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COMP 12.1 Application and Purpose

Application

COMP 12.1.1 R

This chapter applies to the FSCS.

COMP 12.1.2 G

This chapter is also relevant to claimants, since it sets out how a claim will be quantified. (For the process of paying compensation, including the limits on the amount of compensation that can be paid, see COMP 8 - COMP 11).

Purpose

COMP 12.1.3 G

The purpose of this chapter is to set out the different ways in which the FSCS is to calculate compensation.

COMP 12.2 Quantification: general

COMP 12.2.1A R

8The amount of compensation payable to the claimant in respect of any type of protected claim is the amount of his overall net claim against the relevant person (or, where applicable, a successor)7 at the quantification date and any reference in COMP to overall claim means "overall net claim"7.

COMP 12.2.2 R

COMP 12.2.1 R is, however, subject to the other provisions of COMP, in particular those rules that set limits on the amount of compensation payable for various types of protected claim. The limits are set out in COMP 10.

COMP 12.2.3 G

Where a liability of a relevant person (or, where applicable, a successor)7 to an eligible claimant could fall within more than one type of protected claim (see COMP 5.2.1 R), for example a claim in connection with money held by an MiFID investment firm2 that is also a credit institution, the FSCS should seek to ensure that the claimant does not receive any further compensation payment from the FSCS in cases where the claimant has already received compensation from the FSCS in respect of that claim.

2

Overall net claim

COMP 12.2.4 R

A claimant's overall claim5 is the sum of the protected claims of the same category that he has against a relevant person (or, where applicable, a successor)7in default, less the amount of any liability which the relevant person or successor, as appropriate,7 may set off against any of those claims (see COMP 10.2.2 G).

COMP 12.2.5 G

For the different categories of protected claim, see COMP 5 and COMP 10.2.3 R.

COMP 12.2.6 G

In calculating the claimant's overall claim5, the FSCS may rely, to the extent that it is relevant, on any determination by:

  1. (1)

    a court of competent jurisdiction;

  2. (2)

    a trustee in bankruptcy;

  3. (3)

    a liquidator;

  4. (4)

    any other recognised insolvency practitioner;

and on the certification of any net sum due which is made in default proceedings of any exchange or clearing house.

Payments to the claimant5

COMP 12.2.7A R

8The FSCS must take into account any payments to the claimant (including amounts recovered by the FSCS on behalf of the claimant) made by the relevant person (or, where applicable, a successor)7 or the FSCS or any other person, if that payment is connected with the relevant person's (or, where applicable, a successor's)7 liability to the claimant in calculating the claimant's overall claim.

Time for calculation of compensation due to the claimant5

COMP 12.2.8 R

1The FSCS must calculate the amount of compensation due to the claimant as soon as reasonably possible after it is satisfied that the conditions in COMP 3.2.1 R have been met.

Settlement of claims

COMP 12.2.10 R
  1. (1)

    6The FSCS may pay compensation without fully or at all investigating the eligibility of the claimant and/or the validity and/or amount of the claim notwithstanding any provision in this sourcebook or FEES 6 to the contrary, if in the opinion of the FSCS:

    1. (a)

      the costs of investigating the merits of the claim are reasonably likely to be disproportionate to the likely benefit of such investigation; and

    2. (b)

      (as a result or otherwise) it is reasonably in the interests of participant firms to do so.

  2. (2)

    This rule does not apply with respect to claims that are excluded by Article 2 of the Deposit Guarantee Directive or by Article 3 of the Investor Compensation Directive.

COMP 12.3 Quantification date

Protected investment business

COMP 12.3.5 R

For a claim made in connection with protected investment business which is not an ICD claim, the FSCS must determine a specific date as the quantification date, and this date may be either on, before or after the date of the determination of default.

COMP 12.3.6 R

For a claim made in connection with protected investment business which is an ICD claim, the quantification date is the date the relevant person, or, where applicable, a successor,5 is determined to be in default.

