FINANCIAL SERVICES COMPENSATION SCHME LTD V ABBEY NATIONAL TREASURY SERVICES PLC

[2008] EWHC 1897 (Ch), Chancery Division, Mr Justice David Richards, 31 July 2008

Financial Services Compensation Scheme – Claims made by investors – Claims paid by FSCS and then assigned to it – Whether power to take assignments valid – Whether sums paid by FSCS were to be deducted from the amount of the claims

Some 1,800 investors in Abbey National made claims totalling some £21.5 million in respect of the misselling of financial products,. The compensation was paid by the Financial Services Compensation Scheme, because the independent financial advisers responsible for the misselling were unable to meet the claims, and FSCS sought indemnity from Abbey National under assignments of the claims from the investors. The power to take assignments was set out in the rules governing the FCSC. Abbey National argued that the conferring of the power on the FSCS, by the Financial Services Authority, was ultra vires what was permitted by the Financial Services and Markets Act 2000, section s 156(2) and 213. David Richard J held that: (1) the power to take assignments was not ultra vires; and (2) the losses suffered by the investors were not to be regarded as having been reduced by sums received by FSCS, so that FSCS was entitled to recover the full amount of the claims.