Prudential Regulation Authority Rulebook

This chapter applies to the FSCS.

It is also relevant to claimants.

In most cases it is appropriate for there to be a limit on the amount of compensation payable by the FSCS and that there should be some part of the claim which is not compensatable and for which the claimant must bear the loss. The purpose of this chapter is to set these limits out.

The chapter also sets out the limit on the level of protection the FSCS must seek to secure when the FSCS is ensuring that there is continuity of insurance cover.

The limits on the maximum compensation sums payable by the FSCS for protected claims are set out in COMP 10.2.3 R.

The limits apply to the aggregate amount of claims in respect of each category of protected claim that an eligible claimant has against the relevant person. Consequently, a claimant who has, for example, a claim against a relevant person in connection with protected investment business of £30,000 , and a further such claim of £20,000, will not receive 100% compensation for both claims; instead he will receive £48,000 (100% of the first £30,000 and 90% of the next £20,000). Similarly, if a claimant receives more than one payment in respect of a claim or claims on one or more protected contract of insurance, the claimant will only receive 100% of the first £2,000 of the total paid, and not 100% of the first £2,000 of each payment.

COMP 12 sets out the rules the FSCS will follow when calculating the amount of compensation payable.

COMP 12.4.1 R and COMP 12.4.4 R include further limits relating to Deposit Guarantee Directive claims and ICD claims against certain incoming EEA firms. These reflect the Deposit Guarantee Directive and Investor Compensation Directive/s, under which compensation may be payable by the incoming EEA firm's Home State compensation scheme.

In applying the financial limits in COMP 10.2, and in calculating theamount of a claim in respect of a protected contract of insurancearising from the default of one or more members, a policyholder is to be treated as having a single claim for the aggregate of all such amounts as may be payable on the claim in respect of the protected contract of insurance.

If a firm has a claim under COMP 3.2.4 R, the FSCS must treat the share of the shortfall of each customer as if it were a protected claim for the purposes of calculating the limits of compensation payable, within COMP 10.2, in relation to that customer.