Related provisions for PERG 6.4.3
Table: This table belongs to COLL 6.3.2 G (2) (a) and COLL 6.3.3 R (Valuation)1.
Valuation and pricing |
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1 |
The valuation of scheme property |
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(1) |
Where possible, investments should be valued using a reputable source. The reliability of the source of prices should be kept under regular review. |
|
(2) |
For some or all of the investments comprising the scheme property, different prices may quoted according to whether they are being bought (offer prices) or sold (bid prices). The valuation of a single-priced authorised fund should reflect the mid-market value of such investments. In the case of a dual-priced authorised fund, the issue basis of the valuation will be carried out by reference to the offer prices of investments and the cancellation basis by reference to the bid prices of those same investments. The prospectus should explain how investments will be valued for which a single price is quoted for both buying and selling.1 1 |
|
3(2A) |
Schemes investing in approved money-market instruments5should value such instruments on an amortised cost basis on condition that:5
|
|
[Note:CESR's UCITS eligible assets guidelines with respect to article 4(2) of the UCITS eligible assets Directive] |
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(3) |
Any part of the scheme property of an authorised fund that is not an investment should be valued at a fair value, but for immovables this is subject to COLL 5.6.20 R (3) (f) (Standing independent valuer and valuation). |
|
(4) |
For the purposes of (2) and (3), any fiscal charges, commissions, professional fees or other charges that were paid, or would be payable on acquiring or disposing of the investment or other part of the scheme property should, in the case of a single-priced authorised fund,2 be excluded from the value of an investment or other part of the scheme property. In the case of a dual-priced authorised fund, any such payments should be added to the issue basis of the valuation, or subtracted from the cancellation basis of the valuation, as appropriate. Alternatively, the prospectus of a dual-priced authorised fund may prescribe any other method of calculating unitprices that ensures an equivalent treatment of the effect of these payments.2 |
|
(5) |
Where the authorised fund manager has reasonable grounds to believe that:
|
|
(6) |
The circumstances which may give rise to a fair value price being used include:
|
|
(7) |
In determining whether to use such a fair value price , the authorised fund manager should include in his consideration:
|
|
4(7A) |
Where the authorised fund manager, the depositary or the standing independent valuer have reasonable grounds to believe that the most recent valuation of an immovable does not reflect the current value of that immovable, the authorised fund manager should consult and agree with the standing independent valuer a fair and reasonable value for the immovable. |
|
(8) |
The authorised fund manager should document the basis of valuation (including any fair value pricing policy) and, where appropriate, the basis of any methodology and ensure that the procedures are applied consistently and fairly. |
|
(9) |
Where a unit price is determined using properly applied fair value prices in accordance with policies in (8), subsequent information that indicates the price should have been different from that calculated will not normally give rise to an instance of incorrect pricing. |
|
2 |
The pricing controls of the authorised fund manager |
|
(1) |
An authorised fund manager needs to be able to demonstrate that it has effective controls over its calculations of unit prices. |
|
(2) |
The controls referred to in (1) should ensure that:
|
|
(3) |
In exercising its pricing controls, the authorised fund manager may exercise reasonable discretion in determining the appropriate frequency of the operation of the controls and may choose a longer interval, if appropriate, given the level of activity on the authorised fund1or the materiality of any effect on the price. |
|
(4) |
Evidence of the exercise of the pricing controls should be retained. |
|
(5) |
Evidence of persistent or repetitive errors in relation to these matters, and in particular any evidence of a pattern of errors working in an authorised fund manager's favour, will make demonstrating effective controls more difficult. |
|
(6) |
Where the pricing1function is delegated to a third party, COLL 6.6.15 R (1) (Committees and delegation) will apply. |
|
3 |
The depositary's review of the authorised fund manager's systems and controls |
|
(1) |
