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INSPRU 4.1 Application

INSPRU 4.1.1 R

1 INSPRU 4.1 applies to an insurer unless INSPRU 4.1.4 R applies.

INSPRU 4.1.2 R

All of INSPRU 4.1, except INSPRU 4.1.16 G, applies to:

  1. (1)

    an EEA-deposit insurer; and

  2. (2)

    a Swiss general insurer;

but only in respect of the activities of the firm carried on from a branch in the United Kingdom.

INSPRU 4.1.3 R

If a firm carries on:

  1. (1)

    long-term insurance business; and

  2. (2)

    general insurance business;

this section applies separately to each type of business.

INSPRU 4.1.4 R

This section does not apply to:

  1. (1)

    a non-directive friendly society; or

  2. (2)

    an incoming EEA firm; or

  3. (3)

    an incoming Treaty firm.

Purpose

INSPRU 4.1.5 G

The purpose of this section is to amplify parts of INSPRU in their application to liquidity risk and, in so doing, to suggest minimum standards for management of that risk. The main relevant part, SYSC 14 (Prudential risk management and associated systems and controls), itself amplifies Principle 3 (Management and control) and SYSC (Senior management arrangements, Systems and Controls).

INSPRU 4.1.6 G

Appropriate management of liquidity risk will vary with the scale, nature and complexity of the firm's activities. Most of the material in this section is, therefore, guidance. The section lays out some of the main issues that the FSA expects a firm to consider in relation to liquidity risk. A firm should assess the appropriateness of any particular item of guidance in the light of the scale, nature and complexity of its activities as well as its obligations as set out in Principle 3 to organise and control its affairs responsibly and effectively.

INSPRU 4.1.7 G

For insurers, references to liquidity risk in this section are intended to cover only those aspects of liquidity risk that do not fall under the heading of insurance risk. For such firms, the FSA sees the coverage of this section, broadly, as the management of risk arising from short-term cash-flows, rather than the risk arising from longer-term matching of assets and liabilities, which is part of insurance risk. guidance on systems and controls for managing insurance risk is set out in SYSC 17 (Insurance risk systems and controls).

INSPRU 4.1.8 G

This section addresses the need to deal both with liquidity management issues under normal market conditions, and with stressed or extreme situations resulting from either general market turbulence or firm-specific difficulties.

Requirements

INSPRU 4.1.9 G

High level requirements for prudential systems and controls including for liquidity risk are set out in SYSC 14 (Prudential risk management and associated systems and controls). In particular:

  1. (1)

    SYSC 14.1.18 R requires a firm, among other things, to take reasonable steps to ensure the establishment of a business plan and appropriate systems for the management of prudential risk; and

  2. (2)

    SYSC 14.1.19R (2) requires a firm, among other things, to document its policy for managing liquidity risk, including its appetite or tolerance for this risk and how it identifies, measures, monitors and controls this risk.

INSPRU 4.1.10 G

This section sets out guidance on each of these areas, and notes a number of matters which the FSA would expect a firm to deal with in its liquidity risk policy statement as follows:

  1. (1)

    its liquidity risk strategy (see INSPRU 4.1.12 G to INSPRU 4.1.14 G), including:

    1. (a)

      the role of marketable, or otherwise realisable, assets (see INSPRU 4.1.21 G); and

    2. (b)

      its strategy for mitigating liquidity risk on the liability side (see INSPRU 4.1.26 G);

  2. (2)

    its method for measuring liquidity risk (see INSPRU 4.1.44 G)

Managing liquidity risk

INSPRU 4.1.11 G

This section amplifies the general requirements in SYSC 14 by describing the key high level arrangements that the FSA would normally expect to be in place to ensure that a firm'sliquidity risk management system is adequate.

Governing body and senior management oversight

INSPRU 4.1.12 G

SYSC 14.1.11 G amplifies SYSC 2.1.1 R and SYSC 2.1.3 R which require the apportionment, and allocation, of significant responsibilities to be such that the business and affairs of the firm can be adequately monitored and controlled by the directors, relevant senior executives and governing body of the firm. Effective liquidity risk management entails an informed board, capable management and appropriate staffing. The governing body and senior management are responsible for understanding the nature and level of liquidity risk assumed by the firm and the tools used to manage that risk.

