Related provisions for BIPRU 7.9.33

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To access the FCA Handbook Archive choose a date between 1 January 2001 and 31 December 2004 (From field only).

PERG 8.18.1GRP
A person involved in insurance business written at Lloyd’s may be making financial promotions when attracting another person:(1) to effect or carry out contracts of insurance written at Lloyd’s (where the controlled activity which is the subject of the financial promotion is effecting and carrying out contracts of insurance); or(2) to have assets held under funds at Lloyd’s (where the controlled activity may involve dealing in securities and contractually based investments, arranging
LR 15.5.5RRP
112(1) LR 11.1.7 R to LR 11.1.11 R do not apply to an arrangement between a closed-ended investment fund and its investment manager or any member of that investment manager's group4 where the arrangement is such that each invests in or provides finance to an entity or asset and the investment or provision of finance is either:2(a) made at the same time and on substantially the same economic and financial terms; or2(b) referred to in the closed-ended investment fund's published
RCB 3.6.5DRP
Unless otherwise stated, the issuer or the owner, as the case may be, must send the relevant forms and information to the FCA's address marked for the attention of the "Covered Bonds Team, Capital Markets Sector" by any of the following methods:(1) post; or(2) leaving it at the FCA's address and obtaining a time-stamped receipt; or(3) email to rcb@fca.org.uk.
BIPRU 9.12.8RRP
For an originator, a sponsor, or for other firms which can calculate KIRB, the risk weighted exposure amounts calculated in respect of its positions in a securitisation may be limited to that which would produce an amount in respect of its credit risk capital requirement equal to the sum of 8% of the risk weighted exposure amount which would be produced if the securitised assets had not been securitised and were on the balance sheet of the firm plus the expected loss amounts of
BIPRU 9.12.20RRP
(1) If:(a) a firm'sIRB permission allows it to use this treatment; and(b) the conditions in (2)(16) are satisfied,a firm may attribute to an unrated position in an asset backed commercial paper programme a derived rating as laid down in (3).(2) Positions in the commercial paper issued from the programme must be rated positions.(3) Under the ABCP internal assessment approach, the unrated position must be assigned by the firm to one of the rating grades described in (5). The position
BIPRU 1.2.7RRP
A CRD financial instrument means any contract that gives rise to both a financial asset of one party and a financial liability or equity instrument of another party.[Note: CAD Article 3(1)(e)]
BIPRU 1.2.9GRP
Generally, for the purpose of the definition of CRD financial instrument:(1) a financial asset means cash, the right to receive cash or another financial asset, the contractual right to exchange financial assets on potentially favourable terms or an equity instrument; and(2) a financial liability means the contractual obligation to deliver cash or another financial asset or to exchange financial liabilities under conditions that are potentially unfavourable.
SUP App 2.15.3GRP
A firm's run-off plan should include an explanation of its future investment strategy, including:(1) its strategy for matching the with-profits fund's liabilities with appropriate assets; and(2) any changes it expects to make to the with-profits fund's investment strategy as a result of the closure of the with-profits fund, including any changes to the proportions of different types of investments.
SUP App 2.15.9GRP

These tables belong to SUP App 2.15.8 G

Table 1 - forecast summary revenue account for the relevant with-profits fund

(1)

Premiums and claims (gross and net of reinsurance) analysed by major class of insurance business

(2)

Investment return

(3)

Expenses

(4)

Other charges and income

(5)

Taxation

(6)

Increase (decrease) in fund in financial year

(7)

Fund brought forward

(8)

Fund carried forward

Table 2 - forecast summary balance sheet and statement of solvency for the relevant with-profits fund

Assets analysed by type (excluding implicit items):

(1)

Equities

(2)

Land and buildings

(3)

Fixed interest investments

(4)

All other assets

(5)

Total assets (excluding implicit items)

(6)

Policyholder liabilities

(7)

Other liabilities

(8)

Total liabilities

(9)

Excess/(deficiency) of assets over liabilities before implicit items

(10)

Implicit items allocated to the with-profits fund

(11)

Long-term insurance capital requirement for the with-profits fund

(12)

Resilience capital requirement for the with-profits fund

(13)

