COMP 5

Protected claims

COMP 5.1

Application and Purpose

Application

COMP 5.1.1

See Notes

handbook-rule
This chapter applies to the FSCS.

COMP 5.1.2

See Notes

handbook-guidance
It is also relevant to claimants.

Purpose

COMP 5.1.3

See Notes

handbook-guidance
The purpose of this chapter is to set out the various categories of claim for which compensation may be payable.

COMP 5.2

What is a protected claim?

COMP 5.2.1

See Notes

handbook-rule
A protected claim is:
(1) a claim for a protected deposit(see COMP 5.3); or
(3) a claim in connection with protected investment business (see COMP 5.5); or
(4) a claim in connection with protected home finance mediation (see COMP 5.6); or

COMP 5.2.2

See Notes

handbook-guidance
[deleted]

COMP 5.3

Protected deposits

COMP 5.3.1

See Notes

handbook-rule
A deposit is a protected deposit only if:
(1) the deposit was made with:
(a) an establishment of a relevant person in the United Kingdom; or
(b) a branch of a UK firm which is a credit institution established in another EEA State under an EEA right; and
(2) the deposit is not:
(a) a bond issued by a credit institution which is part of the institution's capital, as set out in the Consolidated Banking Directive (Directive 2000/12/EC); or
(b) a secured deposit; or
(c) a deferred share issued by a building society; or
(d) a non-nominative deposit (that is, a deposit made without disclosing the depositor's identity).

COMP 5.4

Protected contracts of insurance

COMP 5.4.1

See Notes

handbook-rule
A protected contract of insurance is:
(1) (if issued after commencement) a contract of insurance within COMP 5.4.2 R (Contracts of insurance issued after commencement)
(2) (if issued before commencement) a contract of insurance within COMP 5.4.5 R (Contracts of insurance issued before commencement)

Contracts of insurance issued after commencement

COMP 5.4.2

See Notes

handbook-rule
A contract of insurance issued after commencement which:
(1) relates to a protected risk or commitment as described in COMP 5.4.3 R;
(2) is issued by the relevant person through an establishment in;
(a) the United Kingdom; or
(b) another EEA State; or
(c) the Channel Islands or the Isle of Man;
(4) is not a reinsurance contract; and
(5) if it is a contract of insurance entered into by a member, was entered into on or after 1 January 2004
is a protected contract of insurance.

COMP 5.4.3

See Notes

handbook-rule
A risk or commitment is a protected risk or commitment for the purpose of COMP 5.4.2 R(1) if:
(1) in the case of a contract of insurance falling within COMP 5.4.2 R(2)(a), it is situated in an EEA State, the Channel Islands or the Isle of Man;
(2) in the case of a contract of insurance falling within COMP 5.4.2 R(2)(b), it is situated in the United Kingdom;
(3) in the case of a contract of insurance falling within COMP 5.4.2 R(2)(c), it is situated in the United Kingdom, the Channel Islands or the Isle of Man.

COMP 5.4.4

See Notes

handbook-rule
For the purpose of COMP 5.4.3 R and COMP 5.4.5 R(1)(b), the situation of a risk or commitment is determined as follows:
(1) for a contract of insurance relating to a building or a building and its contents (in so far as the contents are covered by the same contract of insurance), the risk or commitment is situated where the building is situated;
(2) for a contract of insurance relating to vehicles of any type, the risk or commitment is situated where the vehicle is registered;
(3) for a contract of insurance lasting four months or less covering travel or holiday risks (whatever the class concerned), the risk or commitment is situated where the policyholder took out the contract of insurance; and
(4) in cases not covered by (1) to (3):
(a) where the policyholder who first took out the contract of insurance is an individual, the risk or commitment is situated where he has his habitual residence at the date when the contract of insurance commenced;
(b) where the policyholder who first took out the contract of insurance is not an individual, the risk or commitment is situated where the establishment to which the risk or commitment relates is situated at the date when the contract of insurance commenced.

Contracts of insurance issued before commencement

COMP 5.4.5

See Notes

handbook-rule
(1) If after commencement, a relevant person is subject to one or more of the proceedings listed in COMP 6.3.3 R or is declared in default, then a contract of insurance issued by that relevant person before commencement which is within COMP 5.4.5 R(2) is a protected contract of insurance, provided that the relevant person was not a member at the time the contract of insurance was issued, and:
(a) (unless it comes within (b)) at the earlier of the events in (1) it was a "United Kingdom policy" for the purposes of the Policyholders Protection Act 1975;
(b) if the contract of insurance is a contract of employers' liability insurance entered into before 1 January 1972 or (for contracts in Northern Ireland) 29 December 1975, and the claim was agreed after the default of the insurer, the risk or commitment was situated in the United Kingdom (as set out in COMP 5.4.4 R).
(2) The contracts of insurance referred to in COMP 5.4.5 R(1) are:
(b) a contract of insurance within the credit class; and
which in each case is not a reinsurance contract.