Protected home finance mediation3

COMP 12.3.7 R

2 1For a claim made in connection with protected home finance mediation3, the FSCS must determine a specific date as the quantification date, and this date may be either on, before or after the date of determination of default.

3

Protected non-investment insurance mediation2

COMP 12.3.8 R

2For a claim made in connection with protected non-investment insurance mediation, the FSCS must determine a specific date as the quantification date, and this date may be either on, before or after the date of determination of default.

COMP 12.4 The compensation calculation

Protected investment business: general

COMP 12.4.2 R

The FSCS may pay compensation for any claim made in connection with protected investment business which is not:

  1. (1)

    a claim for property held; or

  2. (2)

    a claim arising from transactions which remain uncompleted at the quantification date;

only to the extent that the FSCS considers that the payment of compensation is essential in order to provide the claimant with fair compensation.

COMP 12.4.3 R

The FSCS must not pay compensation for any claim in connection with protected investment business to the extent that it relates to or depends on:

  1. (1)

    a failure of investment performance to match a guarantee given or representation made; or

  2. (2)

    a contractual obligation to pay or promise to pay which the FSCS considers to have been undertaken without full consideration passing to the relevant person or in anticipation of possible insolvency; or

  3. (3)

    the mere fluctuation in the value of an investment.

COMP 12.4.4 R

If the claimant has an ICD claim against an incoming EEA firm which is a8MiFID investment firm5 (including a credit institution which is a8MiFID investment firm) or, where applicable, a successor of such a firm8, the FSCS must take account of the liability of the Home State compensation scheme in calculating the compensation payable by the FSCS.

5 5 5

Protected investment business: claims covered by the pensions review

COMP 12.4.5 R

If the claimant has a claim in connection with protected investment business relating to the fact that the claimant has:

  1. (1)

    while eligible or reasonably likely to become eligible to be a member of an occupational pension scheme, instead become a member of a personal pension scheme or entered into a retirement annuity; or

  2. (2)

    ceased to be a member of, or to pay contributions to, an occupational pension scheme, and has instead become a member of a personal pension scheme or entered into a retirement annuity; or

  3. (3)

    transferred to a personal pension scheme accrued rights under an occupational pension scheme which is not a defined contribution (money purchase) scheme; or

  4. (4)

    ceased to be a member of an occupational pension scheme and has instead (by virtue of such a provision as is mentioned in section 591(2)(g) of the Income and Corporation Taxes Act 1988) entered into arrangements for securing relevant benefits by means of an annuity;

the FSCS must take the steps set out in COMP 12.4.6R.

COMP 12.4.6 R

If COMP 12.4.5R applies, the FSCS must follow the Specification of Standards and Procedures issued by the FSA in October 1994, as supplemented and modified by subsequent guidance issued by the FCA (in particular, that of November 1996) (the 'Specification') in:

  1. (1)

    assessing whether a relevant person has complied with the relevant regulatory requirements;

  2. (2)

    assessing whether non-compliance has caused the claimant loss; and

  3. (3)

    calculating the amount of compensation due (where the FSCS may rely on calculations made by the FCA or any previous regulator of the relevant person);

unless the FSCS considers that departure from the Specification is essential in order to provide the claimant with fair compensation.

Protected investment business: FSAVC Review

COMP 12.4.7 R

Where a claim made in connection with protected investment business relates to an Additional Voluntary Contribution policy advised on or arranged by a relevant person, the FSCS must follow the FSAVC Review Model Guidance issued by the FSA in May 2000 (the "Guidance") in:

  1. (1)

    assessing whether the relevant person has complied with the relevant regulatory requirements;

  2. (2)

    assessing whether non-compliance has caused the claimant loss; and

  3. (3)

    calculating the compensation due (where the FSCS may rely on calculations made by the FCA or any previous regulator of the relevant person);

unless the FSCS considers that departure from the Guidance is essential in order to provide the claimant with fair compensation.

