Related provisions for COBS 20.2.17B
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5References to distributions in COBS 20 includes distributions of distributable profits arising, namely any permanent addition to policy benefits made at the firm's discretion based on the investment or other experience in the fund or more generally. Distributions include those relating to expected payments for which allowance has been made in the technical provisions or to a firm's other liabilities arising from its regulatory duty to treat customers fairly, and not just distributions
5Examples of distributions include any payment of a cash bonus (including a final bonus on exit or a reduction in premium), or a declaration of a reversionary bonus in the form of a permanent addition to the benefits guaranteed to be payable at death or on maturity. In COBS 20.2.21 R and COBS 20.2.22 E (distributions from excess surplus) distributions also include any other amounts that are added to asset shares or to any other measure that is used to determine pay-outs under
(1) 2Where a firm adjusts the amounts distributed to policyholders, either by market value reduction or otherwise, in a way that would result in a distribution to policyholders of less than the required percentage, taking both the relevant distributions and the adjustment into account, then the firm must apply a proportionate adjustment to amounts distributed to shareholders so that the distribution to policyholders will not be less than the required percentage.(2) The adjustments
7A firm must not make a distribution from a with-profits fund, unless:55(1) if it is not a Solvency II firm, the whole of the cost of that distribution can be met without eliminating the regulatory surplus in that with-profits fund; and5(2) if it is a Solvency II firm:5(a) the whole of the cost of that distribution can be met without eliminating the with-profits fund surplus in that with-profits fund; and(b) following any distribution that is made to meet a liability for which
A firm which is not a Solvency II firm5 must not make a distribution from a with-profits fund to any person who is not a with-profits policyholder, unless the whole of the cost of that distribution (including the cost of any obligations that will or may arise from the decision to make a distribution) can be met from the excess, if any,5 of the assets over the liabilities5 in that with-profits fund.55
5If a firm which is a Solvency II firm proposes to make a distribution from a with-profits fund to any person who is not a with-profits policyholder, where:(1) the distribution to with-profits policyholders is smaller than the ‘pre-notification to policyholder minimum’ calculated in accordance with COBS 20.2.19BR (1) then the firm must:(a) provide the FCA with written details of the proposed distribution at least two months prior to the proposed distribution, together with copies
(1) 5The ‘pre-notification to policyholder minimum’ referred to in COBS 20.2.19A R is as follows:wherea is the total amount available for with-profits distribution in the with-profits fund in question at the time of the most recent previous distribution;b is the amount of the most recent previous distribution to with-profits policyholders; andc is the total amount available for with-profits distribution in relation to the proposed distribution.(2) The ‘after the event notification
(1) 5If the circumstances in COBS 20.2.19AR (1) or (2) arise, the firm should also consider whether any reduction(s) in the proposed distribution and any previous distributions to with-profits policyholders over a period of at least the last five years are consistent with treating with-profits policyholders fairly and any other obligations of the firm under COBS 20.(2) When calculating the amounts distributed in COBS 20.2.19A R and COBS 20.2.19B R:(a) any amount allocated to with-profits
(1) If non-profit insurance business is written in a with-profits fund, a firm should take reasonable steps to ensure that the economic value of any future profits expected to emerge on the non-profit insurance business is available for distribution during the lifetime of the with-profits business.(1A) Where a with-profits fund contains assets which may not be readily realisable, the firm should take reasonable steps to ensure that the economic value of those assets is made available