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Status: You are viewing the version of the handbook as on 2009-03-31.

COMP 15.1 Accelerated compensation for depositors

Purpose

COMP 15.1.1G

1When a relevant person is in default with claims against it for protected deposits, it maybe desirable for the FSCS to make accelerated payments of compensation, for the protection of consumers and to maintain market confidence.

Application

COMP 15.1.4R

Before using any power in this section, the FSCS must determine that using that power:

  1. (1)

    would be beneficial to the generality of eligible claimants with protected deposits made with a relevant person in default in respect of whom the power is to be used; and

  2. (2)

    is unlikely to result in any additional cost to the FSCS which would require the imposition of increased levies on participant firms, over and above those required if the power was not exercised, or any additional cost is likely to be justified by the benefits.

COMP 15.1.5R

The FSCS's powers in this section may be used:

  1. (1)

    separately or in any combination as an alternative and in substitution for the powers and processes elsewhere in this sourcebook;

  2. (2)

    in respect of a relevant person in default irrespective of when the default occurred;

  3. (3)

    in relation to all or any part of a protected deposit or class of protected deposits made with the relevant person; and/or

  4. (4)

    (where the FSCS uses its powers to administer the payment of compensation on behalf of, or to pay compensation or make a payment on account or an advance and recover from, a Non-UK Scheme or Other Funder (see COMP 15.1.14 R)) in respect of all or part of any protected deposit which is compensatable by and/or recoverable from the Non-UK Scheme or Other Funder, and the FSCS may make different provision for those parts of a protected deposit (and references to paying compensation shall be treated as referring to making a payment, making a payment on account or making an advance as appropriate).

COMP 15.1.6R

The FSCS may determine that the exercise of any power in this section is subject to such incidental, consequential or supplemental conditions as the FSCS considers appropriate.

Determinations by the FSCS

COMP 15.1.7R
  1. (1)

    Any power conferred on the FSCS to make determinations under this section is exercisable in writing.

  2. (2)

    An instrument by which the FSCS makes the determination must specify the provision under which it is made, the date and time from which it takes effect and the relevant person and protected deposits, parts of protected deposits and/or classes of protected deposits in respect of which it applies.

  3. (3)

    The FSCS must take appropriate steps to publish the determination as soon as possible after it is made.

  4. (4)

    Failure to comply with any requirement in this rule does not affect the validity of the determination.

  5. (5)

    A determination by the FSCS under this section may be amended, remade or revoked at any time and subject to the same conditions.

Verification of determinations

COMP 15.1.8R
  1. (1)

    The production of a copy of a determination purporting to be made by the FSCS under this section:

    1. (a)

      on which is endorsed a certificate, signed by a member of the FSCS's staff authorised by it for that purpose; and

    2. (b)

      which contains the required statements;

    is evidence (or in Scotland sufficient evidence) of the facts stated in the certificate.

  2. (2)

    The required statements are:

    1. (a)

      that the determination was made by the FSCS; and

    2. (b)

      that the copy is a true copy of the determination.

  3. (3)

    A certificate purporting to be signed as mentioned in (1) is to be taken to have been properly signed unless the contrary is shown.

  4. (4)

    A person who wishes in any legal proceedings to rely on a determination may require the FSCS to endorse a copy of the determination with a certificate of the kind mentioned in (1).

Effect of this section on other provisions in this sourcebook etc

COMP 15.1.9R

Other provisions in this sourcebook and FEES 6 are modified to the extent necessary to give full effect to the powers provided for in this section.

COMP 15.1.10R

Other than as expressly provided for, nothing in this section is to be taken as limiting or modifying the rights or obligations of or powers conferred on the FSCS elsewhere in this sourcebook or in FEES 6.

Payment of compensation without an application

COMP 15.1.11R

The FSCS may pay compensation to an eligible claimant without having received an application and/or an assignment of the whole or any part of the claimant's rights against the relevant person and/or any third party (and COMP 3.2.1 R (1) and COMP 7.2.1 R are modified accordingly).

Early compensation for term or notice accounts

COMP 15.1.12R

If a protected deposit was not due and payable on or before the date that the relevant person was determined to be in default, the FSCS may nevertheless treat that date as the quantification date for that deposit and pay compensation on the basis that the principal sum (including any interest attributable up to that date) is due and payable on that date either (as determined by the FSCS):

  1. (1)

    with the consent of the eligible claimant (express or implied, including by conduct); or

  2. (2)

    without that consent, but in this case the amount that the eligible claimant is entitled to claim from the FSCS is the lesser of:

    1. (a)

      the amount which the FSCS quantifies as being the value of that claim as at the quantification date; and

    2. (b)

      the amount that would have been payable at the date the deposit was due and payable;

    and COMP 12.3.1 R is modified accordingly.

