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Status: You are viewing the version of the handbook as on 2016-04-06.

COMP 3.2 The qualifying conditions for paying compensation

COMP 3.2.1R

The FSCS may pay compensation to an eligible claimant, subject to COMP 11 (Payment of compensation), if it is satisfied that:

  1. (1)

    an eligible claimant has made an application for compensation (but see COMP 3.2.1A R)5;

  2. (2)

    the claim is in respect of a protected claim against a relevant person who is in default;

  3. (3)

    where the FSCS so requires, the claimant has assigned the whole or any part of his rights against the relevant person or against any third party to the FSCS, on such terms as the FSCS thinks fit; and

  4. (4)

    in the case of a claim under a protected contract of insurance:

    1. (a)

      it is not reasonably practicable or appropriate to make, or continue to make, arrangements to secure continuity of insurance under COMP 3.3.1 R; or

    2. (b)

      it would not be appropriate to take, or continue to take, measures under COMP 3.3.3 R to safeguard policyholders of an insurance undertaking in financial difficulties.1

Treating a person as having claimed5

COMP 3.2.1AR

5The FSCS may treat persons who are or may be entitled to claim compensation as if they had done so.

Claims on behalf of another person5

COMP 3.2.2R

The FSCS may also pay compensation (and any recovery or other amount payable by the FSCS to the claimant) 3to a person who makes a claim on behalf of another person if the FSCS is satisfied that the person on whose behalf the claim is made:

  1. (1)

    is or would have been an eligible claimant; and

  2. (2)

    would have been paid compensation by the FSCS had he been able to make the claim himself, or to pursue his application for compensation further.

COMP 3.2.3G

Examples of the circumstances covered by COMP 3.2.2 R are:

  1. (1)

    when personal representatives make a claim on behalf of the deceased;

  2. (2)

    when trustees make a claim on behalf of beneficiaries (for further provisions relating to claims by trustees, see COMP 12.6.1 R to COMP 12.6.7 R);

  3. (3)

    when the donee of an enduring power of attorney or a lasting power of attorney 4makes a claim on behalf of the donor of the power;

  4. (4)

    when the Court of Protection makes a claim on behalf of a person incapable by reason of mental disorder of managing and administering his property and affairs;

  5. (5)

    when an eligible claimant makes a claim for compensation but dies before his claim is determined.

COMP 3.2.4R

2The FSCS may also pay compensation to a firm, who makes a claim in connection with protected non-investment insurance mediation on behalf of its customers, if the FSCS is satisfied that:

  1. (1)

    each customer has borne a shortfall in client money held by the firm caused by a secondary pooling event arising out of the failure of a broker or settlement agent which is a relevant person in default;

  2. (2)

    the customers in respect of which compensation is to be paid satisfy the conditions set out in COMP 3.2.2 R (1);

  3. (3)

    the customers do not have a claim against the relevant person directly, nor a claim against the firm, in respect of the same loss;

  4. (4)

    the customers would have been paid compensation by FSCS if the customers had a claim for their share of the shortfall, and if the firm were the relevant person; and

  5. (5)

    the firm has agreed, on such terms as the FSCS thinks fit, to pay, or credit the accounts of, without deduction, each relevant customer in (1), that part of the compensation equal to the customer's financial loss, subject to the limits in COMP 10.2.