Barclays 2003 Annual Report Download - page 111

Barclays PLC Annual Report 2003 109
Eligible claimants under the Financial Services Compensation Scheme
may make claims against the Scheme in the event of an authorised firm’s
default and may receive compensation if their claim is a protected claim.
Different levels of compensation are available to eligible claimants
depending upon whether the protected claim is in relation to a deposit,
a contract of insurance or protected investment business. The manager
of the Scheme is able to make an offer of compensation or, in respect
of insurance contracts, offer to continue cover or provide assistance to
an insurance undertaking to allow it to continue insurance business
in accordance with the rules of the Scheme. Most deposits made
with branches of Barclays Bank PLC within the European Economic
Area (EEA) which are denominated in sterling or other EEA currencies
(including the euro) are covered by the Scheme. Most claims made in
respect of designated investment business will also be protected claims
if the business was carried on from the UK or from a branch of the bank
or investment firm in another EEA member state. The Scheme
establishes the maximum amounts of compensation payable in respect
of protected claims: for eligible protected deposit claims, this is £31,700
(100% of the first £2,000 and 90% of the next £33,000) and for
protected investment business, this is £48,000 (100% of the first
£30,000 and 90% of the next £20,000). There is no maximum limit for
protected insurance claims. The first £2,000 of a valid claim is paid in full
together with 90% of the remaining loss.
The UK has implemented the minimum requirements imposed by the
European Community Directives on such matters as the carrying on the
business of credit institutions and investment firms, capital adequacy,
own funds and large exposures. These form part of the European Single
Market programme, an important feature of which is the framework for
the regulation of authorised firms. This framework is designed to enable
a credit institution or investment firm authorised in one European Union
member state to conduct banking or investment business through the
establishment of branches or by the provision of services on a cross-
border basis in other member states without the need for local
authorisation. Many of these Directives are being amended to reflect
changes in the market and further European Community Directives are
planned including in the areas of distance marketing, market abuse and
insurance regulation are to be implemented, which once in effect, will
further shape and influence the UK regulatory agenda.
With effect from February 2003, the Group became subject to The
Proceeds of Crime Act 2002 which further strengthens the law with
regard to anti-money laundering. Additionally, new Money Laundering
Regulations came into effect on 1st March 2004. These replace the 1993
Regulations and will be supported by the recently revised Joint Money
Laundering Steering Group Guidance Notes.
Formal consultation is a key aspect of the UK Government’s reform
programme and the Group has been reviewing and, where relevant,
commenting on proposals both directly and through industry
associations.
The Basel Committee on Banking Supervision and the European
Commission have also issued consultation papers designed to replace
the existing framework for the allocation of regulatory capital for credit
risk and to introduce a capital adequacy requirement for operational
risk. These bodies recognise that a more sophisticated approach is
required to address both financial innovation and the increasingly
complex risks faced by financial institutions. The revised Basel Capital
Accord and the EU Risk Based Capital Directive are not currently
expected to be implemented until the end of 2006.
Rest of the World
In the United States, Barclays PLC, Barclays Bank PLC and certain US
subsidiary undertakings, branches and agencies of the Bank are subject
to a comprehensive regulatory structure, involving numerous statutes,
rules and regulations, including the International Banking Act of 1978,
the Bank Holding Company Act of 1956, as amended, the Foreign Bank
Supervision Enhancement Act of 1991 and the USA PATRIOT Act of
2001. Such laws and regulations impose limitations on the types of
businesses, and the ways in which they may be conducted, in the United
States and on the location and expansion of banking business there.
The securities and investment management activities conducted in the
United States are also subject to a comprehensive scheme of regulation
under the US federal securities laws, as enforced by the Securities and
Exchange Commission.
Barclays operates in many other countries and its overseas offices
subsidiary and associated undertakings are subject to reserve and
reporting requirements and controls imposed by the relevant central
banks and regulatory authorities.
Other Information
Supervision and Regulation