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”)
- Enacting Authority: Deputy Prime Minister and Minister for Trade and Industry (Gan Kim Yong), with the Minister charged with responsibility for DIPOPSA
- Making Date: 20 December 2024
- Commencement: 1 January 2025
- Current Version Status: Current version as at 27 March 2026 (per the legislation portal)
- Key Provisions: Section 1 (Citation and commencement); Section 2 (Definitions); Section 3 (Financial penalty formula); Section 4 (Revocation)
- Revokes: Deposit Insurance and Policy Owners’ Protection Schemes (Financial Penalty) Order 2011 (G.N. No. S 236/2011)
What Is This Legislation About?
The Deposit Insurance and Policy Owners’ Protection Schemes (Financial Penalty) Order 2024 is a Singapore subsidiary instrument made under the Deposit Insurance and Policy Owners’ Protection Schemes Act 2011. In practical terms, it sets the calculation method for a daily financial penalty payable by a “DI Scheme member” when that member fails to meet an “asset maintenance requirement” imposed by the relevant authority.
The legislation is not a broad regulatory framework on its own. Instead, it operates as a technical “formula order” that gives effect to DIPOPSA’s penalty mechanism. DIPOPSA empowers the Minister to prescribe how the penalty is computed. This Order supplies the missing piece: the prescribed formula for the penalty (denoted as F) for each day (or part of a day) of non-compliance.
For practitioners, the key point is that the Order is designed to be operational and quantifiable. It defines the interest-rate-like component using the Singapore Overnight Rate Average (SORA), and it ties the penalty to the deficiency in assets relative to the required minimum. The result is a penalty that scales with both the size of the shortfall and the time over which the shortfall persists.
What Are the Key Provisions?
Section 1 (Citation and commencement) provides the formal name of the instrument and states that it comes into operation on 1 January 2025. This matters for compliance planning and for determining which penalty regime applies to non-compliance occurring before and after commencement.
Section 2 (Definitions) is crucial because the penalty formula depends on several defined terms. The Order defines, among other things:
- “business day”: any day other than Saturday, Sunday, public holiday or bank holiday.
- “bank holiday”: a day declared by the Authority under section 60(1) of the Banking Act 1970.
- “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 the Authority on the next business day.
- “3-month compounded SORA”: the compounded average of SORA values for a 3-month period immediately before and including a relevant business day, computed by the Authority using a prescribed methodology and published on the next business day.
- “prescribed methodology”: the user guide titled “Compounded Singapore Overnight Rate Average Index (“SORA Index”), Compounded SORA and MAS Floating Rate Notes (“MAS FRN”): A User Guide” dated 16 March 2021, as published by the Authority.
- “asset maintenance requirement”: the requirement imposed by the Authority under section 8(1) of DIPOPSA on a DI Scheme member (or class of members) to maintain the prescribed minimum amount of assets in Singapore.
- “Authority’s website”: identified as the Monetary Authority of Singapore (MAS) website (https://www.mas.gov.sg), with a fallback where the website is unavailable.
These definitions ensure that the penalty calculation is anchored to publicly verifiable benchmarks (SORA and compounded SORA) and to the Authority’s published methodology. For a lawyer advising a DI Scheme member, this reduces ambiguity about which rate applies and how it is computed.
Section 3 (Financial penalty) is the operative provision. It states that, for purposes of section 8(4) of DIPOPSA, the prescribed formula for the financial penalty (F) is payable for every day or part of a day that the DI Scheme member fails to comply with the asset maintenance requirement.
The Order provides that the formula depends on two key variables:
- A: the deficiency in the amount of assets necessary for the DI Scheme member to comply with the asset maintenance requirement.
- r: a rate equal to 10 percentage points above the 3-month compounded SORA for a specified reference day.
While the extract you provided does not display the full algebraic expression for F (the formula is shown as “where …” and then defines A and r), the structure is clear: the penalty is a function of the asset shortfall (A) and an interest-like rate component (r) derived from compounded SORA plus a fixed spread of 10 percentage points. The “daily or part of a day” language indicates that the penalty accrues with time, not merely as a one-off amount.
Section 3 also specifies how to determine the relevant SORA reference point for r, depending 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, r is calculated using 3-month compounded SORA for that day.
- If that day is not a business day, r uses the last business day immediately before the day of failure.
This “business day” rule is a practical compliance detail. It prevents uncertainty about which rate applies when non-compliance begins on a weekend, public holiday, or bank holiday. For enforcement and dispute scenarios, it also provides a defensible methodology for determining the penalty amount.
Section 4 (Revocation) revokes the earlier framework: the Deposit Insurance and Policy Owners’ Protection Schemes (Financial Penalty) Order 2011 (G.N. No. S 236/2011). This confirms that the 2024 Order is intended to replace the 2011 formula regime, with effect from its commencement date (1 January 2025).
How Is This Legislation Structured?
The Order is structured as a short, formula-focused instrument with four sections:
- Section 1: Citation and commencement (when the Order takes effect).
- Section 2: Definitions (key terms used in the penalty formula, including SORA and compounded SORA concepts, and the asset maintenance requirement).
- Section 3: Financial penalty (the prescribed formula and the rate reference mechanics).
- Section 4: Revocation (repealing the 2011 Order).
Notably, the Order does not itself impose the asset maintenance requirement. That requirement is imposed by the Authority under DIPOPSA (section 8(1)), and the penalty is triggered by failure to comply with that requirement. This Order supplies the calculation for the penalty once the statutory trigger is met.
Who Does This Legislation Apply To?
The Order applies to a DI Scheme member. In the DIPOPSA framework, DI Scheme members are typically financial institutions that participate in the deposit insurance and policy owners’ protection arrangements. The penalty mechanism is therefore aimed at regulated entities that must maintain prescribed minimum assets in Singapore.
Liability arises when a DI Scheme member fails to comply with the asset maintenance requirement imposed by the Authority under DIPOPSA. The Order’s daily accrual approach means that the scope of application is not limited to a single event; rather, it covers each day or part of a day during which non-compliance persists.
Why Is This Legislation Important?
This Order is important because it translates a statutory enforcement concept—penalising non-compliance with asset maintenance—into a precise, market-linked calculation. By using SORA and compounded SORA, the penalty rate is tied to an observable benchmark published by the Authority. This supports transparency and consistency across enforcement cases.
From a compliance perspective, the Order incentivises DI Scheme members to maintain adequate assets in Singapore and to monitor asset levels continuously (or at least with sufficient frequency to avoid “part of a day” exposure). Because the penalty is calculated per day or part of a day, even brief lapses may have financial consequences.
For legal practitioners, the Order also matters in dispute resolution and regulatory engagement. If a DI Scheme member challenges the penalty amount, the defined terms and the business-day reference rule provide a structured basis for recalculation. Additionally, the revocation of the 2011 Order confirms that the 2024 formula is the operative regime from 1 January 2025, which is relevant to transitional issues and to any retrospective arguments about which formula applies.
Related Legislation
- Deposit Insurance and Policy Owners’ Protection Schemes Act 2011 (DIPOPSA) — in particular section 8 (asset maintenance requirement and financial penalty power)
- Banking Act 1970 — definition of “bank holiday” reference point (section 60(1))
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.