The compensation process is initiated when the Prudential Supervision and Resolution Authority (ACPR) determines the unavailability of the securities and associated cash entrusted by customers to the bank or investment services firm and the institution's inability to fulfil its obligation to return or repay the securities.
The customers of the failed investment services provider do not need to take any action. The entire process is handled by the FGDR, which sends them the compensation to which they are entitled within three months, which may be extended once, along with the necessary information. If needed, the FGDR contacts customers directly.
What is the maximum compensation amount under the investor compensation scheme?
In France, the compensation amount offered by the investor compensation scheme may be as much as €70,000 x 2 per customer, per investment services provider.
The principle is that financial securities are held by a bank or an investment services provider on behalf of their customers. The securities belong to those customers and must be returned to them, even if the bank or service provider fails.
However, if the bank or service provider is unable to return or repay them because the securities have disappeared from the accounts, the Fonds de Garantie des Dépôts et de Résolution intervenes to compensate customers for the missing amount, up to a maximum of €70,000 per customer, per institution.
Scenario 1: If your securities are held at a bank, the cash accounts associated with the securities accounts are covered by the deposit guarantee scheme, added to all other deposits and compensated up to a maximum of €100,000.
Scenario 2: If your securities are held at an investment firm (an investment services provider that is not a bank), the FGDR compensates not only your securities up to €70,000 but also your cash associated with the securities accounts up to a maximum of €70,000.
→ Refer to the “Discover my guarantees/I own securities” section
Under what circumstances does the investor compensation scheme become effective?
The FGDR's investor compensation scheme is initiated when the ACPR determines that the service provider is no longer able to return to its customers the securities and other financial instruments and associated cash entrusted to it.
This implies that two conditions have been met simultaneously:
- the securities have disappeared from your accounts;
- the institution at which your account is held is in suspension of payments and cannot return or reimburse the securities.
In this case, the investor compensation scheme pays compensation based on the value of the financial instruments and cash that are no longer available to the customer.
The cash associated with the securities accounts is also compensated:
- included in the amounts covered by the deposit guarantee scheme up to €100,000, if your securities account is held by a bank;
- up to €70,000 if your securities, and therefore the associated cash account, are managed by an investment firm or investment services provider.
The investor compensation scheme does not cover possible changes in the market value of the securities or commercial disputes between the customer and the service provider (for example, relating to management of the portfolio).
→ Refer to the “Discover the compensation process/I own securities” section
How do I know if my institution is covered by the FGDR's deposit guarantee or investor compensation scheme?
As a general rule, any credit institution or investment firm that receives authorisation from the Prudential Supervision and Resolution Authority (ACPR) is a member of the Fonds de Garantie des Dépôts et de Résolution (FGDR).
Membership in the FGDR is a prerequisite for conducting its business. Customers are then covered by the FGDR's guarantees.
The FGDR also covers customers of branches opened by its members in a country of the European Economic Area (EEA).
Conversely, customers of branches of European banks opened in France are covered by the guarantee scheme of the country in which that bank has its head office.
In both cases, the FGDR cooperates with its European counterparts to cover customers of these branches so that they are treated under the same conditions as customers of their bank's head office.
→ Refer to the “Document database/Legal framework/International regulation” section
→ Refer to the “Check if your bank is protected” section to check whether your bank or investment services provider is covered by the FGDR
→ Refer to the “About the FGDR/Members” section