Financial Services and Markets Bill - continued        House of Lords
PART XV, THE FINANCIAL SERVICES COMPENSATION SCHEME - continued
Provisions of the scheme - continued

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Rights of the scheme in relevant person's insolvency.     209. - (1) The compensation scheme may, in particular, make provision-
 
 
    (a) for treating compensation payable under it in respect of a claim against a relevant person as extinguishing or reducing the liability of that person in respect of the claim; and
 
    (b) for conferring on the scheme manager a right of recovery against that person.
      (2) Such a right of recovery conferred by the scheme does not, in the event of the relevant person's insolvency, exceed such right (if any) as the claimant would have had in that event.
 
      (3) If a person other than the scheme manager presents a petition under section 9 of the 1986 Act or Article 22 of the 1989 Order in relation to a company or partnership which is a relevant person, the scheme manager has the same rights as are conferred on the Authority by section 349.
 
      (4) If a person other than the scheme manager presents a petition for the winding up of a body which is a relevant person, the scheme manager has the same rights as are conferred on the Authority by section 358.
 
      (5) If a person other than the scheme manager presents a bankruptcy petition to the court in relation to an individual who is a relevant person, the scheme manager has the same rights as are conferred on the Authority by section 361.
 
      (6) Insolvency rules may be made for the purpose of integrating any procedure for which provision is made as a result of subsection (1) into the general procedure on the administration of a company or partnership or on a winding-up, bankruptcy or sequestration.
 
      (7) "Bankruptcy petition" means a petition to the court-
 
 
    (a) under section 264 of the 1986 Act or Article 238 of the 1989 Order for a bankruptcy order to be made against an individual; or
 
    (b) under section 5 of the 1985 Act for the sequestration of the estate of an individual.
      (8) "Insolvency rules" are-
 
 
    (a) for England and Wales, rules made under sections 411 and 412 of the 1986 Act;
 
    (b) for Scotland, rules made by order by the Treasury, after consultation with the Scottish Ministers, for the purposes of this section; and
 
    (c) for Northern Ireland, rules made under Article 359 of the 1989 Order and section 55 of the Judicature (Northern Ireland) Act 1978.
      (9) "The 1985 Act", "the 1986 Act", "the 1989 Order" and "court" have the same meaning as in Part XXIV.
 
Continuity of long-term insurance policies.     210. - (1) The compensation scheme may, in particular, include provision requiring the scheme manager to make arrangements for securing continuity of insurance for policyholders, or policyholders of a specified class, of relevant long-term insurers.
 
      (2) "Relevant long-term insurers" means relevant persons who-
 
 
    (a) carry on long-term insurance business; and
 
    (b) are unable, or likely to be unable, to satisfy claims made against them.
      (3) The scheme may provide for the scheme manager to take such measures as appear to him to be appropriate-
 
 
    (a) for securing or facilitating the transfer of the long-term business of a relevant long-term insurer, or any part of it, to another authorised person;
 
    (b) for securing the issue by another authorised person to the policyholders concerned of policies in substitution for their existing policies.
      (4) The scheme may also provide for the scheme manager to make payments to the policyholders concerned-
 
 
    (a) during any period while he is seeking to make arrangements mentioned in subsection (1);
 
    (b) if it appears to him that it is not reasonably practicable to make such arrangements.
      (5) A provision of the scheme made by virtue of section 207(3)(b) may include power to impose levies for the purpose of meeting expenses of the scheme manager incurred in-
 
 
    (a) taking measures as a result of any provision of the scheme made by virtue of subsection (3);
 
    (b) making payments as a result of any such provision made by virtue of subsection (4).
Insurers in financial difficulties.     211. - (1) The compensation scheme may, in particular, include provision for the scheme manager to have power to take measures for safeguarding policyholders, or policyholders of a specified class, of relevant insurers.
 
