Who is eligible for IPF compensation?

Who is eligible for IPF compensation?

An investor may turn to the IPF for compensation only if the underlying claim is based on a commitment secured by a contract concluded by and between an investor and a member of the Fund to an insured activity and the investment provider fails to deliver the assets (securities or money) which are registered as the holdings of the investor and have been transferred to the possession of the provider under the contract.

The insurance offered by the IPF covers contracts concluded for client order, trading, portfolio management, safekeeping, safe custody, administrating client accounts and securities accounts.

Entities pursuing any of the  insured investment service activities and ancillary  services, require a license issued by the Hungarian  Central Bank (the Authority, MNB).Investment providers, investment fund management companies and financial enterprises are obliged to join the IPF; hence the regulatory license these entities are granted by the supervisory authority implies IPF coverage. Commodity dealers  are not required under law to join the IPF; it is worth asking them directly about IPF membership.

Compensation is only paid if the contract that constitutes the basis of a claim was concluded after joining the IPF (i.e. acquiring membership).

Depending on the provisions in its business rules , an investment provider  is required to record contracts in writing or capture them electronically if they are concluded under a written blanket agreement and an investor must support its claim for compensation with the related written contract.

  • An exclusion clause in the Act CXX of 2001 on the Capital Market provides that IPF coverage may not be granted to certain legal entities (e.g. institutional investors, local governments); and private individuals, particularly proprietors of an IPF insured investment provider, as well as their immediate relatives. All investors (legal entities, companies without legal entity and natural persons), other than the persons excluded under law, are eligible for compensation provided that they do not receive their insured claims.