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Status: You are viewing the version of the handbook as on 2005-06-30.

SUP App 2.5 Capital resources below required margin of solvency

SUP App 2.5.1R

Unless SUP App 2.5.3 R applies:

  1. (1)

    if a firm's capital resources are such that they no longer equal or exceed its required margin of solvency; or

  2. (2)

    if a firm no longer complies with PRU 2.2.16R and PRU 2.2.24R, or PRU 8.3.45R(1)(a) and PRU 8.3.45R(1)(b), as applicable;

it must, within 28 days of becoming aware of this event, submit to the FSA a plan for the restoration of a sound financial position, including:

  1. (3)

    a scheme of operations; and

  2. (4)

    an explanation of how, if at all, and by when:

    1. (a)

      it expects its capital resources to be restored to the required margin of solvency; or

    2. (b)

      as the case may be, it expects to comply with PRU 2.2.16R and PRU 2.2.24R, or PRU 8.3.45R(1)(a) and PRU 8.3.45R(1)(b), as applicable.

SUP App 2.5.2G

See SUP App 2.11.2 G for guidance on the period that the scheme of operations should cover.

SUP App 2.5.3R

If a firm:

  1. (1)

    falls into SUP App 2.5.1 R (1) or SUP App 2.5.1 R (2); and

  2. (2)

    it has previously submitted either a run-off plan in accordance with SUP App 2.8.1 R or a scheme of operations in accordance with SUP App 2.5.1 R;

it must, within 28 days of becoming aware that it falls into SUP App 2.5.1 R (1) or SUP App 2.5.1 R (2):

  1. (3)

    notify the FSA; and

  2. (4)

    submit a plan for restoration which:

    1. (a)

      explains why the firm's capital resources have fallen below its required margin of solvency or, as the case may be, it no longer complies with PRU 2.2.16R or PRU 2.2.24R, or PRU 8.3.45R(1)(a) and PRU 8.3.45R(1)(b), as applicable; and

    2. (b)

      demonstrates how, if at all, and by when, the firm will restore it or, as the case may be, resume compliance with PRU 2.2.16R and PRU 2.2.24R, or PRU 8.3.45R(1)(a) and PRU 8.3.45R(1)(b), as applicable.