This section provides details of the types of checks a depositary should carry out to be satisfied that the authorised fund manager adopts systems and controls which are appropriate to ensure that prices of units are calculated in accordance with this section and to ensure that the likelihood of incorrect prices will be minimised. These checks also apply where an authorised fund manager has delegated all or some of its pricing1 functions to one or more third parties5. 5 |
|
(2) |
A depositary should thoroughly review an authorised fund manager's systems and controls to confirm that they are satisfactory. The depositary's review should include an analysis of the controls in place to determine the extent to which reliance can be placed on them. |
|
(3) |
A review should be performed when the depositary is appointed and thereafter as it feels appropriate given its knowledge of the robustness and the stability of the systems and controls and their operation. |
|
(4) |
A review should be carried out more frequently where a depositary knows or suspects that an authorised fund manager's systems and controls are weak or are otherwise unsatisfactory. |
|
(5) |
Additionally, a depositary should from time to time review other aspects of the valuation of the scheme property of each authorised fund for which it is responsible, verifying, on a sample basis, if necessary, the assets, liabilities, accruals, units in issue1, securities prices (and in particular the prices of OTC derivatives,5unapproved securities and the basis for the valuation of unquoted securities) and any other relevant matters, for example an accumulation factor or a currency conversion factor. |
|
(6) |
A depositary should ensure that any issues, which are identified in any such review, are properly followed up and resolved. |
|
4 |
The recording and reporting of instances of incorrect pricing |
|
(1) |
An authorised fund manager should record each instance where the price of a unit is incorrect as soon as the error is discovered, and report the fact to the depositary together with details of the action taken, or to be taken, to avoid repetition as soon as practicable. |
|
(2) |
In accordance with COLL 6.6.11 G (Duty to inform the FSA), the depositary should report any breach of the rules in COLL 6.3 immediately to the FSA. However, notification should relate to instances which the depositary considers material only. |
|
(3) |
A depositary should also report to the FSA immediately any instance of incorrect pricing1where the error is 0.5% or more of the price of a unit, where a depositary believes that reimbursement or payment is inappropriate and should not be paid by an authorised fund manager. |
|
(4) |
In accordance with SUP 16.6.8 R, a depositary should also make a return to the FSA on a quarterly basis which summarises the number of instances of incorrect pricing1 during a particular period. |
|
5 |
The rectification of pricing breaches |
|
(1) |
COLL 6.6.3 R (1) (Functions of the authorised fund manager) places a duty on the authorised fund manager to take action to reimburse affected unitholders, former unitholders, and the scheme itself, for instances of incorrect pricing1, except if it appears to the depositary that the breach is of minimal significance. |
|
(2) |
A depositary may consider that the instance of incorrect pricing1is of minimal significance if:
|
|
(3) |
In determining (2), if the instance of incorrect pricing1 is due to one or more factors or exists over a period of time, each price should be considered separately. |
|
(4) |
If a depositary deems it appropriate, it may, in spite of the circumstances outlined in (2), require a payment from the authorised fund manager or from the authorised fund to the unitholders, former unitholders, the authorised fund or the authorised fund manager (where appropriate). |
|
(5) |
The depositary should satisfy itself that any payments required following an instance of incorrect pricing1 are accurately and promptly calculated and paid. |
|
(6) |
If a depositary considers that reimbursement or payment is inappropriate, it should report the matter to the FSA, together with its recommendation and justification. The depositary should take into account the need to avoid prejudice to the rights of unitholders, or the rights of unitholders in a class of units. |
|
(7) |
It may not be practicable, or in some cases legally permissible, for the authorised fund manager to obtain reimbursement from unitholders, where the unitholders have benefited from the incorrect price. |
|
(8) |
In all cases where reimbursement or payment is required, amounts due to be reimbursed to unitholders for individual sums which are reasonably considered by the authorised fund manager and depositary to be immaterial, need not normally be paid. |
1Note: The following definitions relevant to the prospectus rules are extracted from the Glossary.
