SUP 16 Annex 20 Products covered by the reporting requirement in SUP 16.11

G

11This is the guidance referred to in SUP 16.11.6G.

SUP 16.11.3R, SUP 16.11.5R and SUP 16.11.5AR require certain firms to report product sales data and, in respect of regulated mortgage contracts other than legacy CCA mortgage contracts, performance data. For reporting purposes, a reportable sale applies (other than in the case of a mortgage transaction) where the contract has been made and the premium has been paid.

In the case of mortgage transactions, the reporting requirement only applies to loans for house purchase and remortgages and (in the case of sales data only) not to further advances. In the case of sales data, a reportable mortgage transaction applies where the mortgage transaction has completed (i.e. funds have been transferred and have been applied for the purpose of the mortgage).

In the case of high-cost short-term credit and home credit loan agreements, a reportable transaction has taken place where the loan monies have been advanced to the borrower.

In the case of a group section 32 buy-out, the figure reported for the ‘total premium amount’ in form PSD002 should be the aggregate figure of all the individual members’ premiums added together. Firms should not provide an average premium figure. Where form PSD002 requests individual details (e.g. customer postcode) the firm can, only for group section 32 buy-out transactions, leave the fields blank.11

Part 1 - Products

The following tables provide guidance on the products for which sales data is to be reported. These tables are not intended to be a complete list of relevant products; firms should report sales data on all products which would fall within the scope of retail investments, pure protection contracts, and regulated mortgage contracts and other home finance transactions, high-cost short-term credit and home credit loan agreements.

Table 1 – RETAIL INVESTMENTS

Relevant products include:

Unit trust scheme /OEIC

Investment trust

ISA

Structured capital-at-risk product

With profit bond

Unit linked bond

Distribution bond

Mortgage Endowment

With profit endowment

Endowment savings plan

Guaranteed income/growth/investment bond

Trustee investment bond

Life annuity

Pension annuity

Long term care insurance contract

Stakeholder pension

Self-invested personal pension

Personal pension

Group personal pension

FSAVC

Individual pension transfer

Pension opt out

Section 32 buy out

Group section 32 buy out

Income drawdown

Executive pension

SSAS

Group money purchase

AVC final salary

AVC group money purchase

Table 2 - PURE PROTECTION CONTRACTS

Relevant products include:

Income protection

Standalone critical illness

Critical illness sold as a rider benefit to mortgage protection and mortgage term assurances

Table 3 - MORTGAGES

Relevant mortgage types include:

Fixed rate mortgages

Discounted variable rate mortgages

Tracker mortgages

Capped rate mortgages

Standard variable rate mortgages

Table 4 – OTHER HOME FINANCE TRANSACTIONS

Relevant products include:

Home reversion plans

Home purchase plans

Regulated sale and rent back agreements

Table 5 – SHORT TERM LOANS

Relevant loan types comprise:

High-cost short-term credit

Home credit loan agreements

Part 2: Supporting product definitions/guidance for product sales data reporting

Part 2 contains guidance on the terms used in part 1 and on other relevant material.

Where products have not been defined in the Glossary, an explanatory description is provided.

Retail investments

PRODUCT

Guidance

With profit bond

Includes all single premium policies where a lump sum is paid into a with profits fund made up of investments such as company shares, fixed interest securities, commercial property and money. Unitised with profit bonds should be reported under this category.

Unit linked bond

A contract where the premium buys, or is deemed to buy investment units in a selected fund. The value of the policyholder’s fund is linked to the value of the units (see guidance relating to distribution bonds).

Distribution bond

A single premium investment policy. The funds are invested in equities and gilts and an income is paid each year to the policyholder, dependent on the performance of the investments.

Only report as a distribution bond where over 50% of the fund allocation relates to the distribution fund. If less than a 50% allocation is made, the product should be reported as a unit linked bond.

Guaranteed income/growth/ investment bond

This includes income and growth bonds which include guaranteed income and guaranteed equity bonds that include guarantees and pay a percentage of the movement of more one or more index.

Structured capital-at-risk product

Defined in the Handbook Glossary.

Life/pension annuity

An arrangement by which a life company pays someone a regular income, usually for life, in return for a lump sum premium. This would include

• deferred and immediate annuities

• compulsory purchase annuities

• home income plans; and

• all other types of life annuities

Unit trust scheme

Defined in the Handbook Glossary.

Investment trust

Defined in the Handbook Glossary.

ISA

Defined in the Handbook Glossary.

Cash and insurance ISAs should not be reported

Endowment savings plan

An endowment plan with a fixed term with benefits paid on death within the term or on maturity

Mortgage endowment

This should include any regular premium low cost endowments plus unitised with profit endowments

Long-term care insurance contract

[The FSA consulted in CP 200 on the definition of long-term care insurance contract that will apply from 14 January 2005. The guidance here will cross-refer to the finalised definition.]

Stakeholder Pension

See Handbook Glossary for definition of ‘stakeholder pension scheme’.

