FEES 6 Annex 3A 1Financial Services Compensation Scheme - classes

Class B1

[deleted]6

Class B2

General Insurance Distribution8

Firms with permission for:

Any of the following in respect of general insurance contracts:

dealing in investments as agent;

arranging (bringing about) deals in investments;

making arrangements with a view to transactions in investments;

assisting in the administration and performance of a contract of insurance;

advising on investments;

agreeing to carry on a regulated activity which is within any of the above.

Tariff base

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Class B2: annual eligible income where annual eligible income means annual income adjusted in accordance with this box.6 Annual income is calculated as the sum of (a) and (b):

(a) the net amount retained by the firm of all brokerages, fees, commissions and other related income (for example, administration charges, overriders and profit shares) due to the firm in respect of or in relation to class B2 activities, including any income received from an insurer; and

(b) if the firm is an insurer, in relation to class B2 activities, the amount of premiums receivable on its contracts of insurance multiplied by 0.07, excluding those contracts of insurance which result from class B2 activities carried out by another firm, where a payment has been made by the insurer to that other firm and that payment is of a type that falls under (a).

Notes relating to the calculation of the tariff base for class B2:

(1) Exclude annual income for pure protection contracts. Only include general insurance contracts

(2) The calculation is adjusted in accordance with the definition of annual eligible income.

(3) Net amount retained means all the commission, fees, etc. in respect of class B2 activities that the firm has not rebated to customers or passed on to other firms (for example, where there is a commission chain). Items such as general business expenses (for example, employees' salaries and overheads) must not be deducted.

(4) Class B2 activities mean activities that fall within class B2. They also include activities that now fall within class B2 but that were not regulated activities when they were carried out.

(5) A reference to a firm also includes a reference to any person who carried out activities that would now fall into class B2 but which were not at the time regulated activities.

Class C1

[deleted]6

Class C2

Life Distribution8 and Pensions Intermediation

Firms with permission for:

Any of the following:

dealing in investments as agent;

arranging (bringing about) deals in investments;

making arrangements with a view to transactions in investments;

assisting in the administration and performance of a contract of insurance;

advising on investments;

advising on pension transfers and pension opt-outs;

basic advice;6

agreeing to carry on a regulated activity which is within any of the above;

in relation to any of the following:

long-term insurance contracts (including pure protection contracts);

rights under a stakeholder pension scheme or a personal pension scheme.

Tariff base

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Class C2: annual eligible income where annual eligible income means annual income adjusted in accordance with this box.6 Annual income is calculated as the sum of (a) and (b):

(a) the net amount retained by the firm of all brokerages, fees, commissions and other related income (for example, administration charges, overriders and profit shares) due to the firm in respect of or in relation to class C2 activities including any income received from an insurer; and

(b) if the firm is a life and pensions firm, in relation to class C2 activities, the amount of premiums or commission receivable on its life and pensions contracts multiplied by 0.07, excluding those life and pensions contracts which result from class C2 activities carried out by another firm, where a payment has been made by the life and pensions firm to that other firm and that payment is of a type that falls under (a).

Notes relating to the calculation of the tariff base for class C2:

(1) Life and pensions contracts mean long-term insurance contracts (including pure protection contracts) and rights under a stakeholder pension scheme or a personal pension scheme.

(2) Life and pensions firm means an insurer. It also means a firm that provides stakeholder pension schemes or personal pension schemes if those activities fall into class D1.

(3) The calculation is adjusted in accordance with the definition of annual eligible income.

(4) Net amount retained means all the commission, fees, etc. in respect of class C2 activities that the firm has not rebated to customers or passed on to other firms (for example, where there is a commission chain). Items such as general business expenses (for example, employees' salaries and overheads) must not be deducted.

(5) Class C2 activities mean activities that fall within class C2. They also include activities that now fall within class C2 but that were not regulated activities when they were carried out.

(6) A reference to a firm also includes a reference to any person who carried out activities that would now fall into class C2 but which were not at the time regulated activities.

Investment

Class D1

Investment provision

Firms with permission for:

Any of the following:

managing investments;3

3managing an AIF;

3managing a UCITS;

3acting as trustee or depositary of an AIF;

3acting as trustee or depositary of a UCITS;5

establishing, operating or winding up a collective investment scheme;5

establishing, operating or winding up a stakeholder pension scheme;

establishing, operating or winding up a personal pension scheme;

agreeing to carry on a regulated activity which is within any of the above.

Class D2

Investment Intermediation

Firms with permission for:

6intermediation of structured deposits (except for managing investments in relation to structured deposits); and/or

Any of the following activities in relation to designated investment business:

dealing in investments as principal;

dealing in investments as agent;

MiFID business bidding;

arranging (bringing about) deals in investments;

making arrangements with a view to transactions in investments;

advising on investments;

basic advice;6

safeguarding and administering investments;

arranging safeguarding and administering of assets;

operating a multilateral trading facility;

operating an organised trading facility;7

agreeing to carry on a regulated activity which is within any of the above;

BUT excluding activities that relate to long-term insurance contracts or rights under a stakeholder pension scheme or a personal pension scheme.

7Recognised investment exchanges

recognised investment exchanges that are operating a multilateral trading facility or operating an organised trading facility

Tariff base

Class D1: annual eligible income where annual eligible income means annual income adjusted in accordance with this box.6 Annual income is equal to the net amount retained by the firm of all income due to the firm in respect of or in relation to activities falling within class D1.

