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COMP 6.1 Application and Purpose

Application

COMP 6.1.1 R

This chapter applies to the FSCS.

COMP 6.1.2 G

It is also relevant to claimants.

Purpose

COMP 6.1.3 G

The purpose of this chapter is to specify the types of person against whom a claimant must have a claim in order to be eligible for compensation, and when those persons are 'in default'. Generally, this occurs when they are insolvent or unable to meet their liabilities to claimants.

COMP 6.1.4 G

To be eligible for compensation a claimant's claim must be against a relevant person1(or, where applicable, a successor) 1in default: see COMP 3.2.1 R (2).

COMP 6.2 Who is a relevant person?

COMP 6.2.1 R

A relevant person is a person who was, at the time the act or omission giving rise to the claim against it took place:

  1. (1)

    a participant firm; or

  2. (2)

    an appointed representative of a participant firm.

COMP 6.2.2 G
3 4
  1. (1)

    An incoming EEA firm, which is a credit institution, an IMD insurance intermediary,7 a MiFID investment firm or an MCD mortgage credit intermediary7, and its appointed representatives are not relevant persons in relation to the firms'spassported activities, unless it has top-up cover7 (See definition of "participant firm").5

  2. (2)

    An EEA UCITS management company providing collective portfolio management services for a UCITS scheme from a branch in the United Kingdom or under the freedom to provide cross border services, is a relevant person to the extent that it carries on those services.5

  3. (3)

    An EEA UCITS management company carrying on the activities of managing investments (other than collective portfolio management), advising on investments or safeguarding and administering investments, is not a relevant person in relation to those activities, unless it has top-up cover.5

  4. (4)

    An incoming EEA AIFM managing an authorised AIF from a branch in the UK or under the freedom to provide cross-border services, is a relevant person in respect of that activity.6

  5. (5)

    An incoming EEA AIFM managing an unauthorised AIF is not a relevant person in respect of that activity unless it has top-up cover.6

  6. (6)

    An incoming EEA AIFM providing the services in article 6(4) of AIFMD is not a relevant person in relation to those activities, unless it has top-up cover.6

COMP 6.3 When is a relevant person in default?

COMP 6.3.1 R

A relevant person is in default if:

  1. (1)

    (except in relation to an ICD claim or DGD claim) the FSCS has determined it to be in default under COMP 6.3.2 R, COMP 6.3.3 R, COMP 6.3.4 R or COMP 6.3.5 R; or

  2. (2)

    (in relation to an ICD claim or DGD claim):

    1. (a)

      the appropriate regulator has determined it to be in default under COMP 6.3.2 R; or

    2. (b)

      a judicial authority has made a ruling that had the effect of suspending the ability of eligible claimants to bring claims against the participant firm, if that is earlier than (a); and5

      5

    if a relevant person is in default in relation to an ICD claim or a DGD claim it shall be deemed to be in default in relation to any other type of protected claim.5

COMP 6.3.1A

[Note: article 1(3)(i) of the Deposit Guarantee Directive]

COMP 6.3.2 R

Subject to COMP 3.3.3 R to COMP 3.3.6 R and COMP 6.3.6 R, the FSCS (or, where applies, the appropriate regulator) may determine a relevant person to be in default when it is, in the opinion of the FSCS or the appropriate regulator:

  1. (1)

    unable to satisfy protected claims against it; or

  2. (2)

    likely to be unable to satisfy protected claims against it.

COMP 6.3.3 R

Subject to COMP 6.3.6 R the FSCS may determine a relevant person to be in default if it is satisfied that a protected claim exists (other than an ICD claim or DGD claim), and the relevant person is the subject of one or more of the following proceedings in the United Kingdom (or of equivalent or similar proceedings in another jurisdiction):

  1. (1)

    the passing of a resolution for a creditors' voluntary winding up;

  2. (2)

    a determination by the relevant person'sHome State regulator that the relevant person appears unable to meet claims against it and has no early prospect of being able to do so;

  3. (3)

    the appointment of a liquidator or administrator, or provisional liquidator or interim manager;

  4. (4)

    the making of an order by a court of competent jurisdiction for the winding up of a company, the dissolution of a partnership, the administration of a company or partnership, or the bankruptcy of an individual;

  5. (5)

    the approval of a company voluntary arrangement, a partnership voluntary arrangement, or of an individual voluntary arrangement.

