PRA CP18/17 and FCA CP17/34: Joint Consultation on MiFID II, IDD, BMR, and Minor Rulebook Amendments

Consultation Paper |PRA CP18/17
FCA CP17/34
Occasional Consultation Paper
October 2017

Prudential Regulation Authority
20 Moorgate
London EC2R 6DA

Consultation Paper |
Occasional Consultation Paper
October 2017
The Bank of England and the Prudential Regulation Authority (PRA) reserve the right to publish any information which it may receive as part of this consultation. Information provided in response to this consultation, including personal information, may be subject to publication or release to other parties or to disclosure, in accordance with access to information regimes under the Freedom of Information Act 2000 or the Data Protection Act 1998 or otherwise as required by law or in discharge of the PRA’s statutory functions. Please indicate if you regard all, or some of, the information you provide as confidential. If the Bank of England or the PRA receives a request for disclosure of this information, the Bank of England or the PRA will take your indication(s) into account, but cannot give an assurance that confidentiality can be maintained in all circumstances. An automatic confidentiality disclaimer generated by your IT system on emails will not, of itself, be regarded as binding on the Bank of England and the PRA. Responses are requested for:
 Tuesday 17 October 2017 for the administration instrument (Appendix 15);  Friday 3 November 2017 for Chapters 7 and 8;  Tuesday 9 January 2018 for Chapters 2 – 6, 9 and 10. Please address any comments or enquiries to:
Policy Implementation Team
Prudential Regulation Authority
20 Moorgate
London
EC2R 6DA
Email: OCP.responses@bankofengland.co.uk
The Financial Conduct Authority (FCA) makes all responses to formal consultation available for public inspection unless the respondent requests otherwise. The FCA will not regard a standard confidentiality statement in an email message as a request for non-disclosure. Despite this, the FCA may be asked to disclose a confidential response under the Freedom of Information Act 2000. The FCA may consult respondents if it receives such a request. Any

decision the FCA makes not to disclose the response is reviewable by the Information Commissioner and the Information Rights Tribunal. All FCA publications are available to download from www.fca.org.uk. To receive this paper in an alternative format, please call 020 7066 0790 or email:
publications_graphics@fca.org.uk or write to: Editorial and Digital team, Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS. Please address any comments or enquiries on proposals contained in Chapter 7 to the FCA at Cp17-34@fca.org.uk by Friday 3 November 2017. © Bank of England and Financial Conduct Authority 2017

Contents
1 Overview 5
2 Conditions governing business - minor amendments 8 3 Market risk - CRD IV amendments 9 4 Amendments to Transitional Measures Part to correct references 10 5 Application requirements - CRR and CRD amendments 11 6 Whistleblowing in UK branches of non-EEA deposit-takers 12 7 Joint PRA and FCA form, PRA Rulebook, and FCA Handbook changes – Markets in Financial Instruments Directive II (MiFID II), Insurance Distribution Directive (IDD), and Benchmarking Regulation (BMR) amendments 17 8 Consequential amendments to Short Form A 20 9 Application of EBA’s Guidelines on corrections to modified duration for debt instruments 21 10 Naming convention for life insurers when reporting data by homogenous risk group 22 Appendices 24

Occasional Consultation Paper October 2017 5
1 Overview
1.1 This Occasional Consultation Paper (OCP) sets out proposed changes to Prudential Regulation
Authority (PRA) Rulebook Parts and supervisory statements (SS). Chapter 7 also contains joint PRA and Financial Conduct Authority (FCA) proposals.
1.2 This consultation is relevant to all PRA-authorised firms. Chapter 7 is also relevant to FCA-regulated
Markets in Financial Instruments Directive (MiFID) firms.
1.3 The chapters contained in this OCP, the Rulebook Parts, SSs they propose to change, and the
appendices where the draft policy is set out, are listed in the table below.
Chapter Rulebook Part/Supervisory statement Appendix

1. Overview Administration instrument - minor amendments to
   multiple Rulebook Parts
   15
2. Conditions governing
   business – minor amendment
   Conditions Governing Business 1
3. Market risk – Capital
   Requirements Directive (CRD)
   IV amendment
   Internal Capital Adequacy Assessment (ICAA) 2
4. Transitional measures -
   references
   Transitional Measures 3
5. Application requirements –
   Capital Requirements
   Regulation (CRR) and CRD amendments
   Amendments to multiple Rulebook Parts 4
6. Whistleblowing – UK
   branches of non-EEA deposit￾takers
   General Organisational Requirements 5
7. Joint PRA and FCA form, PRA
   Rulebook, and FCA Handbook changes - Markets in Financial Instruments Directive II (MiFID II), Insurance Distribution Directive (IDD), and Benchmarking Regulation (BMR) amendments Amendments to multiple Rulebook Parts and forms and the FCA Handbook 6 - 12
8. Short Form A - consequential
   amendments
   Amendments to Short Form A 9
9. Application of EBA’s
   Guidelines on corrections to modified duration for debt instruments SS13/13 ‘Market risk’ 13
10. Naming convention for life
    insurers when reporting data by homogeneous risk group SS36/15 ‘Solvency II: life insurance product reporting codes’ 14 The PRA’s statutory obligations
    1.4 The PRA must comply with a number of statutory and public law obligations when making rules and
    determining the general policy and principles by which it performs its functions. Each chapter in this OCP will separately address the following obligations:

6 Occasional Consultation Paper October 2017

 The Financial Services and Markets Act 2000 (FSMA)1 requires the PRA, so far as reasonably possible, to act in a way that advances its objectives:
 the general objectives to promote the safety and soundness of PRA-authorised persons, and for insurance, to contribute to ensuring that policyholders are appropriately protected; and  the secondary objective to facilitate effective competition in the markets for services provided by PRA-authorised persons in carrying on regulated activities.  Provide an analysis of the costs together with an analysis of the benefits that will arise if the proposed rules are made or if, in the opinion of the PRA the costs or benefits cannot reasonably be estimated or it is not reasonably practicable to produce an estimate, include a statement of the PRA's opinion and an explanation of it.  To have regard to the Regulatory Principles2 and certify that the policy proposals accord with these.  Where the PRA proposes a rule which would apply both to mutual societies, and other authorised persons, prepare a statement setting out its opinion whether or not the impact of the proposed rule on mutual societies will be significantly different.3  The PRA should have regard to aspects of the economic policy of Her Majesty’s government as recommended in HM Treasury’s recommendations letter.  The requirement of the Equality Act 2010 to have due regard to the need to eliminate discrimination and to promote equality of opportunity in carrying out its policies, services and functions.
1.5 The PRA has consulted the FCA on the proposals in this OCP.
Administration instrument
1.6 This OCP also consults on an administration instrument. An administration instrument is used to
make minor corrections to PRA Rulebook provisions. The corrections are not substantive and are not intended to change PRA policy. The corrections will result in rule amendments.
1.7 In making this instrument, the PRA aims to ensure that rules are correct, presented clearly and
contain up-to-date references. Accurate Rulebook provisions allow the PRA to act in a way that advances the safety and soundness of PRA firms, and regarding insurers, contributes to policyholder protection. For these reasons, the PRA believes that administration instruments are compatible with the requirement on the PRA to act in a way that advances its objectives.
1.8 The PRA consults with the FCA prior to undertaking consultations on administration instruments and
ensures that proposed corrections are consistent with the regulatory principles. Such minor corrections are unlikely to impact on competition or on mutual societies or give rise to any equality or diversity issues. Minor proposals are also unlikely to result in costs for firms, who will benefit from a more accurate Rulebook. Responses and next steps
1.9 The consultation closes on:
 Tuesday 17 October 2017 for the administration instrument (Appendix 15);

