Financial Services Compensation Scheme Ltd v Abbey National Treasury Services Plc

Financial Services Compensation Scheme Ltd v Abbey National Treasury Services Plc

The FSA had power under FSMA, specifically sections 213(1) and 156(2), to include in the scheme rules provision for the assignment to FSCS of claims by investors against third parties. Such provision is integral or at least incidental to the statutory purpose of the compensation scheme. The assignments of investors’ claims against ANTS are not void or ineffective for want of power. On the second issue, compensation paid by FSCS to investors is not to be deducted from the loss recoverable by FSCS as assignee, as the scheme and assignment terms ensure no double recovery and entitle FSCS to pursue the gross claim.

Parties
Claimant: Financial Services Compensation Scheme Limited; Defendant: Abbey National Treasury Services Plc; Intervenor: The Financial Services Authority
Jurisdiction
England and Wales
Judgment Date
31 July 2008
Procedural Posture
Civil / Trial of Preliminary Issues
Outcome
Both preliminary issues determined in favour of FSCS; assignments valid; compensation not deductible from recoverable loss.
Legal Topics
Ultra Vires of Statutory Powers, Assignment of Claims, Compensation Schemes, Calculation of Recoverable Loss, Subrogation
Financial Services Law Statutory Interpretation Ultra Vires of Statutory Powers Assignment of Claims Compensation Schemes Calculation of Recoverable Loss Subrogation

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Parties

Financial Services Compensation Scheme Limited

Claimant

Abbey National Treasury Services Plc

Defendant

The Financial Services Authority

Intervenor

Procedural Posture

Civil / Trial of Preliminary Issues

Legal Issues

  1. 1 Whether the assignments of investors’ claims against ANTS are void and ineffective on the ground that FSCS had no power to agree such assignments
  2. 2 Whether the compensation paid by FSCS to investors is to be taken into account in the calculation of the loss recoverable by FSCS as assignee of the investors’ claims against ANTS

Ratio Decidendi

The FSA had power under FSMA, specifically sections 213(1) and 156(2), to include in the scheme rules provision for the assignment to FSCS of claims by investors against third parties. Such provision is integral or at least incidental to the statutory purpose of the compensation scheme. The assignments of investors’ claims against ANTS are not void or ineffective for want of power. On the second issue, compensation paid by FSCS to investors is not to be deducted from the loss recoverable by FSCS as assignee, as the scheme and assignment terms ensure no double recovery and entitle FSCS to pursue the gross claim.

Court Disposition

Both preliminary issues determined in favour of FSCS; assignments valid; compensation not deductible from recoverable loss.

Orders

  • Assignments of investors’ claims against ANTS are not void and ineffective on the ground of lack of power.
  • Compensation paid by FSCS to investors is not to be taken into account in the calculation of the loss recoverable by FSCS as assignee of the investors’ claims against ANTS.