Donegan & Ors, R (On the Application Of) v Financial Services Compensation Scheme Ltd

Donegan & Ors, R (On the Application Of) v Financial Services Compensation Scheme Ltd

The bonds issued by LCF were not 'transferable securities' under MiFID 2 and the RAO because they were subject to express non-transfer provisions, and the disapplication of those provisions under the Consumer Rights Act 2015 did not render the bonds negotiable on the capital market or alter their regulatory status. Consequently, the Defendant's refusal to compensate the Claimants under the FSCS was lawful.

Parties
Claimant: Emmet Donegan; Claimant: Joanne Ellis-Clarke; Claimant: Alan Considine; Claimant: Nathan Brown; Defendant: Financial Services Compensation Scheme Limited
Jurisdiction
England and Wales
Judgment Date
29 March 2021
Procedural Posture
Judicial Review / Final Judgment
Outcome
Claim dismissed
Legal Topics
Transferable Securities, Regulated Activities, Consumer Contract Terms, Investor Compensation, Interpretation of Mi FID 2, Unfair Contract Terms
Financial Services Law Consumer Protection Law Administrative Law Transferable Securities Regulated Activities Consumer Contract Terms Investor Compensation Interpretation of Mi FID 2 +1 more

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Parties

Emmet Donegan

Claimant

Joanne Ellis-Clarke

Claimant

Alan Considine

Claimant

Nathan Brown

Claimant

Financial Services Compensation Scheme Limited

Defendant

Procedural Posture

Judicial Review / Final Judgment

Legal Issues

  1. 1 Whether LCF bonds were 'transferable securities' under MiFID 2 and the RAO
  2. 2 Whether non-transfer clauses in the bonds were unfair under the Consumer Rights Act 2015 and thus ineffective
  3. 3 Whether LCF engaged in the regulated activity of agreeing to deal in transferable securities

Ratio Decidendi

The bonds issued by LCF were not 'transferable securities' under MiFID 2 and the RAO because they were subject to express non-transfer provisions, and the disapplication of those provisions under the Consumer Rights Act 2015 did not render the bonds negotiable on the capital market or alter their regulatory status. Consequently, the Defendant's refusal to compensate the Claimants under the FSCS was lawful.

Court Disposition

Claim dismissed