Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, this Part applies to:

1. (1) a firm that, on the effective date, has a Part 4A permission for effecting contracts of insurance or carrying out contracts of insurance and which will with effect from 1 January 2016 be:
1. (a) a UK Solvency II firm;
2. (b) a third country branch undertaking (other than a Swiss general insurer); or
3. (c) a UK ISPV;
2. (2) the Society, as modified by 9; and
3. (3) managing agents, as modified by 9.

1.2

In this Part, the following definitions shall apply:

candidate

means a person in respect of whom a firm has made a pending application.

commencement date

means 7 March 2016.

continued approval

means approval to perform a senior insurance management function under section 59 of FSMA, granted pursuant to a grandfathering notification.

effective date

means 19 August 2015.

equivalent function

means a senior insurance management function or an FCA function that, in either case, is specified in 6 as equivalent, for the purposes of articles 2(3)(b) and 11(c) of the Transitional Order, to a pre-implementation controlled function.

FCA activities

means a function which would, except for any of the following provisions in SUP TP 7.2.3R of the FCA Handbook, be an FCA governing function:

1. (1) Part 1 (Solvency II firms other than insurance special purpose vehicles and third-country insurance and reinsurance undertakings) Notes 1 and 2;
2. (2) Part 2 (Insurance special purpose vehicles) Notes 1 and 2; and
3. (3) Part 3 (Third-country insurance and reinsurance undertakings) Note 1.

FCA controlled function

means a controlled function specified by the FCA under section 59 of FSMA.

FCA function

means any of the functions specified in column 3 (FCA controlled functions) of the table set out in 6.

grandfathering notification

means a notice required to be sent to the PRA under article 2(1) or 11(b) of the Transitional Order, including any update to such a notice.

pending application

means an application for approval under section 60 of FSMA which:

1. (1) has been received by the FCA or PRA from the firm on or before the commencement date, and
2. (2) has not been determined or withdrawn.

pre-implementation controlled function

means any of the controlled functions listed in column 1 of the table in 6.

senior insurance management function

means a function specified as a controlled function in Insurance - Senior Insurance Management Functions 2 in relation to the carrying on of a regulated activity by a firm.

Transitional Order

means the Financial Services (Banking Reform) Act 2013 (Transitional and Savings Provisions) Order 2015 (SI 2015/492).

2.1

The PRA directs that a firm must make a grandfathering notification using Form K before 8 February 2016.

2.2

The PRA directs that the notice required by article 6(1) of the Transitional Order must be provided to the PRA using Form K.

2.3

The PRA directs that the notice required by article 11(b) of the Transitional Order in respect of a candidate for whom continued approval is sought must be provided to the PRA in Form K as part of a grandfathering notification.

3.1

Where a grandfathering notification is required pursuant to 2.1, a firm must ensure that it sets out the following details in respect of each approved person or candidate:

1. (1) each of the pre-implementation controlled functions for which the person is approved, or (in the case of a candidate) has a pending application, in relation to the firm;
2. (2) each senior insurance management function to be performed by the person on and after the commencement date in relation to the firm; and
3. (3) each FCA function (if any) to be performed by the person on and after the commencement date in relation to the firm.

3.2

The PRA directs that a firm must not specify in a grandfathering notification a senior insurance management function or FCA function for a person which is not an equivalent function in the table in 6 or the table in SUP TP 7.2.3R in the FCA Handbook in relation to:

1. (1) (for an approved person) any pre-implementation controlled functions for which the person has approval in relation to the firm; or
2. (2) (for a candidate) any pre-implementation controlled functions in respect of which there is a pending application.

3.3

The PRA directs that a firm must list in the grandfathering notification each approved person or candidate who, on the commencement date, will be acting in the capacity of a non-executive director but who will not be performing a senior insurance management function or FCA function.

4.1

The PRA directs that, save as required by 4.2 and 8.2, a firm must make any applications, notifications or submissions required by this Part using the ONA system.