1 s.138J(2) FSMA
2 s.2H FSMA
3 s.138K(2) FSMA

7 Occasional Consultation Paper October 2017

 Friday 3 November 2017 for Chapters 7 and 8;  Tuesday 9 January 2018 for Chapters 2 – 6, 9 and 10.
1.10 Please address any comments or enquiries to OCP.responses@bankofengland.co.uk. For Chapter 7
comments or enquiries can also be sent to the FCA at Cp17-34@fca.org.uk.
1.11 The policy contained in this consultation paper (CP) has been designed in the context of the current
UK and EU regulatory framework. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework, including changes arising once any new arrangements with the European Union take effect.

8 Occasional Consultation Paper October 2017

2 Conditions governing business – minor amendment
2.1 This chapter sets out proposed amendments to the Conditions Governing Business Part of the PRA
Rulebook to correct a typographical error. It is relevant to Solvency II firms that apply a volatility adjustment. The proposals do not represent a change in PRA policy. Proposal
2.2 The PRA proposes to amend the Conditions Governing Business Part to correct rule 3.2(3)(b) by
inserting the defined term ‘volatility adjustment’ in exchange for the word ‘volatility’.
2.3 The proposed changes are set out in Appendix 1.
Statutory obligations
2.4 Amendments proposed in this chapter are intended to clarify and remove any ambiguity around
existing risk management arrangements for firms applying the volatility adjustment. There are no additional costs introduced by the above mentioned proposals.
2.5 The PRA considers that the proposals in this chapter are compatible with the PRA’s general objective
to promote the safety and soundness of firms and to contribute to the securing of an appropriate degree of protection for those who are or may become insurance policyholders, by clarifying the application of PRA rules and the PRA’s policy objectives.
2.6 The PRA considers that the proposed amendments do not have a material impact on effective
competition.
2.7 In developing the proposals in this CP, the PRA has had regard to the regulatory principles and
considers that the regulatory principle of most relevance to the proposals is that a burden imposed should be proportionate to the benefits expected to result. The PRA considers that correcting the terminology gives effect to a rule which is proportionate for Solvency II firms.
2.8 The PRA considers that the impact of the proposed rule changes on mutuals is expected to be no
different from the impact on other firms.
2.9 The PRA has had regard to HM Treasury’s recommendations on aspects of the Government’s
economic policy when considering these proposals.
2.10 The PRA has considered the equality and diversity issues that may arise from the proposals in this
consultation. The PRA considers that the proposals in this consultation do not raise any concerns with regards to equality and diversity issues.

9 Occasional Consultation Paper October 2017

3 Market risk – Capital Requirements Directive (CRD) IV amendment
3.1 In this chapter, the PRA proposes to amend the Internal Capital Adequacy Assessment (ICAA) Part in
the PRA Rulebook with respect to market risk. It is relevant to all firms to which CRD IV1 applies. Proposal
3.2 CRD IV, Article 83(3) clarifies that firms should fund themselves with adequate capital when they hold
opposite positions in stock-index futures which are not identical in respect of either maturity, composition, or both. The PRA proposes to amend ICAA 8.4 to reflect the text set out in CRD IV. This builds on the existing ICAA 8.4 rule, which sets out that a firm which has netted off its positions in one or more of the equities constituting a stock-index against one or more positions in the stock-index future or other stock-index product, must have adequate financial resources and internal capital to cover the basis risk of loss caused by the future's or other product's value not moving fully in line with that of its constituent equities.
3.3 The proposed changes are set out in Appendix 2.
Statutory obligations
3.4 The PRA considers this proposal is compatible with the PRA’s statutory objective to promote the
safety and soundness of firms by removing any regulatory uncertainty over the PRA’s market risk ICAA rules. The PRA does not expect the proposal in this chapter to impose economic costs or benefits.
3.5 The PRA considers that the proposed amendments do not have a material impact on effective
competition.
3.6 In developing the proposals in this CP, the PRA has had regard to the regulatory principles. The PRA
considers that the regulatory principle of most relevance to this proposal is regulatory transparency. The proposed update to the ICAA Part will better enable firms to understand the PRA’s expectations and its implementation of relevant legislation.
3.7 The PRA has also had regard to the Government’s economic policy, the most relevant aspect being
regulatory transparency and consistency, by explicitly clarifying the PRA’s application of CRD IV in the PRA Rulebook.
3.8 The PRA considers that the impact of the proposed rule changes on mutuals is expected to be no
different from the impact on other firms.
3.9 The PRA has performed an assessment of the policy proposals and does not consider that the
proposals give rise to equality and diversity implications.

1 Capital Requirements Directive (2013/36/EU) (CRD) and Capital Requirements Regulation (575/2013) (CRR) – jointly ‘CRD IV.’

10 Occasional Consultation Paper October 2017

4 Amendments to Transitional Measures Part to correct references
4.1 This chapter sets out proposed amendments to the Transitional Measures Part of the PRA Rulebook
to correct the references to the Reporting Part. It is relevant to all Solvency II Firms. Proposal
4.2 The PRA proposes to amend rule 13.3 of the Transitional Measures Part. This rule exempts groups
from reporting a capital add-on or undertaking specific parameters (USPs) in the Solvency and Financial Condition Report (SFCR) for the first two years of Solvency II. 13.3 will be amended so that it references Reporting 3.6 instead of Reporting 3.7 so that the transitional measure is effective.
4.3 The proposed changes are set out in Appendix 3.
Statutory obligations
4.4 The proposals are compatible with the PRA’s statutory objectives to promote the safety and
soundness of PRA-authorised firms, and to contribute to ensuring that policyholders of insurers are appropriately protected, by making the rules firms are required to follow clearer and more consistent.
4.5 The proposed changes do not have a material impact on effective competition because the proposed
changes are correcting a reference that will align the wording of rules applying to both solo insurance undertakings and insurance groups.
4.6 In developing the proposals in this CP, the PRA has had regard to the regulatory principles and to the
Government’s economic policy. The PRA considers that transparency is of the most relevance when considering the PRA’s regulatory principles and the Government’s economic policy: the PRA is amending its rules in order to provide clarity to the users of the SFCR and to the firms it regulates.
4.7 The PRA considers that the impact of the proposed rule changes on mutuals is expected to be no
different from the impact on other firms.
4.8 The PRA has performed an assessment of the policy proposals and does not consider that the
proposals in this chapter give rise to equality and diversity implications.