Protected investment business: excessive benefits

COMP 12.4.8 R

The FSCS may decide to reduce the compensation that would otherwise be payable for a claim made in connection with protected investment business that is not an ICD claim, if it is satisfied that:

  1. (1)

    there is evidence of contributory negligence by the claimant; or

  2. (2)

    payment of the full amount would provide a greater benefit than the claimant might reasonably have expected or than the benefit available on similar investments with other relevant persons; and

it would be inequitable for the FSCS not to take account of (1) or (2).

3 7
COMP 12.4.16 R

3For claims arising in connection with protected contracts of insurance, the FSCS must treat any term in an insurance undertaking's constitution or in its contracts of insurance, limiting the undertaking's liabilities under a long-term insurance contract to the amount of its assets, as limiting the undertaking's liabilities to any claimant to an amount which is not less than the gross assets of the undertaking.

4Protected home finance mediation41

COMP 12.4.17 R

3 1The FSCS may pay compensation for any claim made in connection with protected home finance mediation4only to the extent that the FSCS considers that the payment of compensation is essential in order to provide the claimant with fair compensation.

4
COMP 12.4.18 R

3 1The FSCS must not pay compensation for any claim in connection with protected home finance mediation4to the extent that it relates or depends on:

4
  1. (1)

    a failure of investment performance to match a guarantee given or representation made; or

  2. (2)

    the mere fluctuation in the value of property

COMP 12.4.19 R

1The FSCS may decide to reduce the compensation that would otherwise be payable for a claim made in connection with protected home finance mediation4 if it is satisfied that there is evidence of contributory negligence by the claimant and it would be inequitable for FSCS not to take account of that fact.

4

Protected non-investment insurance mediation3

COMP 12.4.20 R

3The FSCS may pay compensation for any claim made in connection with protected non-investment insurance mediation only to the extent that the FSCS considers that the payment of compensation is essential in order to provide the claimant with fair compensation.

COMP 12.4.21 R

3The FSCS may decide to reduce the compensation that would otherwise be payable for a claim made in connection with protected non-investment insurance mediation if it is satisfied that:

  1. (1)

    there is evidence of contributory negligence by the claimant; or

  2. (2)

    payment of the full amount would provide a greater benefit than the claimant might reasonably have expected or than the benefit available on similar contracts with other relevant persons; and

it would be inequitable for FSCS not to take account of (1) or (2).

Consumer redress schemes

COMP 12.4.22 R

6For a claim which falls to be dealt with (or has properly been dealt with) under a consumer redress scheme, the FSCS must apply the scheme in:

  1. (1)

    assessing whether a relevant person has complied with the relevant regulatory requirements;

  2. (2)

    assessing whether non-compliance has caused the claimant loss; and

  3. (3)

    calculating the compensation due (where the FSCS may rely on calculations made by the FCA or other competent persons acting on the FCA's behalf or authorised to make them under the scheme);

    unless the FSCS considers that departure from the scheme is essential in order to provide the claimant with fair compensation.

COMP 12.5 [deleted]

COMP 12.5.1 R

[deleted]1

COMP 12.5.2 R

[deleted]1

COMP 12.6 Quantification: trustees, operators of pension schemes, persons winding up pension schemes,5personal representatives, agents, and joint claims

Trustees, operators of pension schemes and persons winding up pension schemes5

COMP 12.6.1 R

If a claimant's claim includes a claim as5:

  1. (1)

    trustee; or5

  2. (2)

    the operator of, or the person carrying on the regulated activity of winding up, a stakeholder pension scheme (which is not an occupational pension scheme) or personal pension scheme,5

the FSCS must treat him in respect of that claim as if his claim was the claim of a different person.5

COMP 12.6.2 R

If a claimant has a claim as a bare trustee or nominee company2 for one or more beneficiaries, the FSCS must treat the beneficiary or beneficiaries as having the claim, and not the claimant.2

