The Central Bank ensures that the activities of the Depositors and Investors’ Guarantee Fund for financial undertakings comply with Act no. 98/1999 (in Icelandic) on Deposit Guarantees and Investor Compensation Schemes, Regulation no. 120/2000 (in Icelandic) and the Articles of Association of the fund, cf. Article 15 of the Act.
The Depositors and Investors’ Guarantee Fund is a self-governing foundation. Its objective is to guarantee a minimum level of protection to depositors and to customers of companies in the event of payment difficulties of a given financial undertaking in accordance with the provisions of the aforementioned Act and Act no. 70/2020 (in Icelandic) on Resolution of Credit Institutions and Investment Firms.
The Depositors and Investors’ Guarantee Fund operates as three departments: a Deposit Department, Securities Department and Resolution Fund. The activities of the Deposit Department and the Securities Department are discussed in the Act on Deposit Guarantees and Investor Compensation Schemes. Contributions to the Resolution Fund as well as the disposition of its funds are governed by the Act on Resolution of Credit Institutions and Investment Firms. According to the Act, the Depositors and Investors’ Guarantee Fund has been entrusted with the administration of the fund, which mainly consists in the custody and investment of the fund, but the Resolution Authority of the Central Bank makes decisions regarding payments from the fund.
The provisions of the Act on Deposit Guarantees and Investor Compensation Schemes are based on Directive 94/19/EC on Deposit Guarantee Schemes. The new directive 2014/49/EU on Deposit Guarantee Schemes entered into force within the EU in April 2014, but has not been incorporated into the EEA agreement and therefore has not yet been implemented into Icelandic law. The provisions of the Act on the Securities Department are largely based on the provisions of Directive 97/9/EC on Investor Compensation schemes. Provisions for a resolution fund under the Act on Resolution of Credit Institutions and Investment Firms are based on Directive 2014/59/EU, which establishes a framework for the recovery and resolution of credit institutions and investment firms (BRRD).
Commercial banks, savings banks, investment firms and, if applicable, credit undertakings, UCITS management companies and managers of alternative investment funds must be members of the deposit and securities departments of the Depositors and Investors’ Guarantee Fund, provided they are established in Iceland. The same applies to branches of these entities within the EEA.