SUP 16.8 Persistency reports from insurers and data reports on stakeholder pensions

1. (1)

   An insurer with a permission to effect or carry out life policies must submit to the FCA a persistency report in respect of life policies by 30 April each year in accordance with this section.

   11111118
2. (2)

   A firm with permission to establish, operate or wind up a stakeholder pension scheme must submit to the FCA11:

   11
   1. (a)

      a data report on stakeholder pensions by 30 April each year prepared in accordance with this section; and

   2. (b)

      two extra data reports on stakeholder pensions prepared in accordance with this section as follows:

      1. (i)

         by 31 October 2002, of the number effected in the period to 30 June 2001 and the number of those still in force 12 months after the contract was effected;

      2. (ii)

         by 31 January 2003, of the number effected in the period 1 July 2001 to 30 September 2001 and the number of those still in force 12 months after the contract was effected.

1In this section, and Forms 1R(2) to (4) in SUP 16 Annex 6R:

1. (1)

   '12 month report' means the part of a persistency report or data report reporting on life policies or stakeholder pensions effected in Y-2, '24 month report' means the part of a persistency report or data report reporting on life policies or stakeholder pensions effected in Y-3, and so on;

2. (2)

   'CC' means the number of life policies or stakeholder pensions which:

   1. (a)

      were effected during the period to which the calculation relates; and

   2. (b)

      are reported on in the persistency report or data report (see SUP 16.8.8 R to SUP 16.8.15 R);

3. (3)

   'CF' means the number of life policies or stakeholder pensions within 'CC' which are treated as in force at the end of Y-1 or, for a report under SUP 16.8.3 R (2) (b), the relevant 12 month period (see SUP 16.8.16 R to SUP 16.8.18 R);

4. (4)

   'contract anniversary' means the anniversary of the date on which the life policy or stakeholder pension was effected falling within Y-1;

5. (5)

   'data report' means a report in respect of stakeholder pensions complying with SUP 16.8.19 R to SUP 16.8.21 R;

6. (6)

   Forms 1R(1), 1R(2), 1R(3) and 1R(4) mean the forms in SUP 16 Annex 6;

7. (7)

   'group personal pension policy' means a life policy which is not a separate pension scheme, effected under a collecting arrangement made for the employees of a particular employer to participate in a personal pension arrangement on a group basis;

8. (8)

   [deleted]

9. (9)

   'mortgage endowment' means an endowment assurance effected or believed to be effected for the purposes of paying off a loan on land;

10. (10)

    'new', in relation to a stakeholder pension, has the meaning given in SUP 16.8.11 R (2);

11. (11)

    'ordinary assurance policy' means a life policy which is not an industrial assurance policy;

12. (12)

    'other life assurance' means a life policy other than a pension policy, endowment assurance or whole life assurance;

13. (13)

    'other pension policy' means a pension policy other than a personal pension policy;

14. (14)

    'persistency rate' means a rate calculated using this formula:CF x 100/CC(see the example in SUP 16.8.5 G);

15. (15)

    'persistency report' means a report in respect of life policies complying with SUP 16.8.19 R to SUP 16.8.21 R;

16. (16)

    'regular premium life policy' means a life policy where there is (or could be, or has been) a commitment by the policyholder to make a regular stream of contributions (for example by means of a direct debit mandate);

17. (17)

    'regular premium stakeholder pension' means a stakeholder pension where there is (or could be, or has been) a commitment by the policyholder to make a regular stream of contributions;

18. (18)

    'single premium life policy' means a life policy that is not a regular premium life policy, except that a recurrent single premium life policy must be treated as a regular premium life policy;

19. (19)

    'single premium stakeholder pension' means a stakeholder pension which is not a regular premium stakeholder pension, except that a recurrent single premium stakeholder pension must be treated as a regular premium stakeholder pension;

20. (20)

    'stakeholder pension' means an individual's rights under a stakeholder pension scheme;

21. (21)

    'substitute', in relation to stakeholder pension, has the meaning given in SUP 16.8.11 R (2);

22. (22)

    'Y' means the year in which the report must be submitted, 'Y-1' means the preceding year, 'Y-2' means the next earlier year and so on;

23. (23)

    'year' means calendar year, unless SUP 16.8.7 R applies.

1In relation to a persistency report, a firm may treat a 12-month period ending between 1 October and 31 March as a 'year' for the purposes of this section and Forms 1R(1) to (3):

1. (1)

   if the firm's financial year does not end on 31 December; or

2. (2)

   for industrial assurance policy business;

provided that the use of an alternative period is disclosed in the persistency report.

1A persistency report or data report must report on a life policy or stakeholder pension if:

1. (1)

   it is not of a type listed in SUP 16.8.13 R or SUP 16.8.14 R;

2. (2)

   it was effected by:

   1. (a)

      the firm submitting the report; or

   2. (b)

      an unauthorised member of the group of the firm submitting the report and in circumstances in which that firm was responsible for the promotion of that life policy or stakeholder pension; or

   3. (c)

      another firm, but is being carried out by the firm submitting the report; and

3. (3)

   the person who sold it or who was responsible for its promotion was, in so doing, subject to rules in COBS5.

