SUP TP 8 1Financial Services (Banking Reform) Act 2013: Approved persons in small non-directive insurers

8.1

Purpose of SUP TP 8

8.1.1

G

SUP TP 8 has transitional and grandfathering provisions relating to the changes to the approved persons regime made by Part 4 of the Financial Services (Banking Reform) Act 2013. The Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015 (as amended):

(1)

requires small non-directive insurers before 8 February 2016 to give a notice to the appropriate regulator in respect of each person for whom that regulator has granted a pre-implementation approval in relation to the firm. The notice must specify the post-implementation functions that the person will perform on and after 7 March 2016, and each of these notified functions must be an equivalent function to a pre-implementation function which the person has approval to perform;

(2)

allows the FCA to specify classes of persons in respect of whom a notice is not required and in SUP TP 8.2.1R, for small non-directive insurers, the FCA specifies that class of persons;

(3)

allows the FCA to make rules specifying the post-implementation controlled functions which are to be treated as equivalent to a pre-implementation controlled function for the purposes of that Order. In SUP TP 8.2.2R, for small non-directive insurers, the FCA specifies the post-implementation FCA functions which are equivalent to PRA functions pre-implementation. The PRA has separately, in PRA Rulebook: Non-Solvency II firms: Non-Solvency II firms - Senior Insurance Managers Regime: Transitional Provisions 6, specified equivalent post-implementation PRA functions;

(4)

provides that the pre-implementation approval has effect after 7 March 2016, without the need for re-application, if the notice in (1) is given before 7 March 2016 (whether or not that notice was given before 8 February 2016) and certain conditions in article 3 of the Order are met; and

(5)

applies to large non-directive insurers. Large non-directive insurers are included in the definition of Solvency II firms for the purposes of grandfathering. Therefore, SUP TP 7 applies to large non-directive insurers instead of SUP TP 8.

8.1.2

R

SUP TP 8 applies to:

(1)

small non-directive insurers; and

(2)

approved persons of firms in (1).

8.1.3

G

There is a glossary of terms in SUP TP 8.6.1. Those terms are not defined in the Glossary.

8.2

Grandfathering of approved persons: requirement to give notice and equivalence of old and new functions

8.2.1

R

A firm is not required to give notice to the FCA for the purposes of article 2(1) of the Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015 in relation to any approved person for whom the FCA granted a pre-implementation approval in relation to that firm.

[Note: see article 2(2) of the Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015]

8.2.2

R

Each pre-implementation controlled function in the first column of the table in SUP TP 8.2.3R is specified as an equivalent function to the FCAcontrolled functions listed in column two of the same row of that table.

[Note: see article 17(1)(a) of the Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015]

8.2.3

R

Table: Old PRA controlled functions mapped on to new FCA ones

Current controlled function

New FCA controlled function

PRA Director function (CF1)

FCA Director function (CF1)

PRA Chief Executive Function (CF3)

FCA Chief Executive Function (CF3)

PRA Director of unincorporated association function (CF5)

FCA Director of unincorporated association function (CF5) (executive only)

PRA Small friendly society function (CF6)

FCA Small friendly society function (CF6) (executive only)

Note: FCA controlled functions in column 2 above apply only where the person is not otherwise grandfathered to perform any post-implementation PRA function, as set out in the Table of Equivalent Functions for Grandfathering in the PRA Rulebook: Non-Solvency II firms: Non-Solvency II firms - Senior Insurance Managers Regime Transitional Provisions, rule 6.

8.2.4

G

In SUP TP 8.2.3R, where a person is grandfathered to perform a post-implementation PRA controlled function, as set out in the Table of Equivalent Functions for Grandfathering in PRA Rulebook: Non-Solvency II firms: Non-Solvency II firms - Senior Insurance Managers Regime Transitional Provisions, rule 6, then, if they would also be performing an FCA function referred to in column 2 of the Table in TP 8.2.3R, the FCA function is disapplied and instead absorbed into that PRA function. This absorption happens by virtue of its inclusion in PRA Rulebook: Non-Solvency II firms: Non-Solvency II firms - Senior Insurance Managers Regime - Transitional Provisions 6, and the firm is required to identify the absorbed function on the person’s scope of responsibilities document described in SYSC 2.2.6R when that record is produced.

8.2.5

G

Grandfathering is not relevant to the FCA functions described in SUP TP 8.2.1R as they are not changing, and therefore notification is not required under article 2(1) of the Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015.

8.3

Grandfathering of approved persons: forms

8.3.1

D

This section (SUP TP 8.3) applies to a notification by a firm under the articles of the Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015 listed in the table in SUP TP 8.3.2D.

8.3.2

D

Table: Grandfathering notifications

Purpose of notification

Article of Order

(1) Notification of pre-implementation approval

Article 2(1), 5

(2) Amendments to grandfathering notification in (1)

Article 6

(3) Notification of applications for approval

Article 11

(4) Amendment to grandfathering notification in (1) to add a new candidate

Article 14

(5) Any other amendment to grandfathering notification in (1)

Article 14

8.3.3

D

(1)

A firm must make any notification in row (1) to (5) of the table in SUP TP 8.3.2D by email to PRA-ApprovedPersons@bankofengland.co.uk.

(2)

A firm must use the version of the grandfathering notification form found in SUP TP 8.7.1D and submit it by email to PRA-ApprovedPersons@bankofengland.co.uk.

8.3.4

G

If a firm notifies an application for approval and that application is refused before the commencement date, the firm should update the notification under row (5) of the table in SUP TP 8.3.2D.

8.3.5

G

If a firm gives a grandfathering notification for an approved person and that approved person leaves the firm or gives up performing some of their controlled functions, the firm should notify the appropriate regulator using Form C in addition to SUP TP 8.

8.4

Applications of approved persons to take effect from 7 March 2016

8.4.1

D

(1)

A firm may apply for the FCA’s approval under section 59 of the Act (Approval for particular arrangements) for the performance of a controlled function which comes into force on 7 March 2016.

(2)

Any application must be made between the 1 January 2016 and the day before 7 March 2016.

(3)

Any such application is made on the basis that it is treated as being made on 7 March 2016.

(4)

The application must be made using the version of Form A or Form E applicable from 7 March 2016 and in accordance with the other requirements to be in effect on that date.

8.4.2

G

The Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015 will not apply to an application under SUP TP 8.4.1D.

8.4.3

G

A firm does not have to make an application under SUP TP 8.4.1D. It can make an application between the rule-making date and 7 March 2016 under the rules and directions in force at the time of the application. The Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015 will apply to those applications.

8.5

Application of ongoing requirements to documents submitted as part of grandfathering

8.5.1

R

(1)

The requirements of SUP 10A apply to approvals that are continued in force by the Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015, as they do to applications made after the commencement date.

(2)

The requirements of SUP 10A apply to an application for approval that is grandfathered under the Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015 and has not been finally determined before 7 March 2016, as they do to applications made after the commencement date.

(3)

This paragraph is subject to the other provisions of SUP TP 8.

8.6.1

R

Glossary of terms used in SUP TP 8

pre-implementation controlled functions

an FCAcontrolled function or a PRA controlled function in force immediately before 7 March 2016.

rule-making date

in accordance with The Financial Services (Banking Reform) Act 2013 Transitional and Savings Provisions Order 2015, the date the FCA and the PRA make rules under article 17 of the Order or, if made on different days, the last day on which the rules are made.

Solvency II firm

has the same meaning as in SUP TP 7.6.1R.

[Note: References to rules in SYSC and SUP 10A are to those rules as they will be in force on 7 March 2016.]

8.7.1

D

Form K: Grandfathering notification