision of the Authority establishing the beginning of the repayment obligation. Fast payment is built on solutions offered by the national service architecture suomi.fi. The purpose of the reform was to improve the protection of individual depositors in a compensation event and to foster financial stability in a crisis.
In order to improve the efficiency of the exchange of information, depositors are advised to register as users of the suomi.fi messaging service, enabling them to receive their personal documents and messages from authorities electronically instead of conventional paper mail.
Domestic deposit banks
In the event that a depositor is entitled to compensation, the Deposit Guarantee Fund provides depositors with more detailed information on how they can receive compensation. As a rule, the depositor does not have to provide information on his or her deposits, but the Financial Stability Authority will receive information on each depositor and deposit amount from the deposit bank. The compensation is made as a credit transfer. The depositor is not required to contact the Deposit Guarantee Fund, unless the Fund specifically requests additional information.
Compensation is paid to the depositors out of the Deposit Guarantee Fund within seven (7) working days from the decision of the Financial Stability Authority on the commencement of payment liability. Commencement of payments can be delayed for three months if:
- the depositor's entitlement to compensation is unclear
- the depositor's entitlement to use the deposit has been restricted by a decision of an authority
- the deposit account has not been used for 24 months
- the depositor's claim is based on the sale of a residence
- the deposit concerned was made in a foreign branch of a Finnish bank.
If the claim of a depositor is based on the sale of a residence and exceeds EUR 100,000, the claim is paid in full if the depositor can reliably verify that the claim is based on assets which the depositor has received from the sale of a residence in his own use and that the assets are intended to be used to acquire a new residence for the depositor's own use. This special protection of assets obtained from the sale of a residence is valid for a fixed-term of six months after the assets have been deposited. The depositor must separately claim compensation for assets obtained from the sale of a residence from the Deposit Guarantee Fund.The claim must be made in writing, and must include such clarification as described above. If necessary, the Financial Stability Authority will advise the depositor regarding the clarification.
Domestic banks' foreign branches
The payment of deposit guarantee compensations for a Finnish bank's branch located in a foreign country will be made by the deposit guarantee fund of the host country on behalf of the Financial Stability Authority.
Payment will be made on the basis of information received by the Financial Stability Authority from the deposit bank concerned. The depositor is not required to contact the Deposit Guarantee Fund, unless the Fund specifically requests additional information.
Finnish branches of foreign banks
The payment of deposit guarantee compensations for EU or EEA banks' branches located in Finland will be made by the the Financial Stability Authority on behalf of the home country of the bank concerned. Payment will be made on the basis of information received from the deposit guarantee scheme of the bank concerned, and the depositor needs not contact the Financial Stability Authority, unless it has specifically requested further information.
Other foreign banks operating in Finland
In line with the above, the Financial Stability Authority is not responsible for deposit guarantee for banks that do not have a branch in Finland. The deposit guarantee for a bank operating across the border is the responsibility of the deposit guarantee scheme of the bank's home country. Information on deposit guarantee for foreign banks is available at the website of the respective deposit guarantee scheme. In Sweden, the deposit guarantee scheme is administered by Riksgälden, in Denmark by Finansiel Stabilitet, in Norway by Bankenessikringsfond and in Estonia by Tagatisfond.