PRU TP 1 Transitional Provisions

1

PRU 9.2.7 R

PRU 9.2.7 R (Requirement to hold professional indemnity insurance) does not apply in respect of acts or omissions occurring before:

(1) 31 October 2004 (in relation to mortgage mediation activity); and

(2) 14 January 2005 (in relation to insurance mediation activity).

From 31 October 2004

31 October 2004

2

PRU 9.3.53 R and PRU 9.3.57R (3)

A firm is not required to include goodwill in its intangible assets until 14 January 2008.

From 31 October 2004 until 14 January 2008

31 October 2004

33

[deleted]4

43

[deleted]4

54

Rules in PRU listed in the Table at PRU TR Table 10R4

R4

(1) A rule listed in column (2) is disapplied, or is modified in its application, to a firm;4

(a) in order to produce the same effect, including any conditions, as a waiver had on the corresponding rule in IPRU(INS);4

(b) for the same period as the waiver would have lasted, if shorter than the period in column (5);4

provided the conditions set out in (2) are satisfied.4

(2) The conditions referred to in (1) are:4

(a) the rule is shown in the Table at PRU TR Table 10R as corresponding with the rule in IPRU(INS) in relation to which the waiver was granted to the firm;4

(b) the waiver was current as respects the firm immediately before the date specified in column (6); and4

(c) there is no specific transitional rule relating to the waiver.4

(3) (1) does not have effect if, and to the extent that, it would be inconsistent with any community obligation of the United Kingdom.4

From 31 December 2004 until the relevant rule is revoked4

31 December 20044

5A2

PRU 9.4.5 R and PRU 9.4.7 R2

R2

PRU 9.4.5 R and PRU 9.4.7 R have effect in respect of the use by a firm of the services of another person consisting of insurance mediation and provided from an establishment in an EEA State that has not implemented Article 3 (Registration) of the IMD, as if the condition in paragraph (4) of PRU 9.4.5 R and the condition in paragraph (2) of PRU 9.4.7 R were a condition that the firm has no reason to doubt the good repute, competence and financial standing of that person.2

from 14 January 2005 until the implementation of Article 3 of the IMD by the relevant EEA State6

14 January 20052

64

Rules in PRU not listed in the Table at PRU TR Table 10R44

R4

(1) A rule listed in column (2) is disapplied, or is modified in its application, to a firm:4

(a) in order to produce the same effect, including any conditions, as a waiver had on a rule in IPRU(INS) or IPRU(FSOC), or a written concession had on a pre-commencement provision listed in PRU TR 7R;4

(b) for the same period as the waiver or written concession would have lasted, if shorter than the period in column (5); provided the conditions set out in (2) are satisfied.4

(2) The conditions referred to in (1) are:4

(a) the rule in PRU is substantially similar to the rule in IPRU(INS), IPRU(FSOC), or the pre-commencement provision, as the case may be, with which the waiver or written concession was concerned;4

(b) the waiver or written concession was current as respects the firm immediately before the date specified in column (6);4

(c) there is no specific transitional rule relating to the waiver or written concession; and4

(d) in the case of a written concession, it has not been superseded by a waiver from the FSA.4

(3) (1) does not have effect if, and to the extent that, it would be inconsistent with any community obligation of the United Kingdom.4

From 31 December 2004 until 30 June 20054

31 December 20044

74

As PRU TR 6R4

R4

The pre-commencement provisions referred to in these transitional provisions are those contained in:4

(1) the Insurance Companies Act 1982 and relevant secondary legislation;4

(2) the Friendly Societies Act 1992 and relevant secondary legislation.4

As PRU TR 6R4

As PRU TR 6R4

84

As PRU TR 5R to PRU TR 7R4

R4

A firm which has the benefit of a waiver to which PRU TR 5R applies, or a waiver or written concession to which PRU TR 6R applies, must:4

(1) notify the FSA immediately if it becomes aware of any matter which is material to the relevance or appropriateness of the waiver or written concession;4

(2) maintain a written record of the rule in PRU to which it considers the waiver or written concession applies; and4