[deleted]4

4

(14)

Net excess/(deficiency) of assets in the with-profits fund

Table 3 - forecast summary balance sheet and statement of solvency for the firm

L1

Surplus long-term insurance assets, with-profit fund(s)

L2

Surplus long-term insurance assets, non-profit fund(s)

L3

Total long-term insurance assets

L1+L2

L4

Total long-term insurance liabilities (excluding resilience capital requirement)

L5

Total long-term insurance fund surplus

L3-L4

L6

Shareholder fund assets

L7

Implicit items

L8

Long-term insurance capital requirement

L9

Excess of regulatory assets over long-term insurance capital requirement

L5+L6+L7-L8

L10

[deleted]4

4
4

L11

Resilience capital requirement

L12

Net excess assets

L9-L10-L11

L13

FTSE level at which the long-term insurance capital requirement would be breached

COLL 5.7.4RRP
(1) The scheme property of a non-UCITS retail scheme operating as a FAIF may, subject to the rules in this section, comprise any assets or investments to which it is dedicated.(2) For an ICVC, the scheme property may also include movable or immovable property that is necessary for the direct pursuit of the ICVC's business of investing in those assets or investments.(3) The scheme property must be invested only in accordance with the relevant provisions in this section that are
COLL 5.7.11GRP
An authorised fund manager carrying out due diligence for the purpose of the rules in this section should make enquiries or otherwise obtain information needed to enable him properly to consider:(1) whether the experience, expertise, qualifications and professional standing of the second scheme's investment manager is adequate for the type and complexity of the second scheme;(2) the adequacy of the regulatory, legal and accounting regimes applicable to the second scheme and its
COLL 7.4.1GRP
(1) This section deals with the circumstances and manner in which an AUT is to be wound up or a sub-fund of an AUT is to be terminated. Under section 256 of the Act (Requests for revocation of authorisation order), the manager or trustee of an AUT may request the FCA to revoke the authorisation order in respect of that AUT. Section 257 of the Act (Directions) gives the FCA the power to make certain directions.(2) The termination of a sub-fund under this section will be subject
COLL 7.4.6GRP
(1) 1The effect of COLL 7.4.5R2 is that the manager must continue to prepare annual and half-yearly long reports and to make them available to unitholders in accordance with COLL 4.5.14 R.(2) Where there are outstanding unrealised assets, keeping unitholders appropriately informed may, for example, be carried out by providing updates to unitholders at six-monthly or more frequent intervals.
COLL 7.7.7RRP
(1) The authorised fund manager of a UCITS scheme that is a merging UCITS or a receiving UCITS in a proposed UCITS merger, must in conjunction with any other authorised fund manager or, as the case may be, management company of an EEA UCITS scheme that is a party to the proposed merger, draw up common draft terms of the proposed UCITS merger.(2) The common draft terms in (1) must set out the following particulars:(a) an identification of the type of UCITS merger and of the UCITS
COLL 7.7.21GRP
(1) In a domestic UCITS merger, the effective date of the merger will be the date specified by the FCA in its order authorising the proposed merger in accordance with regulation 9 of the UCITS Regulations 2011.(2) For a UCITS scheme which is the receiving UCITS in a cross-border UCITS merger, the effective date of the merger will be the date agreed by the FCA and the merging UCITS'Home State regulator.(3) For a UCITS scheme which is the receiving UCITS in a domestic UCITS merger
LR 11.1.5RRP
In LR, a "related party transaction" means:(1) a transaction (other than a transaction in the ordinary course of business) between a listed company and a related party; or6(2) an arrangement (other than an arrangement in the ordinary course of business)6 pursuant to which a listed company and a related party each invests in, or provides finance to, another undertaking or asset; or(3) any other similar transaction or arrangement (other than a transaction in the ordinary course
BIPRU 7.11.12ARRP
3Where a firm obtains credit protection for a number of reference entities underlying a credit derivative under the terms that the first default among the assets will trigger payment and that this credit event will terminate the contract, the firm may off-set specific risk for the reference entity to which the lowest specific risk percentage charge among the underlying reference entities applies according to the Table in BIPRU 7.2.44R.[Note:CAD Annex I point 8.B]
BIPRU 7.11.16RRP
(1) A firm may take partial allowance when the value of two legs usually move in the opposite direction. This would be the case in the situations set out in (2) - (4).(2) The first situation referred to in (1) is that the position falls under BIPRU 7.11.16 R (2)(b) but there is an asset mismatch between the reference obligation and the underlying exposure. However, the positions meet the following requirements:(a) the reference obligation ranks pari passu with or is junior to
IPRU-INV 5.8.1RRP

