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COMP 3.1 Application and Purpose

Application

COMP 3.1.1 R

This chapter applies to the FSCS.

COMP 3.1.2 G

It is also relevant to claimants.

Purpose

COMP 3.1.3 G

The purpose of this chapter is to set out in general terms the conditions that must be satisfied before the FSCS can make an offer of compensation or secure continuity of funeral plan contracts2.1

COMP 3.1.4 G

The qualifying conditions for paying compensation are set out in greater detail in COMP 4 - COMP 7.

COMP 3.2 The qualifying conditions for paying compensation

COMP 3.2.1 R

The FSCS may pay compensation to an eligible claimant, subject to COMP 11 (Payment of compensation), if it is satisfied that:

  1. (1)

    an eligible claimant has made an application for compensation (or the FSCS is treating the person as having done so7);

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  2. (2)

    the claim is in respect of a protected claim against a relevant person6(or, where applicable, a successor) 6who is in default; and6

  3. (3)

    where the FSCS so requires, the claimant has assigned the whole or any part of his rights against 6any one or more of 6the relevant person, 6any third party 6or, where applicable, a successor, 6to the FSCS, on such terms as the FSCS thinks fit6.6

  4. (4)

    [deleted]6

Treating a person as having claimed5

COMP 3.2.1A R

5The FSCS may treat persons who are or may be entitled to claim compensation as if they had done so.

Claims on behalf of another person5

COMP 3.2.2 R

The FSCS may also pay compensation (and any recovery or other amount payable by the FSCS to the claimant) 3to a person who makes a claim on behalf of another person if the FSCS is satisfied that the person on whose behalf the claim is made:

  1. (1)

    is or would have been an eligible claimant; and

  2. (2)

    would have been paid compensation by the FSCS had he been able to make the claim himself, or to pursue his application for compensation further.

COMP 3.2.3 G

Examples of the circumstances covered by COMP 3.2.2 R are:

  1. (1)

    when personal representatives make a claim on behalf of the deceased;

  2. (2)

    when trustees make a claim on behalf of beneficiaries (for further provisions relating to claims by trustees, see COMP 12A.1.1R to 12A.1.7R7);

  3. (3)

    when the donee of an enduring power of attorney or a lasting power of attorney 4makes a claim on behalf of the donor of the power;

  4. (4)

    when the Court of Protection makes a claim on behalf of a person incapable by reason of mental disorder of managing and administering his property and affairs;

    4
  5. (5)

    when an eligible claimant makes a claim for compensation but dies before his claim is determined.

  6. (6)

    9in relation to a funeral plan claim which was bought by one individual to provide a funeral on the death of another individual, when the first individual makes a claim.

COMP 3.2.4 R

2The FSCS may also pay compensation to a firm, who makes a claim in connection with protected non-investment insurance distribution8 on behalf of its customers, if the FSCS is satisfied that:

  1. (1)

    each customer has borne a shortfall in client money held by the firm caused by a secondary pooling event arising out of the failure of a broker or settlement agent which is a relevant person in default;

  2. (2)

    the customers in respect of which compensation is to be paid satisfy the conditions set out in COMP 3.2.2 R (1);

  3. (3)

    the customers do not have a claim against the relevant person directly, nor a claim against the firm, in respect of the same loss;

  4. (4)

    the customers would have been paid compensation by FSCS if the customers had a claim for their share of the shortfall, and if the firm were the relevant person; and

  5. (5)

    the firm has agreed, on such terms as the FSCS thinks fit, to pay, or credit the accounts of, without deduction, each relevant customer in (1), that part of the compensation equal to the customer's financial loss, subject to the limits in COMP 10.2.

  6. (6)

    in relation to a funeral plan claim which was bought by one individual to provide a funeral on the death of another individual, when the first individual makes a claim.

Special cases

COMP 3.2.5 G

7See COMP 12A (Special cases) for how the FSCS may pay compensation in certain cases.

