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IPRU-INV 4.2 PURPOSE

IPRU-INV 4.2.1 G

This chapter identifies the financial resource requirements and requirements as to accounts and statements to be met by certain firms conducting business at Lloyd's.

IPRU-INV 4.2.2 G

The directions in IPRU-INV 4.4.1D to IPRU-INV 4.4.5D and IPRU-INV 4.5.1D are given under section 318 of the Act (Exercise of powers through Council), for the purpose of achieving the objective specified, as required by section 318(2) of the Act, in IPRU-INV 4.3.1D.

IPRU-INV 4.2.3 G

Underwriting agents are subject to regulation by the Society as well as by the appropriate regulator. In particular, they are subject to requirements as to their financial resources and as to making and maintaining accounting records, set by the Society. The appropriate regulator is satisfied that underwriting agents will be subject to adequate financial resource and accounting requirements as long as they remain subject to and comply with requirements at least equivalent to Lloyd's Capital and Solvency Requirements 2001 and the relevant parts of, or requirements made under Lloyd's Underwriting Agents Byelaw (No. 4 of 1984), in each case as amended and in force immediately before commencement. Accordingly, instead of imposing an obligation directly on members’ agents1, the directions in IPRU-INV 4.4.1D to IPRU-INV 4.4.5D and IPRU-INV 4.5.1D require the Society to require those firms to comply with the relevant requirements.

IPRU-INV 4.2.4 G

A members' adviser is not regulated by the Society and accordingly this chapter specifies the financial resource and accounting requirements to be met. Firms which fall within the scope of this chapter will be firms with permission only to advise persons on syndicate participation at Lloyd's. The nature of that advisory business is akin to corporate finance advice and so the applicable requirements are those in IPRU-INV 3 relevant to firms giving corporate finance advice. Firms with other permissions will fall within the scope of other chapters of IPRU(INV), GENPRU, BIPRU, IFPRU (and the EU CRR) or INSPRU.

IPRU-INV 4.3 SPECIFICATION OF OBJECTIVE

IPRU-INV 4.3.1 D

The directions in IPRU-INV 4.4.1D to IPRU-INV 4.4.5D and IPRU-INV 4.5.1D are given in relation to the exercise of the powers of the Society and of the Council generally, with a view to achieving the objective that members’ agents1 have adequate financial resources to support, and keep and preserve adequate accounting records in respect of their business at Lloyd's.

IPRU-INV 4.4 FINANCIAL RESOURCE REQUIREMENTS

IPRU-INV 4.4.1 D

The Society must maintain appropriate and effective arrangements to require members’ agents1 to meet and continue to meet financial resource requirements at least equivalent to the requirements set out in Lloyd's Capital and Solvency Requirements 2001, as they are in force immediately before commencement.

IPRU-INV 4.4.2 D

The Society must give the FCA1 a report on each members’ agent's1 compliance with the financial resource requirements referred to in IPRU-INV 4.4.1D as at the end of each quarter (determined by reference to each underwriting agent's accounting reference date).

IPRU-INV 4.4.3 D

The report referred to in IPRU-INV 4.4.2D must reach the FCA1 within two months of the end of the relevant quarter and must state:

  1. (1)

    whether the Society has any information indicating or tending to indicate that, during the quarter to which the report relates, the members’ agents1 failed to meet the financial resource requirements referred to in IPRU-INV 4.4.1D;

  2. (2)

    whether, at the end of the quarter to which the report relates, the members’ agents1 failed to meet the financial resource requirements referred to in IPRU-INV 4.4.1D; an

  3. (3)

    the nature and extent of any failure to comply reported under (1) or (2) and the actions taken or to be taken by the Society in response to this.

IPRU-INV 4.4.4 D

In addition to the reports required under IPRU-INV 4.4.2D, the Society must give the FCA1 an annual report on each members’ agents1 compliance or non-compliance with financial resource requirements as at the end of that members’ agent's1 financial year.

IPRU-INV 4.4.5 D

The report in IPRU-INV 4.4.4D must reach the FCA1 within seven months of that members’ agent's1 accounting reference date and must:

  1. (1)

    confirm that:

    1. (a)

      the Society has received from that members’ agent1 in respect of the financial year to which the report relates, all relevant attachments to the Annual Financial Return that the members’ agent1 is required to make to the Society under the requirements identified in IPRU-INV 4.4.1D;

    2. (b)

      that members’ agent1 met the applicable financial resource requirements at the end of the financial year to which the report relates; and

    3. (c)

      the Society is not aware of any matters likely to be of material concern to the FCA1 relating to that members' agent's1compliance with financial resource requirements during the year to which the report relates, or arising from the attachments referred to in (a); or

  2. (2)

    if the Society is unable to give any of the confirmations required under IPRU-INV 4.4.5D (1)(a), (b) or (c), set out in each case the reasons why it is unable to give that confirmation.

IPRU-INV 4.4.5A D

The Society must submit the reports in IPRU-INV 4.4.2D to IPRU-INV 4.4.5D in accordance with the rules in SUP 16.3 (General provision on reporting).

IPRU-INV 4.4.6 R

A members' adviser must comply with the requirements of IPRU-INV 3-60(3) and IPRU-INV 3-62.

IPRU-INV 4.5 ACCOUNTING RECORDS

IPRU-INV 4.5.1 D

The Society must maintain appropriate and effective arrangements to require members’ agents1 to meet the obligation to keep and preserve accounting records, set out in Lloyd's Underwriting Agents Byelaw (No 4 of 1984), Section III, paragraph 53B, as it is in force immediately before commencement.

IPRU-INV 4.5.2 R R

A members' adviser must comply with the requirements of IPRU-INV 3.10 to IPRU-INV 3.14.