CONRED 2.4 Consumer redress scheme: identifying scheme cases and inviting consumers to request a review

1. (1)

   By 29 April 2013, a firm must take the first and second steps set out in this section and send a redress determination in the form set out in CONRED 2 Annex 1 R to any customer in CONRED 2.1.3 R who falls outside the subject matter of the scheme.

2. (2)

   A firm must, by the deadlines set out in CONRED 2.4.5 R, take the third step set out in this section.

The first step is to identify all cases within the subject matter of the scheme; ie, where each of the following conditions is satisfied ("scheme cases")

1. (1)

   the firm made a personal recommendation to a consumer to invest in an Arch cru fund specified above at CONRED 2.1.1R (2) and after that recommendation the consumer did so invest;

2. (2)

   the suitability requirements (specified at paragraph 5.1R of CONRED 2 Annex 13 R) applied to the recommendation;

3. (3)

   the law applicable to the obligations of the firm arising in connection with the personal recommendation is that of a UK territory (that is, England, Wales, Scotland or Northern Ireland) (see CONRED 2.4.7 R);

4. (4)

   if the applicable law in (3) is that of England, Wales or Northern Ireland, the consumer's investment in Arch cru funds was on or after 13 December 2006;

5. (5)

   if the applicable law in (3) is that of Scotland:

   1. (a)

      the consumer's investment in the Arch cru fund was on or after 13 December 2007; or

   2. (b)

      where the consumer's investment in the Arch cru fund was before 13 December 2007, the consumer did not know, and could not with reasonable diligence have known, before 13 December 2007, that he had suffered loss;

6. (6)

   the consumer has not, prior to 1 April 2013, accepted an offer of redress from the firm or other person in full and final settlement of all potential claims arising out of the recommendation in (1); and

7. (7)

   the consumer has not, prior to 1 April 2013, asked the Financial Ombudsman Service to deal with a complaint against the firm arising out of the recommendation in (1).

The second step is, for all scheme cases, to send to the consumer a letter in the form set out in CONRED 2 Annex 2 R inviting the consumer to opt-in to the scheme.

The third step is to do the following:

1. (1)

   for all scheme cases where the firm has not received an opt-in, by 27 May 2013, the firm should send the consumer an opt-in reminder (in the form set out in CONRED 2 Annex 3 R) by 3 June 2013 (unless the firm has received an opt-in in the interim);

2. (2)

   for all scheme cases where the firm has not received, by 24 June 2013, an opt-in or (where applicable) by (1), the firm should send the consumer an opt-in reminder letter (in the form set out in CONRED 2 Annex 4 R) by 1 July 2013 (unless the firm has received an opt-in in the interim); and

3. (3)

   for all scheme cases where the firm has not received, by 22 July 2013 an opt-in or, where applicable by (1) or (2), the firm should send the consumer a letter in the form set out in CONRED 2 Annex 5 R by 29 July 2013 (unless the firm has received an opt-in in the interim when it must follow the steps in CONRED 2.5.1R (2)).

For the purpose of CONRED 2.4.5 R:

1. (1)

   an 'opt-in' is an indication from, or on behalf of, a consumer that he wishes the firm to carry out a case review (as detailed in CONRED 2.5); and

2. (2)

   if a firm receives a complaint relating to the subject matter of the scheme from a consumer on or after 1 April 2013 and before 23 July 2013 it must treat the complaint as an 'opt in' to the scheme.

For the purposes of CONRED 2.4.2R (3), the applicable law is:

1. (1)

   where, in connection with the personal recommendation:

   1. (a)

      the consumer has agreed to the firm's terms of business; and

   2. (b)

      these include a clause providing for the application of the law of a particular UK territory (that is, England, Wales, Scotland or Northern Ireland);

   that UK territory; or

2. (2)

   if (1) does not apply: where the firm and the consumer are habitually resident in the same UK territory, and the personal recommendation is made there, that UK territory; or

3. (3)

   if neither (1) nor (2) applies: where the conditions in CONRED 2.4.8 R apply, the UK territory in which the consumer is habitually resident; or

4. (4)

   if none of (1), (2) or (3) applies: the UK territory in which the firm made the personal recommendation.

The conditions referred to in CONRED 2.4.7R (3) are that:

1. (1)

   in the UK territory in which the consumer has his habitual residence, either:

   1. (a)

      the contract under which the personal recommendation was provided was preceded by a specific invitation addressed to the consumer, or by advertising, and the consumer took all the steps necessary to engage the firm; or

   2. (b)

      the firm or its agent received the consumer's order; and

2. (2)

   the personal recommendation was provided at least in part in that UK territory.

By 29 July 2013, a firm must report to the FCA by email to archcrureview@fca.org.uk; or (if the email is encrypted) archcrureviewpgp@fca.org.uk with the following information:

1. (1)

   the total number of scheme cases (cases falling within CONRED 2.4.2 R);

2. (2)

   the total number of investments in Arch cru funds resulting from the regulated activities for a customer in CONRED 2.1.3 R which fall outside the subject matter of the scheme (see CONRED 2.1.5 R and CONRED 2.4.2 R), with a summary explanation of the reason why in each case; and

3. (3)

   the total number of opted-in scheme cases.

   [Note: for details of how to obtain an encryption key see guidance above at CONRED 2.3.2 G]