Act |
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admission to trading |
admission to trading on a regulated market. |
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advertisement |
(as defined in the PD Regulation) announcements: |
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(1) |
relating to a specific offer to the public of securities or to an admission to trading on a regulated market; and |
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(2) |
aiming to specifically promote the potential subscription or acquisition of securities. |
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annual information update |
the document referred to in PR 5.2.1 R. |
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applicant |
an applicant for approval of a prospectus or supplementary prospectus relating to transferable securities. |
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asset backed security |
(as defined in the PD Regulation) securities which: |
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(1) |
represent an interest in assets, including any rights intended to assure servicing, or the receipt or timeliness of receipts by holders of assets of amounts payable thereunder; or |
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(2) |
are secured by assets and the terms of which provide for payments which relate to payments or reasonable projections of payments calculated by reference to identified or identifiable assets. |
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base prospectus |
a base prospectus referred to in PR 2.2.7 R. |
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body corporate |
(in accordance with section 417(1) of the Act (Definitions) any body corporate, including a body corporate constituted under the law of a country or territory outside the United Kingdom; |
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building block |
(as defined in the PD Regulation) a list of additional information requirements, not included in one of the schedules, to be added to one or more schedules, as the case may be, depending on the type of instrument and/or transaction for which a prospectus or base prospectus is drawn up. |
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CARD |
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CESR recommendations |
the recommendations for the consistent implementation of the European Commission's Regulation on Prospectuses no 809/2004 published by the Committee of European Securities Regulators. |
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collective investment undertaking other than the closed-end type |
(in PR) (as defined in Article 2.1(o) of the prospectus directive) unit trusts and investment companies: |
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(1) |
the object of which is the collective investment of capital provided by the public, and which operate on the principle of risk-spreading; |
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(2) |
the units of which are, at the holder's request, repurchased or redeemed, directly or indirectly, out of the assets of these undertakings. |
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Consolidated Admissions and Reporting Directive |
Directive 2001/34/EC of the European Parliament and of the Council on the admission of securities to official stock exchange listing and on information to be published on those securities. |
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credit institution |
as defined in article 1(1) of the Banking Consolidation Directive. |
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director |
(in accordance with section 417(1)(a) of the Act) a person occupying in relation to it the position of a director (by whatever name called) and, in relation to an issuer which is not a body corporate, a person with corresponding powers and duties. |
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EEA State |
(in accordance with paragraph 8 of Schedule 3 to the Act (EEA Passport Rights)) a State which is a contracting party to the agreement on the European Economic Area signed at Oporto on 2 May 1992, as it has effect for the time being; as at 1 May 2004, the following are the EEA States: Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden and the United Kingdom. |
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equity security |
(as defined in Article 2.1(b) of the prospectus directive) shares and other transferable securities equivalent to shares in companies, as well as any other type of transferable securities giving the right to acquire any of the aforementioned securities as a consequence of their being converted or the rights conferred by them being exercised, provided that securities of the latter type are issued by the issuer of the underlying shares or by an entity belonging to the group of the said issuer. |
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equity share |
shares comprised in a company'sequity share capital. |
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equity share capital |
(for a company), its issued share capital excluding any part of that capital which, neither as respects dividends nor as respects capital, carries any right to participate beyond a specified amount in a distribution. |
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executive procedures |
the procedures relating to the giving of warning notices, decision notices and supervisory notices that are described in DEPP 4 (Decision by FSA staff under executive procedures)2. 22 |
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FSA |
the Financial Services Authority. |
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guarantee |
(as defined in the PD Regulation) any arrangement intended to ensure that any obligation material to the issue will be duly serviced, whether in the form of guarantee, surety, keep well agreement, mono-line insurance policy or other equivalent commitment. |
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guarantor |
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Home State or Home Member State |
(as defined in section 102C of the Act) in relation to an issuer of transferable securities, the EEA State which is the "home Member State" for the purposes of the prospectus directive (which is to be determined in accordance with Article 2.1(m) of that directive). |
