Prudential Regulation Authority Rulebook

1.1

This Part, unless otherwise stated, applies to every firm and every person required to pay a fee to the PRA.

1.2

In this Part, the following definitions shall apply:

active capacity

means the capacity of the syndicate(s) under management in the fee year in question, including the capacity of syndicates that are not writing new business but have not been closed off in the year in question.

adjusted gross premium income or AGPI

means adjusted gross premium income of an insurer calculated as follows (all business transacted through independent practitioners or tied agents, whether single or multi-tie, being divided by two):

1. (1) amount of new regular premium business (yearly premiums including reassurances ceded but excluding cancellations and reassurances accepted) x10;
2. plus
3. (2) amounts of new single premium business (total including reassurances ceded but excluding cancellations and reassurances accepted). Group protection business (life and private health insurance) must be included;
4. less
5. (3) premiums relating to pension fund management;
6. less
7. (4) premiums relating to trustee investment plans.

advanced IRB

means the internal ratings based approach for assessing credit risk referred to in Article 151(4) and (9) of the CRR.

advanced measurement approaches or AMA

means advanced measurement approaches to operational risk based on a firm’s own operational risk management systems as referred to in s312(2) CRR.

annual funding requirement or AFR

means, in respect of any fee year, the total ongoing costs of the PRA as determined by the PRA.

application

means a request to the PRA, in any format, for the PRA to exercise its functions in relation to the applicant or for approval, waiver or confirmation of any matter relating to the applicant.

assets outside expected RFB subgroups

means assets of a ring-fencing fees group which it has advised the PRA are not intended to be held by a ring-fenced body (or its UK sub-group for ring-fencing purposes) from 1 January 2019.

collection agent

means the agent, currently the FCA, designated from time to time by the PRA to collect and analyse tariff data from firms and to calculate, invoice and collect fees on its behalf.

consumer credit-related activity (ies)

means:

any of the activities 1 (a) – (m) in Part 2 or 3A; and

advising on regulated credit agreements for the acquisition of land under Article 53DA

of the Regulated Activities Order in the manner specified in Part 3 of the Regulated Activities Order as being relevant to those activities.

contributions as income

means contributions as income of a friendly society under Schedule 7: Part I item 1 (a) to the Friendly Societies (Accounts and Related Provisions) Regulations 1994 (SI 1994/1983) in respect of United Kingdom business

core deposit

means core deposits within the meaning of Article 2(2) of the FSMA (Ring-fenced Bodies and Core Activities) Order 2014.

deposit acceptors fee block

means the fee block for firms whose Part 4A permission includes accepting deposits but does not include either of the following:

1. (1) effecting contracts of insurance; or
2. (2) carrying out contracts of insurance.

designated firms dealing as principal fee block

means firms whose Part 4A permission includes dealing in investments as principal where the PRA has designated ‘dealing in investments as principal’ a PRA regulated activity in respect of that firm.

directive friendly society

means a friendly society that is a UK Solvency II firm.

due date for payment

means the due date for payment of any fee under this Part, payment being required in cleared funds on or before 5pm on that day or, where it is not a business day, the next business day.

EU withdrawal costs

means the PRA’s costs associated with the United Kingdom’s withdrawal from the European Union, as determined by the PRA.

EU withdrawal costs fee block

means the firms which are liable to pay EU withdrawal costs as shown in Table VI of the Periodic Fees Schedule.

fee block

means firms conducting broadly similar regulated activities grouped together for the purposes of calculating and collecting fees as follows:

A0 - the minimum fee block

A1 – the deposit acceptors fee block

A3 – the general insurance fee block

A4 – the life insurance fee block

A5 – the Lloyd’s managing agents fee block

A6 - the Society of Lloyd’s fee block

A10 – the designated firms dealing as principal fee block

PT1 – the transition costs fee block

fee payer

means any firm or person required to pay a fee in accordance with this Part of the Rulebook.

fee tariff (s) or tariff

means a payment or scale of payments in accordance with the PRA’s fee-charging system.

fee year

means the PRA’s fee year, being twelve months from 1 March in one calendar year to the last day of February in the following calendar year.

first fee year

means the fee year during which a firm becomes authorised or receives an extended Part 4A permission in relation to PRA-regulated activity.

