Financial Services Compensation Scheme – a brief updatePrint publication
The Financial Conduct Authority has proposed to extend eligibility to claim on the Financial Services Compensation Scheme to all unincorporated associations and certain large partnerships. Andrew Northage takes a closer look at the proposals.
The Financial Services Compensation Scheme
The Financial Services Compensation Scheme (FSCS) is an independent body and a fund of last resort for customers of authorised financial services firms. Generally, it covers claims against firms that are insolvent and unable to pay claims against them.
The Financial Conduct Authority
The Financial Conduct Authority (FCA) has decided that its existing rules in the Compensation sourcebook do not properly implement the relevant provisions in the Investor Compensation Schemes Directive.
The FCA therefore published a consultation paper on 3 October 2013 (CP13/11) proposing to extend eligibility to claim from the FSCS.
The FCA propose to extend eligibility to claim to all unincorporated associations, irrespective of size, and large partnerships provided that they do not exceed the eligibility size limits that apply to companies. If the proposals are passed, a partnership that satisfies at least two of the following three tests at the time of the relevant default will be eligible to claim:
- Its turnover does not exceed £6.5 million
- Its balance sheet does not exceed £3.26 million
- It has no more than 50 employees.
The closing date for responses to the FCA’s proposals is 30 October 2013.
The FCA intends to publish a policy statement with final rules at the end of 2013 or early in 2014.
Draft handbook text can be found in Appendix 1 to CP13/11 by clicking here.
The Prudential Regulation Authority
The Prudential Regulation Authority is also consulting on a similar change for unincorporated associations in respect of the Deposit Guarantee Schemes Directive.
Draft handbook text can be found in Appendix 5 to CP8/13 in the Prudential Regulation Authority Paper by clicking here.