1A firm must calculate its own funds and liquid capital as shown below, subject to the detailed requirements set out in IPRU-INV 5.8.2R.

Financial resources

Category

IPRU-INV 5.8.2R paragraph

Tier 1

(1)

Paid-up share capital (excluding preference shares)

A

(1A)

Eligible LLP members' capital

(2)

Share premium account

(3)

Reserves

2A

(4)

Non-cumulative preference shares

Less:

(5)

Investments in own shares

B

(6)

Intangible assets

(7)

Material current year losses

4

(8)

Material holdings in credit and financial institutions and, for exempt CAD firms only, material insurance holdings.

5 and 5A

(8A)

Excess LLP members' drawings

Tier 1 capital = (A-B)

C

Plus: TIER 2

1

(9)

Revaluation reserves

D

(10)

Fixed term cumulative preference share capital

1(a)

(11)

Long-term Qualifying Subordinated Loans

1(a); 6

(12)

Other cumulative preference share capital and debt but, for capitalexempt CAD firms, only perpetual cumulative preference share capital and qualifying capital instruments

6A

(13)

Qualifying arrangements

7

"Own Funds" = (C+D)

E

Plus: TIER 3

(14)

Net trading book profits

F

1(b)(i); 8

(15)

Short-term Qualifying Subordinated Loans and excess Tier 2 capital

1(b)(ii); 1(c); 9

Less:

(16)

Illiquid assets

G

10

Add:

(17)

Qualifying Property

11

"Liquid Capital" = (E+F+G)

IPRU-INV 5.8.2RRP

1 Deductions and Ratios (Items 10, 11 and 15)

(a)

Notwithstanding IPRU-INV 5.8.1R and 5.8.2R for an exempt CAD firm, in calculating own funds, all of Item 8 must be deducted after the total of Tier 1 and Tier 2 capital and the following restrictions apply:

(i)

the total of fixed term cumulative preference shares (item 10) and long-term qualifying subordinated loans (item 11) that may be included in Tier 2 capital is limited to 50 per cent of Tier 1 capital;

(ii)

Tier 2 capital must not exceed 100 per cent of Tier 1 capital.

(b)

A firm which is not an exempt CAD firm and which is subject to a liquid capital requirement under IPRU-INV 5.4.1R may take into account qualifying subordinated loans in the calculation of liquid capital up to a maximum of 400% of its Tier 1 capital.

2 Non corporate entities

(a)

In the case of partnerships or sole traders, the following terms should be substituted, as appropriate, for items 1 to 4 in Tier 1 capital:

(i)

partners' capital accounts (excluding loan capital);

(ii)

partners' current accounts (excluding unaudited profits and loan capital);

(iii)

proprietors' account (or other term used to signify the sole trader's capital but excluding unaudited profits).

(b)

Loans other than qualifying subordinated loans shown within partners' or proprietors' accounts must be classified as Tier 2 capital under item 12.

(c)

For the calculation of own funds, partners' current accounts figures are subject to the following adjustments in respect of a defined benefit occupational pension scheme:

(i)

a firm must derecognise any defined benefit asset;

(ii)

a firm may substitute for a defined benefit liability the firm'sdeficit reduction amount. The election must be applied consistently in respect of any one financial year.

Note 1

A firm should keep a record of and be ready to explain to its supervisory contacts in the FCA the reasons for any difference between the deficit reduction amount and any commitment the firm has made in any public document to provide funding in respect of a defined benefit occupational pension scheme.