4.2

If, under any direction or rule in this Part:

1. (1) a firm is required to make an application, notification or submission online; and
2. (2) the information technology systems used by the PRA fail and online submission is unavailable for 24 hours or more,

until such time as facilities for online submission are restored a firm may submit the specified form in accordance with Notifications 7.

5.1

The PRA directs that if, before the commencement date, there has been a significant change to the matters covered by the grandfathering notification, the firm must provide a revised version of it to the PRA.

6.1

The senior insurance management functions set out in column 2 of the table are specified as equivalent functions, in each case in relation to the pre-implementation controlled functions set out in the corresponding row in column 1 of the table below.

6.2

The FCA functions set out in column 3 of the table are specified as equivalent functions, in each case in relation to the pre-implementation controlled functions set out in the corresponding row of column 1 of the table below.

Column 1	Column 2	Column 3
PRA or FCA Controlled Function	PRA Senior Insurance Management Function	FCA Function
All firms apart from third country branch undertakings and UK ISPVs
Director (CF1)	Chief Finance function (SIMF2) Chief Risk function (SIMF4) Head of Internal Audit function (SIMF5) Group Entity Senior Insurance Manager function (SIMF7) Chief Actuary function (SIMF20) Chief Underwriting Officer function (SIMF22) Underwriting Risk Oversight function (SIMF23)	FCA Director function (CF1) (see Note)
Non-executive director (CF2)	Group Entity Senior Insurance Manager function (SIMF7) Chairman function (SIMF9) Chair of the Risk Committee function (SIMF10) Chair of the Audit Committee function (SIMF11) Chair of the Remuneration Committee function (SIMF12) Senior Independent Director function (SIMF14)	Chair of the Nomination Committee function (CF2a) Chair of the With-Profits Committee function (CF2b) (see Note)
Chief executive (CF3)	Chief Executive function (SIMF1)
Director of unincorporated association (CF5)	Chief Finance function (SIMF2) Chief Risk function (SIMF4) Head of Internal Audit function (SIMF5) Group Entity Senior Insurance Manager function (SIMF7) Chief Actuary function (SIMF20) Chief Underwriting Officer function (SIMF22) Chairman function (SIMF9) Chair of the Risk Committee function (SIMF10) Chair of the Audit Committee function (SIMF11) Chair of the Remuneration Committee function (SIMF12) Senior Independent Director function (SIMF14)	FCA Director of an unincorporated association function (CF5) Chair of the Nomination Committee function (CF2a) Chair of the With-Profits committee function (CF2b) (See Note)
Actuary (CF12)	Chief Actuary function (SIMF20)
With-Profits Actuary (CF12A)	With-Profits Actuary function (SIMF21)
Lloyd’s Actuary (CF12B)	Chief Actuary function (SIMF20) Underwriting Risk Oversight function (SIMF23)
Systems and Controls (CF28)	Chief Finance function (SIMF2) Chief Risk function (SIMF4) Head of Internal Audit function (SIMF5)
Significant management (CF29)	Group Entity Senior Insurance Manager function (SIMF7) Chief Actuary function (SIMF20) (general insurance firms only) Chief Underwriting Officer function (SIMF22) Underwriting Risk Oversight function (SIMF23)
UK ISPVs
PRA or FCA Controlled Function	PRA Senior Insurance Management Function	FCA Function
Director (CF1)	Chief Finance function (SIMF2) Chief Actuary function (SIMF20) Group Entity Senior Insurance Manager function (SIMF7)	FCA Director function (CF1) (see Note)
Non-executive director (CF2)	Chairman function (SIMF 9)	Chair of the Nomination Committee function (CF2a) Chair of the With-Profits Committee function (CF2b) (see Note)
Chief executive (CF3)	Chief Executive function (SIMF1)
Actuary (CF12)	Chief Actuary function (SIMF20)
Systems and Controls (CF28)	Chief Finance function (SIMF2)	FCA Systems and Controls function (CF28) (see Note)
Significant management (CF29)	Group Entity Senior Insurance Manager function (SIMF7) Chief Actuary function (SIMF20) (general insurance firms only)
Third country branch undertakings
PRA or FCA Controlled Function	PRA Senior Insurance Management Function	FCA Function
Director (CF1)	Chief Finance function (SIMF2) Chief Risk function (SIMF4) Head of Internal Audit function (SIMF5) Group Entity Senior Manager (SIMF7) Head of Third Country Branch function (SIMF19) Chief Actuary function (SIMF20) Chief Underwriting Officer function (SIMF22)	FCA Director function (CF1) (see Note)
Non-executive director (CF2)	Group Entity Senior Manager (SIMF7) Chairman function (SIMF 9) Senior Independent Director function (SIMF 14) Chair of the Risk Committee function (SIMF 10) Chair of the Audit Committee function (SIMF 11) Chair of the Remuneration Committee function (SIMF 12)
Chief executive (CF3)	Head of Third Country Branch function (SIMF19)
Actuarial (CF 12)	Chief Actuary function (SIMF20)	Actuarial conduct function (third country) (CF 51) (conduct perspective only)
With-profits actuary (CF12A)	With-Profits Actuary function (SIMF21)
Systems and controls (CF28)	Chief Finance function (SIMF2) Chief Risk function (SIMF4) Head of Internal Audit function (SIMF5)	FCA Systems and Controls function (CF28) (see Note)
FCA Significant management (CF 29)	Chief Underwriting Officer function (SIMF22) Group Entity Senior Insurance Manager function (SIMF7)