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Host State or Host Member State |
(as defined in Article 2.1(n) of the prospectus directive) the EEA State where an offer to the public is made or admission to trading is sought, when different from the home State. |
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3 | [deleted]3 3 |
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3 | [deleted]3 3 |
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issuer |
(as defined in section 102A of the Act) a legal person who issues or proposes to issue the transferable securities in question. |
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The European Parliament and Council Directive on markets in financial instruments (No. 2004/39/EC). See also MiFID Regulation and MiFID implementing Directive.3 |
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non-equity transferable securities |
(as defined in section 102A of the Act) all transferable securities that are not equity securities. |
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Note: In the prospectus directive and the PD Regulation, the Commission uses the term "non-equity securities" rather than "non-equity transferable securities". |
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offer |
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offer of transferable securities to the public |
(as defined in section 102B of the Act), in summary: |
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(a) |
a communication to any person which presents sufficient information on:
to enable an investor to decide to buy or subscribe for the securities in question; |
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(b) |
which is made in any form or by any means; |
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(c) |
including the placing of securities through a financial intermediary; |
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(d) |
but not including a communication in connection with trading on:
|
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Note: This is only a summary, to see the full text of the definition, readers should consult section 102B of the Act. |
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offering programme |
(as defined in Article 2.1(k) of the prospectus directive) a plan which would permit the issuance of non-equity securities, including warrants in any form, having a similar type and/or class, in a continuous or repeated manner during a specified issuing period. |
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offeror |
a person who makes an offer of transferable securities to the public. |
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overseas company |
a company incorporated outside the United Kingdom. |
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Part 6 rules |
(in accordance with section 73A(1) of the Act), rules made for the purposes of Part 6 of the Act. |
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PD |
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PD Regulation |
Regulation number 809/2004 of the European Commission. |
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person |
(in accordance with the Interpretation Act 1978) any person, including a body of persons corporate or unincorporated that is, a natural person, a legal person and, for example, a partnership). |
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PR |
the Prospectus Rules sourcebook. |
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profit estimate |
(as defined in the PD Regulation) a profit forecast for a financial period which has expired and for which results have not yet been published. |
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profit forecast |
(as defined in the PD Regulation) a form of words which expressly states or by implication indicates a figure or a minimum or maximum figure for the likely level of profits or losses for the current financial period and/or financial periods subsequent to that period, or contains data from which a calculation of such a figure for future profits or losses may be made, even if no particular figure is mentioned and the word "profit" is not used. |
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property collective investment undertaking |
(as defined in the PD Regulation) a collective investment undertaking whose investment objective is the participation in the holding of property in the long term. |
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prospectus |
a prospectus required under the prospectus directive. |
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prospectus directive |
the Directive of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading (No 2003/71/EC). |
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Prospectus Rules |
(as defined in section 73A(4) of the Act) rules expressed to relate to transferable securities. |
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Public international body |
(as defined in the PD Regulation) a legal entity of public nature established by an international treaty between sovereign States and of which one or more Member States are members. |
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qualified investor |
(as defined in section 86(7) of the Act) : |
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(a) |
any entity falling within the meaning of Article 2(1)(e)(i), (ii) or (iii) of the prospectus directive; |
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(b) |
An investor registered on the register maintained by the competent authority under section 87R; |
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(c) |
An investor authorised by an EEA State other than the United Kingdom to be considered as a qualified investor for the purposes of the prospectus directive. |
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register |
register of qualified investors maintained by the FSA under section 87R of the Act. |
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registration document |
a registration document referred to in PR 2.2.2 R. |
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regulated information |
(as defined in the PD Regulation) all information which the issuer, or any person who has applied for the admission of securities to trading on a regulated market without the issuer’s consent, is required to disclose under Directive 2001/34/EC or under Article 6 of Directive 2003/6/EC.3 |
