COMP 10

Limits on the amount of compensation payable

COMP 10.1

Application and Purpose

Application

COMP 10.1.1

See Notes

handbook-rule
This chapter applies to the FSCS.

COMP 10.1.2

See Notes

handbook-guidance
It is also relevant to claimants.

Purpose

COMP 10.1.3

See Notes

handbook-guidance
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.

COMP 10.1.4

See Notes

handbook-guidance
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.

COMP 10.2

Limits on compensation payable

COMP 10.2.1

See Notes

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

COMP 10.2.2

See Notes

handbook-guidance
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 £40,000 , and a further such claim of £20,000, will only receive the £50,000 limit.

COMP 10.2.3

See Notes

handbook-rule

Table Limits

This table belongs to COMP 10.2.1R

COMP 10.2.4

See Notes

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

COMP 10.2.5

See Notes

handbook-guidance
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.

Continuity of insurance cover

Claims against more than one member in respect of a single protected contract of insurance to be treated as a single claim

COMP 10.2.8

See Notes

handbook-rule
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.

Claims arising under COMP 3.2.4 R

COMP 10.2.9

See Notes

handbook-rule
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.

Building society and other mutual society mergers and transfers

COMP 10.2.10

See Notes

handbook-rule
(1) This rule applies from 1 December 2008 to 30 December 2010.
(2) In the event of a merger between two building societies or a transfer of the business of a building society to a subsidiary of another mutual society (whether or not of the same type), there is a separate and additional £50,000 maximum payment limit for a claimant with respect to claims for protected deposits held under the name of the dissolved entity (or such part of the name as is permitted by law) provided the following conditions are satisfied:
(a) the merger or transfer takes effect between 1 December 2008 and 30 December 2010;
(b) the successor entity has notified the FSA before the merger or transfer takes effect that it wishes this rule to apply;
(c) before the merger or transfer took effect, the claimant had a protected deposit with each of therelevant entities; and
(d) the successor entity continues to operate the business of the dissolved entity under the name of the latter(or such part of the name as is permitted by law).
[Note: The FSA will publish the names of any successor entity and the relevant name to which a separate £50,000 limit applies.]
(3) A successor entity to which this rule applies must make and retain a written record of potential claimants for whom the separate limit applies.
(4) In this rule "mutual society" and "subsidiary" have the same meanings as in the Building Societies (Funding) and Mutual Societies (Transfers) Act 2007.

Protected deposit transfers under the special resolution regime

COMP 10.2.11

See Notes

handbook-rule
(1) This rule applies from 16:00 on 29 March 2009 to 30 December 2010.
(2) In the event of a transfer of protected deposits from one deposit-taking firm to another deposit-taking firm pursuant to the property transfer powers under the Banking Act 2009, there is a separate and additional £50,000 maximum payment limit for a claimant with respect to claims for protected deposits held under the name of the transferor (or such part of the name as is permitted by law) provided the following conditions are satisfied:
(a) the transfer takes effect between 16:00 on 29 March 2009 and 30 December 2010;
(b) the transferee has notified the FSA before the transfer takes effect that it wishes this rule to apply;
(c) before the transfer took effect, the claimant had a protected deposit with each of the transferor and the transferee; and
(d) the transferee continues to operate the business relating to the transferred protected deposits under the name of the transferor (or such part of the name as is permitted by law).

[Note: The FSA will publish the names of any transferee and the relevant name to which a separate £50,000 limit applies.]
(3) A transferee to which this rule applies must make and retain a written record of potential claimants for whom the separate limit applies.

Claims in respect of protected dormant accounts

COMP 10.2.12

See Notes

handbook-rule
In the event of a default of a dormant account fund operator, the FSCS will pay compensation in accordance with COMP 10.2.3 R on the basis of the authorisation of the relevant person who was liable for the protected deposit immediately prior to the liability being transferred to the dormant account fund operator (and the relevant authorisation of the relevant person is the authorisation that was in place at the time that the liability was transferred).

COMP 10.2.13

See Notes

handbook-guidance
The purpose of COMP 10.2.12 R is to ensure that persons whose balances in a dormant account have been transferred to a dormant account fund operator do not have their entitlement to compensation reduced in the event of default of the dormant account fund operator. So, a person who held dormant accounts with two different relevant persons, the liability for which were then automatically transferred to the dormant account fund operator, could still be compensated by the FSCS on the basis of accounts with two separate relevant persons (and so could receive up to 2 x £50,000in compensation) rather than just one account with one relevant person.