Compromises are arrangements that allow a firm to settle its liabilities with creditors and/or shareholders. The FCA has seen an increase in the number of regulated firms proposing compromises to deal with significant liabilities to consumers, in particular redress liabilities.

FCA has published guidance to clarify its general approach to compromise agreements. The guidance sets out how it considers compromises, the factors it considers when assessing them and its role when a firm proposes a compromise agreement. The aim is to help firms understand what information the FCA needs and the factors it will consider when deciding if and what actions it takes.

Firms are reminded that if they are considering proposing a compromise, in line with Principle 11 and the notification requirement in SUP 15, they should notify the FCA immediately and provide relevant information at an early stage to enable assessment of the compromise.

Click here to read the guidance.