Deposit fund closed to new business
GGF Fund will not accept any deposit payments into the GGF Deposit Indemnity Fund due to the uncertain market conditions caused by the Covid-19 crisis.
The GGF Fund board, having taken specialist legal advice, decided to close the Deposit Indemnity Fund to any new deposit registrations from April 1, 2020.
John Agnew, GGF Fund chairman, said: “This immediate action was necessary to protect the GGF Deposit Indemnity Fund and also to ensure the GGF Fund board discharge their legal obligations as directors. This decision was not taken lightly but upon expert legal advice and on behalf of GGF Deposit Indemnity Fund members in an extremely difficult trading environment.”
The timing of this decision means that the GGF Deposit Indemnity Fund current insurance cover expired on March 31, 2020. With the extent and length of the Covid-19 lockdown in the UK unknown, re-insurers could not take on the existing risk levels in the current market conditions. Although insurance is now in place from April 1, 2020, the terms of the cover are still not sufficient to cover several large or multiple small liquidations.
GGF Deposit Indemnity Fund members will need to take their own actions to ensure that they comply with the requirements of their chosen Competent Person Scheme in England and Wales.
The GGF Fund will still provide cover for deposits taken by GGF Fund members up to March 31, 2020, as long as any premiums for deposits taken up to that date are paid to the GGF Fund by the April 30, 2020.
“Fully paid up GGF Deposit Indemnity Fund members will be entitled to any re-distribution of funds if there is a surplus after paying out all valid consumer claims and other costs associated with the administration of the GGF Deposit Indemnity Fund,” John said. “We have contacted all GGF Fund members asking for a detailed breakdown of all deposits taken between January 1, 2020, and March 31, 2020.
“In the longer term, and when the trading landscape returns to normal, the GGF will continue its commitment to members by looking for a competitive insurance-based deposit indemnity product to help them protect their customers’ deposits.”