This chapter applies to the FSCS.
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.
To be eligible for compensation a claimant's claim must be against a relevant personin default: see COMP 3.2.1 R (2).
A relevant person is a person who was, at the time the act or omission giving rise to the claim against it took place:
a participant firm; or
an appointed representative of a participant firm.
An incoming EEA firm, which is a credit institution, an IMD insurance intermediary or a MiFID investment firm, and its appointed representatives are not relevant persons in relation to the firms'spassported activities, unless it has top-up cover. (See definition of "participant firm").5
An EEA UCITS management company providing collective portfolio management services for a UCITS scheme from a branch in the United Kingdom or under the freedom to provide cross border services, is a relevant person to the extent that it carries on those services.5
An EEA UCITS management company carrying on the activities of managing investments (other than collective portfolio management), advising on investments or safeguarding and administering investments, is not a relevant person in relation to those activities, unless it has top-up cover.5
A relevant person is in default if:
(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
(in relation to an ICD claim or DGD claim):
the FSA has determined it to be in default under COMP 6.3.2 R; or
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).
[Note: article 1(3)(i) of the Deposit Guarantee Directive]
Subject to COMP 3.3.3 R to COMP 3.3.6 R and COMP 6.3.6 R, the FSCS (or, where applies, the FSA) may determine a relevant person to be in default when it is, in the opinion of the FSCS or the FSA:
unable to satisfy protected claims against it; or
likely to be unable to satisfy protected claims against it.
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):
the passing of a resolution for a creditors' voluntary winding up;
a determination by the relevant person's Home State regulator that the relevant person appears unable to meet claims against it and has no early prospect of being able to do so;
the appointment of a liquidator or administrator, or provisional liquidator or interim manager;
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;
the approval of a company voluntary arrangement, a partnership voluntary arrangement, or of an individual voluntary arrangement.
For claims arising in connection with protected investment business, protected home finance mediation3 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
3the 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
there appears to the FSCS to be no evidence that the relevant person will be able to meet claims made against it.
2For 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.
4For the purposes of sections 219(1A)(b) and (d) of the Act (Scheme manager's power to require information) whether a relevant person is unable or likely to be unable to satisfy claims shall be determined by reference to whether it is in default.