COMP 6.3.4 R

For claims arising in connection with protected investment business, protected home finance mediation3 or protected non-investment insurance mediation, the FSCS has the additional power to determine that a relevant person is in default if it is satisfied that a protected claim exists, and:1

3
  1. (1)

    the FSCS is satisfied that the relevant person cannot be contacted at its last place of business and that reasonable steps have been taken to establish a forwarding or current address, but without success; and

  2. (2)

    there appears to the FSCS to be no evidence that the relevant person will be able to meet claims made against it.

COMP 6.3.5 R

[deleted]

Members in default and the Central Fund of the Society

COMP 6.3.6 R

[deleted]

COMP 6.3.7 G

[deleted]

Claims arising under COMP 3.2.4 R2

COMP 6.3.8 R

2For the purposes of COMP 6.3 a claim made by a firm under COMP 3.2.4 R is to be treated as if it were a protected claim against the relevant person.

Scheme manager's power to require information

COMP 6.3.9 R

4For the purposes of sections 219(1A)(b) and (d) of the Act (Scheme manager's power to require information) whether a relevant person is unable or likely to be unable to satisfy claims shall be determined by reference to whether it is in default.

COMP 6.3A When is a successor in default?

COMP 6.3A.1 R
  1. (1)

    1A successor is in default if:

    1. (a)

      the FSCS has determined it to be in default under COMP 6.3A.2R, COMP 6.3A.3R, or COMP 6.3A.4R, unless the claim is within (b); or

    2. (b)

      (in relation to an ICD claim against a successor that is a MiFID investment firm):

      1. (i)

        the FCA has determined it to be in default under COMP 6.3A.2R; or

      2. (ii)

        a judicial authority has made a ruling that had the effect of suspending the ability of eligible claimants to bring claims against the successor, if that is earlier than (i).

  2. (2)

    If a successor is in default in relation to an ICD claim within (1)(b) it is to be deemed to be in default in relation to any other type of protected claim.

COMP 6.3A.2 R

The FSCS (or, where COMP 6.3A.1R(1)(b)(i) applies, the FCA) may determine a successor to be in default when it is, in the opinion of the FSCS or the FCA:

  1. (1)

    unable to satisfy protected claims against it; or

  2. (2)

    likely to be unable to satisfy protected claims against it.

COMP 6.3A.3 R

The FSCS may determine a successor to be in default if it is satisfied that a protected claim exists (other than an ICD claim against a successor that is a MiFID investment firm), and the successor is the subject of one or more of the following proceedings in the United Kingdom (or of equivalent or similar proceedings in another jurisdiction):

  1. (1)

    the passing of a resolution for a creditors' voluntary winding up; or

  2. (2)

    a determination by the successor’sHome State regulator that the successor appears unable to meet claims against it and has no early prospect of being able to do so; or

  3. (3)

    the appointment of a liquidator or administrator, or provisional liquidator or interim manager; or

  4. (4)

    the making of an order by a court of competent jurisdiction for the winding up of a company, the dissolution of a partnership, the administration of a company or partnership, or the bankruptcy of an individual; or

  5. (5)

    the approval of a company voluntary arrangement, a partnership voluntary arrangement, or an individual voluntary arrangement.

COMP 6.3A.4 R

For claims arising in connection with protected investment business, protected home finance mediation or protected non-investment insurance mediation, the FSCS has the additional power to determine that a successor is in default if it is satisfied that a protected claim exists and:

  1. (1)

    the FSCS is satisfied that the successor cannot be contacted at its last place of business and that reasonable steps have been taken to establish a forwarding or current address, but without success; and

  2. (2)

    there appears to the FSCS to be no evidence that the successor will be able to meet claims made against it.

COMP 6.3A.5 R

For the purposes of sections 219(1A)(b) and (d) of the Act (Scheme manager's power to require information) whether a successor is unable or likely to be unable to satisfy claims is to be determined by reference to whether it is in default.