COMP 14
Participation by EEA Firms
COMP 14.1
Application and Purpose
- 01/12/2004
Application
COMP 14.1.1
See Notes
This chapter applies to the FSCS.
- 13/02/2004
COMP 14.1.2
See Notes
This chapter also applies to an incoming EEA firm which is a credit institution, or an
MiFID investment firm
(or both), an IMD insurance intermediary or a UCITS management company.
- 01/11/2007
Purpose
COMP 14.1.3
See Notes
This chapter provides supplementary rules and guidance for an incoming EEA firm which is a credit institution, an IMD insurance intermediary, an
MiFID investment firm
or
UCITS management company
. It reflects in part the implementation of the Deposit Guarantee Directive, Investors Compensation Directive, and UCITS Directive. This sourcebook applies in the usual way to an incoming EEA firm which is exercising EEA rights under the
Insurance Directives
. Such a firm is not affected by the Deposit Guarantee Directive, the Investors Compensation Directive or the UCITS Directive.
- 01/11/2007
COMP 14.1.4
See Notes
(1)
An incoming EEA firm, which is a credit institution, an IMD insurance intermediary or an MiFID investment firm is not a participant firm in relation to its passported activities unless it "tops-up" into the compensation scheme. This reflects section 213(10) of the Act (The compensation scheme) and regulation 2 of the Electing Participants Regulations (Persons not to be regarded as relevant persons). If an incoming EEA firm also carries on non-passported activities for which the compensation scheme provides cover, it will be a participant firm in relation to those activities and will be covered by the compensation scheme for those activities in the usual way.
(2)
Whether an incoming EEA firm which is an EEA UCITS management company is a participant firm in relation to its passported activities depends on the nature of its activities. In so far as it carries on the activities of managing investments (other than collective portfolio management), advising on investments or safeguarding and administering investments, it is not a participant firm unless it "tops-up" into the compensation scheme. To the extent that such a firm provides collective portfolio management services for a UCITS scheme from a branch in the United Kingdom or under the freedom to provide cross border services, it is a participant firm in respect of those services.
- 01/07/2011
COMP 14.1.5
See Notes
In relation to an incoming EEA firm'spassported activities, its Home State compensation scheme must provide compensation cover in respect of business within the scope of the Deposit Guarantee Directive, Investors Compensation Directive and article 6(3)of the UCITS Directive, whether that business is carried on from a UKbranch or on a cross border services basis. (For an EEA UCITS management company, this is only for certain passported activities, namely managing investments (other than collective portfolio management), advising on investments or safeguarding and administering investments.)
Insurance mediation activity relating to non-investment insurance contracts is not within the scope of the Deposit Guarantee Directive and the Investor Compensation Directive.
- 01/07/2011
COMP 14.1.6
See Notes
If there is no cover provided by the incoming EEA firm'sHome State or the scope and/or level of cover is less than that provided by the compensation scheme, this chapter enables the firm to obtain cover or 'top-up' cover from the compensation scheme for its passported activities carried on from a UKbranch, up to the compensation scheme's limits (set out in COMP 10). This reflects section 214(5) of the Act (General) and regulation 3 of the Electing Participants Regulations (Persons who may elect to participate). If the firm 'tops up' and then becomes insolvent, the Home State compensation scheme will pay compensation up to the limit and scope of the Home State compensation scheme, with the FSCS paying compensation for the additional amount in accordance with the provisions in this sourcebook (COMP 12.4.1 R and COMP 12.4.4 R).
- 06/08/2008
COMP 14.2
Obtaining top-up cover
- 01/12/2004
COMP 14.2.1
See Notes
An incoming EEA firm may, by notice in writing to the FSCS, elect to receive top-up cover from the compensation scheme if it falls within one of the categories prescribed in regulation 3 of the Electing Participants Regulations (Persons who may elect to participate).
- 01/12/2001
COMP 14.2.2
See Notes
An election under COMP 14.2.1 R takes effect on the date when the FSCS notifies the incoming EEA firm that its election has been accepted.
- 01/12/2001
COMP 14.2.3
See Notes
A notice under COMP 14.2.1 R should include details confirming that the incoming EEA firm falls within a prescribed category. In summary:
(1)
the firm must be:
(a) a credit institution; or
(b) an IMD insurance intermediary; or
(c) a MiFID investment firm; or
(d) a UCITS management company that carries on the activities of managing investments (other than collective portfolio management), advising on investments or safeguarding and administering investments;
(2) the firm must have established a branch in the United Kingdom in the exercise of an EEA right; and
(3) the scope and/or level of cover provided by the firm's Home State compensation scheme must be less than that provided by the compensation scheme.
