Financial regulator the Bermuda Monetary Authority is in talks with Government on ways to protect bank customers' deposits.

Yesterday, the BMA said it had been working on "suggestions for design principles of deposit protection" — one of the issues mentioned in the Foot Report on Britain's offshore financial centres.

"The Authority is in the process of working with the Government to develop proposals in this area; the recommendations in the Foot Report will be helpful for this work," the BMA stated.

Finance Minister Paula Cox confirmed later yesterday that her Ministry and the BMA "are taking active steps with reference to enhancing the financial rubric in order to protect depositors".

In the US, the banking industry-funded Federal Deposit Insurance Company provides insurance for customers' deposits of up to $250,000. In Bermuda no such scheme exists.

Deposit protection was one of five regulatory recommendations made by Mr. Foot. The BMA said it was making progress with the others as well.

The others are:

• The need for increased resources: the report emphasises the importance of ensuring that regulatory authorities have sufficient resources to conduct their responsibilities, and notes that the Authority has more than doubled its staff since 2002.

• Establishing good governance arrangements. The BMA said this recommendation appeared to be focused on smaller offshore territories, "but it should be noted that the Authority has been continually upgrading its governance framework over time, and is currently conducting a further benchmarking exercise to ensure that its framework remains effective".

• Ability to take robust action over large banks and clear powers for intervention: The BMA notes that the report commends the prompt action and close oversight of the Bermuda authorities in addressing the pressures facing the local banking sector. The Authority currently has a project underway considering further enhancement of its bank intervention powers.

• Ability to commission independent firm reviews: the Authority already has the power to commission independent reviews of firms, at the firms' expense, and it has used this power during the financial crisis.

Matthew Elderfield, CEO of the Authority said: "While we are pleased with the progress we have already been making in the areas recommended by the report, there is no room for complacency.

"We recognise that the Authority's continuing work programme must ensure Bermuda maintains its high regulatory standards and cooperative approach in the international financial sector. This recognition has driven the work we have underway to enhance Bermuda's regulatory framework."

Jeremy Cox, incoming CEO at the BMA, said: "Our intention moving forward is to ensure that the momentum around the Authority's continual improvement process remains in place, particularly as we work toward our goal of achieving regulatory equivalence for Bermuda."