INSPRU 4.1.13 G

In relation to liquidity risk, the governing body's responsibilities should normally include:

  1. (1)

    approving the firm'sliquidity risk policy, which includes taking reasonable steps to ensure that it is consistent with the firm's expressed risk tolerance (see INSPRU 4.1.15 G to INSPRU 4.1.17 G);

  2. (2)

    establishing a structure for the management of liquidity risk including the allocation of appropriate senior managers who have the authority and responsibility to manage liquidity risk effectively, including the establishment and maintenance of the firm'sliquidity risk policy;

  3. (3)

    monitoring the firm's overall liquidity risk profile on a regular basis and being made aware of any material changes in the firm's current or prospective liquidity risk profile; and

  4. (4)

    taking reasonable steps to ensure that liquidity risk is adequately identified, measured, monitored and controlled.

INSPRU 4.1.14 G

A firm should have an appropriate senior management structure in place to oversee the daily and long-term management of liquidity risk in line with the governing body- approved liquidity risk policy (see INSPRU 4.1.15 G to INSPRU 4.1.17 G). The FSA would normally expect the senior management to:

  1. (1)

    oversee the development, establishment and maintenance of procedures and practices that translate the goals, objectives and risk tolerances approved by the governing body into operating standards that are consistent with the governing body's intent and understood by the relevant members of a firm's personnel;

  2. (2)

    adhere to the lines of authority and responsibility that the governing body has established for managing liquidity risk;

  3. (3)

    oversee the establishment and maintenance of management information (see INSPRU 4.1.53 G to INSPRU 4.1.55 G) and other systems that identify, measure, monitor and control the firm'sliquidity risk; and

  4. (4)

    oversee the establishment of effective internal controls over the liquidity risk management process (see INSPRU 4.1.56 G to INSPRU 4.1.68 G (Controlling liquidity risk)).

Liquidity risk policy

INSPRU 4.1.15 G

SYSC 3.2.17 G gives guidance, which amplifies SYSC 3.2.6 R, on the need for a firm to plan its business appropriately so that it is able to identify, measure, monitor and control risks of regulatory concern. A firm should, therefore, have an agreed policy for the day-to-day and longer term management of liquidity risk which is appropriate to the nature, scale and complexity of the activities carried on.

INSPRU 4.1.16 G

The liquidity risk policy should cover the general approach that the firm will take to liquidity risk management, including, as appropriate, various quantitative and qualitative targets. This general approach should be communicated to all relevant functions within the organisation and be included in the firm'sliquidity risk policy statement.

INSPRU 4.1.17 G

The policy for managing liquidity risk should cover specific aspects of liquidity risk management. So far as appropriate to the nature, scale and complexity of the activities carried on, such aspects might include:

  1. (1)

    the basis for managing liquidity (for example, regional or central);

  2. (2)

    the degree of concentrations, potentially affecting liquidity risk, that are acceptable to the firm;

  3. (3)

    a policy for managing the liability side of liquidity risk (see INSPRU 4.1.26 G);

  4. (4)

    the role of marketable, or otherwise realisable, assets (see INSPRU 4.1.21 G);

  5. (5)

    ways of managing both the firm's aggregate foreign currency liquidity needs and its needs in each individual currency;

  6. (6)

    ways of managing market access;

  7. (7)

    the use of derivatives to minimise liquidity risk; and

  8. (8)

    the management of intra-day liquidity, where this is appropriate, for instance where the firm is a member of or participates (directly or indirectly) in a system for the intra-day settlement of payments or transactions in investments.

Identifying liquidity risk

INSPRU 4.1.18 G

In order to manage liquidity risk successfully, a firm should be aware of the ways in which its activities can affect its liquidity risk profile, and how outside influences may affect its liquidity position. A firm should consider not only its current liquidity risk, but how existing activities may affect its liquidity risk profile in the future; it should also consider the implications of new products or business lines. This section identifies the main sources of liquidity risk and the key factors that a firm might consider when analysing its liquidity risk profile.

INSPRU 4.1.19 G

The overall financial adequacy rule states that a firm must maintain overall financial resources adequate, both as to amount and quality, to ensure that there is no significant risk that its liabilities cannot be met as they fall due. The firm should, therefore, ensure that, overall, its financial resources are of appropriate maturity, and in a form which is sufficiently marketable or otherwise realisable, having regard to the expected timing of liabilities and the risk that liabilities may fall due earlier than expected (for which prudent allowance must be made when assessing whether assets are of appropriate maturity or sufficiently realisable).