- 01/07/2011
COMP 14.2.4
See Notes
When the FSCS accepts an application, it must allocate the incoming EEAfirm to the contribution group (or groups) which seems to the FSCS to be most appropriate, taking into account the nature of the business for which the incoming EEA firm is seeking cover from the compensation scheme.
- 01/12/2001
COMP 14.2.5
See Notes
The FSCS must put in place and publish procedures to enable an appeal by an incoming EEA firm against a rejection by the FSCS of an election to receive top-up cover or a decision to allocate an incoming EEA firm, once the firm's election has been accepted, to a particular contribution group. Such procedures must satisfy the minimum requirements of procedural fairness and comply with the European Convention on Human Rights.
- 01/12/2001
COMP 14.3
Co-operation between the FSCS and Home State compensation schemes
- 01/12/2004
COMP 14.3.1
See Notes
Where an incoming EEA firm obtains top-up cover under COMP 14.2, the FSCS must co-operate with that firm'sHome State compensation scheme. In particular, the FSCS mustseek to establish with that firm's Home State compensation scheme appropriate procedures for the payment of compensation to claimants, following the principles set out in Annex II of the
Deposit Guarantee Directive
or Annex II of the
Investor Compensation Directive, as appropriate.
[Note: article 4(5) of the Deposit Guarantee Directive]
- 30/06/2009
COMP 14.4
Ending top-up cover
- 01/12/2004
FSCS terminating top-up cover
COMP 14.4.1
See Notes
The FSCS must terminate an incoming EEA firm'stop-up cover where it has ascertained that the conditions in COMP 14.2.1 R are no longer satisfied.
- 30/06/2009
COMP 14.4.2
See Notes
If an incoming EEA firm which has top-up cover fails to observe any of the rules in this sourcebook which apply to participant firms, the FSCS must notify the
FSA
and the incoming EEA firm'sHome State regulator.
- 01/12/2001
COMP 14.4.3
See Notes
In cases where COMP 14.4.2 R applies, the FSCS must co-operate with the incoming EEA firm'sHome State regulator so that appropriate measures can be taken to ensure that the incoming EEA firm meets its obligations under this sourcebook.
- 01/12/2001
COMP 14.4.4
See Notes
If the incoming EEA firm fails to meet its obligations for a period of twelve months following the notice, the FSCS may, subject to obtaining the consent of the incoming EEA firm'sHome State regulator, terminate its top-up cover. Notwithstanding the termination of top-up cover under this rule, cover will continue for:
(1)
protected deposits which are not repayable on demand without penalty; and
(2)
protected investment business transacted before that termination.
- 30/06/2009
Resignation of an EEA firm from the compensation scheme
COMP 14.4.5
See Notes
An incoming EEA firm which has top-up cover may terminate that top-up cover by giving six months' notice in writing to the FSCS.
- 01/12/2001
Notice to customers and the FSCS
COMP 14.4.6
See Notes
When an incoming EEA firm's top-up cover comes to an end under COMP 14.4.1 R, COMP 14.4.4 R or COMP 14.4.5 R, it must:
(1) inform all the clients of its UKbranch no later than six weeks after the date that its participation ends that they are no longer protected (or, if appropriate, of the more limited protection provided)by the compensation scheme, and of the level of compensation which is then available to them; and
(2) within two months, notify the FSCS whether it has done so.
- 30/06/2009
COMP 14.4.7
See Notes
If an incoming EEA firm fails to comply with
COMP 14.4.6R (1)
, the FSCS must inform the firm's Home State regulator of that fact.
- 06/06/2006
COMP 14.4.8
See Notes
The FSCS must bring the ending of an incoming EEA firm's top-up cover to the attention of the incoming EEA firm's clients by means of a public notice.
- 01/12/2001
COMP 14.5
EEA UCITS management companies
- 01/07/2011
COMP 14.5.1
See Notes
Where an EEA UCITS management company provides collective portfolio management services for a UCITS scheme from a branch in the United Kingdom, or under the freedom to provide cross border services, the FSCS must allocate the firm to the
sub-class or sub-classes which seems to the FSCS to be most appropriate, taking into account the nature of the firm's business activities.
- 01/07/2011