      (2) "Relevant insurers" means relevant persons who-
 
 
    (a) carry on insurance business; and
 
    (b) are in financial difficulties.
      (3) The measures may include such measures as the scheme manager considers appropriate for-
 
 
    (a) securing or facilitating the transfer of the insurance business of a relevant insurer, or any part of it, to another authorised person;
 
    (b) giving assistance to the relevant insurer to enable it to continue insurance business.
      (4) The scheme may provide-
 
 
    (a) that if measures of a kind mentioned in subsection (3)(a) are to be taken, they should be on terms appearing to the scheme manager to be appropriate, including terms reducing, or deferring payment of, any of the things to which any of those who are eligible policyholders in relation to the relevant insurer are entitled in their capacity as such;
 
    (b) that if measures of a kind mentioned in subsection (3)(b) are to be taken, they should be conditional on the reduction of, or the deferment of the payment of, the things to which any of those who are eligible policyholders in relation to the relevant insurer are entitled in their capacity as such;
 
    (c) for ensuring that measures of a kind mentioned in subsection (3)(b) do not benefit to any material extent persons who were members of a relevant insurer when it began to be in financial difficulties or who had any responsibility for, or who may have profited from, the circumstances giving rise to its financial difficulties, except in specified circumstances;
 
    (d) for requiring the scheme manager to be satisfied that any measures he proposes to take are likely to cost less than it would cost to pay compensation under the scheme if the relevant insurer became unable, or likely to be unable, to satisfy claims made against him.
      (5) The scheme may provide for the Authority to have power-
 
 
    (a) to give such assistance to the scheme manager as it considers appropriate for assisting the scheme manager to determine what measures are practicable or desirable in the case of a particular relevant insurer;
 
    (b) to impose constraints on the taking of measures by the scheme manager in the case of a particular relevant insurer;
 
    (c) to require the scheme manager to provide it with information about any particular measures which the scheme manager is proposing to take.
      (6) The scheme may include provision for the scheme manager to have power-
 
 
    (a) to make interim payments in respect of eligible policyholders of a relevant insurer;
 
    (b) to indemnify any person making payments to eligible policyholders of a relevant insurer.
      (7) A provision of the scheme made by virtue of section 207(3)(b) may include power to impose levies for the purpose of meeting expenses of the scheme manager incurred in-
 
 
    (a) taking measures as a result of any provision of the scheme made by virtue of subsection (1);
 
    (b) making payments or giving indemnities as a result of any such provision made by virtue of subsection (6).
      (8) "Financial difficulties" and "eligible policyholders" have such meanings as may be specified.
 
 
Annual report
Annual report.     212. - (1) At least once a year, the scheme manager must make a report to the Authority on the discharge of its functions.
 
      (2) The report must-
 
 
    (a) include a statement setting out the value of each of the funds established by the compensation scheme; and
 
    (b) comply with any requirements specified in rules made by the Authority.
      (3) The scheme manager must publish each report in the way it considers appropriate.
 
 
Information and documents
Scheme manager's power to require information.     213. - (1) The scheme manager may, by notice in writing given to the relevant person in respect of whom a claim is made under the scheme or to a person otherwise involved, require that person-
 
 
    (a) to provide specified information or information of a specified description; or
 
    (b) to produce specified documents or documents of a specified description.
      (2) The information or documents must be provided or produced-
 
 
    (a) before the end of such reasonable period as may be specified; and
 
    (b) in the case of information, in such manner or form as may be specified.
      (3) This section applies only to information and documents the provision or production of which the scheme manager considers-
 
 
    (a) to be necessary for the fair determination of the claim; or
 
    (b) to be necessary (or likely to be necessary) for the fair determination of other claims made (or which it expects may be made) in respect of the relevant person concerned.
      (4) If a document is produced in response to a requirement imposed under this section, the scheme manager may-
 
 
    (a) take copies or extracts from the document; or
 
    (b) require the person producing the document to provide an explanation of the document.
      (5) If a person who is required under this section to produce a document fails to do so, the scheme manager may require the person to state, to the best of his knowledge and belief, where the document is.
 
      (6) No person may be required under this section to produce or disclose a privileged communication.
 
      (7) If the relevant person is insolvent, no requirement may be imposed under this section on a person to whom section 214 or 218 applies.
 
      (8) If a person claims a lien on a document, its production under this Part does not affect the lien.
 
      (9) "Relevant person" has the same meaning as in section 218.
 
      (10) "Specified" means specified in the notice given under subsection (1).
 
      (11) A person is involved in a claim made under the scheme if he was knowingly involved in the act or omission giving rise to the claim.
 
 
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Prepared 11 February 2000