(3) make the record available to the FSA on request.4

As PRU TR 5R or PRU TR 6R4

As PRU TR 6R4

94

PRU TR 5R to PRU TR 25R4

R4

In these transitional provisions:4

(1) "substantially similar" means substantially similar in purpose and effect;4

(2) "written concession" means a waiver, exemption, concession, modification, consent, approval, determination or similar exercise of discretion which:4

(a) disapplied, or tended to reduce the burden of complying with, a pre-commencement provision (with or without conditions); and4

(b) was evidenced in writing.4

As PRU TR 5R or PRU TR 6R4

31 December 20044

1.3.35R

4.2 (3)

2.1.9R

2.9 (3)

2.1.21R

2.9

2.1.22R

2.9

2.1.30R

2.4 (6)

2.2.80R

2.10 (7)

2.2.81R

2.10 (7)

2.2.86R

4.14

4.5 (7)

3.2.22R

4.14 (1)

4.2.34R

5.11

4.2.39R

5.11

5.11 (4)

5.11 (5)

5.11 (9)

5.11 (11)

4.2.58R

2.3 (2)

7.2.51R

2.4 (6)

7.2.56R

2.4 (1)

7.2.66R

Appendix 2.1 2.4(1)(b)

Appendix 2.2 2.4(1)(b)

5.9 (1)

7.3.40R

5.9 (2)

7.3.41R

5.9 (2)

7.3.43R

5.10

7.3.74R

5.16

8.3.17R(1)(a)-(b)

10.1

10.2

10.2 (1)

10.2 (2)

10.2 (3)

8.3.23R

10.2

10.2 (1)

10.2 (2)

10.2 (3)

411

PRU 1.2

PRU 5.1

R

If a firm, as at 31 December 2004, has the benefit of a waiver of:

(1) SUP 16.7.10 R ; or

(2) SUP 16.7.12 R ;

under which the firm does not have to supply adequate information on mismatch liquidity, the provisions referred to in column (2) do not apply.

From 31 December 2004 until the date the waiver referred to in column (4) ceases to have effect.

31 December 2004

412

PRU 1.3.5 R

PRU 7.4.191 R

R

[deleted]5

413

PRU 1.3.14R

R

A firm will be treated as complying with the rule listed in column (2) if it marks to market by reference to market value as determined in accordance with generally accepted accounting concepts, bases and policies or other generally accepted methods appropriate to insurers.

From 31 December 2004 to 30 December 2006

31 December 2004

414

PRU 1.3.31 RPRU 2.2.90 R

R

(1) A firm may elect to apply PRU 1.3.11 R to shares in a regulated related undertaking that is not an insurance undertaking or an insurance holding company.

(2) A firm may apply PRU 1.3.11 R if it has made the election referred to in sub-paragraph (1) by written notice to the FSA in a way which complies with the requirements for written notice in SUP 15.7.

(3) Where a firm has made the election referred to in (1):

(a) PRU 2.2.90 R is disapplied in respect of the shares in that regulated related undertaking; and

(b) the shares in that regulated related undertaking must be valued in accordance with (4).

(4) Subject to (5), the shares in the regulated related undertaking within (3) must be valued in accordance with PRU 1.3.11 R.

(5) For the purposes of valuing the shares in a regulated related undertaking within (4), the value of those shares determined in accordance with PRU 1.3.11 R must be reduced:

(a) by an approximate amount, to the extent that the value of those shares in the regulated related undertaking cannot effectively be realised to meet the capital resources requirement of the firm; and

(b) by an approximate amount, to exclude value attributable to goodwill generated from the business of the regulated related undertaking with other members of the insurance group.

From 31 December 2004 until the first day of the firm's financial year beginning in 2005

31 December 2004

415

As PRU TR 14R

G

(1) The application of PRU 1.3.31 R to a regulated related undertaking which is not an insurance undertaking or an insurance holding company implements the amendments to the First Non-Life Directive, the First Life Directive and the Insurance Groups Directive in Articles 22(2), 23(2) and 28(6) of the Financial Groups Directive.

(2) PRU TR 14R allows the requirement to treat a regulated related undertaking which is not an insurance undertaking or an insurance holding company in accordance with PRU 1.3.31 R to be postponed until the effective date of the Financial Groups Directive.

