High Level Standards

Principles for Businesses (PRIN)

This applies.

Senior management arrangements, Systems and Controls ( SYSC )

This applies.

Threshold Conditions (COND)

This applies - except for COND 2.6.

Statements of Principle and Code of Practice for Approved Persons (APER)

This applies to an approved person who performs a controlled function for a small friendly society.

The Fit and Proper test for Approved persons (FIT)

This applies to an approved person who performs a controlled function for a small friendly society.

General provisions (GEN)

This applies.

Business Standards

Interim Prudential sourcebooks (IPRU)

The following parts of the Interim Prudential sourcebook (Friendly societies) (IPRU(FSOC)) apply to small friendly societies:

(a) IPRU(FSOC) 1 (Application)

(b) IPRU(FSOC) 2 (Integrity, skill, care and diligence)

(c) IPRU(FSOC) 3 (Management and control)

(d) IPRU(FSOC) 4 (Financial prudence) - in this part sections 4.1 to 4.7 and 4.24 apply

(e) IPRU(FSOC) 5 (Prudential reporting) - the application depends upon the type of business (long-term insurance business or general insurance business) and whether the small friendly society is a registered friendly society or an incorporated friendly society; it does not apply to flat rate benefits business friendly societies

(f) IPRU(FSOC) 7 (Definitions) Appendices to IPRU(FSOC)

(a) Appendix 1 (Long-term insurance business margin of solvency)

(b) Appendix 2 (General insurance business solvency margin)

(c) Appendix 4 (Asset valuation rules)

(d) Appendix 5 (Liability valuation rules)(e) Appendix 6 (Balance sheet)

(f) Appendix 7 (General insurance business: revenue account, other revenue account and additional information)

(g) Appendix 8 (Long-term insurance business: revenue account and additional information)

(h) Appendix 9 (Abstract of actuarial valuation) - this applies to incorporated small friendly societies with Part IV permission to effect or carry outlong-term insurance business

(i) Appendix 10 (Prudential reporting forms)

Annexes to IPRU(FSOC)

(a) Annex 1 (Guidance on corporate governance of friendly societies)

(b) Annex 2 (Guidance on officers' liability insurance)

(c) Annex 3 Part I (Guidance on systems of accounting, control of business and inspection and report)

(d) Annex 3 Part II (Guidance on systems of control over investments) A - sections 9 to 13 do not apply. B - sections 19 to 23 do not apply

(e) Annex 3 - Attachments A to D(f) Annex 4 (Guidance on margins of solvency and the guarantee fund) - provides guidance to different categories of friendly societies and does not apply to flat rate benefits business friendly societies

(g) Annex 5 (Guidance on exemption from triennial valuation)

(h) Annex 5 - Attachment

Friendly societies and their advisers may also wish to refer to IPRU(INS) Volume 3 (Guidance) which contains additional Guidance Notes and other material, such as 'Guidance for insurers and auditors on the Valuation of Assets Rules' and 'Dear Appointed Actuary' letters, that may be of assistance to them.

The other IPRU sourcebooks do not apply.

Conduct of Business sourcebook (COB)

The following parts of COB are relevant to small friendly societies:

(a) COB 1 (Application and general provisions)

(b) COB 2 (Rules which apply to firms conducting designated investment business)

(c) COB 3(Financial promotion)

(d) COB 4(Accepting customers)

(e) COB 5 (Advising and selling)

(f) COB 6 (Product disclosure and the customer's right to cancel or withdraw) but not COB 6.10 (Principles and Practices of Financial Management (PPFM)) or COB 6.11 (Reporting to with-profits policyholders on compliance with PPFM)

(g) COB 7 (Dealing and managing) - but is likely to have limited relevance to small friendly societies.

(h) COB 8 (Reporting to customers) - but is likely to have limited relevance to small friendly societies.

[deleted]

COB 10 to COB 12 do not apply.

This sourcebook is principally relevant to small friendly societies with Part IV permission to effectcontracts of insurance. However, for societies that only carry out contracts of insurance , COB 6.8 will apply. These societies should note that COB 8 may be of relevance to them.

Only the following parts of COB apply in relation to general insurance business and pure protection contracts: COB 1.1 to COB 1.4, COB 1.8, COB 1.9, COB 3.1 to COB 3.5, COB 3.8.4 R to COB 3.8.6 G, COB 3.14, COB 4.1.12 R to COB 4.1.14 R and COB 6.8. COB 6.7 applies in relation to pure protection contracts only.

Mortgages: Conduct of Business sourcebook (MCOB)1

Client assets sourcebook (CASS)

CASS 2.3 and CASS 4.5 are relevant to small friendly societies.

Market conduct sourcebook (MAR)

MAR 1 (Code of Market Conduct) - this gives guidance on what does and does not amount to market abuse; this Code is relevant to all persons seeking guidance as to whether or not behaviour amounts to market abuse.

MAR 2 (Price stabilising rules) - applies to all firms but is likely to have limited relevance to small friendly societies.

MAR 3 (Inter-professionals conduct) - does not apply.

Mortgages: Conduct of Business sourcebook (MCOB)

MAR 4 (Endorsement of the Takeover Code) - this applies to every firm whose permission includes, or ought to include, any designated investment business, but is likely to have limited relevance to small friendly societies.

