Commentary on Sections Part 4: Financial Services Compensation Scheme Section 171: Special resolution regime
385.This section inserts new section 214B into the Financial Services and Markets Act 2000.
386.The new section confers a power on the Treasury to require the FSCS to contribute to the costs incurred in applying the stabilisation powers of the special resolution regime (see Part 1 of the Act) to banks which are encountering financial difficulties. The section allows upfront payments if deemed appropriate. It imposes a duty on the Treasury to make regulations setting out the costs for which a contribution may be required, how the contribution is to be calculated and other matters, including provision for the costs to be independently verified. New section 214B (4) requires that the scheme’s contributions must not exceed the amount of the compensation which the scheme would have had to pay to eligible claimants if the bank had been unable to satisfy claims against it, taking into account any amounts the scheme is likely to have recovered from the insolvent bank’s estate. New section 214B(5) requires the appointment of an independent valuer to calculate this amount of recovery. This person may be the same person as the independent valuer appointed under section 54 of Part 1 of the Banking Act. New section 214B(7) allows the Financial Services Authority to make rules relating to contingency funds provided they are compatible with the regulations the Treasury has made.