(3) In the interim, a firm may elect either to apply PRU 1.3.11 R or to value shares in a regulated related undertaking which is not an insurance undertaking or an insurance holding company in accordance with PRU 1.3.31 R. The intention is to allow firms to continue to account for the value of shares held in these regulated related undertakings as they would formerly have done under IPRU(INS) for the purposes of calculating the capital resources of a firm.

As PRU TR 14R

As PRU TR 14R

416

PRU 2.2.93R (3)

PRU 2.2.101R (3)

PRU 2.2.101R (4)

PRU 2.2.102 R

PRU 2.2.103 R

PRU 2.2.105 R

R

(1) This paragraph applies to a firm which immediately before the date specified in column (6) had the benefit of a waiver in relation to IPRU(INS) rule 2.10 or 5.2, or a written concession in relation to a pre-commencement provision listed in PRU TR 7R, in either case allowing the firm to exclude from the calculation of its liabilities obligations under a particular capital instrument issued by the firm.

(2) Subject to (3) and to compliance with the conditions set out in (4), a firm will be treated as complying with a rule listed in column (2) in relation to the capital instrument to which the waiver or written concession referred to in (1) related so long as the firm is not obliged to pay any interest under the terms of the capital instrument in circumstances where the firm does not have capital resources equal to or in excess of its required margin of solvency under the Insurance Directives.

(3) (2) ceases to apply to a firm:

(a) once the firm has redeemed the capital instrument; or

(b) on or after any date upon which the firm has the option to redeem the capital instrument and may prudently do so.

(4) The conditions referred to in (2) are:

(a) the firm must notify the FSA immediately if it becomes aware of any matter which is material to the relevance or appropriateness of the waiver or written concession;

(b) the firm must maintain a written record of the rule in PRU to which it considers the waiver or written concession applies; and

(c) the firm must make the record available to the FSA on request.

From 31 December 2004 until the relevant rule is revoked

31 December 2004

417

PRU 2.2.93R (2)

R

(1) This paragraph applies to a firm carrying on with-profits insurance business which immediately before the date specified in column (6) had the benefit of a waiver in relation to IPRU(INS) rule 2.10 or 5.2 or a written concession in relation to a pre-commencement provision listed in PRU TR 7R in either case allowing the firm to exclude from the calculation of its liabilities obligations under a particular capital instrument issued by the firm.

(2) Subject to compliance with the conditions set out in (3), PRU 2.2.93R (2) does not apply in relation to the capital instrument to which the waiver or written concession referred to in (1) related provided that capital instrument was issued by the firm on or before 30 December 2004.

(3) The conditions referred to in (2) are:

(a) the firm must notify the FSA immediately if it becomes aware of any matter which is material to the relevance or appropriateness of the waiver or written concession;

(b) the firm must maintain a written record of the rule in PRU to which it considers the waiver or written concession applies; and

(c) the firm must make the record available to the FSA on request.

From 31 December 2004 until 30 December 2005

31 December 2004

418

PRU 2.2.108R (5)

PRU 2.2.108R (7)

R

(1) This rule applies to a firm which immediately before the date specified in column (6) had the benefit of a waiver in relation to IPRU(INS) rule 2.10 or 5.2, or a written concession in relation to a pre-commencement provision listed in PRU TR 7R, in either case allowing the firm to exclude from the calculation of its liabilities obligations under a particular capital instrument issued by the firm.

(2) Subject to compliance with the conditions set out in (3), a firm will be treated as complying with a rule listed in column (2) in relation to the capital instrument to which the waiver or written concession referred to in (1) related.

(3) The conditions referred to in (2) are:

(a) the firm must notify the FSA immediately if it becomes aware of any matter which is material to the relevance or appropriateness of the waiver or written concession;

(b) the firm must maintain a written record of the rule in PRU to which it considers the waiver or written concession applies; and

(c) the firm must make the record available to the FSA on request.

From 31 December 2004 until 30 June 2005

31 December 2004

419

PRU 2.2.108R (6)

PRU 2.2.108R (10)

PRU 2.2.108R (11)

PRU 2.2.111 R

R

(1) This paragraph applies to a firm which immediately before the date specified in column (6) had the benefit of a waiver in relation to IPRU(INS) rule 2.10 or 5.2, or a written concession in relation to a pre-commencement provision listed in PRU TR 7R, in either case allowing the firm to exclude from the calculation of its liabilities obligations under a particular capital instrument issued by the firm.