Asset liquidity

INSPRU 4.1.20 G

A firm's asset portfolio can provide liquidity in three major ways:

  1. (a)

    through the maturity of an asset;

  2. (b)

    the sale of an asset for cash; or

  3. (c)

    the use of an asset as collateral to back other transactions, such as for secured borrowing (including repos), or for deposits with insureds or cedants to back insurance or reinsurance transactions.

INSPRU 4.1.21 G

A firm may incur liquidity risk where inflows from the realisation of assets (at either maturity or time of sale) are less than anticipated because of the crystallisation of credit risk or market risk. Inflows arising from the renewal of secured funding, including repos, are similarly affected, if the haircut (the difference between the value of an asset and the amount lent to the firm by the counterparty using that security as collateral) required by a firm's counterparty is larger than anticipated (see INSPRU 4.1.28 G).

INSPRU 4.1.22 G

Asset concentrations often increase these sources of liquidity risk. A firm should, therefore, identify significant concentrations within its asset portfolio, including in relation to:

  1. (1)

    individual counterparties or related groups of counterparties;

  2. (2)

    credit ratings of the assets in its portfolio;

  3. (3)

    the proportion of an issue held;

  4. (4)

    instrument types;

  5. (5)

    geographical regions; and

  6. (6)

    economic sectors.

Marketable assets

INSPRU 4.1.23 G

Criteria for the marketability of its assets should be decided by the firm and may reflect the firm's access to, and expertise in, individual markets. In determining the appropriateness of the marketability or realisability of assets, a firm may take into account:

  1. (1)

    the depth and liquidity of the market, including:

    1. (a)

      the speed with which assets may be realised;

    2. (b)

      the likelihood and extent of forced-sale loss; and

    3. (c)

      the potential for using the asset as collateral in secured funding and the size of the haircut (see INSPRU 4.1.18 G) likely to be required by the counterparty;

  2. (2)

    the expected date of maturity, redemption, repayment or disposal;

  3. (3)

    the proportion of an issue held;

  4. (4)

    the credit ratings of the assets;

  5. (5)

    the impact of exchange rate risk on the realised value of the asset, where assets are denominated in different currencies from its liabilities; and

  6. (6)

    where applicable, the impact on certain assets' liquidity of their use as eligible collateral either in open-market operations conducted by, or in real-time or other payment systems operated by, a central bank.

INSPRU 4.1.24 G

The role of marketable, or otherwise realisable, assets in a firm's liquidity risk policy, in both normal and stressed conditions, should be set out in its liquidity risk policy statement.

INSPRU 4.1.25 G

In considering the marketability of an asset, a firm should assess how its value and liquidity would be affected in a variety of scenarios (see SYSC 11 (Liquidity risk management systems and controls) at SYSC 11.1.18 G, SYSC 11.1.20 G, SYSC 11.1.21 E and SYSC 11.1.22 G.

Adjusting for the behavioural characteristics of assets

INSPRU 4.1.26 G

In order to manage its liquidity risk effectively, a firm should be able to adjust for the behavioural characteristics of the repayment profiles of assets, that is how their actual behaviour may vary from that suggested by their contractual terms. Such an adjustment may be necessary in order to reduce the risk of wrongly estimating the inflows in relation to, in particular:

  1. (1)

    standby facilities or other commitments that have already been drawn down;

  2. (2)

    retail and wholesale overdrafts;

  3. (3)

    mortgages; and

  4. (4)

    credit cards.

INSPRU 4.1.27 G

The repayment profiles should be considered under both normal market conditions and stressed conditions resulting from either general market turbulence or firm-specific difficulties (see SYSC 11 (Liquidity risk management systems and controls) at SYSC 11.1.18 G, SYSC 11.1.20 G, SYSC 11.1.21 E, SYSC 11.1.22 G , SYSC 11.1.23 G and SYSC 11.1.24 E).

Inflows from off balance sheet items

INSPRU 4.1.28 G

Where a firm has in place a committed facility for the provision of a portion of its funding, it should take care to monitor any covenants included in the agreement. It should also make efforts to retain a good relationship with the provider of the facility and, where possible without jeopardising that relationship, regularly test access to the funds. A firm should also assess the extent to which committed facilities can be relied upon under stressed conditions (see SYSC 11.1.22 G and SYSC 11.1.24 E).

