427.This section clarifies the scope of the Authority’s power to make scheme rules.
428.Subsection (1) provides, in particular, that the scheme may consist of a number of different compensation funds, for which levies can be raised from different sectors of the industry and different rules may be made as to the level of and eligibility for compensation.
429.Subsections (2) to (4) enable the scheme to limit the eligibility of claimants according to a number of different factors, including where the event took place or where the claimant resides.
430.Subsection (6) confers on the scheme manager a power to enter into arrangements with schemes established in other countries outside the EEA.  Where, for example, a US firm does business in the United Kingdom and the level of compensation under the US scheme is lower than in the United Kingdom, the firm would be able to become a member of the UK scheme for the purposes of topping-up its cover.  If the firm was unable to meet its liabilities, claimants might have a claim against both the US and the UK schemes. This power would in turn enable the UK scheme to enter into an arrangement with the US scheme to avoid the need for the claimant to submit a claim to both schemes.  It is possible to make reciprocal arrangements under the power in subsection (1)(k).
Commentary on Sections Part Xv: the Financial Services Compensation Scheme Section 214: General