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The paper's aim is to report and comment on two preliminary issues that arose from claims being pursued by the Financial Services Compensation Scheme (FSCS) against Abbey National Treasury Services (ANTS) and NDF Administration Ltd (NDF).

The paper outlines the facts and explains the decision.

The FSCS commenced action against ANTS as assignee of the assigned claims and alleged that ANTS had collaborated with NDF in product development and promotion of the Structured Capital at Risk Products and was liable in negligence and misrepresentation to the investors whose claims it held as assignee. Having considered the arguments, the Judge concluded that FSA did have power to make rules enabling FSCS to take assignment of investor claims.

The issues in this case go to the heart of the funding mechanism of the FSCS. The financing of such compensation schemes is a perennially controversial issue in every jurisdiction that has them.

The purpose of this paper is to discuss the judicial review of Financial Services Compensation Scheme's (FSCS) exercise of power to impose compensation costs levy (R v. Financial Services Compensation Scheme Ltd and Financial Services Authority ex parte ABS Financial Planning and others; Queens Bench Division of High Court; Administrative Court (Birmingham); Mr Justice Beatson).

The paper describes the judicial review action. It arose out of the FSCS imposition of an interim levy of some £32 million to defray compensation costs arising from the default of Keydata Investment Services Ltd (Keydata) and the claimants impugned, as wrong in law and procedurally incorrect, its decision in March 2010 to allocate the costs of that levy to be borne by those firms that the FSCS classified as “investment intermediaries”. The paper gives details of the decision.

The claimants argued that the error in law or irrationality were constituted by the FSCS's determination that: first, the costs of the Keydata claims arose or could be expected to arise out of one or more of the four regulated activities in the D2 sub‐class to which FSCS referred in its reasoning behind its decision. Rather, the claimants argued, the true position was that the claims did not arise out of any of these activities but arose out of Keydata's marketing of its plans; and second, the costs did not arise and could not be expected to arise out of any D1 sub‐class activity of “managing investments”.

This decision illustrates the increasing difficulty of drawing a clear line between discretionary management and agency broking, for the claimants made a strong argument that Keydata should be considered to have been much more than a passive distribution conduit or channel.

The Isle of Man, a British Isles offshore jurisdiction located in the middle of the Irish Sea, has experienced three separate bank collapses during a relatively brief 26 year period. These collapses have affected in excess of 20,000 depositors and inflicted significant damage on investor confidence in the Isle of Man as an offshore finance centre. The purpose of this paper is to trace the evolution of deposit protection during this time frame, teasing out the delicate balance required in small offshore jurisdictions between rigorous standards of investor protection on the one hand and the vital importance of remaining competitive with rival offshore finance centres on the other. It critically evaluates the recently enacted Isle of Man deposit compensation scheme (DCS) by reference to this organising principle.

The paper outlines the nature of the Manx jurisdiction and its offshore development. Focussing on the period 1982‐2010, it discusses the three separate bank collapses and insular regulatory and legislative responses. The focal point of the paper is a critical evaluation of the new Isle of Man DCS including comparisons where appropriate with deposit protection schemes in the Channel Islands offshore jurisdictions of Jersey and Guernsey and discussion of the extent to which the new Isle of Man DCS complies with specific features of recently formulated international best practice standards.

The paper reports that insular regulatory and government responses to bank collapses have tended to be distinctly short‐term and reactive. Despite being the first small offshore jurisdiction in the world to embrace the principle of deposit protection in 1991, there has been a conspicuous failure in the Isle of Man to develop related financial safety net policies, and the overriding motive for the introduction and indeed continuation of deposit protection has been to repair enduring reputational damage inflicted on its offshore finance centre by successive bank failures. The new Isle of Man DCS conforms to this model, reflecting insular anxieties regarding risks of lost banking business to rival offshore jurisdictions as opposed to rigorous standards of investor protection.

Analysis contained in this paper sheds light on the problem of effective deposit protection in small offshore jurisdictions, including tensions in policy terms between principled investor protection and finance centre reputational and competitiveness concerns. It also highlights, more broadly, the endemic problem of delivering optimum investor protection at (small) jurisdictional level in the context of international banking groups operating on a multi‐jurisdictional basis and deploying entrenched business models which operationalise offshore banking arms as essentially vehicles for the onward transmission of liquid funds to treasury functions located in parent groups' home jurisdictions.

Late in 2001, the Financial Services Authority (FSA) introduced a new set of arrangements for deposit protection in the UK. While the changes involve a welcome improvement on previous arrangements, much more could be done to enhance their overall cost‐effectiveness. This paper explains the flaws in previous and current arrangements and, using a relatively crude but nevertheless objective measure of the extent of their compliance with International Monetary Fund (IMF) best practice ‘rules’, compares their degree of ‘incentive‐compatibility’ (or economic efficiency ‐ ie the extent to which they minimise the problems created by adverse selection, moral hazard and principal/agency conflict) with the counterpart schemes operating elsewhere in the European Union and beyond. In this way, areas for future improvements are identified, which will ideally require accommodating changes in the guiding Deposit Guarantee Schemes Directive.

The purpose of this paper is to discuss R (on the application of British Bankers Association) v. Financial Services Authority and another (Queens Bench Division: Administrative Court: Mr Justice Ouseley). Date of Judgment: 20 April 2011.

The paper outlines the facts surrounding the case and comments on the decision.

This is a lengthy judgment that is dense in closely reasoned interpretative analysis of the Financial Services and Markets Act 2000 schema for regulation of the conduct of retail financial business and attendant redress mechanisms.