Liability liquidity

INSPRU 4.1.29 G

Holding marketable, or otherwise realisable, assets is not the only way for a firm to mitigate the liquidity risk it faces. There are a number of liability-side strategies that can be used to reduce a firm's liquidity risk, such as ensuring a spread of maturities and lengthening the term structure of its liabilities. In order to manage its liquidity risk effectively a firm should have a liability-side policy that is appropriate to the nature and scale of its activities; this policy should be described in its liquidity risk policy statement.

INSPRU 4.1.30 G

When determining the appropriate mix of liabilities, a firm's management should consider potential concentrations. A concentration exists when a single decision or factor could cause a significant and sudden claim on liabilities. What constitutes a liability concentration depends on the nature and scale of a firm's activities. A firm should, however, normally consider:

  1. (1)

    the term structure of its liabilities;

  2. (2)

    the credit-sensitivity of its liabilities;

  3. (3)

    the mix of secured and unsecured funding;

  4. (4)

    concentrations among its liability providers, or related groups of liability providers;

  5. (5)

    reliance on particular instruments or products;

  6. (6)

    the geographical location of liability providers; and

  7. (7)

    reliance on intra-group funding.

INSPRU 4.1.31 G

A firm with credit-sensitive liabilities should be aware that, in times of market turbulence, a proportion of that funding may be withdrawn, particularly funding which is unsecured. Secured funding may also be affected, with counterparties seeking better quality collateral or larger haircuts (see INSPRU 4.1.18 G) on collateral. A firm should recognise these characteristics of its credit-sensitive liabilities and take account of them in its stress testing and scenario analysis and contingency funding plan (see SYSC 11 (Liquidity risk management systems and controls) at SYSC 11.1.18 G, SYSC 11.1.20 G, SYSC 11.1.21 E, SYSC 11.1.22 G , SYSC 11.1.23 G and SYSC 11.1.24E).

INSPRU 4.1.32 G

A firm should consider the dynamics of its liquidity risk including, for example, the normal level of roll-overs, and growth, of liabilities.

Adjusting for the behavioural characteristics of liabilities

INSPRU 4.1.33 G

In order to meet the requirement to maintain sufficient liquid financial resources (see INSPRU 4.1.16 G), a firm should consider the behavioural characteristics of its liabilities, that is how their actual behaviour may vary from that suggested by their contractual terms.

INSPRU 4.1.34 G

In assessing how to adjust for the behavioural characteristics of its liabilities in the context of liquidity risk, an insurer may take into account:

  1. (1)

    the type of insurance business;

  2. (2)

    the past history of volatility in the pattern of claims payment;

  3. (3)

    options available to policyholders and the circumstances in which they are likely to be exercised;

  4. (4)

    options available to the insurer and any incentive for the insurer to exercise them;

  5. (5)

    any relevant requirements to deposit collateral either with the insured (or cedants) under the terms of the insurance Treaty or by requirements of overseas regulators as a condition for covering risks in a particular territory; and

  6. (6)

    the other cash flow needs of the business.

Outflows from off balance sheet items

INSPRU 4.1.35 G

The contingent or optional nature of many off balance sheet instruments adds to the complexity of managing off balance sheet cash flows. In particular, in stressed conditions off balance sheet commitments may be a significant drain on liquidity.

INSPRU 4.1.36 G

A firm should consider how its wholesale off balance sheet activities affect its cash flows and liquidity risk profile under both normal and stressed conditions. In particular, as appropriate, it should consider the amount of funding required by:

  1. (1)

    commitments given;

  2. (2)

    standby facilities given;

  3. (3)

    wholesale overdraft facilities given;

  4. (4)

    proprietary derivatives positions; and

  5. (5)

    liquidity facilities given for securitisation transactions.

INSPRU 4.1.37 G

Similarly, a firm with retail customers should be able to assess the likely draw-down on retail products under a variety of circumstances and taking into account seasonal factors. In particular, as appropriate, it should consider the amount of funding required in relation to:

  1. (1)

    mortgages that have been agreed but not yet drawn down;

  2. (2)

    overdrafts; and

  3. (3)

    credit cards.

Asset securitisations

INSPRU 4.1.38 G

If controlled properly, asset securitisation can be a useful tool in enhancing a firm's liquidity. However, features of certain securitisations, such as early amortisation triggers, as well as excessive reliance on a single funding vehicle, can increase liquidity risk.

