FEES 6 Annex 3A 1Financial Services Compensation Scheme - classes and categories8

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Category 1.18

General insurance distribution8

Firms with permission for:

any8 of the following in respect of general insurance contracts or pure protection contracts8:

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.

8Category 1.2

General insurance provision

8Firms with permission for:

effecting contracts of insurance; and/or

carrying out contracts of insurance;

that are general insurance contracts.

8Also includes:

the Society

Tariff base for category 1.18

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Category 1.18: annual eligible income where annual income 8is calculated as the sum of (a) and (b):

(a) the net amount retained (Note 3)8 by the firm (Note 5)8 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 category 1.18 activities, including any income received from an insurer; and

(b) if the firm is an insurer, in relation to category 1.18 activities (Note 4)8, the amount of premiums receivable on its contracts of insurance multiplied by 0.07, excluding those contracts of insurance which result from category 1.18 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 category 1.18:

(1) [deleted]8

(2) [deleted]8

(3) Net amount retained means all the commission, fees, etc. in respect of category 1.18 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) Category 1.18 activities mean activities that fall within Category 1.18. They also include activities that now fall within Category 1.18 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 Category 1.18 but which were not at the time regulated activities.

8Tariff base for category 1.2

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.

8Category 2.1

Life distribution and investment intermediation8

Firms with permission for:

intermediation of structured deposits (except for managing investments in relation to structured deposits) and/or8 any of the following in relation to long-term insurance contracts (other than pure protection contracts) or rights under a stakeholder pension scheme or a personal pension scheme:8

any8 of the following in relation to long-term insurance contracts (other than pure protection contracts) and/or rights under a stakeholder pension scheme or a personal pension scheme:8

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;

agreeing to carry on a regulated activity which is within any of the above; and/or8

any of the following in relation to designated investment business BUT excluding activities that relate to long-term insurance contracts or rights under a stakeholder pension scheme or a personal pension scheme:8

dealing in investments as principal;8

dealing in investments as agent;8

MiFID business bidding;8

arranging (bringing about) deals in investments;8

making arrangements with a view to transactions in investments;8

advising on investments;8

basic advice;8

safeguarding and administering investments;8

arranging safeguarding and administering of assets;8

operating a multilateral trading facility;8

agreeing to carry on a regulated activity which is within any of the above.8

8Recognised investment exchanges

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

8Category 2.2

Life insurance provision

8Firms with permission for:

effecting contracts of insurance; and/or

carrying out contracts of insurance;

that are long-term insurance contracts (including pure protection contracts).11

8Also includes:

the Society

8Category 2.3

Investment provision

8Firms with permission for:

any of the following:

managing investments;

managing an AIF;

managing a UK UCITS10;

acting as trustee or depositary of an AIF;

acting as trustee or depositary of a UK UCITS9;

establishing, operating or winding up a collective investment scheme;

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.

8Category 2.4

Structured deposits provision

8Firms with permission for:

accepting deposits and/or operating a dormant asset fund12. BUT does not include any fee payer who either effects or carries out contracts of insurance.

Tariff base for category 2.18

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:8

(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 category; and8

(b) multiplied by 0.07.8

Except in respect of direct sales of structured deposits:8 annual eligible income where 8annual income 8is calculated as the sum of (a) and (b):

(a) the net amount retained (Note 4)8 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 category 2.18 activities (Note 5)8 including (in relation to a firm carrying out life distribution or pensions intermediation)8 any income received from an insurer; and

(b) if the firm is a life and pensions firm (Note 2) carrying out life distribution or pensions intermediation8, in relation to category 2.18 activities, the amount of premiums or commission receivable on its life and pensions contracts (Note 1)8 multiplied by 0.07, excluding those life and pensions contracts which result from category 2.18 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 category 2.18:

(1) Life and pensions contracts mean long-term insurance contracts (but not8 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 38.

(3) 8Box management profits are excluded from the calculation of annual income.

(4) Net amount retained means all the commission, fees, etc. in respect of category 2.18 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) Category 2.18 activities mean activities that fall within category 2.18.

(6) In relation to a firm carrying out life distribution or pensions intermediation:8

(a)8 category 2.1 activities8 also include activities that now fall within category 2.18 but that were not regulated activities when they were carried out; and8

(b) a8 reference to a firm also includes a reference to any person who carried out activities that would now fall into category 2.18 but which were not at the time regulated activities.

8Tariff base for category 2.2

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.

8Tariff base for category 2.3

The tariff base for class 3 (Investment Provision Claims).

8Tariff base for category 2.4

The tariff base for Class A (DGS members) in the Depositor Protection part of the PRA Rulebook but only to the extent that it relates to deposits that are structured deposits.

Firms with permission for:

any8 of the following:

managing investments;

managing an AIF;

managing a UK UCITS10;

acting as trustee or depositary of an AIF;

acting as trustee or depositary of a UK UCITS9

establishing, operating or winding up a collective investment scheme;

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.

Tariff base

Annual eligible income where annual income 8is 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 38.

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Notes on annual eligible income for class 38

(1) For the purposes of calculating annual income, net amount retained means all the commission, fees, etc. in respect of activities falling within class 38, 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) [deleted]8

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

Category 4.18

Home finance intermediation8

Firms with permission for:

any8 of the following activities:

arranging (bringing about) a home finance transaction;

making arrangements with a view to a home finance transaction;

advising on a home finance transaction8;

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 a party);

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

8Category 4.2

Home finance provision

8Firms 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.

Tariff base for category 4.18

Annual eligible income8 calculated in accordance with the fee-block A18 in part 3 14of FEES 4 Annex 1AR.

8Tariff base for category 4.2

The number of home finance transactions, calculated in accordance with the tariff base for fee-block A2 in part 3 14of FEES 4 Annex 1AR.

8Category 5.1

Debt management

8Firms 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.

8Category 5.2

Consumer credit provision

8Firms with permission for:

any of the following, except if held under a limited permission:

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.

8Tariff base for category 5.1

Annual debts under management being the annual total value of the participant firm’s relevant debts under management.

8Tariff base for category 5.2

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.

Firms with permission for:

accepting deposits and/or operating a dormant asset fund12. BUT does not include any fee payer who either effects or carries out contracts of insurance.

Tariff base

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

11Firms with permission for:

any of the following in relation to a funeral plan contract:

entering as provider into a funeral plan contract;

carrying out a funeral plan contract as provider;

dealing in investments as agent;

arranging (bringing about) deals in investments;

making arrangements with a view to transactions in investments;

managing investments;

safeguarding and administering investments;

sending dematerialised instructions;

causing dematerialised instructions to be sent;

advising on investments;

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

11Tariff base

Annual eligible income where 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 7.

11Notes on annual eligible income for class 7: For the purposes of calculating annual income, “net amount retained” means all the commission (where relevant), fees, etc. in respect of activities falling within class 7 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.

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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