COMP 12
Calculating compensation
COMP 12.1
Application and Purpose
- 01/12/2004
Application
COMP 12.1.1
See Notes
This chapter applies to the FSCS.
- 01/04/2013
COMP 12.1.2
See Notes
- 01/04/2013
Purpose
COMP 12.1.3
See Notes
The purpose of this chapter is to set out the different ways in which the FSCS is to calculate compensation.
- 01/04/2013
COMP 12.2
Quantification: general
- 01/12/2004
COMP 12.2.1
See Notes
The amount of compensation payable to the claimant in respect of:
(1) any type of protected claim other than a claim for a protected deposit is the amount of his overall net claim against the relevant person at the quantification date; and
(2) any claim for a protected deposit is the amount of his overall gross claim against the relevant person at the quantification date;
and any reference in COMP to overall claim means "overall net claim" or "overall gross claim" as appropriate.- 01/04/2013
COMP 12.2.2
See Notes
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.
- 01/04/2013
COMP 12.2.3
See Notes
Where a liability of a relevant person 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 firm
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.
- 01/04/2013
Overall net claim
COMP 12.2.4
See Notes
A claimant's overall claim is the sum of the protected claims of the same category that he has against a relevant personin default, less the amount of any liability which the relevant person may set off against any of those claims (see COMP 10.2.2 G).
- 01/04/2013
COMP 12.2.5
See Notes
- 01/04/2013
COMP 12.2.6
See Notes
In calculating the claimant's overall claim, the FSCS may rely, to the extent that it is relevant, on any determination by:
(1) a court of competent jurisdiction;
(2) a trustee in bankruptcy;
(3) a liquidator;
(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.- 01/04/2013
Overall gross claim
COMP 12.2.6A
See Notes
A claimant's overall gross claim is the sum of the claims for protected deposits that he has against a relevant personin default.
- 01/04/2013
Payments to the claimant
COMP 12.2.7
See Notes
The 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 the FSCS or any other person, if that payment is connected with the relevant person's liability to the claimant:
(1) in calculating the claimant's overall claim; and
(2) for a claim for a protected deposit, by reducing the amount of compensation by the FSCS retention sum that the FSCS would have retained if it had made those recoveries itself.
- 01/04/2013
Time for calculation of compensation due to the claimant
COMP 12.2.8
See Notes
The 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.
- 01/04/2013
Amounts paid by the Society
COMP 12.2.9
See Notes
- 01/04/2013
Settlement of claims
COMP 12.2.10
See Notes
(1)
The 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:
(a) the costs of investigating the merits of the claim are reasonably likely to be disproportionate to the likely benefit of such investigation; and
(b) (as a result or otherwise) it is reasonably in the interests of participant firms to do so.
(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.
- 01/04/2013
COMP 12.3
Quantification date
- 01/12/2004
Protected deposits
COMP 12.3.1
See Notes
(1) For a protected deposit claim, the quantification date is the date the relevant person is determined to be in default.
(2) 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 must nevertheless treat that date as the quantification date for that deposit and pay compensation comprising:
(a) the principal sum on the basis that it is due and payable on that date;
(b) interest or premium accrued to that date; and
(c) unaccrued interest or premium attributable to or arising in respect of the period to that date.
- 01/04/2013
Protected contracts of insurance
COMP 12.3.2
See Notes
For a claim under a protected contract of insurance that is a long-term insurance contract, the FSCS must determine as the quantification date a specific date by reference to which the liability of the relevant person to the eligible claimant is to be determined.
- 01/04/2013
COMP 12.3.3
See Notes
For a claim under a protected contract of insurance that is a relevant general insurance contract, the FSCS must determine as the quantification date a specific date by reference to which the liability of the relevant person to the eligible claimant is to be determined.
- 01/04/2013
COMP 12.3.4
See Notes
For a claim in respect of the unexpired premiums under a protected contract of insurance that is a relevant general insurance contract (see COMP 5.4.7 R (3)), the quantification date, being the date by which the liability of the relevant person to the eligible claimant is to be determined, is the date the policy was terminated or cancelled.
