Statute Details
- Title: Deposit Insurance and Policy Owners’ Protection Schemes (Withdrawal from DI Fund in Support of Resolution Measures) Regulations 2022
- Act Code: DIPOPSA2011-S59-2022
- Legislation Type: Subsidiary legislation (S.L.)
- Authorising Act: Deposit Insurance and Policy Owners’ Protection Schemes Act 2011
- Enacting power: Section 29B of the Deposit Insurance and Policy Owners’ Protection Schemes Act 2011
- Commencement: 31 January 2022
- Key purpose (as reflected in provisions): Sets out how valuations are to be conducted and reported for determining amounts relevant to section 29A(2) of the Act, in the context of withdrawals from the DI Fund to support resolution measures
- Key Regulations: Regulations 1–4
- Most relevant regulation topics: Independent valuation; valuation principles; valuation report content
- Amendment noted in extract: Amended by S 402/2024 with effect from 10 May 2024 (noted in the valuation assumptions)
What Is This Legislation About?
The Deposit Insurance and Policy Owners’ Protection Schemes (Withdrawal from DI Fund in Support of Resolution Measures) Regulations 2022 (“DI Fund Withdrawal Regulations”) provide the technical framework for a specific decision-making process under Singapore’s deposit insurance and policy owners’ protection regime. In broad terms, the Regulations support the operation of the Deposit Insurance and Policy Owners’ Protection Schemes Act 2011 (“DIPOPSA”) by prescribing how certain amounts must be determined when the DI Fund is used in support of resolution measures.
Resolution measures are actions taken to deal with a failing financial institution in a way that protects depositors and policy owners while maintaining financial stability. The DI Fund is a dedicated fund designed to support deposit insurance and related protection schemes. However, when resolution measures are deployed, the legal and financial consequences for the DI Fund may require calculations that compare what would have happened under ordinary protection outcomes versus what is happening under resolution.
These Regulations focus on the valuation step: they require the appointment of an independent valuer and specify the valuation principles and reporting requirements. The aim is to ensure that the valuation is credible, consistent, and insulated from distortions that would arise if the valuer took into account government support or the effects of resolution measures themselves.
What Are the Key Provisions?
Regulation 1 (Citation and commencement) is straightforward. It confirms the name of the Regulations and that they come into operation on 31 January 2022. For practitioners, this matters when assessing whether a valuation process was required under the Regulations for events occurring after that date.
Regulation 2 (Determination of amounts for purposes of section 29A(2) of the Act) is the gateway provision. It states that, for the purposes of section 29A(2) of DIPOPSA, the Authority (Monetary Authority of Singapore, as the “Authority” under the Act) may appoint an independent valuer to conduct a valuation in accordance with Regulation 3. The valuation is intended to determine the amounts that the Agency would have been repaid from, or out of, the assets of the DI Scheme member under section 27 of the Act.
In practical terms, Regulation 2 links the valuation exercise to a counterfactual question: what would the Agency have been repaid under the statutory scheme if the relevant circumstances had followed the “ordinary” statutory path (as captured by section 27), rather than being affected by resolution measures and related support. This is a common structure in resolution regimes: the law often requires a “what would have happened otherwise” assessment to support fairness, accountability, and the integrity of scheme funding.
Regulation 3 (Principles for conducting valuation) is the core of the Regulations. It mandates that the independent valuer must conduct the valuation according to specified principles, and also allows the Authority to specify additional valuation principles by written notice.
The most important valuation principles include:
- No consideration of government or public support (except ordinary course support): The valuation must not take into account any financial support or assistance provided by the Government, a public body established for public functions, or a public officer—other than financial support provided in the ordinary course of business. This principle prevents the valuation from being artificially improved by extraordinary public interventions.
- Assumption that the DI Scheme member is not subject to resolution measures: The valuation must be made on the assumption that the DI Scheme member is not the subject of resolution measures under specified divisions of Part 8 of the Financial Services and Markets Act 2022. This ensures the valuation reflects a scenario without resolution actions, thereby supporting the counterfactual logic.
- Assumption of winding up under specified insolvency/dissolution pathways: The valuation must be made on the assumption that the DI Scheme member is wound up under Parts 8 and 9 of the Insolvency, Restructuring and Dissolution Act 2018 or by a liquidator appointed under section 250 of that Act. This anchors the valuation in a defined legal process for liquidation, rather than leaving it to the valuer’s discretion.
