INDUSTRYNEWS
GGF Fund Ltd closes to new business
The Board of the GGF Fund Ltd has taken the decision to not accept any deposit
payments into the GGF Deposit Indemnity Fund from 1st April 2020 due to the
uncertain and unprecedented market conditions caused by the COVID-19 crisis.
» THE GGF FUND LTD BOARD,
having sought and taken specialist legal advice
from several experts, took the decision to
close the Deposit Indemnity Fund to any new
deposit registrations from 1st April 2020.
John Agnew, GGF Fund Chairman
commented, “This immediate action was
necessary to protect the GGF Deposit
Indemnity Fund and also to ensure the
GGF Fund Ltd Board discharge their legal
obligations as Directors. This decision was not
taken lightly but upon expert legal advice and
on behalf of GGF Deposit Indemnity Fund
Members in an extremely difficult trading
environment.”
The timing of this decision means that
the GGF Deposit Indemnity Fund current
insurance cover expired on 31st March 2020.
With the extent and length of the COVID-19
lockdown in the UK unknown, re-insurers
could not take on the existing risk levels in
the current market conditions. Although
insurance is now in place from 1st April 2020,
the terms of the cover are still not sufficient
to cover several large or multiple small
liquidations.
‘The decision to close the
Fund to new business, though
regretful, was taken in the
best interests of the Fund
Members and their customers’
Mark Austin, GGF Fund Director
commented “With the worsening COVID-19
situation and the resultant closure to trading
throughout the industry for an unknown
period of time, the GGF Fund Ltd Board of
Directors found itself in a position where legal
advice had to be followed. The advice was
to cease taking on new deposit registrations
to protect the monies currently held by the
GGF Deposit Indemnity Fund. The decision
to close the Fund to new business, though
regretful, was taken in the best interests of the
Fund Members and their customers.”
10 » M AY 2020 » CL EARVI E W- UK . C O M
The implications of this decision now mean
that GGF Deposit Indemnity Fund Members
will need to take their own actions to ensure
that they comply with the requirements of
their chosen Competent Person Scheme in
England & Wales. Examples of compliance
may be;
• That companies wish to encourage
consumers from whom you take a
deposit from to pay some or all of the
deposit by credit card (as long as the total
contract value is above £100 and below
£30,000). The GGF Fund Ltd, advises
that all companies who take deposits seek
their own specific legal advice on this
compliance.
• That customers buying products via credit
finance agreements should have their
deposits protected under Section 75A of
the Consumer Credit Act as long as the
total contract value is under £60,260.
Again the GGF Fund Ltd, advises that
companies seek their own specific legal
advice on this.
The GGF Fund Ltd will still provide cover
for deposits taken by GGF Fund Members up
to 31st March 2020 as long as any premiums
for deposits taken up to that date are paid to
the GGF Fund Ltd., by the 30th April 2020.
Under the GGF Deposit Indemnity Fund
Rules, the consumers’ deposit monies will
not be covered, until a GGF Fund Member
pays the premiums on deposits taken up until
the 31st March 2020. Deposit protection is
a legal requirement of the Competent Person
Schemes in England & Wales.
John Agnew added, “Fully paid up GGF
Deposit Indemnity Fund Members, will be
entitled to any re-distribution of funds if there
is a surplus after paying out all valid consumer
claims and other costs associated with the
administration of the GGF Deposit Indemnity
Fund. We have contacted all GGF Fund
Members asking for a detailed breakdown of
all deposits taken between 1st January 2020
and 31st March 2020. In the longer term and
when the trading landscape returns to normal,
the GGF will continue its commitment
to Members by looking for a competitive
insurance based deposit indemnity product to
help them protect their customers’ deposits.”
www.ggf.org.uk