Prudential Regulation Authority Rulebook

10.1

This Chapter applies only to the FSCS.

10.2

In order to qualify as a temporary high balance, a part of an eligible deposit in excess of the coverage limit provided for in 4.2 must meet at least one of the following additional criteria:

1. (1) it comprises:
1. (a) monies deposited in preparation for the purchase of a private residential property (or an interest in a private residential property) by the depositor;
2. (b) monies which represent the proceeds of sale of a private residential property (or an interest in a private residential property) of the depositor; or
3. (c) monies which represent the proceeds of an equity release by the depositor in a private residential property;
2. (2) it comprises sums paid to the depositor in respect of:
1. (a) benefits payable under an insurance policy;
2. (b) a claim for compensation for personal (including criminal) injury;
3. (c) State benefits paid in respect of a disability or incapacity;
4. (d) a claim for compensation for wrongful conviction;
5. (e) a claim for compensation for unfair dismissal;
6. (f) their redundancy (whether voluntary or compulsory);
7. (g) their marriage or civil partnership;
8. (h) their divorce or dissolution of their civil partnership; or
9. (i) benefits payable on retirement;
3. (3) it comprises sums paid to the depositor in respect of:
1. (a) benefits payable on death;
2. (b) a claim for compensation in respect of a person’s death; or
3. (c) a legacy or other distribution from the estate of a deceased person;
4. (4) it is held in an account on behalf of the personal representatives of a deceased person for the purpose of realising and administering the deceased’s estate; or
5. (5) it otherwise serves a social purpose provided for, or of the type provided for, in the law of a part of the United Kingdom, which is linked to the marriage, civil partnership, divorce, dissolution of civil partnership, retirement, incapacity, death of an individual, or to the buying or selling of a depositor’s only or main residence that is not freehold, heritable or leasehold property.

10.3

Following the compensation date, the FSCS must review the single customer view of each depositor with the DGS member and provide written notice to an individual with aggregate eligible deposits in excess of the coverage levels set out in 4.2 of the following:

1. (1) that the depositor may be entitled to additional compensation if all or part of the eligible deposit in excess of the coverage levels provided for in 4.2 qualifies as a temporary high balance;
2. (2) that in order to claim such additional compensation, the depositor must provide the FSCS with a written application and evidence supporting the depositor’s claim that all or part of the eligible deposit in excess of the coverage levels provided for in 4.2 qualifies as a temporary high balance;
3. (3) that the depositor may make more than one claim for a temporary high balance if there are multiple events giving rise to a temporary high balance; and
4. (4) the date by which such written application and supporting evidence should be submitted to the FSCS.

10.4

The FSCS must pay compensation to a depositor in respect of a temporary high balance in accordance with 4.3 if it is satisfied that there is a sufficient link between an event giving rise to a temporary high balance and the part of the eligible deposit in excess of the coverage levels provided for in 4.2, taking into account the following considerations:

1. (1) the written application and evidence provided by the depositor under 10.3; and
2. (2) any other information that the FSCS considers relevant.

10.5

The FSCS must pay compensation to a depositor in accordance with 4.3 in respect of each temporary high balance that the depositor has with any one DGS member.

10.6

The FSCS may pay compensation in respect of a temporary high balance to a person who makes a claim on behalf of another person if the FSCS is satisfied that the person on whose behalf the claim is made would have been paid compensation by the FSCS in respect of that temporary high balance had the person been able to make the claim themselves, or to pursue their application for compensation further.

10.7

The protection for temporary high balances under 4.3 shall run for a period of six months from the later of:

1. (1) the first date on which a temporary high balance is credited to a depositor’s account, or to a client account on a person’s behalf; and
2. (2) the first date on which the temporary high balance becomes legally transferable to the depositor.

[Note: Art. 6(2) of the DGSD]

10.8

The FSCS must, within three months of the compensation date, pay to the depositor a sum representing the amount due to the depositor in respect of the temporary high balance unless one or more of 10.9 to 10.11 applies.

[Note: Art. 8(5)(d) of the DGSD]

10.9

The FSCS may defer payment in respect of a temporary high balance for a period in excess of the period specified in 10.8 where:

1. (1) the depositor provides the written application and evidence referred to in 10.3 to the FSCS more than two months following the date of the written notice from the FSCS under 10.3;
2. (2) the FSCS has informed the depositor that the FSCS is contacting a third party to ask for additional information necessary to determine the claim; or
3. (3) one or more of the circumstances set out in 9.4 (1)-(7) arise.

10.10

If the FSCS considers that the written application and evidence provided by a depositor under 10.3 does not demonstrate a sufficient link between an event giving rise to a temporary high balance and the eligible deposit being in excess of the coverage levels provided for in 4.2, the FSCS must write promptly to that depositor to:

1. (1) request any additional information that the FSCS considers necessary to determine the claim (within such time as the FSCS may specify); or
2. (2) confirm that the FSCS has determined that the deposit is not a temporary high balance and that it rejects the claim.

10.11

If the written application or evidence provided by the depositor under 10.3 contains any material inaccuracy or omission, the FSCS may reject the claim for compensation unless this is considered by the FSCS to be wholly unintentional.

10.12

Where all or part of a temporary high balance is transferred to another DGS member after the start of the coverage period referred to in 10.7, the FSCS must pay compensation if it considers that the transferred deposit is sufficiently linked to the temporary high balance. The coverage period in 10.7 shall be calculated by reference to the point at which the temporary high balance was credited to the first account.

10.13

Where the FSCS rejects a claim made under this Chapter, it must give:

1. (1) written reasons for its decision;
2. (2) a summary of any right to request an internal FSCS review of the decision; and
3. (3) a summary of any right to appeal the decision.