COMP 6 Relevant persons and successors in default

This chapter applies to the FSCS.

A relevant person is a person who was, at the time the act or omission giving rise to the claim against it took place:

1. (1)

   a participant firm; or

2. (2)

   an appointed representative of a participant firm.

The FSCS may pay compensation in respect of the activities of a relevant person:

1. (1)

   (if it was a firm) whether or not it was acting within the scope of its permission;

2. (2)

   (if it was an appointed representative) whether or not it was acting within the scope of the business for which its principal had accepted responsibility;

3. (3)

   (if it was a recognised investment exchange) whether or not it was acting in accordance with any recognition requirements resulting from section 286 of the Act and relating to the regulated activity of operating a multilateral trading facility or operating an organised trading facility.

[Note: sections 39(3) and 213(3)(a) of the Act]

A relevant person is in default if:

1. (1)

   (except in relation to an ICD claim) the FSCS has determined it to be in default under COMP 6.3.2 R, COMP 6.3.3 R or COMP 6.3.4 R; or

2. (2)

   (in relation to an ICD claim):

   1. (a)

      the FCA has determined it to be in default under COMP 6.3.2 R; or

   2. (b)

      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); and

   if a relevant person is in default in relation to an ICD claim it shall be deemed to be in default in relation to any other type of protected claim.

The FSCS (or, where COMP 6.3.1 R(2)(a) applies, the FCA) may determine a relevant person to be in default when it is, in the opinion of the FSCS (or the FCA):

1. (1)

   unable to satisfy protected claims against it; or

2. (2)

   likely to be unable to satisfy protected claims against it.

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), 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):

1. (1)

   the passing of a resolution for a creditors' voluntary winding up;

2. (2)

   a determination by the FCA or the PRA that the relevant person appears unable to meet claims against it and has no early prospect of being able to do so;

3. (3)

   the appointment of a liquidator or administrator, or provisional liquidator or interim manager;

4. (4)

   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;

5. (5)

   the approval of a company voluntary arrangement, a partnership voluntary arrangement, or of an individual voluntary arrangement;

6. (6)

   a moratorium under Part A1 of the Insolvency Act 1986 being in force.

The FSCS may determine a relevant person to be in default if a protected claim exists (other than an ICD claim), and:

1. (1) the  FSCS is satisfied that:
   1. (a) 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;
   2. (b) the relevant person, or its directors or former directors, have failed to comply with a request for information from the FSCS or otherwise failed to deal with the FSCS in an open, co-operative and timely way; or
   3. (c) the relevant person, or its directors or former directors, are facing personal circumstances such that the FSCS reasonably believes that they are unable to deal with the FSCS in an open, co-operative and timely way; and
2. (2) there appears to the  FSCS to be no evidence that the relevant person will be able to meet claims made against it.

For 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.

For the purposes of section 219(1A)(b), (d) and (e) 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.

1. (1)

   A successor is in default if:

   1. (a)

      the FSCS has determined it to be in default under COMP 6.3A.2R, COMP 6.3A.3R, or COMP 6.3A.4R, unless the claim is within (b); or

   2. (b)

      (in relation to an ICD claim against a successor that is a MiFID investment firm):

      1. (i)

         the FCA has determined it to be in default under COMP 6.3A.2R; or

      2. (ii)

         a judicial authority has made a ruling that had the effect of suspending the ability of eligible claimants to bring claims against the successor, if that is earlier than (i).

2. (2)

   If a successor is in default in relation to an ICD claim within (1)(b) it is to be deemed to be in default in relation to any other type of protected claim.

The FSCS (or, where COMP 6.3A.1R(1)(b)(i) applies, the FCA) may determine a successor to be in default when it is, in the opinion of the FSCS (or the FCA):

1. (1)

   unable to satisfy protected claims against it; or

2. (2)

   likely to be unable to satisfy protected claims against it.

The FSCS may determine a successor to be in default if it is satisfied that a protected claim exists (other than an ICD claim against a successor that is a MiFID investment firm), and the successor is the subject of one or more of the following proceedings in the United Kingdom (or of equivalent or similar proceedings in another jurisdiction):

1. (1)

   the passing of a resolution for a creditors' voluntary winding up; or

2. (2)

   a determination by the FCA or the PRA that the successor appears unable to meet claims against it and has no early prospect of being able to do so; or

3. (3)

   the appointment of a liquidator or administrator, or provisional liquidator or interim manager; or

4. (4)

   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; or

5. (5)

   the approval of a company voluntary arrangement, a partnership voluntary arrangement, or an individual voluntary arrangement; or

6. (6)

   a moratorium under Part A1 of the Insolvency Act 1986 being in force.

The FSCS may determine that a successor to be in default if it is satisfied that a protected claim exists (other than an ICD claim against a successor that is an MiFID investment firm), and:

1. (1)

   the FSCS is satisfied that the successor 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

2. (2)

   there appears to the FSCS to be no evidence that the successor will be able to meet claims made against it.

For the purposes of sections 219(1A)(b), (d) and (f) of the Act (Scheme manager's power to require information) whether a successor is unable or likely to be unable to satisfy claims is to be determined by reference to whether it is in default.