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

The changes to this rule are effective from 23:00 on 31/12/2020.

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.

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.

annual quantitative reporting template

means a reporting template set out in EU Regulation 2015/2450 or any other relevant Solvency II Regulations.

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.

best estimate liabilities for fees purposes

means:

1. (1) for UK Solvency II firms in the general insurance fee block (A3), the sum of items entered under row codes R0010, R0370, R0380, R0410 and R0420, column code C0180, of the annual quantitative reporting template S17.01.01, plus the sum of items entered under row codes R0010 and R0030, column codes C0090, C0140 and C0190, of the annual quantitative reporting template S12.01.01, as reported to the PRA;
2. (2) for non-directive firms in the general insurance fee block (A3), a firm’s total gross technical provisions as reported to the PRA under item 19 of form 15, or where this is not reported because the firm is a marine mutual under the Insurance Companies – Reporting Part, item 29 of form M2, or where the firm is a friendly society, the balance sheet entry C3 claims outstanding where this entry is required under the Friendly Societies (Accounts and Related Provisions) Regulations 1994 (SI 1994/1983), and otherwise zero; and
3. (3) for UK Solvency II firms in the life insurance fee block (A4), the sum of items entered under row codes R0010 and R0030, column codes C0150 and C0210, minus the sum of items entered under row codes R0010 and R0030, column codes C0090, C0140 and C0190 of the annual quantitative reporting template S12.01.01, minus corporate pensions business reported under column code C0180 of the annual quantitative reporting template S14.01.01, and minus 0.35 x unit-linked business which is not also corporate pensions business reported under column code C0180 of the annual quantitative reporting template S14.01.01. as reported to the PRA.

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.

core deposit

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

corporate pensions business

means business reported using product ID codes 300-322 for the annual quantitative reporting template S14.01.01.

cross border services

means:

1. (1) for a former incoming EEA firm or a former incoming Treaty firm, services provided within the UK prior to IP completion day under the freedom to provide services and subsequently under any legislative provision which replaces it;
2. (2) for Gibraltar-based firms, services provided under an entitlement conferred by the Financial Services and Markets Act 2000 (Gibraltar) Order 2001 in the United Kingdom without using a physical presence there to offer or provide those services.

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

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, but for the purposes of the 2020-21 fee year this does not include firms which are former incoming EEA firms or former incoming Treaty firms and where the same legal entity receives new or extended Part 4A permission in relation to PRA-regulated activity during the course of that fee year.

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.

former freedom of services provider

means firms which, immediately prior to IP completion day, relied on an EEA or Treaty right to provide services in the United Kingdom without using a physical presence there to offer or provide those services, and which immediately after IP completion day, are authorised by the PRA as a result of the EEA Passport Rights (Amendment, etc and Transitional Provisions) (EU Exit) Regulations 2018 in relation to those services, and continue not to use a physical presence in the United Kingdom to offer or provide them.

former incoming EEA firm

means a person who immediately before IP completion day was authorised to carry on a regulated activity by virtue of section 31(1)(b) of FSMA.

former incoming Treaty firm

means a person who immediately before IP completion day was authorised to carry on a regulated activity by virtue of section 31(1)(c) of FSMA.

foundation IRB

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

Gibraltar-based firms

has the meaning in the Financial Services and Markets Act (Gibraltar) Order 2001.

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 written premium for fees purposes

means:

1. (1) for UK Solvency II firms in the general insurance fee block (A3), the total of items entered under row codes R0110, R0120 and R0130, as expressed in column code C0200 where this column is completed for those row codes, of the annual quantitative reporting template S.05.01.01, as reported to the PRA;
2. (2) for non-directive firms in the general insurance fee block (A3), a firm’s gross premium written as reported to the PRA under item 11 of form 11, or where this is not reported because the firm is a Swiss general insurer or holds a relevant waiver, the entry at sheet 1, line 1, column 1, of form 20A, or where the firm is a friendly society, the income and expenditure account entry for gross premium written or contributions as income receivable, as appropriate under the Friendly Societies (Accounts and Related Provisions) Regulation 1994 (SI 1994/1983); and
3. (3) for UK Solvency II firms in the life insurance fee block (A4), the item entered under row code R1410, column code C0300 of the annual quantitative reporting template S05.01.01 minus corporate pensions business reported under column code C0060 of the annual quantitative reporting template S14.01.01, and minus 0.35 x unit-linked business which is not also corporate pensions business reported under column code C0060 of the annual quantitative reporting template S14.01.01, as reported to the PRA.

Group internal model

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

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.

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.

life policy

means:

1. (1) a contract of long-term insurance other than a pure protection contract;
2. (2) a long-term care insurance contract which is a pure protection contract; and
3. (3) a pension term assurance policy.

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.

model maintenance fee

means the fee or fees in 3.22.

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.

passported activity

means:

1. (1) for former incoming EEA firms and former incoming Treaty firms, an activity carried on under an EEA right or Treaty right, prior to IP completion day, and subsequently under any legislative provision which replaces it;
2. (2) for Gibraltar-based firms, an activity carried out under an entitlement conferred by the Financial Services and Markets Act 2000 (Gibraltar) Order 2001.

pension term assurance policy

means a personal pension policy which is a pure protection contract and in connection with which tax relief is available under Chapter 4 of Part 4 of the Finance Act 2004.

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.

personal pension policy

means a pension policy under which contributions (single or regular) are paid to a personal pension scheme.

pure protection contracts

means:

1. (1) a contract of long-term insurance in respect of which the following conditions are met:
1. (a) the benefits under the contract are payable only on death or in respect of incapacity due to injury, sickness or infirmity;
2. (b) the contract has no surrender value, or the consideration consists of a single premium and the surrender value does not exceed that premium; and
3. (c) the contract makes no provision for its conversion or extension in a manner which would result in it ceasing to comply with (a) or (b); or
2. (2) a reinsurance contract covering all or part of a risk to which a person is exposed under a contract of long-term insurance that meets the conditions in (1).

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 does not meet the core deposit level condition in Article 12 of the FSMA (Ring-fenced Bodies and Core Activities) Order 2014 and does not fall within the exemptions set out in Article 11 of the FSMA (Ring-fenced Bodies and Core Activities) Order 2014.

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 pursuant thereto.

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 and its subsidiaries are members.

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.

third country branch

means United Kingdom branches of firms which are incorporated elsewhere in the world, excluding Gibraltar.

total assets for fees purposes

means for firms in the designated firms dealing as principal fee block (A10), the sum of the firm's assets as recorded at row 380 of data item template 1.01 of Annex III of the Supervisory Reporting ITS.

total operating income for fees purposes

means for firms in the designated firms dealing as principal fee block (A10), the sum of the firm's net operating income as recorded at row 355 of data item template 2 of Annex III of the Supervisory Reporting ITS.

unit-linked business

means business reported using product ID codes 102, 112, 122, 132, 202, 212, 222, 232, 302, 312, 322, 622, and 722 for the annual quantitative reporting template S14.01.01.

valuation point

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