This consultation paper (CP) sets out proposals for transitional provisions and new rules in the Prudential Regulation Authority (PRA) Rulebook and consequential amendments to the PRA Handbook that arise as a result of the rules being proposed in both the Depositor Protection and Policyholder Protection consultation papers (CP20/14 and CP21/14) published in October 2014. In those previous consultations, this CP was referred to as ’CP2’.
The package of measures across the PRA’s consultations (CP4/15, CP20/14 and CP21/14) helps minimise the adverse impact the failure of a PRA-authorised deposit-taker, dormant account fund operator or PRA-authorised insurer would have on UK financial stability and helps deliver effective compensation or continuity to eligible depositors, dormant account holders and policyholders.
This consultation is relevant to:
- UK banks, building societies and credit unions, as well as to overseas firms with a deposit-taking permission and UK branches of European Economic Area (EEA) credit institutions;
- UK insurers (including those that establish a branch or operate on a freedom of services basis in the EEA), EEA insurers that establish a UK branch or operate in the United Kingdom on a freedom of services basis, and Channel Islands insurers and Isle of Man insurers with UK, Channel Island or Isle of Man risk or commitments (PRA-authorised insurers);
- the Financial Services Compensation Scheme (FSCS), as the administrator of the United Kingdom’s Deposit Guarantee Scheme (DGS) and as the scheme administrator of the policyholder protection rules;
- depositors and policyholders;
- dormant account fund operators;
- firms that have assumed responsibility for liabilities from PRA-authorised insurers (successors); and
- the Society of Lloyd’s.
This consultation addresses:
For depositor protection:
- a transitional regime for single customer view (SCV), account marking and information requirements until rules proposed under CP20/14 come into effect;
- a supervisory statement setting out the PRA’s expectations around the marking of eligible accounts and deposits, the recast Deposit Guarantee Schemes Directive (DGSD) information requirements and SCV reporting during the transition period; and
- a proposed approach in relation to the treatment of existing Compensation Sourcebook (COMP) rule waivers and modifications granted to firms in accordance with section 138A of the Financial Services and Markets Act 2000 (FSMA).
For dormant account fund operators:
- rules on compensation arrangements following a review of the existing PRA Handbook material in COMP and Chapter 6 of the FEES Manual (FEES 6);
- a statement of policy setting out the PRA’s expectations of the FSCS with respect to the Dormant Account Scheme (DAS); and
- a supervisory statement setting out the PRA’s expectations of a dormant account fund operator with regards to the requirement to provide information to the FSCS.
For policyholder protection:
- the introduction of two new transitional rules which clarify: what circumstances, actions and measures will continue to fall under the current COMP and FEES 6 rules; and from 3 July 2015 what circumstances, actions and measures will fall under the new Policyholder Protection Part rules; and
- transposition of certain existing COMP and FEES 6 transitional provisions.
For deposit-takers and insurers:
- consequential amendments to the existing rules which are structural and do not represent a change in policy; and
- consequential amendments to the PRA Handbook relevant to deposit-takers and insurers. These amendments reflect the deletion of COMP and FEES 6 (to include certain rules in FEES 1 and 2, relating to FEES 6) from the PRA Handbook; update cross references to the FSCS, the recast DGSD and introduce relevant new defined terms.
The consultation closed on Friday 27 February 2015.