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the scheme manager to settle a class of claim by payment of sums fixed without reference to, or by modification of, the normal rules for calculation of maximum entitlement for individual claims.
When I read that, I wondered whether it meant that the FSCS could make an interim payment to a certain class of depositor. It could say that, rather than go through the full rigmarole of calculating exactly the deposit balance, people who usually have more than £10,000 in their accounts could have £5,000 as an interim payment. That would be a pragmatic way in which to deal with the problems of eligibility, simplifying criteria and that sort of stuff, or does it mean something completely different? If it is intended to make an interim payment, how would the FSCS recover any surplus or excess of payment made above the level of entitlement of someone in the scheme? It is not clear what the scheme would do in practice. The explanatory note is not much clearer either, particularly given that it is shorter than the clause to which it refers.
Let me try to shed light on the matter. Clause 160 inserts three new subsections into section 214 of the Financial Services and Markets Act 2000. The purpose of those provisions is to facilitate speedy payment of compensation to depositors or to facilitate the speedy transfer of their accounts to another bank under the bank insolvency procedure in part 2 of the Bill. Proposed new section 214(1A) allows the FSA to make rules to deem claims under the scheme to have been made. It will enable the scheme to begin processing the claims from the moment of default, rather than waiting for actual claims to be made. The claims process, especially when dealing with large volumes, will obviously take time so the sooner that it can begin, the better.
The hon. Member for Fareham talked about proposed new section 214(1C). It allows the scheme to deal with certain types of claim, without having to make calculations of individual claimants entitlements. The Government believe that that could help to speed up a bulk transfer of deposits under the bank insolvency procedure or the special resolution regime, which is why we sought to insert it into the clause.