SIFA 8
Financial resources and professional
indemnity insurance
SIFA 8.1
Summary
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SIFA 8.1.1
See Notes
Until the Integrated Prudential sourcebook
is introduced, the detailed financial resources standards that we apply to
investment firms are set out in the Interim Prudential sourcebook for investment
businesses (IPRU (INV)). The rules and guidance in this sourcebook help us
meet our statutory objectives of protecting consumers and maintaining market
confidence. By setting minimum capital standards, this sourcebook seeks to
reduce the risk that investment firms will be unable to meet their liabilities
and commitments to consumers and counterparties.
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SIFA 8.1.2
See Notes
Chapters 1 and 13 of IPRU (INV) relate
to personal investment firms and are largely a continuation of the prudential
requirements that applied under the PIA. The rules of Chapter 13 apply differently
to firms depending on what category of firm they are.
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SIFA 8.1.3
See Notes
This section of the Overview only discusses
those parts that relate to a low resource firm i.e. a firm that is:
(1) a Category B3 firm (see Appendix 13(1)
of IPRU(INV) - Defined terms for Chapter 13);
(2) not a network;
(3) has fewer than 26 advisers or representatives;
and
(4) is not permitted to carry on discretionary
portfolio management.
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SIFA 8.1.4
See Notes
The relevant sections of Chapter 13 for
such firms are IPRU (INV) section 13.1 and sections 13.9 to 13.10. The rules
and guidance set out in these sections relate to four key areas: financial
resources, professional indemnity insurance, record keeping and notification
requirements.
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Financial resources
SIFA 8.1.5
See Notes
Your firm must have and maintain at all
times financial resources of the kinds and amounts specified by the rules
of IPRU (INV) chapter 13. Your firm must also be able to meet its liabilities
as they fall due.
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SIFA 8.1.6
See Notes
In particular, your firm must have financial
resources of at least £10,000 at all times (IPRU(INV) 13.10.1 R). The
method of calculating your firm's financial resources is set out in the following
sections of IPRU (INV): 13.10.2 R, 13.10.2A R, 13.10.3 R and Table 13.10 (2).
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Professional indemnity insurance (PII)
SIFA 8.1.7
See Notes
Our policy is under development. Currently
your firm must have PII cover for all business activities that it undertakes
in line with IPRU (INV) 13.1.3 R to 13.1.5 E.
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SIFA 8.1.8
See Notes
In July 2003 we published Consultation
Paper 193: Professional Indemnity Insurance for personal investment firms
(CP193) which proposes new policy and rules in this area.
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Financial resources record keeping
SIFA 8.1.9
See Notes
Your firm must take reasonable steps
to ensure that it keeps records that are sufficient to show at any time that
it has complied with the requirements of IPRU (INV) Chapter 13. It must also
set up procedures and controls to ensure that those records are made promptly
and accurately and, where appropriate brought up-to-date at regular and frequent
intervals (IPRU (INV) 13.1.10 R).
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SIFA 8.1.10
See Notes
Records may be held in any form, but
they must be in English and up-to-date, and your firm must be able to produce
them in paper form at its business premises at our request. You may store
records electronically but you must be able to print them out at our request.
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SIFA 8.1.11
See Notes
The record keeping requirements are in
IPRU (INV) 13.1.10 to 13.1.17.
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Reporting and notification requirements
SIFA 8.1.12
See Notes
The Supervision manual sets out provisions
on the periodic reporting and notification of financial information to us.
Small personal investment firms (most of which will be low resource firms)
must comply with SUP 16.7.48 to SUP 16.7.53 .
There is further information in Chapter 12 of this Overview.
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SIFA 8.1.13
See Notes
Your firm must tell us as soon as it
finds out that its professional indemnity insurance is being cancelled or
that it cannot obtain new cover (IPRU (INV) 13.1.9 R). This rule is in addition
to the notification requirements in the Supervision manual SUP 15 SUP
15).
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SIFA 8.1.14
See Notes
|
The
following sections of this Overview are also relevant:
•'Reporting and notifications' - Chapter 12; •'Variation of permission' - Chapter 15.1; •'Cancellation of Permission' - Chapter 15.2; and •'Waivers and Rule Modifications' - Chapter 16 |
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