11 Occasional Consultation Paper October 2017

5 Application requirements – Capital Requirements Regulation (CRR) and CRD amendments Overview
5.1 This chapter sets out proposed amendments to the following Parts of the Rulebook:
 Capital Buffers Part;
 General Organisational Requirements Part;
 Internal Capital Adequacy Assessment Part;
 Internal Liquidity Adequacy Assessment Part;  Leverage Ratio Part;  Liquidity Coverage Requirement – UK Designated Investment Firms Part;  Regulatory Reporting Part;  Reporting Pillar 2 Part;  Risk Control Part;  Skills, Knowledge and Expertise Part; and  the Glossary. The amendments are to ensure that the calculation bases used in the PRA Rulebook take account of the exercise of any Capital Requirements Regulation (CRR) discretions available to the PRA as Competent Authority (‘discretions’) that change the scope of application of requirements, whether implemented through PRA rules or granted to firms on a case-by-case basis as a CRR Permission. It is relevant to all CRR firms.
5.2 There are discretions in the CRR which can alter the scope of application of requirements at either
individual or consolidated/sub-consolidated level.
1 For example, on an individual basis firms may be permitted to include certain entities in their individual calculations through the individual consolidation permission2 and on a consolidated (or sub-consolidated basis) the scope of a group can be expanded to include entities that are linked together for reasons other than being a parent and subsidiary.3 Other Discretions permit the individual level of application to be dis-applied entirely for certain requirements, such as Liquidity, and replaced with calculations based on a wider group of entities.4
5.3 The use of a discretion will automatically be reflected in any calculation a firm makes under the
relevant parts of CRR (Pillar 1). However, the parts of the prudential framework, such as Pillar 2, that are set out in the CRD and implemented through PRA rules have to be separately activated at the relevant levels of application. The provisions that do this also need to reflect any relevant changes to the scope of application made by the exercise of any discretions so that the calculation bases are consistent between different Rulebook Parts and between CRR and CRD derived rules. The majority of firms already assume

1 CRR Articles 7 to 10 for individual requirements and in CRR Articles 18 and 19 for consolidated and sub-consolidated requirements 2 CRR Article 9 3 CRR Article 18(3)-(6) 4 A Domestic Liquidity Sub-Group or DolSub set up under CRR Article 8

12 Occasional Consultation Paper October 2017

that these discretions feed through into all relevant requirement calculations. The PRA proposes to amend existing provisions to ensure this intention is clear to all firms. Proposal Requirements on an individual basis
5.4 The PRA proposes to clarify the rules to ensure that the application of requirements on an ‘individual
basis’ reflects any CRR Permissions granted by the PRA under CRR Articles 7 to 10. The PRA proposes to amend the Capital Buffers; Internal Capital Adequacy Assessment; Internal Liquidity Adequacy Assessment; Leverage Ratio; Liquidity Coverage Requirement – UK Designated Firms; and Reporting Pillar 2 Rulebook Parts to reflect the clarification.
5.5 In certain cases the PRA would require firms to report some individual requirements on an
unmodified basis, ie on the basis of the firm’s balance sheet alone, without the modification by any relevant Permissions or PRA rules. In the submission templates and related rules this is described as ‘unconsolidated basis’. In particular, the accounting framework does not recognise CRR discretions so the requirement for firms to submit their Annual report and accounts to the PRA does not reflect such discretions. Also some discretions do not affect all requirements. In particular the Individual Consolidation Permission does not act on liquidity requirements. This has been set out more clearly in the Regulatory Reporting Part. Requirements on a consolidated or sub-consolidated basis
5.6 The PRA proposes to clarify the rules to ensure that the application of requirements on a
‘consolidated basis’ or ‘sub-consolidated basis’ reflects any CRR Permissions granted by the PRA under CRR Articles 18 and 19 (for example under CRR 18(3) or 19(2)) and reflects any other discretions on the scope of consolidation that the PRA has implemented through rules (for example 18(4) and 18(5)). The PRA proposes to amend the Capital Buffers; General Organisational Requirements; Internal Capital Adequacy Assessment; Internal Liquidity Adequacy Assessment; Liquidity Coverage Requirement – UK Designated Firms; Reporting Pillar 2; Risk Controls and Skills, Knowledge; and Expertise Rulebook Parts to reflect the clarification. A consequential amendment to the definition of ‘consolidation group’ is also proposed.
5.7 The proposed changes are set out in Appendix 4.
Statutory obligations
5.8 The PRA has a statutory objective to promote the safety and soundness of banks, building societies,
credit unions, insurers and PRA-designated investment firms. The proposals in this CP are intended to further that objective by clarifying in rule text that discretions which alter the scope of application of requirements in CRR have effect on the application of CRD-derived rules in the PRA Rulebook as envisaged by CRD Articles 108 and 109. This ensures that all firms are clear about the basis on which requirements calculations should be made, and that the PRA can get an accurate and comparable picture of an institution’s requirements and accurately monitor its safety and soundness.
5.9 In the absence of making this change, there is a possibility that firms will incur costs by
misinterpreting the PRA’s application of the rules and prepare information on two different bases (one for CRR and the other for CRD-derived rules). Making these amendments avoids these potential costs by clarifying that the bases of calculation, as adjusted by permissions or PRA rules, and the scope of application of CRR and CRD-derived rules should align.
5.10 In developing the proposals in this CP, the PRA has had regard to the regulatory principles. The two
principles with the most relevance are:

13 Occasional Consultation Paper October 2017

 The principle that the PRA should exercise its functions as transparently as possible. In this CP, the PRA sets out the key information relevant to its proposals, and gives respondents the opportunity to comment. Furthermore, the PRA judges that the proposals outlined in this CP bring greater clarity on compliance with existing PRA requirements regarding the calculation of prudential requirements at different levels of application where these have been altered by the use of discretions contained in CRR, including CRR Permissions granted by the PRA.  In line with the principle that it is desirable, where appropriate, for a regulator to exercise its functions in a way that recognises differences in the nature of, and objectives of, businesses carried on by different persons subject to requirements imposed by or under the Financial Services and Markets Act 2000 (FSMA), the granting of CRR Permissions recognises differences in the nature of business carried on by different persons. These proposals ensure the full effect of any permissions granted are reflected in the calculation of relevant requirements.
5.11 HM Treasury has made recommendations to the Prudential Regulation Committee about aspects of
the Government’s economic policy to which the Committee should have regard when considering how to advance the objectives of the PRA and apply the regulatory principles as set out in FSMA. In the PRA’s opinion the proposals in this chapter do not have implications for the aspects outlined in the HM Treasury recommendations.
5.12 In the PRA’s opinion, the impact of the proposed rule changes on mutuals is expected to be no
different from the impact on other firms.
5.13 The PRA has performed an assessment of the policy proposals and does not consider that the
proposals give rise to equality and diversity implications.