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regulated market |
a multilateral system operated and/or managed by a market operator, which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments in the system and in accordance with its non-discretionary rules in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with the provisions of Title III of MiFID.3 |
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RIS |
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risk factors |
(as defined in the PD Regulation) a list of risks which are specific to the situation of the issuer and/or the securities and which are material for taking investment decisions. |
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rule |
(in accordance with section 417(1) of the Act (Definitions)) a rule made by the FSA under the Act. |
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schedule |
(as defined in the PD Regulation) a list of minimum information requirements adapted to the particular nature of the different types of issuers and/or the different securities involved. |
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securities issued in a continuous and repeated manner |
(as defined in Article 2.1(l) of the prospectus directive) issues on tap or at least two separate issues of securities of a similar type and/or class over a period of 12 months. |
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securities note |
a securities note referred to in PR 2.2.2 R. |
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small and medium-sized enterprise |
(as defined in Article 2.1(f) of the prospectus directive) companies, which, according to their last annual or consolidated accounts, meet at least two of the following three criteria: an average number of employees during the financial year of less than 250, a total balance sheet not exceeding €43,000,000 and an annual net turnover not exceeding €50,000,000. |
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special purpose vehicle |
(as defined in the PD Regulation) an issuer whose objects and purposes are primarily the issue of securities. |
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statutory notice associated decision |
a decision which is made by the FSA and which is associated with a decision to give a statutory notice, including a decision: |
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statutory notice decision |
a decision by the FSA on whether or not to give a statutory notice. |
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(a) |
to determine or extend the period for making representations; |
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(b) |
to determine whether a copy of the statutory notice needs to be given to any third party and the period for him to make representations; |
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(c) |
to refuse access to FSA material; |
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(d) |
as to the information which it is appropriate to publish about the matter to which a final notice or an effective supervisory notice relates. |
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summary |
(in relation to a prospectus) the summary included in the prospectus. |
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supplementary prospectus |
a supplementary prospectus containing details of a new factor, mistake or inaccuracy. |
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transferable security |
(as defined in section 102A of the Act) anything which is a transferable security for the purposes of MiFID3, other than money-market instruments for the purposes of that directive which have a maturity of less than 12 months. 3 |
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Note: In the prospectus directive and PD regulation, the Commission uses the term "security" rather than "transferable security". |
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umbrella collective investment scheme |
(as defined in the PD Regulation) a collective investment undertaking invested in one or more collective investment undertakings, the asset of which is composed of separate class(es) or designation(s) of securities. |
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United Kingdom |
England and Wales, Scotland and Northern Ireland (but not the Channel Islands or the Isle of Man). |
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units of a collective investment scheme |
(as defined in Article 2.1(p) of the prospectus directive) securities issued by a collective investment undertaking as representing the rights of the participants in such an undertaking over its assets. |
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working day |
(as defined in section 103 of the Act) any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom. |
Table: Positions other than ones with short-term credit assessments
This table belongs to BIPRU 9.12.10 R
Credit Quality Step (CQS) |
Risk weight |
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A |
B |
C |
|
CQS 1 |
7% |
12% |
20% |
CQS 2 |
8% |
15% |
25% |
CQS 3 |
10% |
18% |
35% |
CQS 4 |
12% |
20% |
|
CQS 5 |
20% |
35% |
|
CQS 6 |
35% |
50% |
|
CQS 7 |
60% |
75% |
|
CQS 8 |
100% |
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CQS 9 |
250% |
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CQS 10 |
425% |
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CQS 11 |
650% |
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Below CQS 11 |
1250% |
[Note: For mapping of the credit quality step to the credit assessments of eligible ECAIs, referto: www.fsa.gov.uk/pubs/international/ecais_securitisation.pdf ]
Types of activity – are they regulated activities and, if so, why?
Type of activity |
Is it a regulated activity? |
Rationale |
MARKETING AND EFFECTING INTRODUCTIONS |
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Passive display of information -for example, medical insurance brochures in doctor’s surgery (whether or not remuneration is received for this activity) |
No. |
Merely displaying information does not constitute making arrangements under article 25(2) (see PERG 5.6.4 G). |
Recommending a broker/insurance undertaking and providing customer with contact details (whether by phone, fax, e-mail, face-to-face or any other means of communication) |
Yes, but article 72C may be available. |
