Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, this Part applies to a firm that, on the effective date, has a Part 4A permission for effecting contracts of insurance or carrying out contracts of insurance and which will with effect from 1 January 2016 be:

1. (1) a small non-directive insurer; or
2. (2) a run-off firm.

1.2

In this Part, the following definitions shall apply:

candidate

means a person in respect of whom a firm has made a pending application.

commencement date

means 7 March 2016.

continued approval

means approval to perform a senior insurance management function under section 59 of FSMA, granted pursuant to a grandfathering notification.

effective date

means 16 December 2015.

equivalent function

means a senior insurance management function or an FCA function that, in either case, is specified in 6 as equivalent for the purposes of articles 2(3)(b) and 11(c) of the Transitional Order, to a pre-implementation controlled function.

FCA activities

means a function which would, except for SUP TP 8.2.3R of the FCA Handbook, be an FCA governing function.

FCA controlled function

means a controlled function specified by the FCA under section 59 of FSMA.

FCA function

means any of the functions specified in column 3 (FCA controlled functions) of the table set out in 6.

FCA governing function

has the meaning given in SUP 10A.4.4R of the FCA Handbook.

grandfathering notification

means a notice required to be sent to the PRA under article 2(1) or 11(b) of the Transitional Order, including any update to such a notice.

non-executive director

means a director of a firm who does not perform an executive function in relation to that firm.

pending application

means an application for approval under section 60 of FSMA which:

1. (1) has been received by the FCA or PRA from the firm on or before the commencement date, and
2. (2) has not been determined or withdrawn.

pre-implementation controlled function

means any of the controlled functions listed in column 1 of the table in 6.

run-off firm

has the meaning given in Non-Solvency II Firms – Transitional Measures.

scope of responsibilities form

has the meaning given in Non-Solvency II Firms - Senior Insurance Managers Regime - Applications and Notifications.

senior insurance management function

means a function specified as a controlled function in Non-Solvency II Firms - Senior Insurance Management Functions 2 in relation to the carrying on of a regulated activity by a firm.

Transitional Order

means the Financial Services (Banking Reform) Act 2013 (Transitional and Savings Provisions) Order 2015 (SI 2015/492), as amended by the Financial Services (Banking Reform) Act 2013 (Transitional and Savings Provisions) (Amendment) Order 2015 (SI 2015/1660).

2.1

The PRA directs that a firm must make a grandfathering notification using Form K before 8 February 2016.

2.2

The PRA directs that the notice required by article 6(1) of the Transitional Order must be provided to the PRA using Form K.

2.3

The PRA directs that the notice required by article 11(b) of the Transitional Order in respect of a candidate for whom continued approval is sought must be provided to the PRA in Form K as part of a grandfathering notification.

3.1

Where a grandfathering notification is required pursuant to 2.1, a firm must ensure that it sets out the following details in respect of each approved person or candidate:

1. (1) each of the pre-implementation controlled functions for which the person is approved, or (in the case of a candidate) has a pending application, in relation to the firm;
2. (2) each senior insurance management function to be performed by the person on and after the commencement date in relation to the firm; and
3. (3) each FCA function (if any) to be performed by the person on and after the commencement date in relation to the firm.

3.2

The PRA directs that a firm must not specify in a grandfathering notification a senior insurance management function or FCA function for a person which is not an equivalent function in the table in 6 or the table in FCA SUP TP 8.2.3R in relation to:

1. (1) (for an approved person) any pre-implementation controlled functions for which the person has approval in relation to the firm; or
2. (2) (for a candidate) any pre-implementation controlled functions in respect of which there is a pending application.

3.3

The PRA directs that a firm must list in the grandfathering notification each approved person or candidate who, on the commencement date, will be acting in the capacity of a non-executive director but who will not be performing a senior insurance management function or FCA function.

4.1

The PRA directs that a firm must make any applications, notifications or submissions required by this Part by submitting the specified form to PRA-ApprovedPersons@bankofengland.co.uk.

5.1

The PRA directs that if, before the commencement date, there has been a significant change to the matters covered by the grandfathering notification, the firm must provide a revised version of it to the PRA.

6.1

The senior insurance management functions set out in column 2 of the table are specified as equivalent functions, in each case in relation to the pre-implementation controlled functions set out in the corresponding row in column 1 of the table below.

6.2

The FCA functions set out in column 3 of the table are specified as equivalent functions, in each case in relation to the pre-implementation controlled functions set out in the corresponding row of column 1 of the table below.

Column 1	Column 2	Column 3
PRA or FCA Controlled Function	PRA Senior Insurance Management Function	FCA Function
Director (CF1)	Small Insurer Senior Management function (SIMF25)	FCA Director function (CF1) (See Note)
Non-executive director (CF2)	Small Insurer Senior Management function (SIMF25)
Chief executive (CF3)	Small Insurer Senior Management function (SIMF25)	FCA Chief executive function (CF3) (See Note)
Director of unincorporated association (CF5)	Small Insurer Senior Management function (SIMF25)	FCA Director of unincorporated association function (CF5) (See Note)
Small friendly society (CF6)	Small Insurer Senior Management function (SIMF25)	FCA Small friendly society function (CF6) (See Note)
Actuary (CF12)	Small Insurer Chief Actuary function (SIMF20)
With-Profits Actuary (CF12A)	Small Insurer With-Profits Actuary function (SIMF21)
Systems and Controls (CF28)	Small Insurer Senior Management function (SIMF25)

Note: See SUP TP 8.2.3R in the FCA Handbook.

6.3

A firm must submit a scope of responsibilities form to the PRA by 7 March 2017 in respect of any senior insurance management function holder with continued approval in relation to that firm.

6.4

1. (1) If, in relation to a firm, a senior insurance management function holder with continued approval also performs FCA activities on and from the commencement date, performance of the senior insurance management function will include the performance of those FCA activities provided that the firm has included details of the FCA activities in a scope of responsibilities form for that senior insurance management function holder which is provided to the PRA by 7 March 2017.
2. (2) If, in relation to a firm, a senior insurance management function holder with continued approval has been performing FCA activities in the circumstances set out in (1), and that person:
1. (a) ceases to perform the senior insurance management function;
2. (b) within three months of ceasing performance, is approved to perform a new senior insurance management function at the firm; and
3. (c) continues to perform the FCA activities,
3. performance of the new senior insurance management function will include the performance of those FCA activities, provided:
1. (d) the PRA’s approval to perform that senior insurance management function continues in force;
2. (e) the firm makes the notification required by SUP10A.11.12R(4) of the FCA Handbook; and
3. (f) that person performs and is continuing to perform the FCA activities.

6.5

If a senior insurance management function holder to whom 6.4 applies ceases to perform a senior insurance management function but continues to perform the FCA activities, 6.4(1) will continue to apply in respect of the performance of the FCA activities until the earlier of:

1. (1) approval by the FCA in respect of the performance by a person of those FCA activities as an FCA governing function in relation to the firm; or
2. (2) three months from the time that the person ceased to perform that senior insurance management function.

6.6

The PRA directs that a firm must not specify in the grandfathering notification that any person shall perform any combination of senior insurance management functions which is prohibited by any other provision of the PRA Rulebook or the FCA Handbook.

7.1

The grandfathering notification form, Form K, may be found here.

7.2

The scope of responsibilities form may be found here.