14 Occasional Consultation Paper October 2017

6 Whistleblowing in UK branches of non-EEA deposit-takers
6.1 This chapter sets out proposed amendments to the General Organisational Requirements Part of the
PRA Rulebook to clarify how UK branches and subsidiaries share details of their whistleblowing channels. It is relevant to UK deposit-takers with non-EEA subsidiaries that branch back into the United Kingdom.
6.2 The Parliamentary Commission on Banking Standards (PCBS) recommended that banks put in place
mechanisms to allow their employees to raise concerns of risk and wrongdoing internally (‘whistleblowing’) in its final report in June 2013.1 The report noted the lack of whistleblowers coming forward in the run-up to the financial crisis and other banking scandals. In the rules made since then the PRA has sought to provide individuals with the information needed to raise concerns safely, and the opportunities to do so in the way they feel most comfortable. Proposal
6.3 The PRA proposes to amend the General Organisational Requirements Part to clarify that the
requirement on firms to share details of their whistleblowing channels with UK branches of non-UK entities that are part of the same group, applies to firms which are the UK parent company of the group as well as those which are subsidiaries.
6.4 The proposed changes are set out in Appendix 5.
Statutory obligations
6.5 The PRA considers that the proposals in this chapter are compatible with the PRA’s general objectives
to promote the safety and soundness of PRA-authorised persons by assisting firms in meeting the PRA’s requirements through clearer rules.
6.6 The PRA considers that the proposals do not have a material impact on effective competition.
6.7 The PRA considers that the regulatory principle of most relevance to the proposals is the need to use
resources in the most efficient way. Although the proposal will not affect a large number of firms at the moment, as the organisational structure that the rule covers is rare, it will prevent the PRA from having to continue to monitor firms’ operational structures in the future. The PRA has also had regard to the regulatory principle of recognising differences in the nature and objectives of businesses. The existing rules do not place the same regulatory burdens on firms with the organisational structure outlined in paragraph 6.3, so the change will align the treatment of firms with different structures.
6.8 The proposed change aligns with PRA policy on which a cost benefit analysis has already been
conducted as stated in CP35/16 ‘Whistleblowing in UK branches’2 and the PRA does not expect this position to have changed as a result of the clarification on scope. Therefore, a full cost benefit analysis for this chapter has not been provided. Rather, the proposed change helps ensure that the benefits stated in CP35/16 will be realised. In developing the proposals in this CP, the PRA has had regard to the regulatory principles. The regulatory principle of most relevance to this proposal is recognising the differences in the nature of, and objectives of, businesses. In identifying that the rules as drafted applied differently to UK parent companies and UK subsidiaries, this proposal clarifies the intention of the rule and aligns its scope.
6.9 The PRA does not consider that the impact of the proposals on mutual societies will be different from
the impact on other firms, as the proposals do not apply to mutual societies.

1 Changing banking for good, Parliamentary Commission on Banking Standards, June 2013, publications.parliament.uk/pa/jt201314/jtselect/jtpcbs/27/27ii.pdf. 2 September 2016: www.bankofengland.co.uk/pra/Pages/publications/cp/2016/cp3516.aspx.

15 Occasional Consultation Paper October 2017

6.10 The PRA has considered the equality and diversity issues that may arise from the proposals in this
consultation; the PRA does not consider that the proposals in this consultation raise concerns with regards to equality and diversity issues.

16 Occasional Consultation Paper October 2017

7 Joint PRA and FCA form, PRA Rulebook, and FCA Handbook changes – MiFID II, IDD, and BMR amendments
7.1 In this chapter the PRA and the FCA are jointly consulting on proposed amendments to multiple Parts
of the PRA Rulebook and the Supervision Manual (SUP) in the FCA Handbook. These changes are necessary to transpose the second Markets in Financial Instruments Directive (MiFID) II. 1 This chapter also makes some minor MiFID II related changes to the PRA Rulebook, and sets out the PRA’s proposed amendments to multiple Parts of the PRA Rulebook and multiple PRA forms to transpose the Insurance Distribution Directive (IDD)2 and the Benchmarking Regulation (BMR).3 To update the relevant forms as
part of the transposition of IDD and BMR, and to collect the required information as part of MiFID II, the
PRA proposes making the changes outlined in this chapter. The rule instrument is included in Annexes 6- 10 and 12 and further changes to forms that do not appear in the Rulebook are included in Annex 11.
7.2 The changes are relevant to:
 MiFID II: PRA-designated investment firms and FCA-regulated MiFID firms (see paragraph 7.7-7.9), all PRA-regulated firms (see paragraph 7.10) and all common platform firms (see paragraphs (7.11-15);  IDD: UK Relevant Authorised Persons (RAPs), third country RAPs, Solvency II firms, small non-Directive insurers and large non-Directive insurers. As well as all firms completing the authorisation form for banks, the supplements for insurance companies and Lloyd’s managing partners, the controller appendices for corporates and partnerships, the owners and influencers appendix and the Waiver Application Form (see paragraph 7.16-18); and  BMR: All firms completing the Senior Management Regime: Statements of Responsibilities form (see paragraph 7.19-22).
7.3 The PRA has aligned its proposals closely to those of the FCA, which should contribute to ensuring
clarity for firms and a proportionate approach to regulation. Coordination between the PRA and the FCA is required under the Financial Services and Markets Act 2000 (FSMA) when either regulator is making rules.
7.4 The deadline for responses to this chapter is Friday 3 November 2017. While the PRA and the FCA
recognise that this is a relatively short period for consultation, the PRA and FCA consider that: (i) the scope of changes being made is relatively minor and/or are administrative in nature; and (ii) as the MiFID II changes have been widely publicised over a considerable period of time, affected firms should have already had sufficient opportunity to be aware of the substance of the changes and have had sufficient time to consider the likely impact of the changes. Proposal for MiFID II
7.5 As part of the PRA and FCA work in assessing fitness and propriety, the PRA and the FCA will collect
additional information from PRA-designated investment firms and FCA-regulated MiFID firms regarding

1 MiFID II is part of a legislative package, comprising the Directive, MiFID II (2014/65/EU) (eur-lex.europa.eu/legal￾content/EN/TXT/?uri=celex%3A32014L0065); the Markets in Financial Instruments Regulation (2014/600/EU) (eur-lex.europa.eu/legal￾content/EN/TXT/?uri=CELEX%3A32014R0600); and the Commission Delegated Regulation on organisational requirements and operating conditions (MODR) (2017/565/EU) (eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A32017R0565). 2 The IDD comprises the Directive (2016/97/EU) on insurance distribution (recast), eur-lex.europa.eu/legal￾content/en/TXT/?uri=CELEX%3A32016L0097. 3 The BMR comprises the Regulation (2016/1011/EU) on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directive 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014, eur￾lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32016R1011.