- 01/04/2013
COMP 12.4
The compensation calculation
- 01/12/2004
Protected deposit with incoming EEA firm
COMP 12.4.1
See Notes
If the claimant has a DGD claim against an incoming EEA firm which is a credit institution, the FSCS must take account of the liability of the Home State deposit-guarantee scheme in calculating the compensation payable by the FSCS.
- 01/04/2013
Protected contracts of insurance: liabilities subject to compulsory insurance
COMP 12.4.9
See Notes
The FSCS must pay a sum equal to 100% of any liability of a relevant person who is an insurance undertaking in respect of a liability subject to compulsory insurance to the claimant as soon as reasonably practicable after it has determined the relevant person to be in default.
- 01/04/2013
Protected contracts of insurance: general insurance
COMP 12.4.10
See Notes
The FSCS must calculate the liability of a relevant person to the claimant under a relevant general insurance contract in accordance with the terms of the contract, and (subject to any limits in COMP 10.2.3R) pay that amount to the claimant.
- 01/04/2013
Protected contracts of insurance: long-term insurance
COMP 12.4.11
See Notes
Unless the FSCS is making arrangements to secure continuity of insurance cover under COMP 3.3.1R to COMP 3.3.2ER, the FSCS must calculate the liability of a relevant person to the claimant under a long-term insurance contract in accordance with the terms of the contract as valued in a liquidation of the relevant person, or (in the absence of such relevant terms) in accordance with such reasonable valuation techniques as the FSCS considers appropriate.
- 01/04/2013
COMP 12.4.11A
See Notes
(1) Unless the FSCS is seeking to secure continuity of cover for a relevant person under COMP 3.3.1 R to COMP 3.3.2E R, it must:
(a) pay compensation in accordance with COMP 12.4.11 R for any benefit provided for under a protected long-term insurance contract which has fallen due or would have fallen due under the contract to be paid to any eligible claimant and has not already been paid; and
(b) do as soon as reasonably practicable after the time when the benefit in question fell due or would have fallen due under the contract (but subject to and in accordance with any other terms which apply or would have applied under the contract).
(2) If the FSCS decides to treat the liability of the relevant person under the contract as reduced or (as the case may be) disregarded under COMP 12.4.14 R then, for the purposes of (1), the value of benefits falling due after the date of that decision must be treated as reduced or disregarded to that extent.
(3) Unless it has decided to treat the liability of the relevant person under the contract as reduced or disregarded under COMP 12.4.14 R the FSCS must not treat as a reason for failing to pay, or for delaying the payment of compensation in accordance with (1), the fact that:
(a) it considers that any benefit referred to in (1) is or may be excessive in any respect; or
(b) it has referred the contract in question to an independent actuary under COMP 12.4.13 R; or
(c) it considers that it may at some later date decide to treat the liability of the relevant person under a contract as reduced or (as the case may be) disregarded under COMP 12.4.14 R;
save where the FSCS decides to exclude certain benefits to the extent that they arise out of the exercise of any option under the policy (for this purpose option includes, but is not restricted to, a right to surrender the policy).- 01/04/2013
COMP 12.4.12
See Notes
The FSCS must not treat any bonus provided for under a long-term insurance contract as part of the claimant's claim except to the extent that:
(1) a value has been attributed to it by a court in accordance with the Insurers (Winding Up) Rules 2001 or any equivalent rules or legislative provision in force from time to time; or
(2) the FSCS considers that a court would be likely to attribute a value to the bonus if it were to apply the method set out in those rules.
- 01/04/2013
COMP 12.4.13
See Notes
(1) If the FSCS is:
(a) seeking to secure continuity of cover under COMP 3.3.1 R to COMP 3.3.2E R or to calculate the liability owed to an eligible claimant under COMP 12.4.11 R; and
(b) considers that the benefits provided for under a protected long-term insurance contract are or may be excessive in any respect,
it must refer the contract to an actuary who is independent of the eligible claimant and of the relevant person.(2) In this rule and in COMP 12.4.14 R, a benefit is only "excessive" if, at the time when the relevant person decided to confer or to offer to confer that benefit, no reasonable and prudent insurer in the position of the relevant person would have so decided given the premiums payable and other contractual terms.
