COMP 7.7 Funeral plan contracts and related trust arrangements and contracts of insurance

1This section applies:

1. (1)

   in connection with any trust arrangement or contract of insurance that relates to funeral plan contracts entered into or carried out by a relevant person or successor who is in default; and

2. (2)

   irrespective of whether the trust arrangement, contract of insurance or related rights or obligations came into existence before or after the date on which this section comes into force.

The following provisions apply in relation to this section making any necessary changes:

1. (1)

   COMP 7.3.2R and COMP 7.3.3R (General);

2. (2)

   COMP 7.3.4R (Determinations by the FSCS);

3. (3)

   COMP 7.3.5R (Verification of determinations); and

4. (4)

   COMP 7.3.6R (Effect of this section on other provisions in this sourcebook etc).

If the FSCS:

1. (1)

   has paid, or has decided to make a payment of, compensation; or

2. (2)

   has made a payment, or has decided to make a payment, in connection with securing continuity of funeral plan contracts,

   the FSCS may make a determination with all or any of the following effects as set out in the determination:

3. (3)

   to vary existing rights or obligations under or in respect of the trust arrangement or contract of insurance; such variation may, in particular, provide for the right to be transferred, or obligation to be owed, to a different person and, in either case, to subsist between that different person and the trustees or insurer respectively provided that the different person (if not the eligible claimant) has consented;

4. (4)

   to create new rights under the trust arrangement or contract of insurance in favour of, or obligations by the trustees or insurer to, the FSCS; those new rights or obligations may, in particular, override existing rights or obligations;

5. (5)

   to enable the FSCS to claim and take legal or any other proceedings or steps in the United Kingdom or elsewhere to enforce any such rights held by or obligations owed to the FSCS in its own name against the trustees, the insurer and/or any third party.

Any right of recovery conferred on the FSCS by a determination under this section may not exceed the amount paid or (in the opinion of the FSCS) to be paid out by the FSCS in connection with the funeral plan contracts concerned.

Any right of recovery conferred on the FSCS by a determination under this section is subject to the prior payment of those sums that the FSCS reasonably considers should be prioritised. Such sums may include: the legitimate fees and expenses of the trustee, insurer, actuary and relevant person, tax payable in respect of the trust arrangement or contract of insurance and existing funeral costs.

A payment by the trustees pursuant to a determination will operate to discharge the trustees from all other obligations in relation to that part of the trust assets reflecting the payment made.

If the FSCS has a right of recovery under this section, it must pursue all and only such recoveries as it considers are likely to be both reasonably possible and cost effective to pursue.