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Application provision

1.1 This Part applies to the FSCS, and for the purposes of chapter 21, 22.6 - 22.8 and Annex 2, this Part also applies to participant firms and the Society.



  1. (1) Subject to 6.1 and 6.2, the FSCS may take such measures as it considers appropriate for the purpose of safeguarding the rights of eligible claimants under protected contracts of insurance which are:
    1. (a) contracts of general insurance with a relevant person in financial difficulties as described in 5.4; or
    2. (b) contracts of long-term insurance with a relevant person in financial difficulties as described in 5.4 but in respect of which the FSCS is not securing continuity of insurance within 4.1;
  2.       if, in the opinion of the FSCS at the time it proposes to make the measures, it would be beneficial to the generality of eligible claimants covered by the proposed measures, and, in situations where the cost of taking those measures might exceed the cost of paying compensation under 3.1, any additional cost is likely to be justified by the benefits.
  3. (2) Measures under (1) may be taken on such terms (including terms reducing or deferring payment of any liabilities or benefits provided under any protected contracts of insurance) as the FSCS considers appropriate.



The measures contemplated in 5.1 include measures to:

  1. (1) secure or facilitate the transfer of the insurance business of the relevant person, or any part of the business, to another firm;
  2. (2) give assistance to the relevant person to enable it to continue to effect contracts of insurance or carry out contracts of insurance; and
  3. (3) secure the issue of policies by another firm to eligible claimants in substitution for their existing policies.



If it thinks appropriate, the PRA may, in relation to any relevant person which is in financial difficulties:

  1. (1) give the FSCS assistance in determining what measures under 5.1 are practicable or desirable;
  2. (2) impose constraints on the measures which may be taken by the FSCS under 5.1; and/or
  3. (3) require the FSCS to provide it with information about any measures which it is proposing to take under 5.1.



A relevant person is in financial difficulties for the purpose of 5.1 if:

  1. (1) a liquidator, administrator, provisional liquidator, administrative receiver or interim manager is appointed to the relevant person, or a receiver is appointed by the court to manage the relevant person’s affairs;
  2. (2) there is a finding by a court of competent jurisdiction that the relevant person is unable to pay its debts;
  3. (3) a resolution is passed for winding up of the relevant person, unless a declaration of solvency has been made in accordance with section 89 of the Insolvency Act 1986;
  4. (4) the PRA determines that the relevant person is likely to be unable to satisfy protected claims against it;
  5. (5) approval is given to any company voluntary arrangement made by the relevant person;
  6. (6) the relevant person makes a composition or arrangement with any one or more of its creditors providing for the reduction of, or deferral of payment of, the liabilities or benefits provided for under any of the relevant person’s policies;
  7. (7) the relevant person is dissolved or struck off from the Register of Companies;
  8. (8) a receiver is appointed over particular property of the relevant person;
  9. (9) any of (1) to (8) or anything equivalent occurs in respect of the relevant person in a jurisdiction outside England and Wales; or
  10. (10) in the case of a relevant person which is a member, the FSCS is satisfied that any of (1) to (9) apply to the member, and the amounts which the Society is able to provide from the Central Fund are or are likely to be insufficient to ensure that claims against the member under a protected contract of insurance will be met to the level of protection which would otherwise be available under this Part.