GENPRU TP 14 Continued use of IPRU expenditure requirements by BIPRU investment firms

1Application

14.1

R

This section applies to a BIPRU investment firm.

Transitional rule

14.2

R

If a firm:

(1)

is subject to the fixed overheads requirement; and

(2)

was on 31 December 2006 subject to one of the expenditure based requirements under IPRU listed in the table in GENPRU TP 14.3R;

the firm may treat that expenditure based requirement as being its fixed overheads requirement.

14.3

R

Table: Continuing IPRU expenditure requirements This table belongs to GENPRU TP 14.2R

Expenditure based requirement under Chapter 5 of IPRU(INV)

If the firm is subject to an expenditure based requirement of 6/52 of its annual audited expenditure, the firm must, for the purposes of this section, use the requirement of one quarter of its annual audited expenditure under rule 5.2.3(4)(c)(i)

The capital requirement of 13/52 of annual audited expenditure under rule 7.2.3R(1) of Chapter 7 of IPRU(INV)

The expenditure requirement under rule 10-73(1)(b) of Chapter 10 of IPRU(INV)

Financial Resources Test 2 for Category A firms under section 13.5 of Chapter 13 of IPRU(INV) (Expenditure-based requirement)

A firm must, for the purposes of this section, calculate its requirement as 13/52 of its relevant annual expenditure even if the fraction that applies to it under Chapter 13 would otherwise be 4/52 or 8/52.

Note (1): A reference to annual expenditure covers expenditure based on a forecast, pro-rated expenditure based on a period shorter than twelve months or any other expenditure figures for which the IPRU rules in this table provide.

Note (2): Any waiver that a firm has in relation to the rules in IPRU in this table has effect for the purposes of this section. Any condition, limitation or requirement to which such a waiver is subject also continues to apply.

Duration

14.4

R

A firm must stop applying this section at the date when, under the IPRU expenditure requirements that apply to it as described in GENPRU TP 14.3R, it would have had to start using figures for the period following the one on which the expenditure requirements to which it was subject on 31 December 2006 were based.

14.5

G

Say for example that a firm's accounting reference date is 31 December. As at 31 December 2006 the firm's IPRU expenditure requirement was based on its annual accounts for the year ended 31 December 2005. Its annual accounts for the year ending 31 December 2006 are completed on 15 March 2007. From 1 January 2007 to 14 March 2007 the firm may treat its IPRU expenditure requirements as being its fixed overheads requirement. On 15 March 2007 the firm should switch to calculating its fixed overheads requirement under GENPRU 2.1 (Calculation of capital resources requirement).

Capital resources

14.6

G

The expenditure requirement under IPRU is measured against the firm's capital resources as calculated under GENPRU 2.2 (Capital resources) and not capital resources calculated under IPRU.