Notably, the extract indicates that the assumption about resolution measures is tied to particular divisions (Division 2, 4, 5, 6 or 9 of Part 8 of the Financial Services and Markets Act 2022). For practitioners, this is a precision drafting technique: it reduces ambiguity about which resolution measures are excluded from the valuation scenario.
Regulation 4 (Submission of valuation report) sets out the required contents of the independent valuer’s report to the Authority. The independent valuer must submit a valuation report specifying:
- (a) Assessment of amounts: the valuer’s assessment of the amounts that the Agency would have been repaid from or out of the assets of the DI Scheme member under section 27 of the Act.
- (b) Methodologies, assumptions, and sensitivity: an explanation of the key methodologies and assumptions adopted, the reasons for adopting them, and how sensitive the assessment is to those methodologies and assumptions. This is critical for governance and potential review: it allows the Authority (and any stakeholders) to understand what drives the valuation outcome.
- (c) Inherent uncertainty: any source of uncertainty inherent in the valuation assessment. This requirement supports transparency and risk management, acknowledging that valuations often involve estimation and judgment.
From a legal practice perspective, Regulation 4 is not merely administrative. It creates a record that can be used to justify decisions, respond to queries, and support any subsequent legal or regulatory scrutiny. It also helps ensure that the valuation is defensible if challenged.
How Is This Legislation Structured?
The DI Fund Withdrawal Regulations are structured as a short set of four regulations. The structure is designed to move from (1) formalities (citation and commencement), to (2) the decision to appoint an independent valuer, to (3) the substantive valuation methodology and assumptions, and finally to (4) the deliverable (the valuation report) and its required contents.
There are no “Parts” indicated in the extract; instead, the Regulations operate as a compact instrument. The practical effect is that the Regulations function as a procedural and technical annex to DIPOPSA—providing the mechanics for a valuation that DIPOPSA contemplates in section 29A(2), and that is enabled by section 29B.
Who Does This Legislation Apply To?
The Regulations primarily apply to the Authority and any independent valuer appointed by the Authority. The Authority’s role is to decide whether to appoint a valuer and to ensure that the valuation is conducted in accordance with Regulation 3. The independent valuer is bound by the valuation principles and must produce the report required by Regulation 4.
While the Regulations do not directly impose obligations on depositors or policy owners, they indirectly affect them by shaping how the DI Fund’s withdrawal and resolution support mechanisms are quantified. The DI Scheme member (the financial institution within the deposit insurance scheme) is central to the valuation scenario, but the Regulations’ operative duties are directed at the valuation process rather than at the institution’s conduct.
Why Is This Legislation Important?
These Regulations are important because they address a high-stakes intersection between deposit insurance funding and financial institution resolution. When the DI Fund is used to support resolution measures, the legal system needs a disciplined way to determine amounts that would have been repaid under the statutory deposit insurance framework absent resolution. Without a robust valuation methodology, the process could be vulnerable to disputes, inconsistency, or perceived unfairness.
The Regulations’ key contribution is the set of valuation guardrails. By excluding the effects of government support (except ordinary course support) and by assuming the absence of resolution measures, the valuation is designed to reflect a counterfactual baseline. This helps ensure that the amounts determined are not inflated or distorted by the very interventions that resolution entails.
For practitioners advising on resolution-related matters—whether for financial institutions, insolvency practitioners, or stakeholders—the Regulations provide a clear compliance checklist for the valuation process. In particular, the reporting requirements in Regulation 4 create a structured evidentiary record: methodologies, assumptions, sensitivity, and uncertainty must be articulated. This is valuable both for internal governance and for any later regulatory or legal review.
Finally, the ability of the Authority to specify additional valuation principles by written notice (Regulation 3) means that the valuation framework is not frozen in time. Practitioners should therefore monitor any such notices in relevant cases, as they may affect the valuation approach beyond the baseline principles set out in the Regulations.
Related Legislation
- Deposit Insurance and Policy Owners’ Protection Schemes Act 2011 (including sections 27, 29A(2), and 29B)
- Financial Services and Markets Act 2022 (Part 8, including the referenced resolution measure divisions)
- Insolvency, Restructuring and Dissolution Act 2018 (Parts 8 and 9; section 250)
- Dissolution Act 2018 (listed in metadata; relevant to the broader insolvency/dissolution context)
- Markets Act 2022 (listed in metadata; relevant to the broader financial markets legislative framework)
Source Documents
This article provides an overview of the Deposit Insurance and Policy Owners’ Protection Schemes (Withdrawal from DI Fund in Support of Resolution Measures) Regulations 2022 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.