Class D2 except in respect of direct sales of structured deposits6: annual eligible income where annual eligible income means annual income adjusted in accordance with this box.6 Annual income is equal to the net amount retained by the firm of all income due to the firm in respect of or in relation to activities falling within class D2.

Notes on annual eligible income for classes D1 and D2 (except in respect of direct sales of structured deposits)6:

(1) For the purposes of calculating annual income, net amount retained means all the commission, fees, etc. in respect of activities falling within class D1 or D2, as the case may be, that the firm has not rebated to customers or passed on to other firms (for example, where there is a commission chain). Items such as general business expenses (for example employees' salaries and overheads) must not be deducted.

(2) The calculation is adjusted in accordance with the definition of annual eligible income.

(3) Box management profits are excluded from the calculation of annual income.

6Class D2 in respect of direct sales of structured deposits: the tariff base for Class A (DGS members) set out in the Depositor Protection part of the PRA Rulebook, but only to the extent that it:

6(a) relates to structured deposits accepted in the firm’s last financial year ended in the year to 31 December preceding the date for submission of the information under FEES 6.5.13R attributable to that class; and

6(b) multiplied by 0.07.

Class E2

Home Finance Intermediation

Firms with permission for:

Any of the following activities:

arranging (bringing about) a home finance transaction;

making arrangements with a view to a home finance transaction;

advising on home finance transaction;

the activities of a home finance provider which would be arranging but for article 28A of the Regulated Activities Order (Arranging contracts or plans to which the arranger is party);

agreeing to carry on a regulated activity which is within any of the above.

Tariff base

Class6 E2: annual eligible income where the annual income is calculated in accordance with fee-block A18 in part 2 of FEES 4 Annex 1A R.

Class F

Deposit acceptor's contribution

Firms with permission for:

accepting deposits and/or operating a dormant account fund. BUT does not include any fee payer who either effects or carries out contracts of insurance.

6Tariff base

The tariff base for Class A (DGS members) in the Depositor Protection part of the PRA Rulebook.

Class G

Insurers - life contribution

Firms with permission for:

effecting contracts of insurance; and/or

carrying out contracts of insurance;

that are long term insurance contracts (including pure protection contracts)6;

entering as provider into a funeral plan contract.

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6Also includes:

the Society

6Tariff base

For the Society, the aggregate of the tariff base for Insurance Class C1 in the Policyholder Protection part of the PRA Rulebook that would apply to each member if:

(a) that tariff base applied to each member in respect of their insurance business in relation to long-term insurance contracts (including pure protection contracts); and

(b) all references to “firm” or “participant firm” in the Policyholder Protection part of the PRA Rulebook were read as referring to the member.

For all other participant firms, the tariff base for Insurance Class C1 in the Policyholder Protection part of the PRA Rulebook.

Class H

Insurers - general contribution

Firms with permission for:

effecting contracts of insurance; and/or

carrying out contracts of insurance;

that are general insurance contracts.6

6Also includes:

the Society

6Tariff base

For the Society, the aggregate of the tariff base for Insurance Class B1 in the Policyholder Protection part of the PRA Rulebook that would apply to each member if:

(a) that tariff base applied to each member in respect of their insurance business in relation to general insurance contracts; and

(b) all references to “firm” or “participant firm” in the Policyholder Protection part of the PRA Rulebook were read as referring to the member.

For all other participant firms, the tariff base for Insurance Class B1 in the Policyholder Protection part of the PRA Rulebook.

Class I

Home finance provision

Firms with permission for:

Any of the activities below:

entering into a home finance transaction;

administering a home finance transaction;

agreeing to carry on a regulated activity which is within any of the above.

6Tariff base

The number of home finance transactions, calculated in accordance with the tariff base for fee-block A2 in part 2 of FEES 4 Annex 1AR.

6Class K

Debt management claims

6Firms with permission for:

Any of the following except if held under a limited permission:

debt adjusting and/or debt counselling, in each case in relation to protected debt management business except where these activities are carried on by a not-for-profit debt advice body;

entering into a regulated credit agreement as lender;

exercising, or having the right to exercise, the lender’s rights and duties under a regulated credit agreement.

6Tariff base

For debt adjusting and debt counselling: annual debts under management being the annual total value of the participant firm’s relevant debts under management.

For all other participant firms in this class: annual lending being the annual total amount provided under all regulated credit agreements in respect of which the participant firm is the lender or exercises, or has the right to exercise, the lender’s rights and duties under such agreements.

Notes for all classes6

(1) Any reference in this annex to a specified investment includes a reference to rights to or interests in investments in that specified investment.

(2) In calculating annual eligible income a firm must apportion income between different classes and between income that falls within the definition of annual eligible income and income that does not in a reasonable and consistent way and on the basis of clear policies.

(3) The question of whether a person is an eligible claimant or not6 or whether business is compensatable business or not must be judged at whichever of the following dates the firm chooses:

(a) (for a person who has become a new client during the period by reference to which the firm's tariff base is being calculated) the date on which the person becomes a client;

(b) (for a person who has ceased to be a client during that period) the date on which the person ceases to be a client; or

(c) (in any other case) the date to which the most recent information supplied by the firm under FEES 6.5.13 R is prepared.

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