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Part XVU.K. The Financial Services Compensation Scheme

Modifications etc. (not altering text)

C2Pt. 15 modified (29.9.2008 at 8.00 a.m.) by The Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008 (S.I. 2008/2546), art. 29 (with art. 30(6))

C3Pt. 15 modified (7.10.2008 at 9.30 a.m.) by The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2644), art. 14 (with art. 15(8)

C4Pt. 15 modified (8.10.2008 at 12.15 p.m.) by The Kaupthing Singer & Friedlander Limited Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2674), art. 15 (with art. 16(8))

The schemeU.K.

213 The compensation scheme.U.K.

(1)The [F1regulators] must by rules [F2made in accordance with an order under subsection (1A)] establish a scheme for compensating persons in [F3cases where—

(a)relevant persons are unable, or likely to be unable, to satisfy claims against them, F4...

[F5(aa)relevant exchanges are unable, or likely to be unable, to satisfy claims made against them in connection with a regulated activity relating to a trading facility carried on by the exchange, or]

(b)persons who have assumed responsibility for liabilities arising from acts or omissions of relevant persons [F6or relevant exchanges] (“successors”) are unable, or likely to be unable, to satisfy claims against the successors that are based on those acts or omissions.]

[F7(1A)The Treasury must by order specify—

(a)the cases in which the FCA may, or may not, make rules under subsection (1), and

(b)the cases in which the PRA may, or may not, make rules under that subsection.]

(2)The rules [F8(taken together)] are to be known as the Financial Services Compensation Scheme (but are referred to in this Act as “the compensation scheme”).

(3)The compensation scheme must, in particular, provide for the scheme manager—

[F9(a)to assess and pay compensation, in accordance with the scheme, to claimants in respect of claims made in connection with—

(i)a regulated activity carried on (whether or not with permission) by relevant persons; and

(ii)a regulated activity relating to a trading facility carried on (whether or not in accordance with any requirements relating to that activity resulting from section 286) by relevant exchanges; and

(b)to have power to impose levies for the purpose of meeting its expenses (including in particular expenses incurred, or expected to be incurred, in paying compensation, borrowing or insuring risks)—

(i)on authorised persons, or any class of authorised person;

(ii)on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or any class of such exchanges; or

(iii)on authorised persons and on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or on any class of such persons and exchanges.]

[F10(4)The compensation scheme may provide for the scheme manager to have power to impose levies—

(a)on authorised persons, or any class of authorised person;

(b)on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or any class of such exchanges; or

(c)on authorised persons and on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or on any class of such persons and exchanges,

for the purpose of recovering the cost (whenever incurred) of establishing the scheme.]

[F11(5)In making any provision of the scheme by virtue of subsection (3)(b), the regulators must take account of the desirability of ensuring that the amount of the levies imposed on a particular —

(a)class of authorised person;

(b)class of recognised investment exchange carrying on a regulated activity relating to a trading facility; or

(c)class of authorised person and of recognised investment exchanges carrying on a regulated activity relating to a trading facility;

reflects, so far as is practicable, the amount of claims made, or likely to be made in respect of that class of person, exchange, or persons and exchanges.]

(6)An amount payable to the scheme manager as a result of any provision of the scheme made by virtue of subsection (3)(b) or (4) may be recovered as a debt due to the scheme manager.

(7)Sections 214 to 217 make further provision about the scheme but are not to be taken as limiting the power conferred on the [F1regulators] by subsection (1).

(8)In those sections “specified” means specified in the scheme.

(9)In this Part (except in sections 219, 220 or 224) “relevant person” means a person who was—

(a)an authorised person at the time the act or omission giving rise to the claim against him [F12, or against a successor falling within subsection (1)(b),] took place; or

(b)an appointed representative at that time.

[F13(10)But a person who, at that time—

(a)qualified for authorisation under Schedule 3, and

(b)fell within a prescribed category in relation to any authorised activities,

is not to be regarded as a relevant person in relation to those activities, unless the person had elected to participate in the scheme in relation to those activities at that time.

(11)In subsection (10) “authorised activities”, in relation to a person, means activities for which the person had, at the time mentioned in that subsection, permission as a result of any provision of, or made under, Schedule 3.]

[F14(12)In this Part (except in sections 220 and 224) “relevant exchange” means a body corporate or unincorporated association which was a recognised investment exchange carrying on a regulated activity relating to a trading facility at the time the act or omission giving rise to the claim against it, or against a successor falling within subsection (1)(b), took place.

(13)In this Part “regulated activity relating to a trading facility” means—

(a)the regulated activity of operating a multilateral trading facility; or

(b)the regulated activity of operating an organised trading facility.]

Textual Amendments

F1Word in s. 213 substituted (24.1.2013 for specified purposes, 1.4.2013 in so far as not already in force) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 10 para. 3(2) (with Sch. 20); S.I. 2013/113, art. 2(1)(b)(c), Sch. Pts. 2, 3; S.I. 2013/423, art. 3, Sch.

F2Words in s. 213(1) inserted (24.1.2013 for specified purposes, 1.4.2013 in so far as not already in force) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 10 para. 3(3)(a) (with Sch. 20); S.I. 2013/113, art. 2(1)(b)(c), Sch. Pts. 2, 3; S.I. 2013/423, art. 3, Sch.

F3Words in s. 213(1) substituted (24.1.2013 for specified purposes, 1.4.2013 in so far as not already in force) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 10 para. 3(3)(b) (with Sch. 20); S.I. 2013/113, art. 2(1)(b)(c), Sch. Pts. 2, 3; S.I. 2013/423, art. 3, Sch.

F7S. 213(1A) inserted (24.1.2013 for specified purposes, 1.4.2013 in so far as not already in force) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 10 para. 3(4) (with Sch. 20); S.I. 2013/113, art. 2(1)(b)(c), Sch. Pts. 2, 3; S.I. 2013/423, art. 3, Sch.

F8Words in s. 213(2) inserted (24.1.2013 for specified purposes, 1.4.2013 in so far as not already in force) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 10 para. 3(5) (with Sch. 20); S.I. 2013/113, art. 2(1)(b)(c), Sch. Pts. 2, 3; S.I. 2013/423, art. 3, Sch.

F12Words in s. 213(9)(a) inserted (24.1.2013 for specified purposes, 1.4.2013 in so far as not already in force) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 10 para. 3(6) (with Sch. 20); S.I. 2013/113, art. 2(1)(b)(c), Sch. Pts. 2, 3; S.I. 2013/423, art. 3, Sch.

F13S. 213(10)(11) substituted for s. 213(10) (1.7.2011) by The Undertakings for Collective Investment in Transferable Securities Regulations 2011 (S.I. 2011/1613), reg. 2(13)

Modifications etc. (not altering text)

C7S. 213(3)(a) excluded (26.7.2013 for specified purposes, 2.9.2013 in so far as not already in force) by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2013 (S.I. 2013/1881), arts. 1(2)(5), 59(8)

Commencement Information

I1S. 213 wholly in force at 18.6.2001; s. 213 not in force at Royal Assent see s. 431(2); s. 213(10) in force for certain purposes at 25.2.2001 by S.I. 2001/516, art. 2(b), Sch. Pt. 2; s. 213 in force in so far as not already in force at 18.6.2001 by S.I. 2001/1820, art. 2, Sch.