IPRU-INV 12.1 APPLICATION AND PURPOSE
Application
This chapter applies to an operator of an electronic system in relation to lending.
This chapter amplifies the threshold condition 2D (Appropriate resources) by providing that a firm must meet, on a continuing basis, a basic solvency requirement. This chapter also builds on Principle 4 which requires a firm to maintain adequate financial resources1 by setting out appropriate requirements for a firm according to what type of firm it is.
More generally, having adequate financial resources1 gives the firm a degree of resilience and some indication to consumers of creditworthiness, substance and the commitment of its owners. The rules in this chapter aim to ensure that a firm has financial resources1 which can provide cover for operational and compliance failures and pay redress, as well as reducing the possibility of a shortfall in funds and providing a cushion against disruption if the firm ceases to trade.
Relevant accounting principles
Actions for damages
A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 138D of the Act (and each of those rules is specified under section 138D(3) of the Act as a provision giving rise to no such right of action).
Interpretation
1The definitions in the glossary at IPRU-INV 12 Appendix 1 apply to terms shown in bold type this chapter. Where the term is italicised, the FCA Handbook Glossary definition applies.