Self-invested personal pension

See Handbook Glossary for definition ofself-invested personal pension’.

Personal pension

See Handbook Glossary for definition of ‘personal pension scheme’.

For reporting purposes do not include Rebate Only Pension business.

Group personal pension

See Handbook Glossary for definition of ‘group personal pension scheme’.

Phased retirement should include transfer plans that permit staggered annuities to subsequently be purchased.

Deferred transfer plans should be excluded.

Report each individual policy as a separate case.

FSAVC

Defined in the Handbook Glossary.

Do not include Rebate Only Pension business.

Individual pension transfer

See Handbook Glossary for definition of ‘pension transfer’.

Pension opt out

Defined in the Handbook Glossary.

Section 32 buy out/ Group section 32 buy out

An arrangement where trustees accept capital from employees who have left occupational pension scheme service and the transfer value is reinvested in an attempt to provide better benefits when the employee retires.

Income drawdown

See Handbook Glossary for definition of ‘income withdrawal’.

This should include transfer plans that allow income from a pension plan in advance of an annuity being purchased

Executive pension scheme

An arrangement where each premium paid is identifiable to an individual employee and where an employer has discretion as to whether a pension arrangement is made for a particular employee and to the level of contribution or target benefit under the policy.

Report each individual policy as a separate case.

Pension premiums should be reported gross.

SSAS

Defined in the Handbook Glossary.

Pension premiums should be reported gross.

SSAS business should not be reported if you only provide an administration service.

Report each individual policy as a separate case.

Trustee investment bond

A lump sum investment vehicle designed for use by pension scheme trustees. Includes SSAS Trustee Investment Bonds and SIPP Trustee Investment Bonds

Group money purchase

An occupational pension scheme which provides money-purchase benefits which is available to employees of the same employer or of employers within a group.

AVC Final salary

Pension premiums should be reported gross.

AVC Group money purchase

Pension premiums should be reported gross.

Mortgages

(a) Types of interest or reversion rate

Types of interest or reversion rate

Description

Fixed rate

where the interest rate is fixed for a stated period.

Discounted variable rate

where a discount is applied to a variable rate, usually for a limited period of time.

Bank of England Base Rate tracker

where the interest rate is guaranteed to move in line with the Bank of England Base (or Repo) Rate.

LIBOR tracker

where the interest rate is guaranteed to move in line with LIBOR (the London InterBank Offered Rate).

Other tracker

where the interest rate is guaranteed to move in line with an index other than the Bank of England Base (or Repo) Rate or LIBOR.

Capped (and collared) rate mortgage

where the interest rate is guaranteed not to exceed a stated maximum rate (the ‘capped’ rate) for specific period of time, but where the standard variable interest rate applies when the rate is lower than the capped rate. Also includes products where the interest rate is subject to a minimum rate (the ‘collared’ rate).

Standard variable rate

the lender’s underlying interest rate.

(b) Features

Data Item

Description

Flexible mortgage

A mortgage where you can change the monthly payments and pay off part or all of the loan whenever you like. It is normally linked to any interest rate type.

Details vary from one mortgage to another, but for reporting purposes, to be reported as a flexible mortgage, the mortgage should have the following features:

• interest must be calculated monthly or daily; and

• must have an overpayment facility

Cashback

a cash amount paid by a mortgage lender to a customer (typically at the beginning of a contract) as an inducement to enter into a regulated mortgage contract with the mortgage lender.

Offset mortgage – positive and/or negative offset

An offset mortgage will typically have similar facilities to a flexible mortgage, but will also allow the borrower to offset positive (savings and/or current account) and/or negative balances (credit card and/or personal loans) against their outstanding mortgage balance.

Mortgage with a shared equity loan attached

where the lender is aware that the customer will also have a shared equity loan secured on the property.

Mortgage with indemnity insurance attached

where a mortgage has attached indemnity insurance to protect the lender in the case of default, whether arranged by the lender privately or through a government scheme.

Pure protection contracts

Policy Type

Description

Standalone critical illness

These policies are ‘pure’ critical illness policies i.e. there is no life cover sold alongside them. Under these policies the insurer provides the sum insured to the policyholder in the event of diagnosis of a life threatening condition.

Critical illness sold as a rider benefit to term assurance

For reporting purposes, this applies where critical illness is offered as a rider benefit to either a mortgage protection policy (a life policy that provides by means of decreasing term assurance for a mortgage to be paid off in the event of the borrower’s death) or a protection term assurance contract.

Income protection

Insurance contracts arranged by an individual to provide for payment of income during a period of incapacity, due to ill health or accident.

Other home finance transactions

Finance Type

Description

Home reversion plan

Defined in the Handbook Glossary

Home purchase plan

Defined in the Handbook Glossary

Regulated sale and rent back agreement

Defined in the Handbook Glossary

Short-term loans

Loan Type

Description

High-cost short-term credit

Defined in the Handbook Glossary

Home credit loan agreements

Defined in the Handbook Glossary

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