This will constitute making arrangements under article 25(2). But, the exclusion in article 72C will apply if all the intermediary does is supply information to the customer and the conditions of article 72C are otherwise met (see PERG 5.6.5 G to PERG 5.6.9 G). Generally, this will not amount to advice under article 53 unless there is an implied recommendation of a particular policy (see PERG 5.8.4 G), in which case article 72C would not be available. |
Providing an insurance undertaking/broker with contact details of customer |
Yes. |
This will constitute making arrangements under article 25(2) when undertaken in the context of regular or ongoing arrangements for introducing customers. Article 72C will not apply because the information is supplied to someone other than the policyholder or potential policyholder. |
Marketing on behalf of insurance undertaking to intermediaries only (for example, broker consultants) |
Yes. |
This amounts to work preparatory to the conclusion of contracts of insurance and so constitutes making arrangements under article 25(2). Article 72C is not available because this activity does not involve provision of information to the policyholder or potential policyholder only. |
Telemarketing services (that is, companies specialising in marketing an insurance undertaking's products/services to prospective customers) |
Yes. |
This amounts to introducing and/or other work preparatory to the conclusion of contracts of insurance and so constitutes making arrangements under article 25(2). This could also involve article 25(1) arranging where the telemarketing company actually sells a particular policy and could involve advising on investments. Article 72C will not be available where the provision of information is more than incidental to the telemarketing company’s main business or where the telemarketing company is advising on investments. |
PRE-PURCHASE DISCUSSIONS WITH CUSTOMERS AND ADVICE |
||
Discussion with client about need for insurance generally/need to take out a particular type of insurance |
Generally, no. Article 72C available if needed. |
Not enough, of itself, to constitute making arrangements under article 25(2), but you should consider whether, viewed as a whole, your activities might amount to arranging. If so, article 72C might be of application (see PERG 5.6.5 G to PERG 5.6.9 G). |
Advising on the level of cover needed |
Generally, no. Article 72C available if needed. |
Not enough, of itself, to constitute making arrangements under article 25(2), but you should consider whether, viewed as a whole, your activities might amount to making arrangements under article 25(2) (see PERG 5.8.3 G). If so, article 72C might be of application (see PERG 5.6.5 G to PERG 5.6.9 G). |
Pre-purchase questioning in the context of filtered sales (intermediary asks a series of questions and then suggests several policies which suit the answers given) |
Yes. Subject to article 72 C exclusion where available. |
This will constitute arranging although article 72C may be of application (see PERG 5.6.5 G to PERG 5.6.9 G). If there is no express or implied recommendation of a particular policy, this activity will not amount to advice under article 53 (see PERG 5.8.15 G to PERG 5.8.19 G). |
Explanation of the terms of a particular policy or comparison of the terms of different policies |
Possibly. Article 72C available. |
This is likely to amount to making arrangements under article 25(2). In certain circumstances, it could involve advising on investments (see PERG 5.8.8 G (Advice or information)). Where the explanation is provided to the potential policyholder, and does not involve advising on investments, article 72C may be of application (see PERG 5.6.5 G to PERG 5.6.9 G), and where information is provided by a professional in the course of a profession, article 67 may apply (see PERG 5.11.9 G to PERG 5.11.12 G). |
Advising that a customer take out a particular policy |
Yes. |
This amounts to advice on the merits of a particular policy under article 53 (see PERG 5.8.4 G to PERG 5.8.5 G). |
Advising that a customer does not take out a particular policy |
Yes. |
This amounts to advice on the merits of a particular policy under article 53 (see PERG 5.8.4 G to PERG 5.8.5 G). |
Advice by journalists in newspapers, broadcasts etc. |
Generally, no because of the article 54 exclusion. |
Article 54 provides an exclusion for advice given in newspapers etc (see PERG 5.8.24 G to PERG 5.8.25 G). |
Giving advice to a customer in relation to his buying a consumer product, where insurance is a compulsory secondary purchase and/or a benefit that comes with buying the product |
Not necessarily but depends on the circumstances. |
Where the advice relates specifically to the merits of the consumer product, it is possible that references to the accompanying insurance may be seen to be information and not advice. If, however, the advice relates, in part, to the merits of the insurance element, then it will be regulated activity. |
ASSISTING CUSTOMERS WITH COMPLETING/SENDING APPLICATION FORMS |
||
Providing information to customer who fills in application form |
Possibly. Subject to article 67 or 72C exclusions where available. |
This activity may amount to arranging although the exclusions in article 67 (see PERG 5.11.9 G to PERG 5.11.12 G) and article 72C (see PERG 5.6.5 G to PERG 5.6.9 G) may be of application. |
Helping a potential policyholder fill in an application form |
Yes. |
This activity amounts to arranging. Article 72C will not apply because this activity goes beyond the mere provision of information to a policyholder or potential policyholder (see PERG 5.6.5 G to PERG 5.6.9 G). |
Receiving completed proposal forms for checking and forwarding to an insurance undertaking (for example, an administration outsourcing service provider that receives and processes proposal forms) |
Yes. |
This amounts to arranging. Article 72C does not apply because this activity goes beyond the mere provision of information to a policyholder or potential policyholder (see PERG 5.6.5 G to PERG 5.6.9 G). |
Assisting in completion of proposal form and sending to insurance undertaking |
Yes. |
This activity amounts to arranging. Article 72C does not apply because this activity goes beyond the mere provision of information (see PERG 5.6.5 G to PERG 5.6.9 G). |
NEGOTIATING AND CONCLUDING CONTRACTS OF INSURANCE |
||
Negotiating terms of policy on behalf of a customer with the insurance undertaking |
