Statute Details
- Title: Deposit Insurance and Policy Owners’ Protection Schemes (Financial Penalty) Order 2024
- Act Code: DIPOPSA2011-S1042-2024
- Legislative Type: Subsidiary legislation (SL)
- Authorising Act: Deposit Insurance and Policy Owners’ Protection Schemes Act 2011 (“DIPOPSA 2011”)
- Enacting authority: Deputy Prime Minister and Minister for Trade and Industry (Gan Kim Yong), with the Minister charged with responsibility for DIPOPSA 2011
- Key power used: Section 8(4) of DIPOPSA 2011
- Commencement: 1 January 2025
- Citation: SL 1042/2024 (No. S 1042)
- Status (as provided): Current version as at 27 March 2026
- Made date: 20 December 2024
- Core provisions: Section 1 (citation/commencement), Section 2 (definitions), Section 3 (financial penalty formula), Section 4 (revocation)
What Is This Legislation About?
The Deposit Insurance and Policy Owners’ Protection Schemes (Financial Penalty) Order 2024 (“Financial Penalty Order 2024”) is a Singapore subsidiary instrument that sets out how a financial penalty is calculated when a member of the Deposit Insurance (“DI”) Scheme fails to meet an “asset maintenance requirement”. In practical terms, it provides the formula and the interest-like rate mechanics used to quantify the daily (or part-day) penalty payable for non-compliance.
The Order is made under section 8(4) of the Deposit Insurance and Policy Owners’ Protection Schemes Act 2011 (“DIPOPSA 2011”). DIPOPSA 2011 establishes the regulatory framework for deposit insurance and policy owners’ protection schemes. Within that framework, the Authority (the Monetary Authority of Singapore, “MAS”) may impose requirements on DI Scheme members to maintain a minimum amount of assets in Singapore. If a DI Scheme member falls short, the law empowers the Government to prescribe a financial penalty mechanism.
Although the Order is short, it is operationally significant. It translates a compliance failure (insufficient assets) into a quantifiable monetary liability, using a formula tied to a market benchmark—specifically, the 3-month compounded Singapore Overnight Rate Average (“SORA”). This matters for treasury, compliance, and legal risk management because the penalty can accrue daily, and the rate component changes with the relevant SORA reference.
What Are the Key Provisions?
Section 1: Citation and commencement confirms that the instrument is the “Deposit Insurance and Policy Owners’ Protection Schemes (Financial Penalty) Order 2024” and that it comes into operation on 1 January 2025. For practitioners, this is the effective date for the new penalty regime (including the revocation of the earlier 2011 Order).
Section 2: Definitions is central because the penalty formula in section 3 depends on several defined terms. The definitions clarify (i) how SORA is computed and sourced, (ii) what counts as a “business day”, (iii) what “asset maintenance requirement” means, and (iv) what “3-month compounded SORA” means for the relevant day.
Key defined terms include:
- “asset maintenance requirement”: the requirement imposed by the Authority under section 8(1) of DIPOPSA 2011 on a DI Scheme member (or class of members) to maintain the prescribed minimum amount of assets in Singapore.
- “business day”: any day other than Saturday, Sunday, public holiday or bank holiday.
- “SORA”: the volume-weighted average rate of unsecured overnight interbank Singapore dollar borrowing transactions in Singapore between 8 a.m. and 6.15 p.m., published by MAS on the next business day (or otherwise made publicly accessible if MAS’s website is unavailable).
- “3-month compounded SORA”: the compounded average of SORA values for a 3-month period immediately before and including the relevant business day, computed by the Authority using a prescribed methodology (the “SORA Index / Compounded SORA and MAS FRN: A User Guide” dated 16 March 2021), and published on the next business day on MAS’s website (or in another accessible form).
- “bank holiday”: a day declared by the Authority under section 60(1) of the Banking Act 1970.
Section 3: Financial penalty sets the prescribed formula for the penalty F payable for every day or part of a day that the DI Scheme member fails to comply with the asset maintenance requirement. The extract provided indicates that the formula is expressed in terms of a deficiency amount and a rate component.