This keenly awaited decision raises several issues of wider public interest about the design and operation of the regulatory environment for retail finance in the UK. In the context of the FSA's emphasis over the past few years of its “Treating Customers Fairly” programme of work the legality of the action taken by both FSA and the Financial Ombudsman Service (FOS) to effect a broad measure and depth of consumer redress in respect of what they judged to be widespread incidence of inappropriate sales of payment protection insurance (PPI) by banks in particular came under intensive scrutiny from the Court in what is a fascinating judgment for regulatory lawyers.

This paper examines the regulatory regime of the Financial Services Authority towards the credit union movement in Great Britain as contained in the Credit Union Sourcebook. The author discusses the merits of a strong regulatory regime towards credit unions within Great Britain and concludes that such an approach could improve the traditional perception of credit unions, increase the protection of members and increase awareness of the benefits of joining a credit union.

The purpose of this paper is to explore the full potential of an effective deposit insurance system. The current financial crisis in Europe has arguably casted fresh doubt on the role and need for deposit insurance. In this regard, the deposit insurance system’s rationale is a key starting issue in order to fully understand its design and role within a financial safety net system.

Using the UK regulatory regime as the main reference point, the deposit insurance system’s objectives are divided into two broad categories: depositor protection and financial stability.

It is argued that a deposit insurance system could only be effective if designed to perform key regulatory objectives. Otherwise, authorities will keep resorting to other rescue measures, as this system will never be well equipped to respond to a bank failure.

Notwithstanding recent regulatory reforms, there is still a lack of clear objectives and, thus, a clear profile for the Financial Services Compensation Scheme, as the UK deposit compensation scheme. In light of systemic risk and increased demands on prudential banking regulation, the UK deposit insurance system should be reformed to perform significant regulatory objectives.

The further reform of the UK deposit insurance will enhance depositor protection and financial stability, especially amid the euro-crisis.

An effective reform of deposit insurance requires a clear role-setting for deposit insurance. To this end, this paper offers a comprehensive analysis of all regulatory objectives that the post-crisis UK deposit insurance system should serve.

The purpose of this paper is to report and comment on Financial Services Compensation Scheme Ltd v. Abbey National Treasury Services plc.

The paper outlines the facts surrounding the case and comments on the decision.

The Court agreed with the FSCS's view and upheld its claim to legal advice privilege for both the questions and answers and the relevant narrative commentaries that appeared on the investor claim checklists.

This decision represents an interesting consequence of the rationalisation and assignment to the FSCS of private investors' claims for redress in the wake of firms' default triggering regulatory compensation payments.

The financial crisis that hit countries worldwide in 2007 tested and tried deposit guarantee schemes (DGSs) and their ability to protect consumers’ bank deposits. The crisis also served as a reality check for regulators, institutions and the general public alike. Against this backdrop, there was a significant rationale by governments and regulators to protect consumers and at the same time maintain financial stability through expansion of coverage offered in existing DGS arrangements or setting up such a scheme where this was not already in place.

Consumers need other possible safety net in addition to the already set-up lender-of-last resort facilities provided by central banks, banking supervision regulations, assistance granted by international institutions such as the International Monetary Fund and European Central Bank and also the recently enacted EU Bank Recovery and Resolution Directive (BRRD).

In this chapter the authors evaluated whether the launch of a European Deposit Insurance Scheme (EDIS) as a single deposit guarantee in Europe which is now being recognised as one of the three main pillars, together with the single supervisory and resolution mechanisms, would enhance depositors’ protection in times of banking crisis and also reinforce financial stability in the EU as part of the proposed Banking Union.

The chapter made reference to academic literature and also recent EDIS political dossier to outline the developments. Apart from political insensitivity to the proposed EDIS, the chapter also concluded that the introduction of EDIS raises questions about moral hazard amongst banks in the EU, issues on bank’s contributions during the transition period and difficulty in comparing banks across EU countries through banks’ deposits and risk profiles.

This paper aims to examine the implications of exemptions to facilitate small businesses’ access to crowdfunding (CF) schemes. The aftermath of the 2008 global financial crisis and even now witnessed many small profits and non-profits encountering significant difficulties in accessing funding from the conventional sources and on many occasions have to turn to the newly emerging Internet-enabled donation or product compensation CF schemes. Access to securities-based CF schemes has, however, been seriously difficult due to securities laws obstacles. Regulatory authorities in the USA and the UK have responded with exemptions to facilitate small businesses’ access to CF.

The paper driven by the qualitative doctrinal approach would rely extensively on primary data from the applicable regulations and secondary data from industry sources and other publicly available commentaries.

Securities-based CF schemes hitherto heavily restricted in the USA and the UK are under current regulatory interventions-accorded exemption status, thereby enabling enhanced access for those small businesses seeking alternatives to conventional financing and enhanced investment opportunities for small investors. The paper’s preliminary analysis suggests that the proposed new regulatory rules in the USA and the UK are generally well-balanced with adequate small investors’ protection, while simultaneously not hampering the innovative growth of small businesses with excessive restrictions. Further, the preparedness of the regulators to fine-tune the proposed rules as the CF industry evolves would likely ensure its orderly growth, thereby helping to address various humanitarian and social challenges in these jurisdictions.

The added value of the analysis lies in its substantive evaluation of the proposed rules in both jurisdictions to ascertain the feasibility of securities-based CF schemes as alternatives for small businesses in relation to traditional financing and enhanced investment opportunities for small unsophisticated investors.