Contracts not evidenced by a policy

COMP 5.4.6

See Notes

handbook-rule
If it appears to the FSCS that a person is insured under a contract with an insurance undertaking which is not evidenced by a policy, and it is satisfied that if a policy evidencing the contract had been issued, the person in question would have had a protected contract of insurance, the FSCS must treat the contract as a protected contract of insurance.

Liabilities giving rise to claims under a protected contract of insurance

COMP 5.4.7

See Notes

handbook-rule
The FSCS must treat liabilities of an insurance undertaking which is in default, in respect of the following items, as giving rise to claims under a protected contract of insurance:
(1) (if the contract is not a reinsurance contract and has not commenced) premiums paid to the insurance undertaking; or
(2) proceeds of a long-term insurance contract that is not a reinsurance contract and that has matured or been surrendered which have not yet been passed to the claimant; or
(3) the unexpired portion of any premium in relation to relevant general insurance contracts which are not reinsurance contracts; or
(4) claims by persons entitled to the benefit of a judgement under section 151 of the Road Traffic Act 1988 or Article 98 of the Road Traffic (Northern Ireland) Order 1981.

COMP 5.5

Protected investment business

COMP 5.5.1

See Notes

handbook-rule
Protected investment business is:
(1) designated investment business carried on by the relevant person with, or for the benefit of, the claimant (so long as that claimant has a claim), or as agent on the claimant's behalf;
(2) the activities of the manager or trustee of an AUT, provided that the claim is made by a holder;
(3) the activities of the ACD or depositary of an ICVC, provided that the claim is made by a holder;
provided that the condition in COMP 5.5.2 R is satisfied.

COMP 5.5.2

See Notes

handbook-rule
COMP 5.5.1 R only applies if the protected investment business was carried on from:
(1) an establishment of the relevant person in the United Kingdom; or
and the claim is an ICD claim; or
(3) both (1) and (2).

COMP 5.6

Protected home finance mediation

COMP 5.6.1

See Notes

handbook-rule
Protected home finance mediationis:
(5) the activities of a home finance provider which would be arranging but for article 28A of the Regulated Activities Order (Arranging contracts or plans to which the arranger is a party);
provided that the condition in COMP 5.6.2 R is satisfied.

COMP 5.6.2

See Notes

handbook-rule
COMP 5.6.1 R applies only if the protected home finance mediation was carried on by a relevant person:
(1) with a customer who was a resident in the United Kingdom; or
(2) from an establishment maintained by the relevant person (or its appointed representative) in the United Kingdom with a customer who was resident elsewhere in the EEA;
at the time the protected home finance mediation was carried on.

COMP 5.7

Protected non-investment insurance mediation

COMP 5.7.2

See Notes

handbook-rule
COMP 5.7.1 R only applies if the conditions in (1) and (2) are satisfied:
(1) the protected non-investment insurance mediation was carried on from:
(a) an establishment of the relevant person in the United Kingdom; or
(b) a branch of a UK firm established in another EEA State in the exercise of an EEA right derived from the IMD; and
(2) the claimant making the claim (or where COMP 3.2.4 R applies, the customer on behalf of whom a firm makes a claim) dealt initially, with a view to entering into a relevant general insurance contract or a pure protection contract but not a long-term care insurance contract or a reinsurance contract, with an intermediary that was:
(a) established in the United Kingdom; or
(b) a branch of a UK firm established in another EEA State in the exercise of an EEA right derived from the IMD.

COMP 5.7.3

See Notes

handbook-guidance
The FSCS will not cover a claim against an intermediary that meets the criteria of either COMP 5.7.2R (2)(a) or COMP 5.7.2R (2)(b) where the claimant was introduced to that intermediary by an intermediary that does not meet the criteria of either COMP 5.7.2R (2)(a) or COMP 5.7.2R (2)(b).

COMP 5.7.4

See Notes

handbook-guidance
The FSCS will not cover a claim in respect of an intermediary that is not a relevant person, for example a retailer selling extended warranties that are connected contracts. However, COMP 5.7.2 R has the effect that a claim in respect of a relevant person further up the chain carrying on protected non-investment insurance mediation in accordance with COMP 5.7.2R (1)(a) may be covered by the FSCS if the claimant dealt initially with a UK intermediary that is not a relevant person.