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COB 6.11 Reporting to with-profits policyholders on compliance with PPFM


COB 6.11.1R

1This section applies to a firm carrying on with-profits business other than:

  1. (1)

    a non-directive friendly society; or

  2. (2)

    an EEA insurer.

COB 6.11.2R

This section does not apply to with-profits business that consists of effecting or carrying out Holloway sickness policies.


COB 6.11.3G

The rules and guidance in this section are intended to secure an appropriate degree of protection for with-profits policyholders and potential with-profits policyholders and to promote confidence among such policyholders by:

  1. (1)

    giving guidance on governance arrangements relevant to the way in which with-profits firms comply with SYSC in the conduct of with-profits business; and

  2. (2)

    requiring firms to make an annual report available to with-profits policyholders.

Governance arrangements for with-profits business

COB 6.11.4G

In complying with SYSC 3.2.6, a firm should maintain governance arrangements designed to ensure that in the conduct of with-profits business it complies with, maintains and records any applicable PPFM.

COB 6.11.5G

The governance arrangements referred to in COB 6.11.4 G should:

  1. (1)

    be appropriate to the scale and complexity of a firm's with-profits business; and

  2. (2)

    involve some independent judgement in the assessment of compliance with PPFM and how any competing or conflicting rights and interests of policyholders and, if applicable, shareholders have been addressed.

COB 6.11.6G

The independent judgement in COB 6.11.5 G(2) can be provided in different ways. These may include but are not confined to:

  1. (1)

    establishing a committee of the governing body (a With-profits Committee), including non-executive members of the governing body and possibly some external non-directors with appropriate skills and experience;

  2. (2)

    asking an independent person with appropriate skills and experience to report on these matters to the governing body or to any With-Profits Committee; or

  3. (3)

    for small firms in particular, asking a non-executive member (or members) of the governing body to report to the governing body on these matters.

COB 6.11.7G

For the purposes of COB 6.11.6 G(2), appropriate skills and experience could have been gained in, for example, consumer protection, the life insurance industry, regulation or as a member of the accountancy, actuarial or legal professions.

COB 6.11.8G

If a person or committee who provides the independent judgement under COB 6.11.5 G(2) wishes to make a statement or report to with-profits policyholders, in addition to that made by a firm under COB 6.11.9 R, a firm should facilitate this. COB 6.11.12 G is also relevant to such a report.

Annual report to with-profits policyholders

COB 6.11.9R

A firm must produce an annual report to its with-profits policyholders stating whether, throughout the financial year to which the report relates, the firm believes it has complied with the obligations relating to PPFM referred to in COB 6.11.4 G and setting out the firm's reasons for that belief.

COB 6.11.10R

The annual report in COB 6.11.9 R must address all significant relevant issues, including the way in which the firm has:

  1. (1)

    exercised, or failed to exercise, any discretion that it has in the conduct of its with-profits business; and

  2. (2)

    addressed any competing or conflicting rights, interests or expectations of its policyholders (or groups of policyholders) and, if applicable, shareholders (or groups of shareholders).

COB 6.11.11R

The2 report to with-profits policyholdersmade under SUP 4.3.16AR (4) by a with-profits actuary2 must be annexed to the annual report in COB 6.11.9 R.

COB 6.11.12G

Any statement or report made under COB 6.11.8 G should be annexed to the annual report in COB 6.11.9 R.

COB 6.11.13G

The competing rights, interests or expectations in COB 6.11.10 R(2) include the competing interests of different classes and generations of with-profits policyholders, and, if applicable, shareholders.

COB 6.11.14G

In preparing the report to with-profits policyholders in COB 6.11.9 R, a firm should take advice from a with-profits actuary2.

COB 6.11.15G

A firm should make the report in COB 6.11.9 R available to with-profits policyholders within six months of the end of the financial year to which it relates. A firm may choose how it makes the report available. Methods of delivery might include publishing the report on the firm's website, providing copies on request, or including it in the firm's annual financial statements. A firm should notify its with-profits policyholders in any annual statements how copies of the report can be obtained.

COB 6.11.16G

3IPRU(INS) rule 9.6(6) requires an insurer to deposit with the FSA any statement or report made to its with-profits policyholders under COB 6.11.8 G, COB 6.11.9 R or SUP 4.3.16A R (4) when it deposits its return. If a statement or report has not been made when the return is deposited, IPRU(INS) rule 9.6(6A) requires the insurer to deposit it as soon as possible thereafter.