The Investor Compensation Scheme is a rescue fund for customers of failed investment firms which are licensed by the Malta Financial Services Authority (MFSA). The Scheme pays compensation if a licensed investment firm is unable or likely to be unable to pay claims against it. In general, this is when the licensed firm stops trading or becomes insolvent. The Scheme is based on the EU Directive 97/9 on investor-compensation schemes.
The Depositor Compensation Scheme is a rescue fund for depositors of failed banks which are licensed by the Malta Financial Services Authority (MFSA). The Scheme only pays compensation if a bank is unable to meet its obligations towards depositors or has otherwise suspended payment. The Scheme is based on the EU Directive 2014/49/EU on deposit-guarantee schemes.
Each scheme is a separate and distinct entity from the other. However, both schemes are managed by a single Management Committee which is appointed by the MFSA. This Committee is made up of persons representing the MFSA, the Central Bank of Malta, investment firms, the banks and customers.
Each Scheme is intended to promote confidence not only in licensed institutions, but more importantly, in the financial system as a whole. The two schemes are in fact financed by the banks and investment firms respectively. This means that the consumer will not be asked to contribute to these schemes.
These two schemes have been introduced as an additional layer of security within a regulatory and legal framework that is already sound and are not being implemented for any particular situation that has arisen in practice.