2A Reserves

For the calculation of own funds the following adjustments apply to the audited reserves figure:

(a)

a firm must deduct any unrealised gains or, where applicable, add back in any unrealised losses on cash flow hedges of financial instruments measured at cost or amortised cost;

(b)

in respect of a defined benefit occupational pension scheme, a firm must derecognise any defined benefit asset;

(c)

a firm may substitute for a defined benefit liability the firm's deficit reduction amount. The election must be applied consistently in respect of any one financial year.

Note 2

A firm should keep a record of and be ready to explain to its supervisory contacts in the FCA the reasons for any difference between the deficit reduction amount and any commitment the firm has made in any public document to provide funding in respect of a defined benefit occupational pension scheme.

(d)

a firm must not include any unrealised gains from investment property.

Note 3

Unrealised gains from investment property should be reported as part of revaluation reserves.

(e)

where applicable, a firm must deduct any asset in respect of deferred acquisition costs and add back in any liability in respect of deferred income (but exclude from the deduction or addition any asset or liability which will give rise to future cash flows), together with any associated deferred tax.

Note 4

Reserves must be audited unless the firm is exempt from the provisions of Part VII of the Companies Act 1985 (section 249A (Exemptions from audit)), or where applicable, Part 16 of the Companies Act 2006 (section 477 (Small companies: Conditions for exemption from audit)) relating to the audit of accounts.

3 Intangible assets (Item 6)

Intangible assets comprise:

(a)

formation expenses to the extent that these are treated as an asset in the firm's accounts;

(b)

goodwill, to the extent that it is treated as an asset in the firm's accounts; and

(c)

other assets treated as intangibles in the firm's accounts.

Intangible assets do not include a deferred acquisition cost asset.

4 Material current year losses (Item 7)

Losses in current year operating figures must be deducted when calculating Tier 1 capital if such losses are material. For this purpose profits and losses must be calculated quarterly or monthly, as appropriate. If this calculation reveals a net loss it shall only be deemed to be material for the purposes of this Table if it exceeds 10 per cent of the firm's Tier 1 capital.

5 Material holdings in credit and financial institutions (Item 8)

Material holdings comprise:

(a)

where the firm holds more than 10 per cent of the equity share capital of the institution, the value of that holding and the amount of any subordinated loans to the institution and the value of holdings in qualifying capital items or qualifying capital instruments issued by the institution;

(b)

in the case of holdings other than those mentioned in (a) above, the value of holdings of equity share capital in, and the amount of subordinated loans made to, such institutions and the value of holdings in qualifying capital items or qualifying capital instruments issued by such institutions to the extent that the total of such holdings and subordinated loans exceeds 10 per cent of the firm'sown funds calculated before the deduction of item 8.

5A Material insurance holdings (Item 8)

(a)

A material insurance holding means the holdings of an exempt CAD firm of items of the type set out in (b) in any:

(i)

insurance undertaking; or

(ii)

insurance holding company;

that fulfils one of the following conditions:

(iii)

it is a subsidiary undertaking of that firm; or

(iv)

that firm holds a participation in it.

(b)

An item falls into this provision for the purpose of (a) if it is:

(i)

an ownership share; or

(ii)

subordinated debt or another item of capital that forms part of the tier two capital resources that falls into GENPRU 2 or, as the case may be, INSPRU 7, or is an item of “basic own funds” defined in the PRA Rulebook: Glossary.

6 Long term qualifying subordinated loans (Item 11)

Loans having the characteristics prescribed by IPRU-INV 5.6.1R may be included in item 11, subject to the limits set out in paragraph (1) above.

6A Perpetual cumulative preference share capital

Perpetual cumulative preference share capital may not be included in the calculation of own funds by an exempt CAD firm unless it meets the following requirements:

(a)

it may not be reimbursed on the holder's initiative or without the prior agreement of the FCA;

(b)

the instrument must provide for the firm to have the option of deferring the dividend payment on the share capital;

(c)

the shareholder's claims on the firm must be wholly subordinated to those of all non-subordinated creditors;

(d)

the terms of the instrument must provide for the loss-absorption capacity of the share capital and unpaid dividends, whilst enabling the firm to continue its business; and

(e)

it must be fully paid-up.

