Prudential Regulation Authority Rulebook

4.1

The purpose of this statement is to explain: 

• how the PRA’s process for with-profits mutual waivers will work, including how it will coordinate with that of the FCA; and
• how the PRA expects the Solvency II ring-fenced fund provisions to interact with the UK with-profits regime.

4.2

This statement therefore expands on the PRA’s general approach, as set out in the insurance approach document ^[5]. By articulating in this statement the approach it will take to applications for these waivers (referred to in this statement as ‘mutual with-profits waivers’), the PRA is seeking to advance both its general objective of promoting the safety and soundness of the firms it regulates and its insurance objective of contributing to the securing of an appropriate degree of protection for policyholders. 

4.3

With effect from 1 March 2014, the PRA was also given a secondary competition objective, which applies when the PRA discharges its general functions in a way that advances its objectives. This secondary objective is to act in a way which (as far as reasonably possible) facilitates effective competition in the markets for services provided by PRA-authorised persons in carrying on regulated activities. In issuing this statement, the PRA is setting out the basis upon which with-profits mutuals may apply for a waiver as a means of continuing to write new business, thereby increasing or maintaining the range of products on offer from mutual providers in the markets in which these firms operate. The PRA considers this to be compatible with its secondary competition objective.

4.4

The PRA has also considered other matters to which it is required to have regard, and believes that this statement is compatible with the Regulatory Principles ^[6] , in particular the principle that a burden or restriction placed on firms should be proportionate to the benefits expected to result and the desirability of recognising differences in the nature of, and objectives of, businesses carried on by different persons regulated under FSMA.