The PRA issued a letter on 21 January setting out the approach it will take to Part VII transfers during 2015, and emphasising the need to deal with these in “an efficient and planned way”.
In cases where the PRA’s fee has already been paid, it will continue to progress the transfer, if the firm has indicated its intention to complete the transfer in 2015 and is on track to do so. In all other cases, the PRA will assess on a case by case basis the impact of the transfer on its objectives, and whether it is likely to complete by the end of the year, and will seek to agree a credible and realistic timetable, based on this assessment. The relevance of the reference to impact on the PRA’s objectives is not clear. It could be read as an indication that transfers which pose a significant risk to the PRA’s objectives are likely to be subject to a much longer timetable and may not complete by the end of this year; or alternatively, that the PRA will not focus time and resource on small transfers that are of insignificant impact. It is important to seek early engagement with the PRA on any transfer, whatever the size, where the aim is to complete before 2016.
The PRA makes it clear that it will not consider any scheme documentation until it has a final draft of the independent expert’s report, by which we assume it to mean a draft that the parties are content is complete, subject to any PRA comments. All documents must be received at least six weeks prior to the directions hearing, and must be in final form.
It is clear that the PRA is being asked to deal with a large number of Part VII transfers in the run up to the implementation of Solvency II in January 2016, and that this will put a strain on its resources. The letter should not, however, be taken as an indication that it will not consider any new proposal. The PRA expressly states that it recognises the importance of Part VIIs and will continue to engage on them. However, it is clear that parties will need to propose a sensible and credible timetable which is achievable for them. If an overly ambitious deadline for submitting documents to the PRA is missed, it may mean that the relevant project will be put to the back of the queue and jeopardise its chances of completion in 2015.