17 Occasional Consultation Paper October 2017

members of their management body, as set out in the MiFID II Technical Standards. 1 This chapter sets out proposals to collect additional information in relation to individuals as part of the application process, extend the deadline for submitting Form C and make minor formatting and grammatical changes to certain Parts of the PRA Rulebook.
7.6 MiFID II comprises a considerable package of reforms to the provision of investment services and
activities in the European Union. As the United Kingdom’s prudential regulator for credit institutions and PRA-designated investment firms, the PRA is responsible for implementing those aspects of the MiFID II package that set out prudential requirements for affected PRA-authorised persons. As the above firms are dual regulated, the FCA is jointly consulting on those changes. MiFID II also affects FCA-regulated MiFID firms and the FCA is required to implement aspects of the MiFID II package that affects these firms. MiFID II aims to enhance governance through management body requirements. The PRA and the FCA set out their approach to transposing the governance aspects of MiFID II in Policy Statement (PS) 9/17 ‘Implementation of MiFID II: Part 2’2 and PS17/53 respectively.
7.7 The MiFID II Technical Standards require investment firms to submit specific information when there
is a change to the membership of its board. To facilitate this, the PRA and the FCA propose to amend the Senior Managers Regime – Applications and Notifications Part, the Fitness and Propriety Part and the Glossary of the PRA Rulebook and SUP in the FCA Handbook to direct relevant firms to submit additional information on individuals taking up management body positions at PRA-designated investment firms and FCA-regulated MiFID firms. The Regulatory Technical Standard (RTS) requires relevant firms to supply additional information about members of the management body including personal details, information on decision-making powers held in roles over the last ten years, and details of any self-administered suitability tests. The Implementing Technical Standard (ITS) requires relevant firms to submit particular additional information in a specific format (the Annex 3 European Securities and Market Authority (ESMA) template). PRA-designated investment firms must submit Long Form A, Form E or Form M, with the additional information and in the form required by the MiFID II Technical Standards. The PRA intends to assist firms to provide all required additional MiFID II information in the required form by providing a link to two additional information templates. In practice firms should submit both templates when submitting those forms.
7.8 The proposed amendment to the Glossary of the PRA Rulebook includes reference to the ITS, which
has not yet been published in the Official Journal. The PRA intends to make a final instrument amending the Glossary to include the correct reference to the ITS once it is published in the Official Journal. The PRA considers that this amendment is not significant for the purposes of section 138J(5) FSMA as the editorial change will only insert the number of the directly applicable ITS. The PRA will therefore make that instrument without further consultation.
7.9 FCA solo-regulated MiFID firms must submit the Annex 3 ESMA template and the new additional
information template that the FCA is providing when there is a change to the membership of the firm’s management body, or to the persons who effectively direct the business. In practice, this means that firms will need to provide those forms when they submit a Long Form A or Form E. Form C must be submitted with the Annex 3 ESMA template as an attachment.

1 The authorisation Regulatory Technical Standard (RTS) was adopted by the European Commission on 14 July 2016 (ec.europa.eu/finance/securities/docs/isd/mifid/rts/160714-rts-authorisation_en.pdf). The authorisation Implementing Technical Standard (ITS), drafted by ESMA pursuant to Article 7(5) of the Directive, MiFID II (2014/65/EU), has not yet been published in the Official Journal but the draft ITS can be found in the ESMA Final report: MiFID II/MiFIR draft Technical Standards on authorisation, passporting, registration of third country firms and cooperation between competent authorities (www.esma.europa.eu/document/final-report-mifid-ii-mifir-draft￾technical-standards-authorisation-passporting). The RTS and the ITS, together being the MiFID II Technical Standards. 2 April 2017:, www.bankofengland.co.uk/pra/Pages/publications/ps/2017/ps917.aspx. 3 Markets in Financial Instruments Directive II Implementation – Policy Statement, available at www.fca.org.uk/publication/policy/ps17- 05.pdf.

18 Occasional Consultation Paper October 2017

7.10 Previous MiFID II requirements have applied across the entire population of common platform
firms;
1 the additional information will only be required by PRA-designated investment firms. The PRA recognises that this represents a departure from the common platform approach for this change. However, it could be considered disproportionate to extend these requirements to such a large group of firms when this is not necessary to implement MiFID II.
7.11 MiFID II extends the deadline for firms to notify the PRA and FCA about changes to the membership
of their management board. To implement those aspects of the MiFID II package that set out prudential requirements for affected authorised persons, the PRA and FCA propose to extend the deadline for submitting notifications for individuals ceasing to perform controlled functions via Form C from no more than seven days after an individual ceases to perform a controlled function to no more than ten days after an individual ceases to perform a controlled function. However, the PRA and FCA would still expect to be informed through regular supervisory channels of changes as soon as practicable, in accordance with Fundamental Rule 7.2
7.12 In addition to the changes for MiFID II in paragraphs 7.5 to 7.10, the instruments in the annexes of
this chapter make further amendments to Parts of the PRA Rulebook which were previously amended in light of MiFID II.3 Many of these amendments relate to minor formatting and grammatical issues and ensure that the correct article of MiFID II or other Part of the Rulebook are correctly referenced. There has also been a deletion of the definition of ‘MTF’ in General Provisions, due to the movement of the definition of this word to the Glossary. Finally, there are changes to the Passporting Part to update the rules with the correct reference to the directly applicable RTS which has recently been published in the Official Journal of the European Union.4
7.13 The PRA intends to make a final instrument amending the Passporting Part to include the correct
reference to the directly applicable passporting ITS, which includes the relevant passporting forms, when it is published in the Official Journal. The PRA considers that this amendment is not significant for the purposes of section 138J (5) FSMA as the editorial change will only insert the number of the directly applicable ITS. The PRA will therefore make that instrument without further consultation.
7.14 The PRA is required by the Financial Services and Markets Act 2000 (Markets in Financial
Instruments) Regulations 2017 (the ‘MiFID II Regulations’)5 to issue a statement of policy with respect to:
(a) the imposition of penalties where the PRA considers that a person has contravened a requirement imposed by or under the MiFID II Regulations or by Article 28 of the markets in financial instruments regulation; and (b) the amount of any such penalties.
7.15 Article 72(2) of MiFID II (Exercise of supervisory powers and powers to impose sanctions) sets out a
non-exhaustive list of factors which Member States are required to ensure that competent authorities take into account, where appropriate, when determining the type and level of an administrative sanction or measure. The MiFID II Regulations provide that the PRA’s policy in determining what the amount of a penalty should be must include having regard to:

1 The common platform was initially devised to ensure that a single set of requirements apply to firms subject to MiFID and CRD, as opposed to separate regulatory requirements arising from these directives being imposed upon the same business functions. 2 A firm must deal with its regulators in an open and co-operative way, and must disclose to the PRA appropriately anything relating to the firm of which the PRA would reasonably expect notice. 3 Following the close of the consultation, the PRA intends to also add effective dates to PRA Rulebook: Passporting Instrument 2016 and PRA Rulebook: CRR Firms: Algorithmic Trading Instrument 2016, which are amended by the instruments in this consultation. 4 eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2017.155.01.0001.01.ENG&toc=OJ:L:2017:155:TOC. 5 Paragraph 14(1) of Schedule 1 to the MiFID II Regulations.

19 Occasional Consultation Paper October 2017

(a) the seriousness of the contravention in question in relation to the nature of the requirement contravened; (b) the extent to which that contravention was deliberate or reckless; and (c) whether the person against whom action is to be taken is an individual.1
7.16 In January 2016 the PRA published an updated version of its statement of policy on its approach to
enforcement2 including its policy on the imposition and amount of financial penalties under the Financial Services and Markets Act 2000. This policy encapsulates the factors referred to above (in both Article 72(2) of MiFID II and the MiFID II Regulations) and therefore the PRA proposes to apply its existing penalties policy as set out in its statement of policy, in relation to the imposition of public censures and financial penalties for the contraventions referred to above. The PRA does not consider that any changes to its current policy are required for the purposes of MiFID II. Proposals for IDD
7.17 This section outlines proposals to update the necessary forms and Parts of the PRA Rulebook to take
account of the changes to requirements brought about by the IDD.
7.18 IDD aims to strengthen and consolidate requirements set out in the Insurance Mediation Directive
(2002/92/EC) (IMD) designed to encourage competition between insurance firms and ensure appropriate levels of protection for consumers across the European Union. The PRA currently requires firms to submit certain information relating to insurance mediation as part of the authorisations process for: (i) individuals taking up certain controlled functions; (ii) applying for permissions to passport services into other EEA member states; or (iii) applying for variations of permission.
7.19 The PRA proposes to amend the following forms to change references to ‘insurance mediation’ or
the IMD to refer instead to ‘insurance distribution’ or the IDD. The PRA has identified these references in:
 Long Form A, which is applicable to UK Relevant Authorised Persons (RAPs) and Third Country RAPs, small non-Directive insurers, large non-Directive insurers, and Solvency II firms;  Short Form A, which is applicable to UK RAPs and Third Country RAPs, small non-Directive insurers, large non-Directive insurers, and Solvency II firms;  versions of Form E on internal transfer of an approved person applicable to Solvency II firms, small non-Directive firms, and large non-directive firms;  the Branch Notification Form and the Cross Border Services Notification Form;  the application for authorisation form for banks, as well as the supplements for insurance companies and Lloyd’s managing partners, the controllers appendices for partnerships and corporates, and the owners and influencers appendix; and  the Waiver Application Form.

1 Paragraph 14(2) of Schedule 1 to the MiFID II Regulations.
2 www.bankofengland.co.uk/pra/Pages/publications/sop/2016/approachenforcementupdate.aspx .

20 Occasional Consultation Paper October 2017

Proposals for BMR
7.20 This section sets out proposals to change Statement of Responsibilities (SoRs) for the BMR. The BMR
introduces measures to prevent harm that could affect those who use financial instruments or contracts, or investment funds that reference benchmarks. It introduces new regulated activities, and as a result additional prescribed responsibilities are being introduced by the Financial Conduct Authority (FCA) to ensure responsibility is allocated to the Senior Management Function (SMF) for aspects of these activities.1
7.21 To achieve alignment and compliance with BMR, the PRA proposes to amend Senior Management
Regime: Statement of Responsibilities forms to replace the description of activities 26 and 27 with the specific benchmarking activities prescribed by the BMR.
7.22 To accommodate the directly applicable provisions of the BMR relating to benchmarking activities,
the PRA proposes to make minor amendments to the Compliance and Internal Audit, General Organisational Requirements, Outsourcing, Record Keeping, Risk Control, and Skills, Knowledge and Expertise Parts of the Rulebook and the Glossary.
7.23 The proposed changes are set out in Appendices 6 to 12.
PRA statutory obligations
7.24 The PRA and FCA have different objectives. While looking to meet their own objectives, each
considers the other’s obligations and objectives, as outlined in the following chapters.
7.25 The proposals in this chapter will help ensure that relevant PRA-regulated firms comply with the
standards set out in MiFID II, IDD and BMR, thereby reducing the risk that their benefits are not fully realised. The PRA does not expect the proposals to impose material incremental compliance costs on affected firms.
7.26 The proposals are compatible with the PRA’s statutory objectives to promote the safety and
soundness of PRA-authorised firms. By ensuring that relevant PRA-regulated firms comply with the standards set out in MiFID II, IDD and BMR, the PRA is promoting the safety and soundness of regulated firms by ensuring that they meet the associated requirements.
7.27 The PRA considers that the proposals do not have an impact on effective competition.
7.28 In developing the proposals in this CP, the PRA has had regard to the regulatory principles. The
regulatory principles of most relevance to these proposals are the responsibilities of the senior management of persons subject to PRA rules to comply with those rules. The forms affected by these changes are largely aimed at the senior management of regulated firms, and the additional information requirements generally relate to their activities or background.
7.29 The PRA does not consider that the impact of the proposals on mutual societies will be different
from the impact on other firms.
7.30 The PRA has also had regard to the Government’s economic policy. The aspects most relevant to
these proposals are in encouraging trade and inward investment to the United Kingdom, by ensuring that PRA-regulated firms are compliant with common European standards.

