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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.



If the FSCS determines that compensation is payable (or any recovery or other amount is payable by the FSCS to the claimant), it must pay it to the claimant, or if the FSCS so decides, as directed by the claimant, unless:

  1. (1) arrangements have or are being made to secure continuity of insurance under 4.1 or the FSCS is taking measures it considers appropriate to safeguard eligible claimants under 5.1; or
  2. (2) 18.2 applies.



Where an eligible claimant has a claim under a protected contract of insurance against a relevant person (or where applicable, the successor) that is in administration, provisional liquidation, or liquidation, the FSCS may:

  1. (1) make payments to or on behalf of eligible claimants on such terms (including any terms requiring repayment in whole or in part) and on such conditions as it thinks fit (subject to 17); or
  2. (2) secure that payments (subject to 17) are made to or on behalf of any such eligible claimants by the liquidator, administrator or provisional liquidator by giving him an indemnity covering any such payments or any class or description of such payments.



The FSCS may pay compensation in any form and by any method (or any combination of them) that it determines is appropriate including, without limitation:

  1. (1) by paying the compensation (on such terms as the FSCS considers appropriate) to an authorised person with permission to accept deposits which agrees to become liable to the claimant in a like sum;
  2. (2) by paying compensation directly into an existing deposit account of (or for the benefit of) the claimant, or as otherwise identified by (or on behalf of) the claimant, with an authorised person (but before doing so the FSCS must take such steps as it considers appropriate to verify the existence of such an account and to give notice to the claimant of its intention to exercise this power); and/or
  3. (3) (where two or more persons have a joint beneficial claim) by accepting communications from and/or paying compensation to any of those persons where this is in accordance with the terms and conditions of the contract of insurance.



If the FSCS is satisfied that in principle compensation is payable in connection with any protected claim, but considers that immediate payment in full would not be prudent because of uncertainty as to the amount of the claimant's overall claim, it may decide to pay an appropriate lesser sum in final settlement, or to make payment on account.



The FSCS may also decide to make a payment on account or to pay a lesser sum in final settlement if the claimant has any reasonable prospect for recovery in respect of the claim from any third party or by applying for compensation to any other person.



The FSCS may pay interest on the compensation sum in such circumstances as it considers appropriate.



Interest under 18.6 is not to be taken into account when applying the limits on the compensation sum payable in respect of a claim under 17.



Where the FSCS considers that the conditions in 18.4 are satisfied but, in relation to a class of claim, in order to provide fair compensation for the generality of such claims it would be appropriate, it may for that class of claim:

  1. (1) receive whether by assignment, subrogation, transfer or operation of law the whole or any part of a claimant's rights against the relevant person (or where applicable, the successor), or against any third party, or all of them on such terms as the FSCS thinks fit; and
  2. (2) disregard the value of the rights so received in determining the claimant's overall claim;

rather than pay an appropriate lesser sum in final settlement or make a payment on account, for that class of claims.