Vol. 573 No. 5
61 Mr. J. O'Keeffe asked the Minister for Finance his views on whether the compensation limit of ?20,000 is adequate for investors in the event of the failure of investment or stockbroking firms; and if he will initiate arrangements to have put in place a more realistic arrangement. [25677/03]
The amount of compensation payable to an investor under the investor compensation scheme is limited to 90% of the amount lost, subject to a maximum pay-out of €20,000. This amount is in line with the obligations imposed under the relevant EU directive, and is generally consistent with the levels of payment available in most other EU member states.
The scheme is funded by contributions from firms which are authorised to conduct investment services. When the scheme was established on 1 August 1998, the compensation fund had no resources of its own. It was hoped that it would have several years in which to accumulate funds from its contributors before it would be called upon to deal with a failing firm. Unfortunately, that was not the case and the scheme has been called upon to deal with three failures. In addition to the annual contributions levied on member firms, it has been necessary to collect a top-up from certain participating firms to maintain the resources of the scheme.
Many of the contributing firms are small scale undertakings and one must strike a fair balance between the interests of investor protection on the one hand and those of the well managed and compliant firms which are being called upon to meet the cost of failed entities on the other.
While, like the Deputy, I would like to see investors' losses from failed stockbroking or investment firms minimised or even eliminated, one must have regard to the burden this would impose on other compliant firms. In all the circumstances, I do not propose to raise the level of compensation payable under the investor compensation scheme at this time.