7 Qualifying arrangements (Item 13)

(a)

An exempt CAD firm may only include a qualifying undertaking or other arrangement in item 13 if it is a qualifying capital instrument or a qualifying capital item.

(b)

A firm which is not an exempt CAD firm may only include qualifying undertakings in its calculation of liquid capital if:

(i)

it maintains liquid capital equivalent to 6/52 of its annual expenditure in a form other than qualifying undertakings; and

(ii)

the total amount of all qualifying undertakings plus qualifying subordinated loans does not exceed the limits set out in paragraph (1)(b) above.

8 Net trading book profits (Item 14)

For firms which are not exempt CAD firms unaudited profits can be included at item 14.

This Item must not be included in the liquid capital calculation of a firm whose permitted business includes establishing, operating or winding up a personal pension scheme.

Note 5

Non-trading book interim profits may only be included in Tier 1 of the calculation if they have been independently verified by the firm’s external auditors, unless the firm is exempt from the provisions of Part VII of the Companies Act 1985 (section 249A (Exemptions from audit)), or where applicable, Part 16 of the Companies Act 2006 (section 477 (Small companies: Conditions for exemption from audit)) relating to the audit of accounts.

For this purpose, the external auditor should normally undertake at least the following:

(a)

satisfy himself that the figures forming the basis of the interim profits have been properly extracted from the underlying accounting records;

(b)

review the accounting policies used in calculating the interim profits so as to obtain comfort that they are consistent with those normally adopted by the firm in drawing up its annual financial statements;

(c)

perform analytical review procedures on the results to date, including comparisons of actual performance to date with budget and with the results of prior periods;

(d)

discuss with management the overall performance and financial position of the firm;

(e)

obtain adequate comfort that the implications of current and prospective litigation, all known claims and commitments, changes in business activities and provisions for bad and doubtful debts have been properly taken into account in arriving at the interim profits; and

(f)

follow up problem areas of which the auditors are already aware in the course of auditing the firm’s financial statements.

A firm wishing to include interim profits in Tier 1 capital in a financial return should submit to the FCA with the financial return a verification report signed by its external auditor which states whether the interim results are fairly stated, unless the firm is exempt from the provisions of Part VII of the Companies Act 198 (section 249A (Exemptions from audit)), or where applicable, Part 16 of the Companies Act 2006 (section 477 (Small companies: Conditions for exemption from audit)) relating to the audit of accounts.

Profits on the sale of capital items or arising from other activities which are not directly related to the investment business of the firm may also be included within the calculation of liquid capital, but (unless the firm is exempt as above) only if they can be separately verified by the firm’s auditors. In such a case, such profits can form part of the firm’s Tier 1 capital as profits.

9 Short term qualifying subordinated loans (Item 15)

Loans having the characteristics prescribed by IPRU-INV 5.6.3R may be included in item 15 subject to the limits set out in paragraph (1) above. Tier 2 capital which exceeds the ratios prescribed by paragraph (1)(a) and (b) may be included in item 15 subject to paragraph (1) above.

10 Illiquid assets (Item 16)

Illiquid assets comprise:

(a)

tangible fixed assets.

Note 6

In respect of tangible fixed assets purchased under finance leases the amount to be deducted as an illiquid asset shall be limited to the excess of the asset over the amount of the related liability shown on the balance sheet.

(b)

holdings in, including subordinated loans to, credit or financial institutions which may be included in the own funds of such institutions unless they have been deducted under item 8;

(c)

any investment in undertakings other than credit institutions and other financial institutions where such investments are not readily realisable;

(d)

any deficiency in net assets of a subsidiary;

(e)

deposits not available for repayment within 90 days or less (except for payments in connection with margined futures or options contracts);

Note 7

Where cash is placed on deposit with a maturity of more than 90 days but is repayable on demand subject to the payment of a penalty, then this is not required to be deducted as an illiquid asset but a deduction is required for the amount of the penalty.

(f)

loans, other debtors and accruals not falling due to be repaid within 90 days or which are more than one month overdue by reference to the contractual payment date;

(g)

physical stocks (except where subject to the position risk requirement as set out in IPRU-INV 5.11; and

(h)

prepayments to the extent that the period of prepayment exceeds six weeks in the case of a firm subject to the 6/52 expenditure based requirement or thirteen weeks in the case of a firm subject to the 13/52 expenditure based requirement.