Form ELS

means the eligible liabilities return by which banks and building societies provide information to the Bank of England as required by the Bank of England Act 1998.

foundation IRB

means the internal ratings based approach for assessing credit risk referred to in Article 143(1) of the CRR.

FRS 101

means Financial Reporting Standard 101 issued by the Financial Reporting Council.

general insurance fee block

means firms whose Part 4A permission includes effecting or carrying out contracts of general insurance or contracts of long term insurance other than life policies or firms whose Part 4A permission is insurance risk transformation.

gone into run-off

means that an insurer has acquired the following characteristics:

1. (1) it has ceased to effect new contracts of insurance;
2. (2) its permission for effecting contracts of insurance has been cancelled;
3. (3) its exclusive remaining business is administering its remaining insurance liabilities;
4. and
5. (4) if required to do so, it has submitted a run-off plan to the PRA.

gross premium income or GPI

means the amount of premium receivable which must be included in the documents required to be deposited under IPRU(INS) 9.6 in relation to the financial year to which the documents relate but disregarding for this purpose such amounts as are not included in the documents by reason of a waiver or an order under section 68 of the Insurance Companies Act 1982 carried forward as an amendment to IPRU (INS) of the PRA Handbook under transitional provisions relating to written concessions; or

gross premiums written

means gross premiums written under Schedule 1: Part I.1 (a) and II.1. (a) of the Friendly Societies (Accounts and Related Provisions) Regulations 1994 (SI 1994/1983)

gross technical liabilities or GTL

means the amount of gross technical liabilities referred to in (IPRU (INS) (Appendix 9.1- Form 15 line 19) which must be included in the documents required to be deposited under IPRU(INS)9.6R in relation to the financial year to which the documents relate but disregarding for this purpose such amounts as are not included in the documents by reason of a waiver or an order under section 68 of the Insurance Companies Act 1982 carried forward as an amendment to IPRU (INS) of the PRA Handbook under transitional provisions relating to written concessions.

Group internal model

means the internal models referred to in Articles 230 and 231 of the Solvency II Directive.

IFRS 9 implementation fee(s)

means the fee or fees in 3.21.

insolvency proceedings

means:

1. (1) any proceedings under the Insolvency Act 1986 or Companies Act 2006 to have a firm declared insolvent or to wind up its business including, without limitation, administration, company voluntary arrangement, scheme of arrangement, receivership, administrative receivership, liquidation, sequestration or appointment of a trustee in bankruptcy;
2. (2) any proceedings under the Banking Act 2009 special insolvency regime; or
3. (3) any equivalent process in any jurisdiction outside the United Kingdom.

insurance business transfer scheme

means a scheme to transfer the whole or part of the business of an insurance undertaking or member or former member of the Society which meets the conditions of Part VII FSMA or, where applicable, the Financial Services and Markets Act 2000 (Control of Transfers of Business Done at Lloyd’s) Order 2001(SI 2001/3626).

internal model method or IMM

means the internal approach to counterparty credit risk referred to in Article 283 of the CRR.

Internal models approach or IMA

means the internal models approach referred to in Article 363 of the CRR.

international financial reporting standards or IFRS

means the international accounting standards issued by the International Accounting Standards Board, whether as adopted in the EU under Regulation 1606/2002 or otherwise.

IPRU (INS)

means the IPRU (INS) section of the PRA Handbook which remains in force to the extent required by:

1. (1) Transitional Measures 3.7 of the PRA Rulebook for Solvency II firms; and
2. (2) Transitional Measures 3.1 of the PRA Rulebook for non-directive firms,

and references to rules, forms and appendices are to those applicable as at 31 December 2015.

late payment interest

means interest at the rate of 5% per annum above the official bank rate of the Bank of England from time to time in force.

life insurance fee block

means firms whose permission includes effecting or carrying out contracts of insurance which are, or include, life policies or entering into a funeral plan contract as provider.

