Section 58

4 Part 15 of FSMA 2000 (the Financial Services Compensation Scheme) is amended as follows.

5 After section 217 (insurers in financial difficulties) insert -

"217ZA Insurers subject to write-down orders

(1) The compensation scheme must include provision requiring the scheme manager to take specified measures for safeguarding policyholders affected by write-down orders.

(2) A person ("P") is a policyholder affected by a write-down order if -

(a) P is a policyholder of an insurer in respect of whom a write-down order has effect, and

(b) the value of any thing to which P is (or may become) entitled, in P's capacity as a policyholder of the insurer, is reduced under the write-down order.

(3) Measures specified by virtue of subsection (1) must, in particular, require financial assistance to be given to insurers subject to write-down orders for the purpose mentioned in subsection (4).

(4) The purpose is to enable payments to be made to affected policyholders in respect of the reduction in value of their entitlements (or contingent entitlements), as mentioned in subsection (2)(b).

(5) Financial assistance given under this section -