COMP 12 Calculating compensation

This chapter applies to the FSCS.

The amount of compensation payable to the claimant in respect of any type of protected claim is the amount of his overall net claim against the relevant person (or, where applicable, a successor) at the quantification date and any reference in COMP to overall claim means "overall net claim".

COMP 12.2.1AR is, however, subject to the other provisions of COMP, in particular those rules that set limits on the amount of compensation payable for various types of protected claim. The limits are set out in COMP 10.

A claimant's overall claim is the sum of the protected claims of the same category that he has against a relevant person (or, where applicable, a successor) in default, less the amount of any liability which the relevant person or successor, as appropriate, may set off against any of those claims (see COMP 10.2.2 G).

The FSCS must take into account any payments to the claimant (including amounts recovered by the FSCS on behalf of the claimant) made by the relevant person (or, where applicable, a successor) or the FSCS or any other person, including any payment made by the FSCS under the PRA’s rules, if that payment is connected with the relevant person's (or, where applicable, a successor's) liability to the claimant in calculating the claimant's overall claim.

The FSCS must calculate the amount of compensation due to the claimant as soon as reasonably possible after it is satisfied that the conditions in COMP 3.2.1 R have been met.

1. (1) The FSCS may pay compensation without fully or at all investigating the eligibility of the claimant and/or the validity and/or amount of the claim notwithstanding any provision in this sourcebook or FEES 6 to the contrary, if the FSCS considers it reasonable to do so.
   1. (a) [deleted]
   2. (b) [deleted]
2. (2) [deleted]

In determining whether to exercise its discretion under COMP 12.2.10R, the FSCS must take into account:

1. (1) whether, in the opinion of the FSCS based on the information available to the FSCS at the time the determination is considered, the costs of investigating the merits of the claim are reasonably likely to be disproportionate to the likely benefit of such investigation, having regard to the need to minimise those costs and burdens and allocate them efficiently and proportionately; and

2. (2) the need to preserve public confidence in, and the efficient and effective operation of, the compensation scheme.

    

For a claim made in connection with protected investment business which is not an ICD claim, the FSCS must determine a specific date as the quantification date, and this date may be either on, before or after the date of the determination of default.

For a claim made in connection with protected investment business which is an ICD claim, the quantification date is the date the relevant person, or, where applicable, a successor, is determined to be in default.

For a claim made in connection with protected home finance mediation, the FSCS must determine a specific date as the quantification date, and this date may be either on, before or after the date of determination of default.

For a claim made in connection with protected non-investment insurance distribution, the FSCS must determine a specific date as the quantification date, and this date may be either on, before or after the date of determination of default.

For a claim made in connection with protected debt management business, the FSCS must determine a specific date as the quantification date, and this date may be either on, before or after the date of determination of default.

For a claim made in connection with protected funeral plan business, the FSCS must determine a specific date as the quantification date, and this date may be either on, before or after the date of determination of default.

The FSCS may pay compensation for any claim made in connection with protected investment business which is not:

1. (1)

   a claim for property held; or

2. (2)

   a claim arising from transactions which remain uncompleted at the quantification date;

only to the extent that the FSCS considers that the payment of compensation is essential in order to provide the claimant with fair compensation.

The FSCS must not pay compensation for any claim in connection with protected investment business to the extent that it relates to or depends on:

1. (1)

   a failure of investment performance to match a guarantee given or representation made; or

2. (2)

   a contractual obligation to pay or promise to pay which the FSCS considers to have been undertaken without full consideration passing to the relevant person or in anticipation of possible insolvency; or

3. (3)

   the mere fluctuation in the value of an investment.

If the claimant has an ICD claim against a pre-IP completion day incoming EEA firm which is a MiFID investment firm or, where applicable, a successor of such a firm, and the act or omission giving rise to the ICD claim arose before exit day, the FSCS must take account of the liability of the EEA State compensation scheme in calculating the compensation payable by the FSCS. For the purposes of applying this rule, “ICD claim” and “MiFID investment firm” have the meaning they had immediately before exit day.

