Regina v Investors Compensation Scheme Ltd, ex Parte Bowden and Another: HL 18 Jul 1995

A regulated firm, Fisher Prew-Smith, ran a scheme whereby elderly homeowners were persuaded to invest money in equity-linked funds by mortgaging their homes on terms that the interest would roll up unless and until the total mortgage debt reached a stated percentage of the then current value of the investors’ home. Investors could retain part of the money raised on the mortgage and/or receive the income from the investments if they wanted. The scheme began to unravel when interest rates rose, thereby increasing the speed at which interest rolled up, whilst simultaneously both property prices and investment values fell. Fisher Prew-Smith became insolvent and the investors claimed against the defendants. ICS had decided that the measure of compensation ‘essential in order to provide fair compensation to the investor’ should be the amount of the outstanding mortgage, less (a) the current value of the investment and (b) any sums received, whether at the outset or by way of income from the investment.
Held: The Investors Compensation Scheme may assess how much of claim it is to pay. It is not a question of all or nothing. It has a discretion to limit pay outs on claims to allow for deductions of receipts, and set payments at ‘fair compensation’ level. ICS’s decision was not susceptible to challenge because rule 2.04(1) gave ICS: ‘a broad discretion to include within the definition of a compensatable claim either the claim as a whole, or those elements of the claim which [ICS] considers essential in order to provide fair compensation and to exclude those elements which do not meet that requirement.’


Times 18-Jul-1995, Gazette 31-Aug-1995, Independent 21-Jul-1995, [1996] AC 261


Financial Services (Compensation of Investors) Rules 1990, Financial Services Act 1986 54


England and Wales


Appeal fromRegina v Investors Compensation Scheme Ltd, ex Parte Bowden and Another CA 30-Jun-1994
The Scheme must award compensation in accordance with accepted methods of calculating damages. It had no authority to limit payment of legal fees of applicants to andpound;500.00. . .

Cited by:

CitedInvestors Compensation Scheme Ltd v West Bromwich Building Society HL 19-Jun-1997
Account taken of circumstances wihout ambiguity
The respondent gave advice on home income plans. The individual claimants had assigned their initial claims to the scheme, but later sought also to have their mortgages in favour of the respondent set aside.
Held: Investors having once . .
CitedRoyal Mail Group Plc v The Consumer Council for Postal Services CA 7-Mar-2007
The Royal Mail appealed a grant of judicial review of the decision of the Post regulator not to penalise the company for its failure to meet its service conditions as regards enforcement of credit terms for bulk mail customers.
Held: The . .
CitedEmptage v Financial Services Compensation Scheme Ltd CA 18-Jun-2013
The claimants had acted on mortgage advice given by a company regulated by the FSA, as a result of which, on the collapse of the property market in Spain, they had lost their investment and their home which had been charged to assist in the purchase . .
CitedEmptage v Financial Services Compensation Scheme Ltd Admn 11-Oct-2012
The claimant had on her mortgage adviser’s advice charged her existing property to purchase property in Spain. After the investment failed, she lost the house. On the financial failure of the adviser without being insred, she claimed against the . .
CitedSalvage Wharf Ltd and Another v G and S Brough Ltd CA 29-Jan-2009
The claimant had agreed with a developer in 1999 to allow a development which would have a minor affect on his light. The developer later extended the development, to increase the interference with the right to light, relying on the earlier . .
CitedThe Financial Conduct Authority and Others v Arch Insurance (UK) Ltd and Others SC 15-Jan-2021
Many businesses, having been ordered to suspend business during the Covid-19 epidemic, sought to claim under business interruption insurance. The claims were rejected by the insurers and the insurers now appealed from a finding that they had been . .
Lists of cited by and citing cases may be incomplete.

Financial Services

Updated: 17 June 2022; Ref: scu.86958