INSPRU 4.1.39 G

The implications of securitisations on a firm's liquidity position should be considered for both day-to-day liquidity management and its contingency planning for liquidity risk. A contemplated securitisation should be analysed for its impact on liquidity risk. A firm using securitisation should consider:

  1. (1)

    the volume of securities issued in connection with the securitisation that are scheduled to amortise during any particular period;

  2. (2)

    the existence of early amortisation triggers (see also SYSC 11.1.22 G);

  3. (3)

    its plans for meeting its funding requirements (including their timing);

  4. (4)

    strategies for obtaining substantial amounts of liquidity at short notice (see also SYSC 11.1.24 E); and

  5. (5)

    operational issues associated with the rollover of short-dated securities, particularly commercial paper.

INSPRU 4.1.40 G

If a firm is a provider of liquidity facilities for securitisation transactions it should be able to assess the probability and scale of draw-down and make provision for it.

INSPRU 4.1.41 G

A firm using securitisation should also be aware that its ability to securitise assets may diminish in stressed market conditions and take account of this in its stress testing and contingency funding plan. In addition, the time taken to organise a securitisation transaction may mean that it cannot be relied upon to provide liquidity at short notice.

Foreign currency liquidity

INSPRU 4.1.42 G

Foreign currency liquidity risk arises where a firm faces actual or potential future outflows in a particular currency which it may not be able to meet from likely available inflows in that currency. A firm's exposure to foreign currency liquidity risk depends on the nature, scale and complexity of its business. Where a firm has significant, unhedged liquidity mismatches in particular currencies, it should consider:

  1. (1)

    the volatilities of the exchange rates of the mismatched currencies;

  2. (2)

    likely access to the foreign exchange markets in normal and stressed conditions; and

  3. (3)

    the stickiness of deposits in those currencies with the firm in stressed conditions.

INSPRU 4.1.43 G

A possible strategy for mitigating foreign currency liquidity risk, which is effective and simple, is for a firm to hold assets in a particular currency in an amount equal to, and realisable at maturities no later than, its liabilities in that currency. This strategy may be worth considering particularly where, as a result of the nature, scale and complexity of its business, a firm'sliquidity risk is relatively small.

Intra-day liquidity

INSPRU 4.1.44 G

SYSC 3.1.1 R requires a firm to take reasonable care to establish and maintain systems and controls appropriate to its business. This includes appropriate systems and controls over activities that give rise to significant market, credit, liquidity, insurance, operational or group risk, including over the processes of settling and paying debts and other commitments that arise from those activities.

INSPRU 4.1.45 G

Structural and operational changes in payment systems have increased the importance of intra-day liquidity for many firms. Within real time gross settlement systems, for example, a firm needs to take appropriate steps to ensure that it has sufficient collateral to cover cash positions and has systems capable of monitoring intra-day liquidity positions and cash needs.

INSPRU 4.1.46 G

A firm should be aware that in stressed conditions it is likely to require more intra-day liquidity than in normal market conditions, for a variety of reasons including payments due to the firm being delayed and wholesale depositors withdrawing from the market. A firm should take account of this in its stress testing and scenario analysis.

Measuring liquidity risk

INSPRU 4.1.47 G

A firm should establish and maintain a process for the measurement of liquidity risk, using a robust and consistent method which should be described in its liquidity risk policy statement.

INSPRU 4.1.48 G

A number of techniques can be used for measuring liquidity risk, ranging from simple calculations to highly sophisticated modelling; a firm should use a measurement method which is appropriate to the nature, scale and complexity of its activities.

INSPRU 4.1.49 G

The method that a firm uses for measuring liquidity risk should be capable of:

  1. (1)

    measuring the extent of the liquidity risk it is incurring;

  2. (2)

    dealing with the dynamic aspects of a firm's liquidity profile (for example, rollovers of funding and assets or new business);

  3. (3)

    assessing the behavioural characteristics of its on and off balance sheet instruments; and

  4. (4)

    where appropriate, measuring the firm's exposure to foreign currency liquidity risk.

Monitoring liquidity risk

INSPRU 4.1.50 G

A firm should establish and maintain an appropriate system for monitoring its liquidity risk, which should be described in its liquidity risk policy statement.

INSPRU 4.1.51 G

A firm should establish and maintain a system of management reporting which provides clear, concise, timely and accurate liquidity risk reports to relevant functions within the firm. These reports should alert management when the firm approaches, or breaches, predefined thresholds or limits, including quantitative limits imposed by the FSA or another regulator.

INSPRU 4.1.52 G

Where a firm is a member of a group, it should be able to assess the potential impact on it of liquidity risk arising in other parts of the group.