If the claimant has a claim in connection with protected investment business relating to the fact that the claimant has:

1. (1)

   while eligible or reasonably likely to become eligible to be a member of an occupational pension scheme, instead become a member of a personal pension scheme or entered into a retirement annuity; or

2. (2)

   ceased to be a member of, or to pay contributions to, an occupational pension scheme, and has instead become a member of a personal pension scheme or entered into a retirement annuity; or

3. (3)

   transferred to a personal pension scheme accrued rights under an occupational pension scheme which is not a defined contribution (money purchase) scheme; or

4. (4)

   ceased to be a member of an occupational pension scheme and has instead (by virtue of such a provision as is mentioned in section 591(2)(g) of the Income and Corporation Taxes Act 1988) entered into arrangements for securing relevant benefits by means of an annuity;

the FSCS must take the steps set out in COMP 12.4.6R.

If COMP 12.4.5R applies, the FSCS must follow the Specification of Standards and Procedures issued by the FSA in October 1994, as supplemented and modified by subsequent guidance issued by the FSA (in particular, that of November 1996) (the 'Specification') in:

1. (1)

   assessing whether a relevant person has complied with the relevant regulatory requirements;

2. (2)

   assessing whether non-compliance has caused the claimant loss; and

3. (3)

   calculating the amount of compensation due (where the FSCS may rely on calculations made by the FCA or any previous regulator of the relevant person);

unless the FSCS considers that departure from the Specification is essential in order to provide the claimant with fair compensation.

Where a claim made in connection with protected investment business relates to an Additional Voluntary Contribution policy advised on or arranged by a relevant person, the FSCS must follow the FSAVC Review Model Guidance issued by the FSA in May 2000 (the "Guidance") in:

1. (1)

   assessing whether the relevant person has complied with the relevant regulatory requirements;

2. (2)

   assessing whether non-compliance has caused the claimant loss; and

3. (3)

   calculating the compensation due (where the FSCS may rely on calculations made by the FCA or any previous regulator of the relevant person);

unless the FSCS considers that departure from the Guidance is essential in order to provide the claimant with fair compensation.

The FSCS may decide to reduce the compensation that would otherwise be payable for a claim made in connection with protected investment business that is not an ICD claim, if it is satisfied that:

1. (1)

   there is evidence of contributory negligence by the claimant; or

2. (2)

   payment of the full amount would provide a greater benefit than the claimant might reasonably have expected or than the benefit available on similar investments with other relevant persons; and

it would be inequitable for the FSCS not to take account of (1) or (2).

The FSCS may pay compensation for any claim made in connection with protected home finance mediation only to the extent that the FSCS considers that the payment of compensation is essential in order to provide the claimant with fair compensation.

The FSCS must not pay compensation for any claim in connection with protected home finance mediation to the extent that it relates or depends on:

1. (1)

   a failure of investment performance to match a guarantee given or representation made; or

2. (2)

   the mere fluctuation in the value of property

The FSCS may decide to reduce the compensation that would otherwise be payable for a claim made in connection with protected home finance mediation if it is satisfied that there is evidence of contributory negligence by the claimant and it would be inequitable for FSCS not to take account of that fact.

The FSCS may pay compensation for any claim made in connection with protected non-investment insurance distribution only to the extent that the FSCS considers that the payment of compensation is essential in order to provide the claimant with fair compensation.

The FSCS may decide to reduce the compensation that would otherwise be payable for a claim made in connection with protected non-investment insurance distribution if it is satisfied that:

1. (1)

   there is evidence of contributory negligence by the claimant; or

2. (2)

   payment of the full amount would provide a greater benefit than the claimant might reasonably have expected or than the benefit available on similar contracts with other relevant persons; and

it would be inequitable for FSCS not to take account of (1) or (2).

The FSCS may pay compensation for any claim made in connection with protected debt management business only to the extent that the FSCS considers that the payment of compensation is essential to provide the claimant with fair compensation.

The FSCS may pay compensation for any claim made in connection with protected funeral plan business only to the extent that the FSCS considers that the payment of compensation is essential to provide the claimant with fair compensation.

For a claim which falls to be dealt with (or has properly been dealt with) under a consumer redress scheme, the FSCS must apply the scheme in:

1. (1)

   assessing whether a relevant person has complied with the relevant regulatory requirements;

2. (2)

   assessing whether non-compliance has caused the claimant loss; and

3. (3)

   calculating the compensation due (where the FSCS may rely on calculations made by the FCA or other competent persons acting on the FCA's behalf or authorised to make them under the scheme);

   unless the FSCS considers that departure from the scheme is essential in order to provide the claimant with fair compensation.