This policy deals with FSCS’s process of determining a relevant person or firm to be in default. 'In default' is FSCS’s technical term for when a person or firm fails and can’t pay claims against it. This policy does not apply to defaults arising from formal insolvency procedures or other automatic triggers set down in COMP 6.3.3 of the Financial Conduct Authority Handbook.
The objective of this policy is to allow relevant persons or firms who have not yet been the subject of insolvency or similar proceedings to challenge FSCS’s default decision. This policy is only a general indication of the steps FSCS will take and will not apply to all cases. In certain cases, FSCS may choose not to apply parts of this policy.
On receiving a claim, we will attempt to contact the relevant person or firm at their last known address (or through other means, such as email or telephone) to notify them of the investigation and to request information from them as to their ability to satisfy claims against them.
If we don’t receive this information from the relevant person or firm, we will assess their ability to satisfy potential claims against them after making reasonable enquiries of public sources. If, following this assessment, we believe the relevant person or firm is unable (or likely to be unable) to pay claims against them, we will notify them of our intention to declare them in default, allowing them time to object.
We will review any objection or comment we receive from, or on behalf of, the relevant person or firm. Then, we will notify them whether we still intend to declare them in default. Following this, if the relevant person or firm’s response is still to object, we may invite them to attend a meeting with us.
If, at any time, FSCS decides that the relevant person or firm can pay all claims against them, we will inform them. Any claims against the person or firm would then need to be made directly to them.