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PR(01)22: The EFTA Surveillance Authority adopts a report on the application of the investor-compensation schemes directive (97/9/EC)


The EFTA Surveillance Authority has adopted a report on the application of the Investor-Compensation Schemes Directive (97/9/EC) in Iceland, Liechtenstein and Norway.

Directive 97/9/EC, as incorporated into the EEA Agreement, requires every EEA State to have an investor-compensation scheme or schemes to which every investment firm must belong.  Directive 97/9/EC sets out a harmonised minimum level of compensation of Euro 20.000 which has to be covered for each investor in respect of claims arising out of an investment firm’s inability to repay money or return instruments owned by investors, but held by the firm in connection with its investment business. Special provisions relate to branches of investment firms that operate in other EEA States.

According to Article 14 of Directive 97/9/EC, the European Commission shall draft a report on the application of the Directive. In respect of the EFTA States, this task is incumbent upon the EFTA Surveillance Authority, except in relation to the “export ban clause” of the Directive which was the subject of a report by the Standing Committee of the EFTA States on 20 March 2000 (S/00/R/010).

The Authority’s report gives detailed qualitative and quantitative information on the functioning of the Investor-Compensation Schemes established in the EFTA States. The Authority’s report focuses more particularly on the application of the so-called “top-up clause”, as provided by Article 7, paragraphs 1 and 2 of the Directive 97/9/EC, in the three EFTA States.

The “top-up clause” gives branches from investment firms established in other EEA States the right to join their host countries’ investor-compensation schemes in the case where these schemes provide for a higher level of cover than the State of origin. This rule is meant to prevent disparities in compensation and unequal competition between national investment firms and branches of firms established in other EEA States. On the basis of the information provided by the EFTA States, the Authority’s report notes that, so far, no request for top-up clauses by branches from other EEA States has been formulated to the EFTA States.

The full text of the Authority’s report is available at: under Surveillance Authority, publications, other reports. A paper version of the Authority’s report is also available on request.

For further information please contact Mr. Jónas Fr. Jónsson, Director of the Persons, Services and Capital Movements Directorate, telephone (32)-2-286-1860.

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