Jersey’s politicians have unanimously voted in favour of bringing a depositor’s protection scheme into law, following in the wake of the credit crunch which saw financial insitutions collapse, in some cases affecting firms based in the Channel Islands.

Lawmakers have approved the principle of a permanent, standalone DCS that will be activated should a Jersey-registered bank fail. It will provide full protection for private individuals up to a maximum of £50,000 ($82,000) per person, per Jersey banking group, whether or not the depositor is resident in Jersey, according to a statement.

The details of the legislation will now be scrutinised, and will be brought back to parliament later this year for a full debate.

Last year, the issue of compensation in the event of loss surfaced when a number of Icelandic banks, which were registered to do business in some of the UK’s offshore dependencies, ran into trouble.

Besides the £50,000 coverage limit, another key features of the proposed DCS is that it will deliver protection to individuals holding joint accounts, so a £100,000 deposit held by two people would be completely covered. Additionally, the DCS will be operated by an independent board.

The scheme was drawn up after the findings of independent consultants Oxera’s economic analysis of all the options for depositor protection, specifically tailored to Jersey’s banking industry.