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IPRU-INV 12.2 FINANCIAL RESOURCES REQUIREMENTS

General solvency requirement

IPRU-INV 12.2.1RRP

A firm must at all times be able to meet its liabilities as they fall due.

General financial resource requirement

IPRU-INV 12.2.2RRP

A firm must ensure that at all times its financial resources1 are not less than its financial resources requirement1.

Financial resources requirement: firms carrying on other regulated activities

IPRU-INV 12.2.3RRP

The financial resources requirement1 for a firm carrying on one or more regulated activities in addition to operating an electronic system in relation to lending, is the higher of:

  1. (1)

    the financial resources requirement1 which is applied by this chapter; and

  2. (2)

    the financial resources or own funds requirement which is applied by another rule or by directly applicable legislation of the UK2 to the firm.

Financial resources requirement

IPRU-INV 12.2.4RRP

On its accounting reference date in each year, a firm must calculate:

  1. (1)

    the total value of loaned funds outstanding on that date; and

  2. (2)

    the sum of:

    1. (a)

      0.2% of the first £50 million of that total value;

    2. (b)

      0.15% of the next £200 million of that total value;

    3. (c)

      0.1% of the next £250 million of that total value; and

    4. (d)

      0.05% of any remaining total value.

IPRU-INV 12.2.5RRP

The total value of loaned funds outstanding is the total amount of funds that are currently being provided to borrowers under P2P agreements through an operator of an electronic system in relation to lending.

IPRU-INV 12.2.6RRP

The financial resources requirement1 for a firm to which this chapter applies is the higher of:

  1. (1)

    £50,000; and

  2. (2)

    the sum calculated in accordance with IPRU-INV 12.2.4R(2) for the period until (subject to IPRU-INV 12.2.9R) its next accounting reference date.

IPRU-INV 12.2.7RRP

To determine a firm’s financial resources requirement1 for the period beginning on the date on which it obtains a Part 4A permission and ending on the day before its next accounting reference date, the firm must carry out the calculation in IPRU-INV 12.2.4R(2) on the basis of the total value of loaned funds the firm projects will be outstanding on the day before its next accounting reference date.

Determining the financial resources requirement

IPRU-INV 12.2.8GRP

If the firm has 30,000 individuals each lending £100,000, the total value of the firm’s1 loaned funds outstanding is £3,000,000,000. If the firm does not carry on any other regulated activity to which another higher financial resources or own funds requirement applies, its financial resources requirement1 is £1,900,000. This is calculated as follows:

  1. (1)

    0.2% x £50,000,000 = £100,000;

  2. (2)

    0.15% x £200,000,000 = £300,000;

  3. (3)

    0.1% x £250,000,000 = £250,000;

  4. (4)

    0.05% x £2,500,000,000 = £1,250,000.

Recalculating the financial resources requirement

IPRU-INV 12.2.9RRP

If the firm experiences a greater than 25% increase in the total value of loaned funds outstanding compared to the value used in its last financial resources requirement1 calculation, it must recalculate its financial resources requirement1 using the higher total value of loaned funds outstanding.

IPRU-INV 12.2.10RRP

A firm must notify the FCA of any change, or any likely change, in its financial resources requirement1 within 14 days of that change, or it becoming aware that the change is likely, whichever is the earlier.