Ιn February 2004 the Investment Firms Law («IF Law») was amended, in order to be harmonised with Directive 97/9/EC of the European Parliament and the Council of 3 March 1997 on investor compensation schemes. In view of the above amendment, two separate compensation funds were established, one for clients of credit institutions which offer investment services known as the Investor Compensation Fund for Clients of Banks («ICF») and one for clients of investment firms known as the Investor Compensation Fund for Investment Firm Clients.
Based on the above amendment, the two competent supervisory authorities, the Central Bank of Cyprus and the Cyprus Securities and Exchange Commission proceeded with the issue of relevant Regulations for the operation of the two Funds. In April 2004 the Regulations for the Establishment and Operation of an Investor Compensation Fund for Clients of Banks were issued and amended thereafter in June 2007.
All Cyprus incorporated banks, which offer investment services as defined in the Law which provides for the provision of investment services, the exercise of investment activities, the operation of regulated markets and other related matters of 2017 L. 87(I)/2017 as amended thereafter, are obliged to become members of the ICF. Branches of such banks which operate in other countries outside the Republic of Cyprus are also obliged to become members of the ICF.
Banks having their registered office in a third country which maintain a branch in the Republic or provide in the Republic investment and/or non-core services on a cross-border basis, must also become members of the ICF provided that no cover by a similar Fund of a third country, at least equivalent to the one prescribed by the national legal framework, is extended to its covered clients in the Republic.
The purpose of the ICF is to secure the claims of the covered clients against banks, members of the ICF, through the payment of compensation in cases where the bank concerned is unable, due to its financial circumstances: (a) to return to its covered clients funds owed to them or funds which belong to them but are, directly or indirectly, held by the bank in the context of providing investment services to the said clients or (b) to hand over to covered clients financial instruments which belong to them and which the bank concerned holds, manages or keeps on their account.
Institutional and professional investors are exempted from the ICF.
The maximum amount of compensation to each covered client is €20.000, irrespective of the number of accounts held, currency and place of offering the investment service.
Latest update: 19 March 2024
The above Regulations have been amended and were published in the Official Gazette of the Government on 8 June, 2007. The text of the amended Regulations can be found in this website, only in Greek.