Yes. |
This activity amounts to arranging (see PERG 5.6.2 G). |
Negotiating terms of policy on behalf of insurance undertaking with the customer and signing proposal form on his behalf |
Yes. |
These activities amount to both arranging and dealing in investments as agent. |
Concluding a contract of insurance on insurance company’s behalf, for example, motor dealer who has authority to conclude insurance contract on behalf of insurance undertaking when selling a car |
Yes. |
A person carrying on this activity will be dealing in investments as agent. He will also be arranging (as the article 28 exclusion only applies in the limited circumstances envisaged under article 28(3)) (see PERG 5.6.12 G). |
Agreeing, on behalf of a prospective policyholder, to buy a policy. |
Yes. |
A person who, with authority, enters into a contract of insurance on behalf of another is dealing in investments as agent under article 21, and will also be arranging. |
Providing compulsory insurance as a secondary purchase |
Yes. It will amount to dealing in investments as agent or arranging. |
The fact that the insurance is secondary to the primary product does not alter the fact that arranging the package involves arranging the insurance. |
COLLECTION OF PREMIUMS |
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Collection of cheque for premium from the customer at the pre-contract stage. |
Yes (as part of arranging). |
This activity is likely to form part of arranging. But the mere collection/receipt of premiums from the customer is unlikely, without more, to amount to arranging. |
Collection of premiums at post-contract stage |
No. |
The mere collection of premiums from policyholders is unlikely, without more, to amount to assisting in the administration and performance of a contract of insurance. |
MID-TERM ADJUSTMENTS AND ASSIGNMENTS |
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Solicitors or licensed conveyancers discharging client instructions to assign contracts of insurance. |
Not where article 67 applies. |
As the assignment of rights under a contract of insurance (as opposed to the creation of new contracts of insurance) does not fall within the IMD, article 67 is of potential application (see PERG 5.11.9 G to PERG 5.11.12 G). |
Making mid-term adjustments to a policy, for example, property manager notifies changes to the names of the leaseholders registered as “interested parties” in the policy in respect of the property. |
Yes. |
Assuming the freeholder (as policyholder) is obliged under the terms of the policy to notify the insurance undertaking of changes to the identity of the leaseholders, the property manager is likely to be assisting in the administration and the performance of the contract of insurance. |
TRADED ENDOWMENT POLICIES (“TEPs”) |
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Making introductions for the purposes of selling TEPs |
Yes, unless article 72C applies. |
Making introductions for these purposes is arranging unless article 72C applies (see PERG 5.6.5 G to PERG 5.6.9 G). The exclusions in article 29 (Arranging deals with or through authorised persons) and 33 (Introducing) no longer apply to arranging contracts of insurance. |
Market makers in TEPs |
Yes, although the exclusion in article 28 may apply. |
Unauthorised market makers can continue to make use of the exclusions in articles 15 (Absence of holding out etc.) and 16 (Dealing in contractually based investments), where appropriate. In order to avoid the need for authorisation in respect of arranging they may be able to rely upon article 28 (see PERG 5.6.12 G). |
ASSISTING POLICYHOLDER WITH MAKING A CLAIM |
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Merely providing information to the insured to help him complete a claim form |
No. |
Of itself, this is likely to amount to assisting in the administration but not the performance of a contract of insurance. In the FSA's view, the provision of information in these circumstances is more akin to facilitating performance of a contract of insurance rather than assisting in the performance (see PERG 5.7.3 G to PERG 5.7.5 G) |
Completion of claim form on behalf of insured |
Potentially. |
This activity amounts to assisting in the administration of a contract of insurance. Whether this activity amounts to assisting in the administration and performance of a contract of insurance will depend upon whether a person's assistance in filling in a claims form is material to whether performance of the contractual obligation to notify a claim takes place (see PERG 5.7.2 G to PERG 5.7.3 G). |
Notification of claim to insurance undertaking and helping negotiate its settlement on the policyholder's behalf |
Yes. |
This activity amounts to assisting in the administration and performance of a contract of insurance (see PERG 5.7.4 G). |
ASSISTING INSURANCE UNDERTAKING WITH CLAIMS BY POLICYHOLDERS |
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Negotiation of settlement of claims on behalf of an insurance undertaking |
No. |
Claims management on behalf of an insurance undertaking does not amount to assisting in the administration and performance of a contract of insurance by virtue of the exclusion in article 39B (see PERG 5.7.7 G). |
Providing information to an insurance undertaking in connection with its investigation or assessment of a claim |
No. |
This activity does not amount to assisting in the administration and performance of a contract of insurance. |
Loss adjusters and claims management services (for example, by administration outsourcing providers) |
Potentially. |
These activities may amount to assisting in the administration and performance of a contract of insurance. Article 39B excludes these activities, however, when undertaken on behalf of an insurance undertaking only (see PERG 5.7.7 G). |
Providing an expert appraisal of a claim |
No. |
This activity does not amount to assisting in the administration and performance of a contract of insurance whether carried out on behalf of an insurance undertaking or otherwise. |
Jeweller repairs customer’s jewellery pursuant to a policy which permits the jeweller to carry out repairs |
No. |
This activity does not amount to assisting in the administration and performance of a contract of insurance. It amounts to managing claims on behalf of an insurance undertaking and so falls within the exclusion in article 39B (see PERG 5.7.7 G). |