1. C-222/02: Paul v Germany Some observations from a regulator
Michelle Ewing
General Counsel’s Division, FSA
6 January 2005

2. Significance of the reference
UK intervention
Implications for FSA and FSMA
Immunity - Schedule 1, paragraph 19
Balanced package of regulatory protection
Statutory objectives and risk-based approach
Consideration by ECJ post Three Rivers
Position of others

3. Reasons for the decision
(1) Directives contain no express rule granting rights to depositors
(2) Harmonisation is limited and coordination of national rules on liability is not necessary
(3) Several Member States exclude liability for defective supervision for policy reasons
(4) DGD guarantees minimal protection including in cases of defective supervision

4. Scope of the decision DGD/ICD prescribe compensation
How integral is this to the overall finding?
Implications for insurance claims
Should someone not entitled to compensation be in a better position and recover full losses?
Protection in UK

5. Why this is the right outcome
FOS, FSCS, complaints, bad faith, HRA, JR, prosecution = balance + flexibility
Implications of liability
Create incentive to take defensive decisions favouring those most likely to sue
Overregulation
FSA becomes insurer of last resort
Huge costs for firms (& consumers)