In substance, the penalty is calculated as follows:
- A represents the deficiency in the amount of assets necessary for the DI Scheme member to comply with the asset maintenance requirement.
- r is the rate equal to 10 percentage points above the 3-month compounded SORA for a specified reference day.
- The reference for r depends on whether the day of non-compliance is a business day:
- If the day on which the bank fails to comply is a business day, then r uses the 3-month compounded SORA for that day.
- If that day is not a business day, then r uses the 3-month compounded SORA for the last business day immediately before the day of non-compliance.
While the extract does not display the full algebraic formatting of the formula (the “where—” structure is shown, but the exact placement of multiplication/division symbols is truncated), the legal effect is clear: the penalty is driven by (i) the size of the asset shortfall and (ii) a daily rate derived from SORA plus a fixed spread of 10 percentage points. This structure resembles a penalty interest calculation, designed to be punitive and to reflect time value and market conditions.
Section 4: Revocation provides that the earlier Deposit Insurance and Policy Owners’ Protection Schemes (Financial Penalty) Order 2011 (G.N. No. S 236/2011) is revoked. This is important for transition: after 1 January 2025, the 2024 Order governs the prescribed penalty formula for non-compliance occurring on or after its commencement.
How Is This Legislation Structured?
The Financial Penalty Order 2024 is structured as a short instrument with four sections:
- Section 1 sets out the citation and commencement date.
- Section 2 provides definitions used in the penalty computation, including the SORA-based benchmark and the meaning of “business day” and “asset maintenance requirement”.
- Section 3 contains the operative provision: the prescribed formula for the financial penalty payable for each day (or part day) of non-compliance.
- Section 4 revokes the earlier 2011 penalty order.
Who Does This Legislation Apply To?
The Order applies to DI Scheme members—that is, entities that are members of the Deposit Insurance Scheme established under DIPOPSA 2011. The penalty liability is triggered when such a member fails to comply with the asset maintenance requirement imposed by the Authority under section 8(1) of DIPOPSA 2011.
In practice, the scope is therefore not “all financial institutions” generally, but those specifically designated as DI Scheme members and subject to the Authority’s asset maintenance requirement. The Order also contemplates that the Authority may impose the requirement on a class of DI Scheme members, meaning the penalty regime can apply uniformly to a category of institutions if the deficiency and non-compliance occur.
Why Is This Legislation Important?
Although the Order is brief, it has direct financial and compliance consequences. The penalty is calculated for every day or part of a day of non-compliance. This means that even shortfalls that persist across multiple days can lead to compounding liability, and that compliance teams must monitor asset positions with operational precision.
From a legal and risk perspective, the Order’s reliance on SORA-based benchmarks makes the penalty sensitive to market rates and to the Authority’s published compounded SORA methodology. The definitions ensure that there is a clear reference source (MAS’s website or an alternative public form if the website is unavailable) and a clear computational method (the “SORA Index / Compounded SORA and MAS FRN: A User Guide” dated 16 March 2021). This reduces ambiguity and supports enforceability.
The fixed spread of 10 percentage points above 3-month compounded SORA indicates a deliberate policy choice: the penalty is not merely a reimbursement of funding costs but is designed to be punitive. For practitioners advising DI Scheme members, this underscores the importance of (i) governance around compliance with asset maintenance requirements, (ii) early detection and remediation of asset deficiencies, and (iii) documentation of calculations and the relevant SORA reference day (including the business day/non-business day rule).
Related Legislation
- Deposit Insurance and Policy Owners’ Protection Schemes Act 2011 (DIPOPSA 2011), including section 8 (asset maintenance requirement and penalty power)
- Banking Act 1970 (definition of “bank holiday” reference)
- Deposit Insurance and Policy Owners’ Protection Schemes (Financial Penalty) Order 2011 (revoked by Section 4 of this Order)
Source Documents
This article provides an overview of the Deposit Insurance and Policy Owners’ Protection Schemes (Financial Penalty) Order 2024 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.