The FCA has issued the final version of its guidance on voluntary redress schemes under the Competition Act 1998 (CA 1998). The guidance, released on 30 March 2016, has remained mostly unchanged from the draft version consulted on in January 2016 and lays out the legal framework and criteria for approval of redress schemes. The FCA states that the guidance is “aimed at firms looking to provide compensation under a CA 1998 redress scheme as well as…members of independent boards appointed to determine compensation in relation to such a scheme.”
The Competition Act 1998 (Redress Scheme) Regulations 2015 set out a framework of the processes and schemes that the Competition and Markets Authority (CMA) and FCA can approve. Rather than adopting the CMA guidance that has already been issued, the FCA has issued its own.
The FCA guidance explains the format that applications for approval of a redress scheme should take and what factors the FCA will take into account in deciding whether or not to grant that approval. The FCA may approve or reject a scheme or approve it subject to conditions, the applicant firm may also be given the opportunity to respond and amend the proposed scheme.
The guidance also clarifies the relationship between the FCA’s powers to approve redress schemes under the CA 1998 and its powers to require firms to pay redress or restitution under the Financial Services and Markets Act 2000.