COMP 5 Protected claims

This chapter applies to the FSCS.

A protected claim is:

1. (1)

   [deleted]

2. (2)

   [deleted]

3. (3)

   a claim in connection with protected investment business (see COMP 5.5); or

4. (4)

   a claim in connection with protected home finance mediation (see COMP 5.6); or

5. (5)

   a claim in connection with protected non-investment insurance distribution (see COMP 5.7); or

6. (6)

   a claim in connection with protected debt management business (see COMP 5.8); or

7. (7)

   a claim in connection with protected funeral plan business (see COMP 5.9).

Notwithstanding COMP 5.2.1 R and paragraph (1)(d) of the definition of participant firm, where the relevant person is in default:

1. (1)

   is an authorised professional firm that is subject to the rules of the Law Society (England and Wales) or the Law Society of Scotland; and

2. (2)

   with respect to its regulated activities, does not participate in the relevant society's compensation scheme:

a claim with respect to that person is only a protected claim if, when the basis for the claim arose, that person did not participate in the relevant society's compensation scheme with respect to its regulated activities.

Protected investment business is:

1. (1)

   designated investment business carried on by the relevant person with, or for the benefit of, the claimant (so long as that claimant has a claim), or as agent on the claimant's behalf;

2. (2)

   the activities of the manager or trustee of an AUT, provided that the claim is made by a holder;

3. (3)

   the activities of the ACD or depositary of an ICVC, provided that the claim is made by a holder;

4. (4)

   the activities of the authorised contractual scheme manager or depositary of an ACS, provided that the claim is made by a holder;

5. (5)

   [deleted]

6. (5A)

   the activities by a recognised investment exchange of operating a multilateral trading facility or operating an organised trading facility,

7. (6)

   the intermediation of structured deposits,

provided that the territorial scope condition in COMP 5.5.2 R is satisfied and, for a firm acting as the manager or depositary of a fund, one of the conditions in COMP 5.5.3 R is satisfied.

The territorial scope condition is that the protected investment business was carried on from:

1. (1)

   an establishment of the relevant person in the United Kingdom; or

2. (2)

   [deleted]

3. (3)

   [deleted]

4. (4)

   [deleted]

5. (5)

   [deleted]

6. (6)

   an establishment in an EEA State of the relevant person, if it is a TP firm (other than a supervised run-off firm) that is:

   1. (a)

      managing a UK UCITS; or

   2. (b)

      managing an AIF that is an authorised fund.

The conditions referred to in COMP 5.5.1 R for a manager or depositary of a fund are:

1. (1)

   for the activities of managing an AIF, managing a UK UCITS or establishing, operating or winding up a collective investment scheme, the claim is in respect of an investment in:

   1. (a)

      an authorised fund; or

   2. (b)

      any other fund which has its registered office or head office in the UK or is otherwise domiciled in the UK unless it is an AIF that is a body corporate and not a collective investment scheme;

2. (2)

   where a firm is acting as depositary of a fund, the claim is in respect of their activities for:

   1. (a)

      an authorised fund; or

   2. (b)

      a charity AIF unless it is a body corporate that is not a collective investment scheme.

The FSCS must treat a claim relating to advice in relation to a designated investment that falls outside article 53(1) of the Regulated Activities Order by virtue of article 53(1A) of that Order as being ‘in connection with protected investment business’ for the purposes of COMP 5.2.1R(3) where the relevant person giving the advice, at the time the act or omission giving rise to the claim took place:

1. (1)

   had, or required, permission to carry on; or

2. (2)

   (in the case of an appointed representative) was exempt from the general prohibition in respect of,

an activity that was designated investment business.

Protected home finance mediation is:

1. (1)

   advising on a home finance transaction; or

2. (2)

   arranging (bringing about) a home finance transaction; or

3. (3)

   making arrangements with a view to a home finance transaction; or

4. (4)

   agreeing to carry on a regulated activity in (1) to (3); or

5. (5)

   the activities of a home finance provider which would be arranging but for article 28A of the Regulated Activities Order (Arranging contracts or plans to which the arranger is a party);

provided that the condition in COMP 5.6.2 R is satisfied.

COMP 5.6.1 R applies only if the protected home finance mediation was carried on by a relevant person with a customer who was a resident in the United Kingdom at the time the protected home finance mediation was carried on.

This section does not apply in respect of a regulated mortgage contract which is:

1. (1)

   a legacy CCA mortgage contract; or

2. (2)

   a CBTL credit agreement.

Protected non-investment insurance distribution is an insurance distribution activity where the investment concerned is a relevant general insurance contract or a pure protection contract but which is not a long-term care insurance contract or a reinsurance contract, provided that the conditions in COMP 5.7.2 R are satisfied.

COMP 5.7.1 R only applies if the conditions in (1) and (2) are satisfied:

1. (1)

   the protected non-investment insurance distribution was carried on from an establishment of the relevant person in the United Kingdom; and

2. (2)

   the claimant making the claim (or where COMP 3.2.4 R applies, the customer on behalf of whom a firm makes a claim) dealt initially, with a view to entering into a relevant general insurance contract or a pure protection contract but not a long-term care insurance contract or a reinsurance contract, with an intermediary that was established in the United Kingdom.

The FSCS must treat a claim relating to advice on a relevant general insurance contract or a pure protection contract (which is not a long-term insurance contract or a reinsurance contract) that falls outside article 53(1) of the Regulated Activities Order by virtue of article 53(1A) of that Order as being ‘in connection with protected non-investment insurance business’ for the purposes of COMP 5.2.1R(5) where the relevant person giving the advice, at the time the act or omission giving rise to the claim took place:

1. (1)

   had, or required, permission to carry on; or

2. (2)

   (in the case of an appointed representative) was exempt from the general prohibition in respect of,

an activity that was non-investment insurance business.

Protected debt management business is debt management activity carried out by a CASS debt management firm from an establishment maintained by it in the United Kingdom, but only in so far as the claim relates to a shortfall in client money.

Protected funeral plan business is a regulated funeral plan activity carried on by a relevant person from an establishment maintained by the relevant person (or its appointed representative) in the United Kingdom.

COMP 5.9.1R does not apply in relation to a claim against an intermediary (or where applicable, their successor) where the eligible claimant did not deal initially with an intermediary that was established in the United Kingdom.

The FSCS must treat a claim relating to advice in relation to a funeral plan contract that falls outside article 53(1) of the Regulated Activities Order by virtue of article 53(1A) of that Order as being ‘in connection with protected funeral plan business’ for the purposes of COMP 5.2.1R(7) where the relevant person giving the advice, at the time the act or omission giving rise to the claim took place:

1. (1)

   had, or required, permission to carry on; or

2. (2)

   (in the case of an appointed representative) was exempt from the general prohibition in respect of,

an activity that was protected funeral plan business.