UK: Corporate Insurance Regulatory update - September 2011

PS11/9: Delivering the RDR and other issues for platforms and nominee related services

PS11/9 contains the FSA's rules and guidance in relation to the proposals it consulted on in CP10/29 (Platforms: Delivering the RDR and other issues for platforms and nomineerelated services). The FSA published this consultation paper following feedback on its discussion paper, DP10/2 (Platforms: Delivering the RDR and other issues).

Some of the proposals in CP10/29 were widely supported. However, where appropriate the FSA has amended the proposed rules to take account of the concerns of the industry. The final rules are contained in Appendix 1 of PS11/9. PS11/9 also provides a chapter on each of the following:

  • the definition of a platform, the distribution of products through a platform and the FSA's expectations of advisers using platforms;
  • providers' payments to platforms and cash rebates to clients;
  • the re-registration of clients' investments and the required capital for platform service providers;
  • the use of platforms to invest in funds and the passing of relevant information and voting rights to the end investor; and
  • cost benefit analysis.

The new rules will be implemented on 31 December 2012.

A copy of the policy statement can be found at:

Handbook Notice 112

The Handbook Notice 112 outlines the changes which were made to the Handbook and other material which were made by the Board of the FSA in July 2011. Changes to the Handbook included the following:

  • Amendments to the Handbook in the UCITS IV Directive Instrument (FSA 2011/39) which implements changes to the UCITS Directive made by the European Union and incorporates the Key Investor Information Regulation which is directly applicable in the UK " Clarification of the definition of "Holloway sickness policy" by setting out the crucial features of a policy offered or effected under the Holloway system (FSA 2011/40);
  • Restriction of the FSCS discretion to raise exit levies from a firm to the levy year when the firm exits the scheme (FSA 2011/41);
  • Implementation of the Committee of European Banking Supervisors' Guidelines on managing operational risk in market-related activities (FSA 2011/43);
  • Deferral of new rules for personal investment firms on capital and connected reporting;
  • Clarification of requirements around liquidity reporting;
  • Introduction of regulatory powers to enable redress in instances of mass consumer detriment, particularly so as to act as a deterrent to mis-selling; and
  • Creation of new obligations to ensure that platforms used to buy and manage investments are, amongst other things, brought in line with the requirements of the RDR from 31 December 2012.

Changes were also made to the Enforcement Guide and the Perimeter Guidance manual.

A copy of Handbook Notice 112 can be found at:

CP11/16: Recovery and Resolution Plans

The FSA has published a consultation paper on its proposal for banks, building societies, significant investment firms and certain other firms to prepare and maintain Recovery and Resolution Plans (RRPs). The scope of such RRP requirements may, subject to consultation, extend to a wider range of authorised firms in the future.

The recent financial crisis highlighted the need for financial institutions to equip themselves with the capacity to recover from extreme stress. The FSA is of the view that RRPs will ensure that financial institutions develop recovery options that could be utilized effectively and efficiently in adverse conditions that could otherwise cause their failure. RRPs will also assist authorities in the preparation of resolution plans that are capable of reducing the potential impact on financial stability.

There are two aspects to RRPs:

  • Recovery Plans which require firms to identify credible options that would be available to enable them to recover financial strength and viability in the event of severe idiosyncratic or market-wide stress. Such options should be capable of speedy implantation if the relevant circumstances arose.
  • Resolution Planning which requires firms to submit detailed information about their business and operational structure in the form of a Resolution Pack. This information would enable the authorities to make a resolution of the business in question should it be required.

The FSA intends on publishing the final rules in relation to RRPs in the first quarter of 2012. The deadline for responses to this consultation is 9 November 2011. A copy of the Feedback Statement can be found at:

GC 11/20: Top Questions Asked at the Retail Distribution Review (RDR) road shows

In order to help firms gain a clear understanding of what will be expected of them following implementation of the Retail Distribution Review (RDR), the FSA has published a Guidance Consultation setting out the regulator's response to list of 11 questions that were frequently raised at the recent RDR roadshows.

The Guidance Consultation provides answers to questions on subjects such as:

  • Whether an someone who without an appropriate RDR qualification carry out particular client-related activities
  • How advisers should expect to get help from accredited bodies in preparing to meet the professionalism requirements
  • What constitutes structured continual professional development
  • Whether an adviser who is uncomfortable in recommending a particular product would still be considered independent
  • Whether a firm can be independent if some of its advisers are restricted advisers
  • The meaning of a relevant market in the context of independent advice
  • Ongoing charges for ongoing services following the RDR
  • The interplay between adviser charging and the need to treat customers fairly Any comments on this guidance consultation and the answers to the questions should be submitted to the FSA by 22 September 2011.

A copy of this document can be found at:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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