Application provision

1.1 Unless otherwise stated, this Part applies to a non-directive insurer other than a non-directive friendly society.



A firm must only include a capital instrument in its lower tier two capital resources if (in addition to meeting the requirements of the rules about eligibility for inclusion in tier two capital) either the holder has no right to repayment or it satisfies either of the following conditions:

  1. (1) it has an original maturity of at least five years; or
  2. (2) it is redeemable on notice from the holder, but the period of notice of repayment required to be given by the holder is five years or more.



For the purposes of calculating the amount of a lower tier two instrument which may be included in a firm's capital resources:

  1. (1) in the case of an instrument with a fixed maturity date, in the final five years to maturity; and
  2. (2) in the case of an instrument with or without a fixed maturity date but where five years' or more notice of redemption or repayment has been given, in the final five years to the date of redemption or repayment;

the principal amount must be amortised on a straight line basis.