ENF 6.8 Section 198

Under section 198 of the Act (Power to apply to court for injunction in respect of certain overseas insurance companies) the FSA has power to apply to court on behalf of the Home State regulator of certain incoming EEA firms for an injunction restraining the incoming EEA firm from disposing of, or otherwise dealing with, any of its assets.

1. (1)

   Section 198(1) sets out the circumstances in which the FSA may exercise the power referred to in ENF 6.8.1 G.

2. (2)

   Section 198(1) states, 'This section applies if the FSA has received a request made in respect of an incoming EEA firm in accordance with:

   1. (a)

      Article 20.5 of the First Non-Life Directive; or

   2. (b)

      Article 24.5 of the First Life Directive'

The FSA's power under section 198 is intended to implement article 20.5 of the First Non-Life Directive, on general insurance, and article 24.5 of the First Life Directive, on long-term insurance. Section 198(1) limits use of the power to where it is in accordance with those articles, which means that it can be exercised only where the Home State regulator concerned has asked the FSA to prohibit the free disposal of the incoming EEA firm's assets and has confirmed that:

1. (1)

   the incoming EEA firm has failed to comply with the requirements of article 15 of the First Non-LifeDirective, or article 17 of the First LifeDirective; or

2. (2)

   the solvency margin of the incoming EEA firm has fallen below the minimum required by article 16.3 of the First Non-Life Directive, or article 19 of the First Life Directive; or

3. (3)

   the solvency margin of the incoming EEA firm has fallen below the guaranteefund as defined in article 17 of the First Non-Life Directive, or article 20 of the First Life Directive.

The FSA will therefore consider exercising this power only where a request from a Home State regulator satisfies the requirements of section 198(1).