1 Under the Senior Managers Regime, firms must produce and submit a SoRs for each of their SMFs setting out the areas and activities of the firm which they are responsible for managing. SoRs have to be submitted to the PRA and the FCA in the SoR template. Firms have to submit a SoR when they first apply for pre-approval on behalf of an SMF. They must also update and resubmit it if there is a ‘significant change’ to that individual’s responsibilities.

21 Occasional Consultation Paper October 2017

7.31 The PRA has considered the equality and diversity issues that may arise from the proposals in this
consultation; the PRA does not consider that the proposals in this consultation raise concerns with regards to equality and diversity issues. Compatibility with the FCA’s general duties and regulatory principles
7.32 The proposals are compatible with the FCA’s statutory objectives under FSMA to secure an
appropriate degree of protection for consumers, to protect and enhance the integrity of the UK financial system and promote effective competition in the interests of consumers.
7.33 The FCA is legally required, insofar as it is compatible with its strategic and operational objectives, to
discharge its general functions (including its rule‐making function) in a way which promotes competition. The FCA does not consider that the proposed amendments will either hinder or promote effective competition. Cost Benefit Analysis
7.34 The proposals in this chapter will help ensure that FCA-regulated firms comply with the standards
set out in MiFID II. The additional information requirements are set out in EU Regulation and we have limited discretion in how we apply them to firms.
7.35 Section 138I of FSMA requires the FCA to perform a cost benefit analysis of proposed rules, and to
publish the results. However, the FCA is not required to do so where it considers that any increase in costs resulting from the proposed rule will be of minimal significance (section 138L FSMA). The FCA expects that the rule changes proposed in this chapter will impose incremental costs of minimal significance on firms and the FCA has only carried out a high-level cost benefit analysis. The FCA is also consulting on changes to forms (made by direction) and guidance. While FSMA does not require the FCA to perform a cost benefit analysis in relation to those changes, the FCA has considered the impacts below.
7.36 The ITS requires firms to provide the FCA with the form set out in Annex III to the ITS when there is a
change to membership of the management body or the persons who effectively direct the business (the
Annex III ESMA template). Further, under Article 4 of the RTS, relevant firms are required to provide extra
information about members of the management body and persons who effectively direct the business of the firm. Most of this information is already captured when firms submit existing Form A or Form E, however to comply with the FCA’s obligations under the RTS, the FCA is providing a further form to ensure that the required information is collected, ie the Additional Information Article 4 RTS Annex. From commencement, both of the above forms (the Annex III ESMA template and the Additional Information
Article 4 RTS Annex) must be submitted as attachments by a solo-regulated MiFID investment firms when
sending the FCA a Long Form A or Form E. The Annex III ESMA template must also be submitted as an attachment to Form C.
7.37 The Annex III ESMA template has been created by ESMA and the FCA will provide a version of this on
the FCA website. When submitting this Annex, firms can cross refer to information that has already been included in the Form A, C, or E. This will avoid unnecessary duplication of the information provided and reduce the time and costs required.
7.38 The Additional Information Article 4 RTS Annex has two versions for firms subject to the Approved
Persons Regime and the Senior Managers Regime. Firms must include the appropriate annex when submitting a Long Form A or Form E. As much of the information in this Annex will already be collected in the Long Form A or Form E, the Annex allows firms to leave the sections blank where this is the case. As above, this will avoid unnecessary duplication of information and reduce the time required to complete the annex.

22 Occasional Consultation Paper October 2017

7.39 The FCA recognises that obtaining the additional information required by Article 4 of the RTS
through the Additional Information Article 4 RTS Annex rather than through an amendment to existing forms means that firms will be required to submit an additional form. However, the FCA considers that this is a transparent and proportionate approach which avoids the need to make additional changes to existing forms (which many firms are already familiar with). The FCA therefore expects that these changes will impose incremental costs of minimal significance on firms, as much of the required information can be cross referred to in the existing Form A, C or E.
7.40 To comply with MiFID II the FCA is also extending the notification period that firms have to inform
the FCA, via Form C, that an individual is ceasing to perform a controlled function or senior management function, from seven to ten days. We do not expect this to impose an additional cost on firms.
7.41 The proposals described in this chapter are in line with the FCA’s consumer protection and market
integrity objectives by ensuring that prospective applicant firms provide all the relevant information, required under MiFID II to assess the fitness and propriety of members of the management body or who direct the business, with their authorisation application. This will enable the FCA to conduct a full assessment of the application and identify any potential risks to the FCA’s statutory objectives.
7.42 The FCA does not consider that the impact of the proposals on mutual societies will be different
from the impact on other firms.
7.43 In preparing these proposals, the FCA has had regard to all of the regulatory principles in section 3B
of FSMA.
7.44 The FCA has considered the equality and diversity issues that may arise from the proposals. The FCA
does not consider that the proposed amendments raise concerns in this regard. The FCA does not consider that the proposals in this consultation result in direct discrimination for any of the groups with protected characteristics: that is, age, disability, gender, pregnancy and maternity, race, religion and belief, sexual orientation and transgender.

23 Occasional Consultation Paper October 2017

8 Consequential amendment to Short Form A
8.1 This chapter sets out a proposed consequential amendment to Short Form A to ensure consistency
with existing forms.
8.2 It is relevant to banks, building societies, credit unions, PRA-designated investment firms, known as
relevant authorised persons (RAPs), and Third Country branches. The proposals do not represent a change in PRA policy. Proposal
8.3 The PRA has identified an inconsistency with regard to the criminal records check question. This
question is included in Short Form A for insurers and the electronic version of Short Form A for both insurers and RAPs, but was inadvertently omitted from the paper version of Short Form A for RAPs.
8.4 The PRA proposes to include the criminal records check question found in 5.05.4 of Short Form A for
insurers and 5.05.3 in Long Form A for RAPs: ‘Has the firm undertaken a criminal records check in accordance with the requirements of the FCA or PRA?’ in Short Form A for RAPs Section 5 (Fitness and Propriety). This amendment is identical to the change the FCA consulted on in their consultation paper CP16/21 ‘Quarterly Consultation No.14’. 1
8.5 The proposed change is set out in the draft rule instrument at Appendix 9. The amendment follows
changes to forms published in PS24/17 ‘Strengthening accountability in banking and insurance: changes to SMR forms’. Statutory obligations
8.6 Long Form A for RAPs, Short Form A for insurers, and the electronic version of Short Form A for RAPs
already include the criminal reference question we are proposing to add. This proposed change will align the paper version of Short Form A with the electronic version. The majority of firms use the electronic version so the impact is likely to be minimal.
8.7 The PRA considers the proposal would enhance the ongoing safety and soundness of firms by
ensuring the individuals managing these firms are fit and proper, and are assessed with a consistent approach across the relevant forms.
8.8 The PRA considers that the proposals do not have an impact on effective competition. In developing
the proposals in this CP, the PRA has had regard to the regulatory principles. The regulatory principles of most relevance to the proposals in this CP are the responsibilities of the senior management of persons subject to requirements imposed by or under the Financial Services and Markets Act 2000 (FSMA).
8.9 The PRA has had regard to HM Treasury’s recommendations on aspects of the Government’s
economic policy when considering these proposals.
8.10 The PRA considers that the impact of the proposed rule changes on mutuals is expected to be no
different from the impact on other firms.
8.11 The PRA has performed an assessment of the policy proposals and does not consider that the
proposals give rise to equality and diversity implications.

