UK

FSA consults on detailed funding arrangements for New Compensation Scheme

Joanna Gray, Solicitor and Senior Lecturer in Law, University of Dundee. Joanna@alwinton.fsnet.co.uk

The Financial Services Compensation Scheme

Part XV of the Financial Services and Markets Act 2000 (FSMA) contains the statutory framework for the new industry-wide single compensation scheme, the Financial Services Compensation Scheme. This scheme will provide the statutory safety net of industry funded compensation (subject to certain maxima) to meet the claims of private customers in the event of the default of an FSA authorised firm. Section 213 FSMA obliges FSA to make rules “to establish a scheme for compensating persons in cases where relevant persons are unable, or are likely to be unable,to satisfy claims against them.”Section 212 FSMA further obliges FSA to establish and oversee a corporate body “the scheme manager” which itself in turn is charged by the Act with: