Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, this Part applies to:

1. (1) a UK Solvency II firm;
2. (2) in accordance with Insurance General Application 3, the Society, as modified by 5;
3. (3) in accordance with Insurance General Application 3, managing agents, as modified by 5;
4. (4) a third country branch undertaking (other than a Swiss general insurer); and
5. (5) a UK ISPV.

1.2

In this Part, the following definitions shall apply:

continued approval

has the meaning given in Senior Insurance Managers Regime – Transitional Provisions.

2.1

A firm must ensure that all persons who perform key functions are at all times fit and proper persons.

[Note: Art. 42(1) of the Solvency II Directive]

2.2

In deciding whether a person is fit and proper pursuant to 2.1, a firm must be satisfied that the person:

1. (1) has the personal characteristics (including being of good repute and integrity);
2. (2) possesses the level of competence, knowledge and experience;
3. (3) has the qualifications; and
4. (4) has undergone or is undergoing all training,

required to enable such person to perform his or her key function effectively and in accordance with any relevant regulatory requirements, including those under the regulatory system, and to enable sound and prudent management of the firm.

[Note: Art. 42(1) of the Solvency II Directive]

2.3

Before deciding, and in considering on an on-going basis, whether a person is fit and proper pursuant to 2.1 and 2.2, a firm must consider:

1. (1) the person’s past business conduct; and
2. (2) whether the person performs his or her key functions in accordance with the relevant conduct standards specified in Insurance - Conduct Standards 3.

[Note: Art. 42(1) of the Solvency II Directive]

2.4

In deciding whether a person (P) is fit and proper to be appointed as a senior insurance management function holder or a notified non-executive director, a firm must:

1. (1) obtain P’s consent for the firm to request the fullest information in relation to P that it is lawfully able to request under the Police Act 1997 and related subordinated legislation of the UK or any part of the UK;
2. (2) if P has lived or worked outside the UK for a material time in the previous six years, obtain P’s consent for the firm to request the fullest information in relation to P that it is lawfully able to request under equivalent overseas legislation; and
3. (3) request, and have regard to, such information.

2.5

Before deciding whether a person is fit and proper to be appointed as a senior insurance management function holder or a notified non-executive director, a firm must take reasonable steps to obtain appropriate references from that person’s current and previous employers, and from organisations at which that person served as, or is currently, a non-executive director, covering at least the past five years.

2.6

Where a firm (A) seeks a reference pursuant to 2.5 from an FCA-authorised person or a PRA-authorised person (B), A must also request that B discloses all matters of which B is aware that are relevant to the assessment of that person’s fitness and propriety.

2.7

If a firm engages a person for a continuous period of time as a senior insurance management function holder or a notified non-executive director it is only required to comply with 2.4 - 2.6 the first time it determines that person is fit and proper to act as a senior insurance management function holder or a notified non-executive director.

3.1

If any PRA-authorised person (A):

1. (1) is considering issuing a certificate to, making a senior management application in respect of, or appointing as a senior insurance management function holder, a key function holder, a non-executive director, a notified non-executive director or a credit union non-executive director, a person (P);
2. (2) makes a request for a reference or other information in respect of P from a firm to which this Part applies (B), in B’s capacity as:
1. (a) P’s current or former employer; or
2. (b) an organisation at which P is or was a member of the governing body; and
3. (3) indicates to B the purpose of the request;

B must, as soon as reasonably practicable, provide a reference and disclose to A in the reference all information of which B is aware that is relevant to A’s assessment of whether P is fit and proper.

4.1

1. (1) A firm (other than a UK ISPV) shall notify the PRA of any changes to the identity of key function holders and shall provide the PRA
1. (a) all the information needed to assess whether such person is fit and proper pursuant to 2.2; and
2. (b) the information referred to in Insurance - Allocation of Responsibilities 5.1(3) in respect of that person.
2. (2) A UK ISPV shall notify the PRA of any changes to the identity of key function holders who are effectively running the firm and shall provide the PRA with all the information needed to assess whether such person is fit and proper pursuant to 2.2.
3. [Note: Art. 42(2) of the Solvency II Directive]
4. (3) Where a firm has complied with 4.1(1) in connection with the appointment of a person as a key function holder, and such person transfers from that key function to a different key function or is appointed to an additional key function, in either case within the same firm, for the purposes of 4.1(1) the firm need only supply, in connection with such subsequent appointment:
1. (a) updates to the information previously provided; and
2. (b) if the key function holder is also to perform a senior insurance management function or an FCA controlled function, the information required in connection with an application for approval to do so.

4.2

Where:

1. (1) a person who is to become a key function holder is also to be approved by the PRA to perform a senior insurance management function or by the FCA to perform an FCA controlled function; and
2. (2) the firm includes the information referred to in 4.1 in its application to the PRA for the approval of that person to perform the senior insurance management function, or in the application to the FCA for the approval of that person to perform the FCA controlled function,

this shall satisfy the requirement in 4.1 in respect of that key function appointment.

4.3

If a firm becomes aware of information which would reasonably be expected to be material to the assessment of a current or former key function holder’s fitness and propriety under this Part, it must inform the PRA as soon as practicable.

[Note: Art. 42(3) of the Solvency II Directive]

4.4

Where a firm replaces a key function holder because the firm considers that that person is no longer fit and proper pursuant to 2.1 and 2.2, the firm must notify the PRA as soon as reasonably practicable.

[Note: Art. 42(3) of the Solvency II Directive]

5.1

This Part applies to the Society and managing agents separately.

6.1

The requirements of 2.4 - 2.6 do not apply to a firm in respect of any person who has continued approval in relation to that firm.