COMP 12.6.2A R

3If a claimant has a claim:5

8
  1. (1)

    as 8the trustee of9 an occupational pension scheme9 or the trustee or operator of, or the person carrying on the regulated activity of winding up, a stakeholder pension scheme (which is not an occupational pension scheme) or personal pension scheme;8 and95

    8
  2. (2)

    for one or more members of a pension scheme (or, where relevant, the beneficiary of any member) whose benefits are, or include,9money-purchase benefits;85

    8

the FSCS must treat the member or members (or, where relevant, the beneficiary of any member) as having the claim, and not the claimant (insofar as members’ benefits are money-purchase benefits)9.

5
COMP 12.6.3 R

If any group of persons has a claim as:5

  1. (1)

    trustees; or5

  2. (2)

    operators of, or as persons carrying on the regulated activity of winding up, a stakeholder pension scheme (which is not an occupational pension scheme) or a personal pension scheme,5

(or any combination thereof), the FSCS must treat them as a single and continuing person distinct from the persons who may from time to time be the trustees, operators or persons winding up the relevant pension scheme.5

COMP 12.6.4 R

Where the same person has a claim as:5

  1. (1)

    trustee for different trusts or for different stakeholder pension schemes (which are not occupational pension schemes) or personal pension schemes; or5

  2. (2)

    the operator of, or the person carrying on the regulated activity of winding up, different stakeholder pension schemes (which are not occupational pension schemes) or personal pension schemes, 5

COMP applies as if the claims relating to each of these trusts or schemes were claims of different persons.5

COMP 12.6.5 R

Where the claimant is a trustee, and some of the beneficiaries of the trust are persons who would not be eligible claimants if they had a claim themselves, the FSCS must adjust the amount of the overall claim7 to eliminate the part of the claim which, in the FSCS's view, is a claim for those beneficiaries.

COMP 12.6.6 R

Where any of the provisions of5COMP 12.6.1 R to COMP 12.6.5 R apply, the FSCS must try to ensure that any amount 6paid to:

6
  1. (1)

    the trustee; or5

    5
  2. (2)

    the operator of, or the person carrying on the regulated activity of winding up, a stakeholder pension scheme (which is not an occupational pension scheme) or personal pension scheme5

    5

is, in each case:5

  1. (3)

    for the benefit of members or beneficiaries who would be eligible claimants if they had a claim themselves; and5

  2. (4)

    no more than the amount of the loss suffered by those members or beneficiaries.5

Personal representative

COMP 12.6.8 R

Where a person numbers among his claims a claim as the personal representative of another, the FSCS must treat him in respect of that claim as if he were standing in the shoes of that other person.

Agents

COMP 12.6.9 R

If a claimant has a claim as agent for one or more principals, the FSCS must treat the principal or principals as having the claim, not the claimant.

Joint claims

COMP 12.6.10 R

If two or more persons have a joint beneficial claim, the claim is to be treated as a claim of the partnership if they are carrying on business together in partnership. Otherwise each of those persons is taken to have a claim for his share, and in the absence of satisfactory evidence as to their respective shares, the FSCS must regard each person as entitled to an equal share.

Foreign law

COMP 12.6.11 R

In applying COMP to claims arising out of business done with a branch or establishment5 of the relevant person outside the United Kingdom, the FSCS must interpret references to:5

  1. (1)

    persons entitled as personal representatives, trustees, bare trustees or agents, operators of pension schemes or persons carrying on the regulated activity of winding up pension schemes; or5

  2. (2)

    persons having a joint beneficial claim or carrying on business in partnership, 5

as references to persons entitled, under the law of the relevant country or territory, in a capacity appearing to the FSCS to correspond as nearly as may be to that capacity.5

Claims arising under COMP 3.2.4 R1

COMP 12.6.12 R

1If a firm has a claim under COMP 3.2.4 R, the FSCS must treat each customer of the firm as having the claim for the purposes of calculating compensation within COMP 12.