The FCA has published updated guidance (FG22/1)1 setting out its key considerations and general expectations when reviewing a Part VII transfer.
The guidance aims to provide examples of comments that the FCA is likely to make on applicants' Part VII submissions. The FCA hopes that it will minimise challenges by the FCA of such submissions and result in a more efficient review process, allowing the FCA to focus on transfer-specific issues when reviewing each submission.
This guidance replaces the previous guidance published in FG18/4 2 and aims to provide clarity on certain points raised by stakeholders and reflect the changes to the UK regulatory framework following the UK's withdrawal from the EU. The guidance also sets out the FCA's responses to the feedback received during its consultation under GC21/3.3
The FCA has acknowledged that the PRA leads the Part VII process, while still clarifying that the FCA has an active and important role to play.
In particular, the FCA has noted its focus on its consumer protection statutory objective and its ability to object to a Scheme based on conduct concerns, even if there is no prudential concern.
The guidance sets out:
- Factors that firms should consider before contacting the FCA, and what they will need to produce prior to a pre application meeting with the FCA.
- The documents which the FCA expects firms to provide in order for the FCA to assess whether to approve the proposed Independent Expert (IE).
- The FCA's overall approach, its expectations and the key aspects it will consider when reviewing the proposed Part VII.
- Detailed information and examples for the key documentation, such as the Scheme documents, the IE report and communications with policyholders.
- Examples and factors to consider if the firms proposing the Part VII are planning to apply for a waiver of any of the statutory notification requirements.
The FCA has made clear that the guidance does not explain all aspects of its role in a Part VII, or all of the issues that firms need to consider, and that deviations from the guidance may be permitted in areas where it is unreasonable or not relevant or appropriate to follow it. However, firms will be expected to explain why they have not followed the guidance, and they should draw this to the FCA's attention at the outset or sufficiently early in the process so as to reduce the scope for delays at a later stage.
1. FCA Finalised Guidance FG22/1 can be accessed here
2. FCA Finalised Guidance FG18/4 can be accessed here
3. FCA Guidance Consultation GC21/3 can be accessed here
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.