Lloyd’s managing agents fee block

means firms whose permission includes managing the underwriting capacity of a syndicate as a managing agent at the Society.

mathematical reserves for fees purposes

modified eligible liabilities or MELs

minimum fee block

means the fee block comprising all firms referred to in Table I of the Periodic Fees Schedule.

new authorisations

means any application, or granting of an application, for (1) a Part 4A permission which includes a PRA regulated activity or (2) a top-up permission which includes a PRA regulated activity.

non-EEA branches

means United Kingdom branches of firms which are incorporated outside the EEA.

non-trading book assets for fees purposes

means total non-trading book assets as reported to the PRA under item 20B of form FSA001 minus £500 million.

number of traders

means the number of employees or agents who, as part of their ordinary duties on behalf of a firm in the designated firms dealing as principal fee block (A10) commit the firm in market dealings or in transactions in securities or other investments in the course of PRA regulated activities, but excluding anyone working solely for the firm’s multi-lateral trading facility operation.

pension fund management

means the class of contract of insurance specified in paragraph VII of Part II of Schedule 1 to the Regulated Activities Order (Contracts of long-term insurance) where effected or carried out by a person who does not carry on a banking business but otherwise carries on insurance business.

periodic fee(s)

means the fee or fees payable in accordance with Chapter 3.

Periodic Fees Schedule

means the schedule of periodic fees annexed to Chapter 3, which is replaced annually following the PRA’s fee rates consultation.

reattribution

means the process under which an insurer seeks to redefine the rights and interests of policy holders.

regulatory transaction fee(s)

means the fee or fees payable in accordance with Chapter 4.

ring-fencing fees group

means a banking group, or part of a banking group, which (i) has submitted forecasts to the PRA indicating that, from 1 January 2019, it will not meet the core deposit level condition in Article 12 of the FSMA (Ring-fenced Bodies and Core Activities) Order 2014 and (ii) has been notified by the PRA between 1 May 2016 and 1 May 2017 that a fee relating to the implementation of ring-fencing will be payable by one or more members of its group.

ring-fenced body or RFB

has the meaning in Section 142A of FSMA.

ring-fencing

means the UK ring-fencing regime as provided for in the Financial Services (Banking Reform) Act 2013, including statutory instruments and PRA rules made or to be made pursuant thereto.

ring-fencing implementation fee(s)

means the fee or fees in 3.18.

second fee year

means the fee year commencing on 1 March immediately following the end of the firm’s first fee year.

special project fee(s) or SPF (s)

means the fee or fees payable in accordance with Chapter 5.

Society of Lloyd’s fee block

means the fee block of which the Society is the sole member.

Solo internal model

means the internal model referred to in Article 112 of the Solvency II Directive.

tariff bands

means broad groupings of business volumes for the purpose of calculating periodic fees.

tariff base

means the PRA’s methodology for calculating volumes of business for the purposes of determining periodic fees.

tariff data

means information about a firm’s business used in the calculation of periodic fees.

tariff rate

means the rate of fee applied to a particular activity for the purpose of calculating periodic fees.

transition costs

means the costs of establishing the PRA which are being recovered from firms over a period of five years from 2013/14 to 2017/18.

transition costs fee block

means firms which are liable to pay transition costs as shown in Table II of the Periodic Fees Schedule..

Treaty firm

means, as defined in paragraph 1 of Schedule 4 of FSMA, a person whose head office is situated in an EEA state other than the United Kingdom and which is recognised by the law of that state as its national.

trustee investment plans

means the class of contracts of insurance specified in Class 3 of Part II of Schedule 1 to the Regulated Activities Order and which are invested in pooled funds beneficially owned by an insurer and not earmarked for individual beneficiaries by that insurer.

valuation point

means the relevant date or period for assessing a firm’s tariff data and calculating periodic fees under Chapter 3.