(2) Subject to compliance with the conditions set out in (3), a firm will be treated as complying with a rule listed in column (2) in relation to the capital instrument to which the waiver or written concession referred to in (1) related.

(3) The conditions referred to in (2) are:

(a) the firm must notify the FSA immediately if it becomes aware of any matter which is material to the relevance or appropriateness of the waiver or written concession;

(b) the firm must maintain a written record of the rule in PRU to which it considers the waiver or written concession applies; and

(c) the firm must make the record available to the FSA on request.

From 31 December 2004 until the relevant rule is revoked

31 December 2004

420

PRU 2.2.12 R

PRU 2.2.14 R

(Table)

R

(1) This rule applies to a firm which immediately before the date specified in column (6) had the benefit of a waiver in relation to IPRU(INS) rule 2.10 (4).

(2) For the period specified in column (5) or the same period as the waiver would have lasted if shorter, subject to (3) and to compliance with the conditions set out in (4), for the purposes of calculating its capital resources a firm may include the value of claims against its members by way of calls for supplementary contributions as core tier one capital to the same extent as it was permitted by the waiver to include the value of those claims in the calculation of its margin of solvency.

(3) (2) does not apply for the purposes of PRU 2.2.18 R or SUP App 2.4.

(4) The conditions referred to in (2) are:

(a) the limits specified in the waiver on the extent to which the firm's claim against its members by way of call for supplementary contributions may be brought into account apply as if the reference (if any) in the waiver to the firm's required margin of solvency referred to its general insurance capital requirement and the reference (if any) in the waiver to the firm's margin of solvency referred to its capital resources; and

(b) the firm must comply with any further conditions imposed by the waiver.

From 31 December 2004 until the relevant rule is revoked

31 December 2004

421

PRU 2.2.12 R

PRU 2.2.14 R

(Table)

R

(1) This rule applies to a firm which immediately before the date specified in column (6) had the benefit of a waiver in relation to IPRU(INS) rule 2.10 (5) or IPRU(FSOC) rule 4.7 (3).

(2) For the period specified in column (5) or the same period as the waiver would have lasted if shorter, subject to (3) and to compliance with the conditions set out in (4), for the purpose of calculating its capital resources a firm may include the value of implicit items at Stage B of the calculation in PRU 2.2.14 R Table to the same extent to which it was permitted by the waiver to include the value of those implicit items in the calculation of its margin of solvency.

(3) (2) does not apply for the purposes of PRU 2.2.17 R.

(4) The conditions referred to in (2) are:

(a) the limits specified in the waiver on the extent to which the value of implicit items may be brought into account apply as if the reference (if any) in the waiver to the firm's required margin of solvency referred to its minimum capital requirement and the reference (if any) in the waiver to the firm's margin of solvency referred to its capital resources; and

(b) the firm must comply with any further conditions imposed by the waiver.

From 31 December 2004 until the relevant rule is revoked

31 December 2004

422

PRU 2.1.21 R

PRU 2.1.30 R

PRU 2.2.18 R

PRU 3.2.22 R

PRU 7.2.51 R

PRU 7.2.85 R

R

In relation to any financial year starting on or before 30 December 2004, a firm's general insurance capital requirement or a firm's insurance health risk capital component is its margin of solvency calculated in accordance with:

(1) IPRU(INS) rule 2.4 (excluding 2.4(1)(a)) and Appendices 2.1 and 2.2, or IPRU(INS) rule 2.4 (excluding 2.4(1)(a)) and Appendices 2.1 and 2.2 (as applied by rule 2.7 to long-term insurance business of class IV); or

(2) APER 3.1.4 G (excluding 4.2(1)(a)) and Appendix 2 Parts I and II, or APER 3.1.4 G (excluding 4.2(1)(a)) and Appendix 2 Parts I and II, (as applied by paragraph 3 of Appendix I to long-term insurance business of class IV);

as the case may be, as those rules had effect immediately prior to the date in column (6).

From 31 December 2004 until the relevant rule is revoked

31 December 2004

423

PRU 4.3.5 R (3)(b)

PRU 4.3.34 R

PRU 4.3.35 R

R

(1) PRU 4.3.5 R (3)(b) has effect as if the words "and is capable of valuation" and "to 4.3.35R" were omitted.