Note: See SUP TP 7.2.3 R in the FCA Handbook.

6.3

1. (1) If, in relation to a firm, a senior insurance management function holder with continued approval also performs FCA activities on and from the commencement date, performance of the senior insurance management function will include the performance of those FCA activities provided that the firm has included details of the FCA activities in a scope of responsibilities form for that senior insurance management function holder which is provided to the PRA by 7 September 2016 in accordance with Key Function Holder – Notifications 6.3.
2. (2) If, in relation to a firm, a senior insurance management function holder with continued approval has been performing FCA activities in the circumstances set out in (1), and that person:
1. (a) ceases to perform the senior insurance management function;
2. (b) within three months of ceasing performance, is approved to perform a new senior insurance management function at the firm; and
3. (c) continues to perform the FCA activities,
3. performance of the new senior insurance management function will include the performance of those FCA activities, provided:
1. (d) the PRA’s approval to perform that PRA’s continues in force;
2. (e) the firm makes the notification required by SUP10A.11.12 R (4) of the FCA Handbook; and
3. (f) that person performs and is continuing to perform the FCA activities.

6.4

If a senior insurance management function holder to whom 6.3 applies ceases to perform a senior insurance management function but continues to perform the FCA activities, 6.3(1) will continue to apply in respect of the performance of the FCA activities until the earlier of:

1. (1) approval by the FCA in respect of the performance by that person of those FCA activities as an FCA governing function in relation to the firm; or
2. (2) three months from the time that the person ceased to perform that senior insurance management function.

6.5

The PRA directs that a firm must not specify in the grandfathering notification that any person shall perform any combination of senior insurance management functions which is prohibited by any other provision of the PRA Rulebook or the FCA Handbook.

7.1

The grandfathering notification form, Form K, may be found here.

8.1

This Chapter applies only before the commencement date.

8.2

Where an approved person or a candidate is intended to perform a senior insurance management function with effect from the commencement date but:

1. (1) in the case of an approved person, is not prior to the commencement date approved; or
2. (2) in the case of a candidate, is not to be approved

to perform a controlled function that is equivalent to the proposed senior insurance management function in accordance with 6, the PRA directs that the firm must not submit a grandfathering notification in respect of that approved person or candidate (as the case may be) but must instead submit a senior insurance management approval application for the proposed senior insurance management function in accordance with Key Function Holder – Notifications 6.4.

9.1

This Part applies to the Society and managing agents separately.