(i)

if not otherwise covered, any holding in eligible capital instruments of an insurance undertaking, insurance holding company, or reinsurance undertaking that is a subsidiary or participation. Eligible capital instruments include ordinary share capital, cumulative preference shares, perpetual securities and long-term subordinated loans that are eligible for insurance undertakings under INSPRU 1.

Illiquid assets do not include a defined benefit asset or a deferred acquisition cost asset.

11 Qualifying property (Item 17)

This item comprises the qualifying amount calculated in accordance with IPRU-INV 5.7.1R.

IFPRU 11.3.11GRP
(1) When identifying recovery options, a firm or qualifying parent undertaking should consider a range of scenarios of severe macroeconomic and financial stress relevant to the group's specific conditions.(2) The range of scenarios should include system-wide events and stress specific to individual legal persons and groups.(3) For each of the scenarios in (1), a group recovery plan should identify whether there are:(a) obstacles to implementing recovery measures within the group,
IFPRU 11.3.13RRP
If the group recovery plan includes the use of central bank facilities, the firm or qualifying parent undertaking must: (1) include an analysis of how and when members of the group may apply for the use of central bank facilities; and(2) identify those assets which would be expected to qualify as collateral.[Note: articles 5(4) and 7(5) of RRD]
BIPRU 4.7.2RRP
The following exposures must be classed as equity exposures:(1) non-debt exposures conveying a subordinated, residual claim on the assets or income of the issuer; and(2) debt exposures the economic substance of which is similar to the exposures specified in (1).[Note:BCD Article 86(2)]
BIPRU 4.7.6RRP
Notwithstanding BIPRU 4.7.5 R a firm may, if its IRB permission permits it to do so, attribute the risk weighted exposure amounts for equity exposures to ancillary services undertakings according to the treatment of non credit-obligation assets.[Note:BCD Annex VII Part 1 point 18]
COLL 6.2.4GRP
(1) Details of any initial offer period must be provided in the relevant prospectus as described in COLL 4.2.5R (17)(h) (Table: contents of the prospectus).(2) It may be appropriate that the initial offer for a scheme operating limited issue or limited redemption arrangements, or intending to invest in illiquid assets, is longer than one for a scheme which does not have these features.
COLL 6.2.15RRP
The depositary may take into or pay out of scheme property assets other than cash2 as payment for the issue or cancellation of units2 but only if:(1) it has taken reasonable care to ensure that the property concerned would not be likely to result in any material prejudice to the interests of unitholders; and(2) the instrument constituting the fund8 so provides.8
SYSC 7.1.17RRP
(1) 13The management body of a CRR firm has overall responsibility for risk management. It must devote sufficient time to the consideration of risk issues.(2) The management body of a CRR firm must be actively involved in and ensure that adequate resources are allocated to the management of all material risks addressed in the rules implementing the CRD and in the EU CRR as well as in the valuation of assets, the use of external ratings and internal models related to those risks.
SYSC 7.1.18RRP
(1) 13A CRR firm that is significant must establish a risk committee composed of members of the management body who do not perform any executive function in the firm. Members of the risk committee must have appropriate knowledge, skills and expertise to fully understand and monitor the risk strategy and the risk appetite of the firm.(2) The risk committee must advise the management body on the institution’s overall current and future risk appetite and assist the management body
COLL 6.12.3RRP
(1) 3(a) An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must use a risk management process enabling it to monitor and measure at any time the risk of the scheme's positions and their contribution to the overall risk profile of the scheme.3(b) In particular, an authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must not solely or mechanistically rely on credit ratings issued by
COLL 6.12.4GRP
(1) The risk management process in COLL 6.12.3 R should take account of the investment objectives and policy of the scheme as stated in the most recent prospectus.(2) The depositary of a UCITS scheme should take reasonable care to review the appropriateness of the risk management process in line with its duties under COLL 6.6.4 R (General duties of the depositary) and COLL 6.6.14 R (Duties of the depositary and authorised fund manager: investment and borrowing powers), as appropriate.