73.—(1) This rule applies if the FSA Rules allow the FSCS to make gross payments of compensation(1).
(2) Rule 71 shall apply but, for the purpose of determining the sums due from the bank to an eligible depositor and from an eligible depositor to the bank for the purpose of paragraph (2)—
(a)where the total of the sums held by the bank for the eligible depositor in respect of protected deposits is no more than the amount prescribed as the maximum compensation payable in respect of protected deposits under Part 15 of the Financial Services and Markets Act 2000, then paragraph (3) applies; and
(b)where the sums held exceeds that limit, then paragraph (4) applies.
(3) Where paragraph (2)(a) applies, there shall be deemed to have been no mutual dealings, regardless of whether there are any sums due from the depositor to the bank, and the sum due to the eligible depositor from the bank will be the total of the sums held by the bank for that depositor in respect of the protected deposits.
(4) Where paragraph (2)(b) applies then—
(a)any mutual dealings shall be treated as being mutual dealings only in relation to the amount by which that total exceeds that limit; and
(b)the sums due from the bank to the eligible depositor will be—
(i)the amount by which that total exceeds that limit, set off in accordance with rule 71(2); and
(ii)the sums held by the bank for the eligible depositor in respect of protected deposits up to the limit of the amount prescribed as the maximum compensation payable.
(5) Any arrangements with regard to set off between the bank and the eligible depositor in existence before the commencement of bank insolvency shall be subject to this rule.
(6) “Protected deposit” means a protected deposit within the meaning given by the Compensation Sourcebook(2).
The reference to FSA Rules are to the FSA’s Compensation Sourcebook (made under section 213 of the Financial Services and Markets Act 2000) (2000 c. 8).
The FSA’s Compensation Sourcebook (made under section 213 of the Financial Services and Markets Act 2000.)