The FCA has published guidance setting out its key considerations and general expectations when reviewing a Part VII transfer. The guidance can be found here.
In releasing the guidance, the FCA has acknowledged that the PRA leads the Part VII process, while still noting that the FCA has an active and important role to play, as it is required to consider such transfers in the context of its own statutory objectives.
The guidance sets out:
- Factors that firms should consider before contacting the FCA, and what they will need to produce prior to a pre‑application meeting with the FCA.
- The documents which the FCA expects firms to provide in order for the FCA to assess whether to approve the proposed Independent Expert (IE).
- The FCA's overall approach, its expectations and the key aspects it will consider when reviewing the proposed Part VII.
- Detailed information and examples for the key documentation, such as the Scheme documents, the IE report and communications with policyholders.
- Examples and factors to consider if the firms proposing the Part VII are planning to apply for a waiver of any of the statutory notification requirements.
The FCA has made clear that the guidance does not explain all aspects of its role in a Part VII, or all of the issues that firms need to consider. The guidance also explicitly states that the FCA may permit deviations from the guidance, if appropriate in the context of the relevant transfer, but that firms will be expected to explain why they have not followed the guidance.
At a time when numerous (re)insurers are proposing Part VIIs as part of their Brexit strategy, the guidance should reduce the number of occasions on which the FCA has to make the same comments across multiple Part VIIs. The FCA's hope will be that applicants take the guidance into account during the transfer process, allowing the FCA to focus on transfer-specific issues when reviewing each Part VII.