Prudential Regulation Authority Rulebook

4.1

1. (1) A firm must have in place an effective internal control system.
2. (2) That internal control system must include:
   1. (a) administrative and accounting procedure;
   2. (b) an internal control framework
   3. (c) appropriate reporting arrangements at all levels of the firm; and
   4. (d) a compliance function.

[Note: Art. 46(1) of the Solvency II Directive]

1. (3) A firm must ensure that its internal control system ensures:
   1. (a) the firm's compliance with applicable laws, regulations and administrative provisions;
   2. (b) the effectiveness and the efficiency of the firm's operations in light of its objectives; and
   3. (c) the availability and reliability of financial and non-financial information.
      

4.1A

1. (1) A firm must ensure that the compliance function required by 4.1(2)(d) establishes a compliance policy and a compliance plan.
2. (2) That compliance policy must define the responsibilities, competencies and reporting duties of the compliance function.
3. (3) That compliance plan must set out the planned activities of the compliance function which must take into account all relevant areas of the firm’s activities and its exposure to compliance risk.

4.2

The duties of the compliance function referred to in 4.1A(1) must include:

1. (1) advising the governing body on compliance with all of its obligations under PRA rules and FSMA and any other laws, rules, regulations and administrative provisions deriving from FSMA that apply to UK Solvency II firms;
2. (1A) assessing the adequacy of the measures adopted by the firm to prevent non-compliance; and
3. (2) an assessment of the possible impact of any changes in the legal environment on the operations of the firm concerned and the identification and assessment of compliance risk.

[Note: Art. 46(2) of the Solvency II Directive]

4.3

A firm must have internal processes and procedures in place to ensure the appropriateness, completeness and accuracy of the data used in the calculation of its technical provisions.

[Note: Art. 82 of the Solvency II Directive]

4.4

A firm must have processes and procedures in place to ensure that the best estimate and the assumptions underlying the calculation of the best estimate are regularly compared against experience.

[Note: Art. 83 of the Solvency II Directive]