   56

1Life policies falling within SUP 16.8.8 R, which were sold subject to the conduct of business rules of a previous regulator, need to be reported only if they were required to be reported on by the rules of the previous regulator of the firm submitting the report.

1. (1)

   1A life policy or stakeholder pension which was issued in substitution for a similar contract may be treated as being effected on the inception date of the previous life policy or stakeholder pension, provided that the firm is satisfied that no loss to the policyholder is attributable to the substitution;

2. (2)

   A stakeholder pension which is treated as in (1) is a "substitute" stakeholder pension. A "new" stakeholder pension is any other stakeholder pension.

1A persistency or data report must not report on any of the following:

1. (1)

   a life policy or stakeholder pension that was cancelled from inception whether or not this was as a result of service of a notice under the rules on cancellation (COBS 15)5;

   5
2. (2)

   [deleted]7

   7
3. (3)

   a life policy (excluding income withdrawal) or stakeholder pension which has terminated as a result of death, critical illness, retirement, maturity or other completion of the contract term;

4. (4)

   income withdrawals that have ceased as a result of the death of the policyholder;

5. (5)

   in the case of a persistency report only, a life policy which is a stakeholder pension;

6. (6)

   a life policy purchased by the trustees of an occupational pension scheme 2 which is a defined benefits pension scheme;

7. (7)

   a life policy purchased by the trustees of an executive money purchase occupational pension scheme.

1A persistency report required by SUP 16.8.3 R (1) need not report on a life policy if the number of life policies on substantially the same terms effected by the relevant firm (or member of the firm's group) in the relevant year did not exceed the higher of fifty and 1% of the total reportable life policies effected by the person in that year.

1If the term of an endowment assurance is less than five years, the life policy must only be included in a persistency report in respect of years up to and including the anniversary prior to maturity.

1Subject to SUP 16.8.17 R and SUP 16.8.18 R, a life policy or stakeholder pension must be treated as in force at the end of Y-1 (that is, included in CF) if and only if:

1. (1)

   in the case of a regular premium life policy:

   1. (a)

      in the case of an industrial assurance policy on which the premiums are paid at intervals of four weeks, the premium has been paid in respect of the four-week period in which the policy anniversary falls; or

   2. (b)

      in any other case, the premium has been paid in respect of the month in which the policy anniversary falls;

2. (2)

   in the case of a single premium life policy, the policy has not been surrendered as at the policy anniversary;

3. (3)

   in the case of a regular premium stakeholder pension:

   1. (a)

      for a report required by SUP 16.8.3 R (2) (a), the premium has been paid in respect of the month in which the contract anniversary falls;

   2. (b)

      for a report required by SUP 16.8.3 R (2) (b), the premium has been paid in respect of the month 12 months after the contract was effected;

4. (4)

   in the case of a single premium stakeholder pension:

   1. (a)

      for a report required by SUP 16.8.3 R (2)(a), the contract has not been surrendered as at the contract anniversary; or

   2. (b)

      for a report required by SUP 16.8.3 R (2)(b), the contract has not been surrendered as at the end of the 12 month period.

1A cluster life policy must be reported as a single life policy and must be treated as in force (that is included in CF) even if some of the constituent life policies have been terminated.

1An income withdrawal that has terminated other than by death of the policyholder must be treated as not in force at the end of Y-1 (that is, not included in CF).

1. (1)

   1A persistency report on life policies must be a report in the format of Forms 1R(1), (2) and (3).

2. (2)

   A data report on stakeholder pensions must be a report in the format of Form 1R(4).

3. (3)

   A persistency and a data report must include:

   1. (a)

      for a report required by SUP 16.8.3 R (1) or (2) (a), a separate copy of each Form reporting on life policies or stakeholder pensions effected during each of Y-2, Y-3, Y-4, Y-5;

   2. (b)

      for a persistency report, a separate copy of Forms IR(1) and IR(2) reporting on:

      1. (i)

         regular premium life policies and single premium life policies; and

      2. (ii)

         life policies classified as ordinary assurance policies and industrial assurance policies .

1If, in relation to any Form, a firm has no life policies or stakeholder pensions to report on in a copy of that Form, the firm need not submit that copy provided that it confirms in writing to the FCA11, as part of the persistency or data report, that it is not doing so and the reason for not doing so.

1The firm must, if a persistency report reports on;

1. (1)

   an endowment assurance with a term of five years or less:

   1. (a)

      report on such a policy in Form 1R(2); and

   2. (b)

      not report on such a policy in Form 1R(1);

2. (2)

   a group personal pension policy, include the policy as a personal pension policy in Forms 1R(1) and 1R(3);

3. (3)

   a mortgage endowment, also include the policy as an endowment assurance in Forms 1R(1) and 1R(3);

4. (4)

   an income withdrawal, not include the policy under any other relevant category in Forms 1R(1) and 1R(3).

   4

1A firm must make and retain such records as will enable it to:

1. (1)

   monitor regularly the persistency of life policies and stakeholder pensions effected through each of its representatives; and

2. (2)

   make persistency reports or data reports to the FCA11 in accordance with SUP 16.8.3R.

   11