(Alternative Trading Systems) - this applies to a firm that operates an ATS, but is likely to have limited relevance to small friendly societies.

Training and Competence sourcebook (TC)

TC 1 (Commitments) applies.

TC 2 (Rules and guidance) applies in respect of employees engaged in advising on certain long-term insurance products (see the table at TC 2.1.4 R).

Money Laundering sourcebook (ML)

This applies to small friendly societies but not in respect of their pure protection contracts or in relation to general insurance business.

Regulatory Processes

Authorisation manual (AUTH)

This applies.

AUTH contains guidance on the Act and Regulated Activities Order. It explains, among other matters, the FSA's procedures for applications for Part IV permission for an applicant that is not already an authorised person.

Supervision manual (SUP)

SUP contains, and explains, provisions that relate to how the FSA will monitor firms for compliance with requirements imposed by or under the Act.

The following parts of SUP apply to small friendly societies:

(a) SUP 1 (The FSA's approach to supervision)

(b) SUP 2 (Information gathering by the FSA on its own initiative)

(c) SUP 3 (Auditors) - in this part sections 3.1 to 3.7 apply; societies should note that sections 3.1, 3.2 and 3.8 apply to a society's external auditors

(d) SUP 4 (Actuaries)

(e) SUP 5 (Skilled persons)

(f) SUP 6 (Applications to vary and cancel Part IV permission)

(g) SUP 7 (Individual requirements)

(h) SUP 8 (Waiver and modification of rules)

(i) SUP 9 (Individual guidance)

(j) SUP 10 (Approved persons) - to SUP 10.6.29G provide for a special controlled function for small friendly societies (the small friendly society function). SUP 10.10 (Customer functions) does not apply in relation to general insurance business or pure protection contracts

(k) SUP 11 (Controllers and close links) - in this part sections 11.1, 11.2 and 11.9 apply

(l) SUP 12 (Appointed representatives) - this part applies to a friendly society with permission to carry on designated investment business and which is considering appointing, has decided to appoint or has appointed an appointed representative

(m) SUP 15 (Notifications to the FSA)

(n) SUP 16 (Reporting requirements) - in this part sections 16.4 to 16.7 do not apply; section 16.8 applies to societies with permission to establish, operate or wind-up a stakeholder pension scheme.

(o) SUP 18 (Transfers of business)

(p)SUP 20 (Fees Rules)

(q) Appendix 1 (Prudential categories and sub-categories)

(r) Appendix 2 (Scheme of operations)

Enforcement manual (ENF)

ENF describes the FSA's policies and procedures for the exercise of its enforcement powers, and contains guidance on how those powers will be exercised. ENF applies to firms, approved persons and (in relation to some of the powers) other persons. ENF applies to small friendly societies, except for the following parts:

(a) ENF 4 (Intervention against incoming firms)

(b) ENF 16 (Collective investment schemes)

(c) ENF 18 (Disapplication orders against members of the professions)

Societies should be aware of the following parts of ENF, although they may be of limited relevance:

(a) ENF 14 (Sanctions for market abuse) - applies to any person, whether regulated or not, who may be the subject of a financial penalty or public statement on the basis that the FSA suspects the person is or has engaged in market abuse

(b) ENF 17 (Disqualification of auditors and Actuaries) - applies to auditors and actuaries of small friendly societies

Decision making manual (DEC)

This applies.

DEC contains guidance on the FSA's decision making, and other procedures for giving statutory notices. It also gives guidance on the FSA's procedures for using its powers under certain Parts of the Act.

Redress

Dispute resolution: the Complaints sourcebook (DISP)

This applies. All firms are subject to the Compulsory Jurisdiction of the Financial Ombudsman Service.DISP 4 (Standard terms) - only applies to a firm which has decided to be a participant in the Voluntary Jurisdiction of the Financial Ombudsman Service.

Compensation sourcebook (COMP)

This sourcebook is principally relevant to the Financial Services Compensation Scheme Limited (FSCS). It sets out the circumstances in which compensation may be paid, to whom compensation may be paid and on whom the FSCS can impose levies to meet the costs of paying compensation.

Firms will be particularly interested in COMP 13 (Funding) which deals with levies.

Complaints Against the FSA (COAF)

This sourcebook sets out the details of the complaints scheme. The complaints scheme applies in relation to complaints made about the way the FSA has carried out its functions under the Act.

Specialist Sourcebooks

E-Commerce Directive sourcebook (ECO)

This applies to a small friendly society which is an electronic commerce activity provider.

Collective Investment Schemes sourcebook (CIS)

None of the other specialist sourcebooks applies.

Credit Unions sourcebook (CRED)

Professional firms sourcebook (PROF)

Lloyd's sourcebook (LLD)

Recognised Investment Exchange and Recognised Clearing House sourcebook (REC)

Special Guides

Special guide for Energy Market Participants (EMPS)

This does not apply.

Special guide for small Friendly societies (FREN)

This applies.

Special guide for Oil Market Participants (OMPS)

This does not apply.

Special guide for Service companies (SERV)

This does not apply.

Schedules

Summary schedules

1. Record keeping requirements

2. Notification requirements

3. Fees and other required payments

4. Powers exercised in making the Handbook

5. Rights of action for damages

6. Rules that can be waived

7. Releases

These apply, but only to the extent that the sourcebook or manual to which they relate applies.

Glossary of definitions

This applies

Index

This applies