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 6;
3. (3) in accordance with Insurance General Application 3, managing agents, as modified by 6; and
4. (4) a third country branch undertaking (other than a Swiss general insurer).

1.2

In this Part, the following definitions shall apply:

governance map

has the meaning given in 5.1.

SIMR prescribed responsibility

1. (1) for a firm (other than a third country branch undertaking) means the responsibilities in 3.1;
2. (2) for a third country branch undertaking (other than a UK-deposit insurer or a Swiss general insurer) means the responsibilities set out in 3.1 to the extent only that they are relevant to the operations effected by its third country branch, save in relation to 3.1(4) which shall also take account of the operations of the third country branch undertaking to the same extent as is necessary to ensure compliance by the third country branch undertaking with Third Country Branches 13;
3. (3) for a UK-deposit insurer, means the responsibilities set out in 3.1 to the extent only that they are relevant to the operations effected by its third country branch and all its third country undertaking EEA branches, save in relation to 3.1(4) which shall also take account of the operations of the third country branch undertaking to the same extent as is necessary to ensure compliance by the third country branch undertaking with Third Country Branches 13.

2.1

A firm (other than a third country branch undertaking) must allocate each of the SIMR prescribed responsibilities set out in 3.1 (other than 3.1(10) and (11)), to one or more persons who, in relation to that firm, are approved under section 59 of FSMA by:

1. (1) the PRA to perform a senior insurance management function; or
2. (2) in relation to relevant senior management functions only, the FCA.

2.2

A firm (other than a third country branch undertaking) must allocate each of the SIMR prescribed responsibilities set out in 3.1(10) and (11) to one or more non-executive directors who perform a senior insurance management function set out in Insurance – Senior Insurance Management Functions 4 or an FCA governing function at that firm.

2.3

A third country branch undertaking (other than a Swiss general insurer) must allocate each of the SIMR prescribed responsibilities set out in 3.1(1), (4), (5), (6) and (7) to one or more persons who, in relation to that firm, are approved under section 59 of FSMA by:

1. (1) the PRA to perform a senior insurance management function; or
2. (2) in relation to relevant senior management functions only, the FCA.

3.1

Each of the responsibilities set out in this rule is an SIMR prescribed responsibility:

1. (1) responsibility for ensuring that the firm has complied with its obligations in Insurance - Fitness and Propriety to:
1. (a) ensure that every person who performs a key function (including every person in respect of whom an application under section 59 of FSMA is made) is a fit and proper person; and
2. (b) provide and obtain regulatory references:
2. (2) responsibility for leading the development of the firm’s culture by the governing body as a whole;
3. (3) responsibility for overseeing the adoption of the firm’s culture in the day-to-day management of the firm;
4. (4) responsibility for the production and integrity of the firm’s financial information and its regulatory reporting;
5. (5) responsibility for management of the allocation and maintenance of the firm’s:
1. (a) capital; and
2. (b) liquidity;
6. (6) responsibility for the development and maintenance of the firm’s business model by the governing body;
7. (7) responsibility for performance of the firm’s ORSA;
8. (8) responsibility for leading the development and monitoring effective implementation of policies and procedures for the induction, training and professional development of all members of the firm’s governing body;
9. (9) responsibility for monitoring effective implementation of policies and procedures for the induction, training and professional development of all of the firm’s key function holders (other than members of the firm’s governing body);
10. (10) responsibility for oversight of the independence, autonomy and effectiveness of the firm’s policies and procedures on whistleblowing including the procedures for protection of staff who raise concerns from detrimental treatment; and
11. (11) responsibility for overseeing the development and implementation of the firm’s remuneration policies and practices.

4.1

A firm must identify:

1. (1) each of the functions that the firm considers to be a key function; and
2. (2) any such key function that amounts to effectively running the firm (or, for a third country branch undertaking other than a Swiss general insurer, effectively running the operations effected by the third country branch, or, for a UK-deposit insurer, the operations effected by the third country branch and all the third country undertaking EEA branches).

4.2

A firm must keep its identification of key functions pursuant to 4.1 up-to-date.

4.3

A firm must keep a record of its reasoning for the identification of key functions pursuant to 4.1.

5.1

A firm must have and maintain a governance map, which is a clear and coherent document or series of documents with the following details:

1. (1) a list of the key functions identified by the firm in accordance with 4.1 highlighting those that amount to effectively running the firm (or, for a third country branch undertaking other than a Swiss general insurer, effectively running the operations effected by the third country branch or, for a UK-deposit insurer, the operations effected by the third country branch and all the third country undertaking EEA branches);
2. (2) the names of the persons who effectively run the firm (or, for a third country branch undertaking other than a Swiss general insurer, effectively run the operations effected by the third country branch or, for a UK-deposit insurer, the operations effected by the third country branch and all the third country undertaking EEA branches) or who are responsible for other key functions listed pursuant to 5.1(1);
3. (3) for each person named pursuant to 5.1(2), a summary of the significant responsibilities allocated to that person (including, if applicable, any SIMR prescribed responsibilities that have been allocated to that person in accordance with 2);
4. (4) where any responsibilities covered by 5.1(3) are allocated to more than one person, details of how those responsibilities are shared or divided between the persons concerned;
5. (5) reporting lines and lines of responsibility for each person listed pursuant to 5.1(2);
6. (6) where a firm (other than a third country branch undertaking) is a member of a group:
1. (a) how the firm’s management and governance arrangements fit together with those of its group and the extent to which the firm’s management and governance arrangements are provided by or shared with other members of its group; and
2. (b) for the persons listed pursuant to 5.1(2), details of the reporting lines and the lines of responsibility (if any) to persons who are employees or officers of other group members or to committees or other bodies of the group or of other group members.

5.2

A firm must update the governance map:

1. (1) at least quarterly; and
2. (2) in the event of a significant change to:
1. (a) the firm’s governance structure;
2. (b) the significant responsibilities allocated to a key function holder; or
3. (c) the reporting lines or lines of responsibility for a key function holder.

5.3

A firm must, as soon as reasonably practicable, provide the following to the PRA:

1. (1) upon request by the PRA, a copy of the governance map; and
2. (2) in the event of an update pursuant to 5.2(2), a copy of the relevant part of the governance map.

5.4

A firm must keep an up-to-date record of the scope of responsibilities of each key function holder.

5.5

A scope of responsibilities form, where it is kept and maintained on behalf of a key function holder, will satisfy the requirement in 5.4.

5.6

The record in 5.4, and each updated version, must be signed by the key function holder and an appropriate representative of the firm.

5.7

Where a firm amends its governance map to show changes in a person’s responsibilities it must also ensure that:

1. (1) the person concerned is informed in writing of the changes; and
2. (2) the record in 5.4 is amended to show the changes.

5.8

Each version of both the governance map and the record in 5.4 must be retained for a period of ten years from the date on which it was superseded by a more up-to-date record, and must be provided to the PRA on request.

5.9

[Not currently used.]

5.10

A firm must comply with 5.8 in relation to any record created in accordance with SYSC 2.2.1R of the PRA Handbook as at 31 December 2015.

6.1

This Part applies to the Society and managing agents separately.