Management information systems

INSPRU 4.1.53 G

A firm should have adequate information systems for controlling and reporting liquidity risk. The management information system should be used to check for compliance with the firm's established policies, procedures and limits.

INSPRU 4.1.54 G

Reports on liquidity risk should be provided on a timely basis to the firm'sgoverning body, senior management and other appropriate personnel. The appropriate content and format of reports depends on a firm's liquidity management practices and the nature, scale and complexity of the firm's business. Reports to the firm's governing body may be less detailed and less frequent than reports to senior management with responsibility for managing liquidity risk.

INSPRU 4.1.55 G

When considering what else might be included in liquidity risk management information, a firm should consider other types of information that may be important for understanding its liquidity risk profile.

Controlling liquidity risk

INSPRU 4.1.56 G

A firm should establish and maintain an appropriate system for controlling its liquidity risk, which should be described in its liquidity risk policy statement. Such a system should allow the firm'sgoverning body and senior management to review compliance with established limits and operating procedures.

INSPRU 4.1.57 G

A firm should have in place appropriate approval processes, limits and other mechanisms designed to provide reasonable assurance that the firm'sliquidity risk management processes are adhered to.

INSPRU 4.1.58 G

When revisions or enhancements to internal controls are warranted, a firm should implement them in a timely manner.

INSPRU 4.1.59 G

The effectiveness of a firm'sliquidity risk management system should be regularly reviewed and evaluated by individuals unconnected with day-to-day liquidity risk management in order to check that personnel are following established policies and procedures, and that procedures accomplish the intended objectives.

INSPRU 4.1.60 G

In addition to the regular review and evaluation described in INSPRU 4.1.59 G, a firm's internal audit function should periodically review the liquidity risk management process in order to identify any weaknesses or problems. Any weaknesses should be addressed by management in a timely and effective manner.

Limit Setting

INSPRU 4.1.61 G

A firm's senior management should decide what limits need to be set, in accordance with the nature, scale and complexity of its activities. The structure of limits should reflect the need for a firm to have systems and controls in place to guard against a spectrum of possible risks, from those arising in day-to-day liquidity risk management to those arising in stressed conditions.

INSPRU 4.1.62 G

SYSC 14.1.18 R states that a firm must take reasonable steps to ensure the establishment and maintenance of a business plan and appropriate systems for the management of prudential risk.

INSPRU 4.1.63 E

  1. (1)

    If a firm has liquidity risk that arises because it has substantial exposures in foreign currencies, the risk management systems of the firm referred to in SYSC 14.1.18 R should include systems and procedures that are designed to ensure that the firm does not, except in accordance with those procedures, exceed limits that are designed to limit:

    1. (a)

      the aggregate amount of its liquidity risk for all exposures in foreign currencies; and

    2. (b)

      the amount of its liquidity risk for each individual currency in which it has a significant exposure.

  2. (2)

    Contravention of (1) may be relied upon as tending to establish contravention of SYSC 14.1.18 R.

INSPRU 4.1.64 G

A firm should periodically review and, where appropriate, adjust its limits when conditions or risk tolerances change.

INSPRU 4.1.65 G

Policy or limit exceptions should receive the prompt attention of the appropriate management and should be resolved according to processes described in approved policies.

Managing market access

INSPRU 4.1.66 G

A firm should periodically review its efforts to establish and maintain relationships with liability providers, to maintain adequate diversification of liabilities, and to ensure adequate capacity to sell assets, or use them as collateral in secured funding. Where possible the firm should aim regularly to test its access to the individual markets in assets that it holds for liquidity purposes.

INSPRU 4.1.67 G

Market access should be assessed under a variety of normal and stressed conditions.

INSPRU 4.1.68 G

In some circumstances, the disclosure of information about a firm may be useful in managing the public perception of its organisation and soundness. A firm should consider the role of disclosure in managing the liquidity risk to which it is exposed.

Application of INSPRU 4.1 to Lloyd's

INSPRU 4.1.69 G

INSPRU 4.1 applies to managing agents and to the Society in accordance with:

  1. (1)

    for managing agents, INSPRU 8.1.4 R; and

  2. (2)

    for the Society, INSPRU 8.1.2 R

INSPRU 4.1.70 G

In accordance with INSPRU 8.6.2 R, the rules and guidance in INSPRU 4.1 relating to the establishment and maintenance of a business plan do not apply to the Society.