- 01/04/2013
COMP 12.4.14
See Notes
If the FSCS is satisfied, following the actuary's written recommendation, that any of the benefits provided for under the contract are or may be excessive, it may treat the liability of the relevant person under the contract as reduced or (as the case may be) disregarded for the purpose of any payment made after the date of that decision.
- 01/04/2013
COMP 12.4.15
See Notes
The FSCS may rely on the value attributed to the contract by the actuary when calculating the compensation payable to the claimant, or when securing continuity of cover.
- 01/04/2013
Protected non-investment insurance mediation
COMP 12.4.16
See Notes
For 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.
- 01/04/2013
Consumer redress schemes
COMP 12.4.22
See Notes
For 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) assessing whether a relevant person has complied with the relevant regulatory requirements;
(2) assessing whether non-compliance has caused the claimant loss; and
(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.
unless the FSCS considers that departure from the scheme is essential in order to provide the claimant with fair compensation.
- 01/04/2013
COMP 12.6
Quantification: trustees, operators of pension schemes, persons winding up pension schemes,personal representatives, agents, and joint claims
- 06/04/2007
Trustees, operators of pension schemes and persons winding up pension schemes
COMP 12.6.1
See Notes
If a claimant's claim includes a claim as:
(1) trustee; or
(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,
the FSCS must treat him in respect of that claim as if his claim was the claim of a different person.- 01/04/2013
COMP 12.6.2
See Notes
If a claimant has a claim as a bare trustee or nominee company for one or more beneficiaries, the FSCS must treat the beneficiary or beneficiaries as having the claim, and not the claimant.
- 01/04/2013
COMP 12.6.2A
See Notes
If a claimant has a claim:
(1) as the trustee of a small self-administered scheme or an occupational pension scheme of an employer which is not a large company, large partnership or large mutual association 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;
(2) for one or more members of a pension scheme (or, where relevant, the beneficiary of any member) whose benefits are money-purchase benefits;
the FSCS must treat the member or members (or, where relevant, the beneficiary of any member) as having the claim, and not the claimant.- 01/04/2013
COMP 12.6.3
See Notes
If any group of persons has a claim as:
(1) trustees; or
(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,
(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.- 01/04/2013
COMP 12.6.4
See Notes
Where the same person has a claim as:
(1) trustee for different trusts or for different stakeholder pension schemes (which are not occupational pension schemes) or personal pension schemes; or
(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,
COMP applies as if the claims relating to each of these trusts or schemes were claims of different persons.- 01/04/2013
COMP 12.6.5
See Notes
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 claim to eliminate the part of the claim which, in the FSCS's view, is a claim for those beneficiaries.
- 01/04/2013
COMP 12.6.6
See Notes
Where any of the provisions of
COMP 12.6.1 R to COMP 12.6.5 R apply, the FSCS must try to ensure that any amount paid to:
(1) the trustee; or
(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
is, in each case:(3) for the benefit of members or beneficiaries who would be eligible claimants if they had a claim themselves; and
(4) no more than the amount of the loss suffered by those members or beneficiaries.
- 01/04/2013
COMP 12.6.7
See Notes
Where a person A is entitled (whether as trustee or otherwise) to a deposit made out of a clients' or other similar account containing money to which one or more persons are entitled, the FSCS must treat each of those other persons, and not A, as entitled to the part of the deposit that corresponds to the proportion of the money in the account to which the other person is entitled.
- 01/04/2013
Personal representative
COMP 12.6.8
See Notes
- 01/04/2013
Agents
COMP 12.6.9
See Notes
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.
- 01/04/2013
Joint claims
COMP 12.6.10
See Notes
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.
- 01/04/2013
Foreign law
COMP 12.6.11
See Notes
In applying COMP to claims arising out of business done with a branch or
establishment
of the relevant person outside the United Kingdom, the FSCS must interpret references to:
(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; or
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.- 01/04/2013