COMP 3.3 Continuity of funeral plan contracts

Ability to secure continuity of funeral plan contracts

COMP 3.3.1 R

1The FSCS may make arrangements to secure continuity of a funeral plan contract for an eligible claimant who has a funeral plan contract if:

  1. (1)

    the contract is with a relevant person (or, where applicable, a successor) that is in default;

  2. (2)

    it is reasonably practicable to do so;

  3. (3)

    in the opinion of the FSCS at the time it proposes to make the arrangements, it would be beneficial to the generality of eligible claimants covered by the proposed arrangements; and

  4. (4)

    in situations where the cost of securing continuity of funeral plan contracts might exceed the cost of paying compensation, any additional cost is likely to be justified by the benefits.

COMP 3.3.2 R

1When assessing the cost of paying compensation, the FSCS may have regard to the likely total cost of paying compensation arising out of the default, net of recoveries, not just the compensation amounts likely to be payable to particular eligible claimants covered by the proposed arrangements for continuity.

Quality of funeral under new arrangements

COMP 3.3.3 R

1In securing continuity of a funeral plan contract:

  1. (1)

    the FSCS must seek to secure the provision of a funeral for the eligible claimant under the new or continuing funeral plan contract on terms corresponding in all material respects (so far as it appears to the FSCS to be reasonable in the circumstances) to those which have applied under the funeral plan contract;

  2. (2)

    if the FSCS secures continuity of a funeral plan contract other than as in (1), then the FSCS must:

    1. (a)

      give the eligible claimant the option of receiving compensation instead; and

    2. (b)

      (if the claimant does not elect to receive compensation) ensure that any future premiums that the claimant is committed to paying under the contract will be reduced by an amount (if any) that the FSCS considers reasonable to reflect the change in terms.

1Measures to be taken

COMP 3.3.4 R

1In order to secure continuity of funeral plan contracts, the FSCS may take such measures as it considers appropriate to:

  1. (1)

    secure or facilitate the transfer of the business of the relevant person or successor that is in default and which consists of carrying out funeral plan contracts or any part of that business to another firm; and/or

  2. (2)

    secure the issue of funeral plan contracts by another firm to eligible claimants in substitution for their existing contracts.

COMP 3.3.5 R

1In making arrangements to secure continuity of funeral plan contracts, the FSCS must use its reasonable endeavours to seek the most cost-effective arrangements available.

COMP 3.3.6 G

1For trust arrangements and contracts of insurance relating to funeral plan contracts, COMP 7.7 gives the FSCS powers to vary existing rights or obligations, and create new rights in favour of, or obligations to, the FSCS. These powers may be exercised to assist in securing continuity of funeral plan contracts.

1Provision of funerals while seeking continuity

COMP 3.3.7 R
  1. (1)

    1While the FSCS is seeking to secure continuity of funeral plan contracts, it may secure the provision of a funeral, which is due to be provided under any protected funeral plan contract of the relevant person (or, where applicable, a successor), on terms corresponding in all material respects (so far as it appears to the FSCS to be reasonable in the circumstances) to that contract.

  2. (2)

    The provision of a funeral is required regardless of whether the cost of securing its provision is more or less than the cost of paying compensation.

  3. (3)

    To secure the provision of a funeral, the FSCS may:

    1. (a)

      make a payment to or on behalf of the estate of an eligible claimant, or to any other person in connection with the provision of a funeral, on such terms (including any terms requiring repayment in whole or in part) and on such conditions as it thinks fit; or

    2. (b)

      secure that a payment is made to or on behalf of the estate of the eligible claimant, or to any other person in connection with the provision of a funeral, by the liquidator, administrator or provisional liquidator of the relevant person (or, where applicable, a successor), or by the trustees of any trust arrangement or insurer of any contract of insurance relating to the funeral plan contract, by giving them an indemnity covering any such payment or any class or description of such payments.