COMP 6
Relevant persons in default
COMP 6.1
Application and Purpose
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Application
COMP 6.1.1
See Notes
This chapter applies to the FSCS.
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COMP 6.1.2
See Notes
It is also relevant to claimants.
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Purpose
COMP 6.1.3
See Notes
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.
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COMP 6.1.4
See Notes
To be eligible for compensation a claimant's claim must be against a relevant personin default: see COMP 3.2.1 R (2).
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COMP 6.2
Who is a relevant person?
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COMP 6.2.1
See Notes
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) a participant firm; or
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COMP 6.2.2
See Notes
An incoming EEA firm, which is a credit institution, an IMD insurance intermediary, an ISD investment firm or a UCITS management company, and its appointed representatives are not relevant persons in relation to the firm'spassported activities, unless it has top-up cover (and in the case of a UCITS management company, only in relation to managing investments (other than of a collective investment scheme), advising on investments or safeguarding and administering investments). (See definition of "participant firm").
- 14/01/2005
COMP 6.3
When is a relevant person in default?
- 01/12/2004
COMP 6.3.1
See Notes
A relevant person is in default if:
(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) (in relation to an ICD claim or DGD claim):
(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).
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COMP 6.3.2
See Notes
Subject to COMP 3.3.3 R to COMP 3.3.6 R and COMP 6.3.6 R, the FSCS (or, where COMP 6.3.1 R(2)(a) applies, the
FSA) may determine a relevant person to be in default when it is, in the opinion of the FSCS or the
FSA:
(1) unable to satisfy protected claims against it; or
(2) likely to be unable to satisfy protected claims against it.
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COMP 6.3.3
See Notes
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) the passing of a resolution for a creditors' voluntary winding up;
(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) the appointment of a liquidator or administrator, or provisional liquidator or interim manager;
(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) the approval of a company voluntary arrangement, a partnership voluntary arrangement, or of an individual voluntary arrangement.
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COMP 6.3.4
See Notes
For claims arising in connection with protected investment business or protected mortgage business 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) 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) there appears to the FSCS to be no evidence that the relevant person will be able to meet claims made against it.
- 31/10/2004
COMP 6.3.5
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.
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Members in default and the Central Fund of the Society
COMP 6.3.6
See Notes
The FSCS may not declare a member to be in default unless it is satisfied that the amounts which the Society may provide from the Central Fund are or are likely to be insufficient to ensure that claims against the member under a protected contract of insurance will be met to the level of protection which would otherwise be available under this sourcebook.
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COMP 6.3.7
See Notes
If a member is unable fully to meet protected claims against it then in the first instance any shortfall will be avoided by payments by the Society from the assets of the Central Fund. The FSCS will not consider claims for compensation unless it is satisfied that the amounts which the Society will make available from the Central Fund are or are likely to be insufficient to ensure that claims against the member under a protected contract of insurance will be met to the level of protection which would otherwise be available under this sourcebook. The amount which the FSCS may pay in respect of any such claim will be limited to the difference between the amount which the claimant will receive, or is expected to receive, from the member and the Society together and the maximum amount of compensation payable in accordance with COMP 10 and COMP 12.
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Claims arising under COMP 3.2.4 R
COMP 6.3.8
See Notes
For 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.
- 14/01/2005