54Compensation fund
(1)The Secretary of State may by rules establish a scheme for compensating investors in cases where persons who are or have been authorised persons are unable, or likely to be unable, to satisfy claims in respect of any description of civil liability incurred by them in connection with their investment businesses.
(2)Without prejudice to the generality of subsection (1) above, rules under this section may—
(a)provide for the administration of the scheme and, subject to the rules, the determination and regulation of any matter relating to its operation by a body appearing to the Secretary of State to be representative of, or of any class of, authorised persons ;
(b)establish a fund out of which compensation is to be paid;
(c)provide for the levying of contributions from, or from any class of, authorised persons and otherwise for financing the scheme and for the payment of contributions and other money into the fund;
(d)specify the terms and conditions on which, and the extent to which, compensation is to be payable and any circumstances in which the right to compensation is to be excluded or modified ;
(e)provide for treating compensation payable under the scheme in respect of a claim against any person as extinguishing or reducing the liability of that person in respect of the claim and for conferring on the body administering the scheme a right of recovery against that person, being, in the event of his insolvency, a right not exceeding such right, if any, as the claimant would have had in that event; and
(f)contain incidental and supplementary provisions.
(3)A scheme under this section shall not be made so as to apply to persons who are members of a recognised self-regulating organisation except after consultation with that organisation or, except at the request of a recognised professional body, to persons who are certified by it and subject to its rules in carrying on all the investment business carried on by them; and no scheme applying to such persons shall be made unless the Secretary of State is satisfied that the rules establishing it make sufficient provision—
(a)for this administration of the scheme by a body on which the interests of those persons are adequately represented ; and
(b)for securing that the amounts which they are liable to contribute reflect, so far as practicable, the amount of the claims made or likely to be made in respect of those persons.
(4)Where a scheme applies to such persons as are mentioned in subsection (3) above the rules under this section may—
(a)constitute the recognised self-regulating organisation or recognised professional body in question as the body administering the scheme in relation to those persons ;
(b)provide for the levying of contributions from that organisation or body instead of from those persons; and
(c)establish a separate fund for the contributions and compensation payable in respect of those persons, with or without provision for payments and repayments in specified circumstances between that and any other fund established by the scheme.
(5)A request by a recognised professional body under subsection (3) above shall not be capable of being withdrawn after rules giving effect to it have been made but without prejudice to the power of the Secretary of State to revoke the rules if he thinks fit.
(6)Rules may be made—
(a)for England and Wales, under sections 411 and 412 of the [1986 c. 45.] Insolvency Act 1986 ;
(b)for Scotland—
(i)under the said section 411; and
(ii)in relation to the application of this section where the persons who are or have been authorised persons are persons whose estates may be sequestrated under the [1985 c. 66.] Bankruptcy (Scotland) Act 1985, by the Secretary of State under this section; and
(c)for Northern Ireland, under Article 613 of the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986 and section 65 of the [1978 c. 23.] Judicature (Northern Ireland) Act 1978,
for the purpose of integrating any procedure for which provision is made by virtue of subsection (2)(e) above into the general procedure on a winding-up, bankruptcy or sequestration.