Form and method of paying compensation

COMP 15.1.13R

The FSCS may pay compensation in any form and by any method (or any combination of them) that it determines is appropriate including, without limitation:

  1. (1)

    by paying the compensation (on such terms as the FSCS considers appropriate) to an authorised person with permission to accept deposits which agrees to become liable to the claimant in a like sum;

  2. (2)

    by paying compensation directly into an existing deposit account of (or for the benefit of) the claimant, or as otherwise identified by (or on behalf of) the claimant, with an authorised person (but before doing so the FSCS must take such steps as it considers appropriate to verify the existence of such an account and to give notice to the claimant of its intention to exercise this power); and/or

  3. (3)

    (where two or more persons have a joint beneficial claim) by accepting communications from and/or paying compensation to any one of those persons where this is in accordance with the terms and conditions for communications and withdrawals of the protected deposit.

Rights and obligations against the relevant person and third parties

COMP 15.1.17R

The FSCS may determine that:

  1. (1)

    the payment of compensation by the FSCS; and/or

  2. (2)

    the following actions by the FSCS (under COMP 15.1.14 R):

    1. (a)

      administering the payment of compensation on behalf of; and/or

    2. (b)

      paying and/or making a payment on account of compensation from;

    a Non-UK Scheme or Other Funder;

shall have all or any of the following effects:

  1. (3)

    the FSCS shall immediately and automatically be subrogated, subject to such conditions as the FSCS determines are appropriate, to all or any part (as determined by the FSCS) of the rights and claims in the United Kingdom and elsewhere of the claimant against the relevant person and/or any third party (whether such rights are legal, equitable or of any other nature whatsoever and in whatever capacity the relevant person or third party is acting) in respect of or arising out of the claim in respect of which the payment of or on account of compensation was made;

  2. (4)

    the FSCS may claim and take legal or any other proceedings or steps in the United Kingdom or elsewhere to enforce such rights in its own name or in the name of, and on behalf of, the claimant or in both names against the relevant person and/or any third party;

  3. (5)

    the subrogated rights and claims conferred on the FSCS shall be rights of recovery and claims against the relevant person and/or any third party which are equivalent (including as to amount and priority and whether or not the relevant person is insolvent) to and not exceed the rights and claims that the claimant would have had; and/or

  4. (6)

    such rights and/or obligations (as determined by the FSCS) as between the relevant person and the claimant arising out of the protected deposit in respect of which the payment was made shall be transferred to, and subsist between, another authorised person with permission to accept deposits and the claimant provided that the authorised person has consented (but the transferred rights and/or obligations shall be treated as existing between the relevant person and the FSCS to the extent of any subrogation, transfer or assignment for the purposes of (3) to (5) and COMP 15.1.18 R).

COMP 15.1.18R

The FSCS may alternatively or additionally make the actions in COMP 15.1.17 R (1) and COMP 15.1.17R (2) conditional on the claimant assigning or transferring the whole or any part of all such rights as he may have against the relevant person and/or any third party (including, for the avoidance of any doubt, any Non-UK Scheme or Other Funder) on such terms as the FSCS determines are appropriate.

COMP 15.1.20R
  1. (1)

    The FSCS may determine that:

    1. (a)

      if the claimant does not assign or transfer his rights under COMP 15.1.18 R;

    2. (b)

      if it is impractical to obtain such an assignment or transfer; and/or

    3. (c)

      if it is otherwise necessary or desirable in conjunction with the exercise of the FSCS's powers under COMP 15.1.17 R to COMP 15.1.19 R;

    that claimant shall be treated as having irrevocably and unconditionally appointed the chairman of the FSCS for the time being to be his attorney and agent and on his behalf and in his name or otherwise to do such things and execute such deeds and documents as may be required under such laws of the United Kingdom, another EEA State or any other state or law-country to create or give effect to such assignment or transfer or otherwise give full effect to those powers.

  2. (2)

    The execution of any deed or document under (1) shall be as effective as if made in writing by the claimant or by his agent lawfully authorised in writing or by will.