(2) PRU 4.3.34 R has effect as if it read "For the purpose of PRU 4.3.5 R (3)(b), a transaction is on approved terms only if the firm reasonably believes that it may be readily closed out".

(3) PRU 4.3.35 R does not apply.

From 31 December 2004 until 30 December 20067

31 December 2004

723A

PRU 7.3.85 R (2)

R

PRU 7.3.85 R (2) has effect as if it read "misrepresentation".

From 31 December 2005 until 31 March 2006

31 December 2005

723B

PRU 7.3.88 G

G

PRU 7.3.88 G has effect as if the word "material" were omitted.

As PRU TR 23AR

As PRU TR 23AR

424

PRU 7.5.20 R

PRU 7.5.45 R

R

In relation to any financial year starting on or before 30 December 2004:

(1) a firm's non-credit equalisation provision is its equalisation reserve in respect of Part II business carried on by the firm calculated in accordance with IPRU(INS) rules 6.4 to 6.10 and Appendix 6.1 as those rules had effect immediately prior to the date in column (6); and

(2) a firm's credit equalisation provision is its equalisation reserve in respect of credit insurance business carried on by the firm calculated in accordance with IPRU(INS) rules 6.11 to 6.12 and Appendix 6.2 as those rules had effect immediately prior to the date in column (6).

From 31 December 2004 until the relevant rule is revoked.

31 December 2004

425

PRU 8.3.8 R

PRU 8.3.9 R

PRU 8.3.10 R

PRU 8.3.15 R

R

(1) For the purpose of the calculation of the group capital resources and group capital resources requirement of an undertaking referred to in PRU 8.3.17 R, a firm may elect not to take a regulated related undertaking, which is not an insurance undertaking or an insurance holding company, into account in accordance with PRU 8.3.33 R and PRU 8.3.36 R.

(2) A firm may elect not to take a regulated related undertaking, which is not an insurance undertaking or an insurance holding company into account as referred to in (1), if it has made the election by written notice to the FSA in a way that complies with the requirements for written notice in SUP 15.7

(3) A firm that has made an election referred to in (2) must value that regulated related undertaking in accordance with (4) for the purpose of the calculation of the group capital resources and group capital resources requirement of an undertaking referred to in PRU 8.3.17 R.

(4) Subject to (5), a regulated related undertaking within (3) must, for the purposes of the calculations referred to in (1), be valued in accordance with PRU 1.3.11 R.

(5) For the purposes of valuing a regulated related undertaking within (3), the value of that regulated related undertaking determined in accordance with PRU 1.3.11 R, must be reduced:

(a) by an approximate amount, to the extent that the value of the regulated related undertaking cannot effectively be realised to meet the group capital resources requirement of an undertaking in PRU 8.3.17 R; and

(b) by an approximate amount, to the extent needed to exclude value attributable to goodwill generated from the business of the regulated related undertaking with other members of the insurance group.

From 31 December 2004 until the first day of the firm's financial year beginning in 2005

31 December 2004

426

As PRU TR 25R

G

(1) The inclusion of a regulated related undertaking which is not an insurance undertaking or an insurance holding company in the scope of application of PRU 8.3.33 R and PRU 8.3.36 R and implements the amendments to the First Non-Life Directive, the First Life Directive and the Insurance Groups Directive in Articles 22(2), 23(2) and 28(6) of the Financial Groups Directive.

(2) PRU TR 25R allows the requirement to include a regulated related undertaking which is not an insurance undertaking or an insurance holding company in the calculations required by Transitional Provisions to be postponed until the effective date of the Financial Groups Directive.

(3) In the interim, a firm may apply PRU 8.3, or elect to use the general valuation rules for related undertakings which do not fall within the scope of PRU 8.3, as set out in PRU 1.3.11 R, subject to the adjustments required by PRU TR 25R(5). The intention is to allow firms to continue to take the regulated related undertakings referred to in PRU TR 25R(1) and any other related undertaking not referred to in PRU 8.3 into account as they would formerly have done for the purposes of calculating the group capital resources of an undertaking in PRU 8.3.17 R.

As PRU TR 25R

As PRU TR 25R