1 CP16/21 ‘Quarterly Consultation No.14’ (September 2016), available here: www.fca.org.uk/publications/consultation-papers/quarterly￾consultation-paper-no-14-cp16-21.

24 Occasional Consultation Paper October 2017

9 Application of EBA’s Guidelines on corrections to modified duration for debt instruments
9.1 This chapter sets out proposed amendments to SS13/13 ‘Market risk’ to clarify the PRA’s expectations
on the application of the EBA’s Guidelines on corrections to modified duration for debt instruments. It is relevant to all PRA-supervised firms to which CRD IV applies. Proposal
9.2 Article 340 of the CRR requires firms that apply the duration-based calculation of general risk, to
make a correction in the calculation of the modified duration for debt instruments that are subject to prepayment risk. The article also mandates the EBA to issue guidelines on how such corrections should be made. In 2016, the EBA finalised guidelines on how to apply such corrections. The PRA proposes to amend SS13/13 to state that UK firms should comply with the EBA Guidelines when making calculations under Art 340 CRR.
9.3 The proposed changes to SS13/13 are set out in Appendix 13.
Statutory obligations
9.4 The proposal in this chapter confirms the PRA’s expectation that UK firms should comply with the EBA
Guidelines when making calculations under Article 340 of the CRR. The Guidelines were consulted on by the EBA during development, and one response was received. The proposals have previously been subject to an EBA cost benefit analysis during development of the Guidelines. The EBA estimated that approximately 1% of total positions under the market risk standardised rules fall under the scope of the EBA guidelines. Consequently, the proposals are not expected to materially increase costs, and as a result, the PRA has not produced a full cost benefit analysis.
9.5 The PRA considers this proposal as compatible with the PRA’s statutory objective to promote the
safety and soundness of firms, by streamlining existing processes and ensuring a more efficient use of PRA resources in its supervision of firms.
9.6 The PRA considers that the proposals do not have a material impact on effective competition.
9.7 The PRA considers that the regulatory principle of most relevance to the proposals is that a burden or
restriction should be proportionate to the benefits. This update to the SS will better enable firms to reflect their risks in capital calculations without having to engage with the PRA.
9.8 The PRA considers that the impact of the proposed rule changes on mutuals is expected to be no
different from the impact on other firms.
9.9 The PRA has had regard to HM Treasury’s recommendations on aspects of the Government’s
economic policy when considering these proposals.
9.10 The PRA has considered the equality and diversity issues that may arise from the proposals in this
consultation. The PRA does not consider that the proposals in this consultation raise concerns with regards to equality and diversity issues.

25 Occasional Consultation Paper October 2017

10 Naming convention for life insurers when reporting data by homogeneous risk group
10.1 This chapter sets out proposed changes to SS36/15 ‘Solvency II: life insurance product reporting
codes’ to specify how firms should label their homogeneous risk groups.
10.2 These proposals are relevant to all Solvency II Directive insurers with life insurance business,
including general insurers with annuities stemming from non-life business.
10.3 The proposed changes to SS36/15 are set out in Appendix 14.
Background
10.4 Information on the product split of life insurers’ best estimate liabilities is only available in annual
European Insurance and Occupational Pensions Authority (EIOPA) template S.14.01. The life insurance lines of business in S.12 (with-profits, unit-linked, other, health) are focussed on risk rather than product.
10.5 S.14.01 requires firms to use a product code to apportion written premium and claims paid.
Supervisory authorities are permitted to specify the format of this product code and SS36/15 specifies the first three characters. This enables the PRA to apportion premiums and claims between products.
10.6 S.14.01 requires firms to report best estimate liabilities by homogeneous risk group and to give a
mapping of product codes to homogeneous risk groups. There is currently no guidance on how homogeneous risk groups should be labelled. Where firms have a one to one mapping from product code to homogeneous risk group the PRA is able to use this data. In other cases the homogeneous risk groups are a combination of product codes which makes the data less valuable and in some cases valueless.
10.7 Guideline 19 in EIOPA-BoS-14/166 (guidelines on the valuation of technical provisions) states that
firms should consider underwriting policy, claims settlement pattern, risk profile of policyholders, product features in particular guarantees and future management actions when setting homogeneous risk groups.
10.8 The PRA considers that the product codes in the appendix are a proportionate way in segmenting
life insurance business in a way that each product code represents a separate homogeneous risk group. Firms would be permitted to create multiple homogeneous risk groups for a single product code if appropriate for its products. Proposal
10.9 The PRA proposes to amend SS36/15 to specify that firms should adopt a structured approach when
naming homogeneous risk groups when reporting best estimate liabilities in annual Solvency II reporting template S.14.01. Two paragraphs will be deleted where the issue is now covered by the new version of EIOPA’s Implementing Technical Standards to take effect from December 2017. Statutory obligations
10.10 The proposals in this chapter are compatible with the PRA’s statutory objectives to promote the
safety and soundness of firms, and to contribute to the securing of an appropriate degree of protection for those who are or may become insurance policyholders, by clarifying the application of PRA rules and the PRA’s policy objectives.
10.11 The PRA’s internal assessment is that the benefits of the change should outweigh the costs. Firms
already have a mapping of their products to product code, so this same mapping can be used to label the homogeneous risk groups. The PRA expects that the cost to firms should be modest. There will be significant benefit to the PRA in enabling understanding of the markets in which firms operate and to detailed identification of the exposures at product level. The data will also be of value to Office of

26 Occasional Consultation Paper October 2017

National Statistics (ONS). If the ONS is able to use data from S.14 this will avoid it needing to send surveys to firms which would have an adverse cost implication for the firms.
10.12 The PRA does not consider that there will be an impact on competition as a result of the proposals
in this chapter.
10.13 The PRA has had regard to the applicable regulatory principles and considers that the regulatory
principle of most relevance to the proposals is that a burden imposed should be proportionate to the benefits expected to result. For savings, investment and pension products best estimate liabilities are a much better measure of exposure than premiums. The ability to analyse best estimate liabilities by product code will enable the PRA to identify firm and market exposures to products exhibiting specific features.
10.14 HM Treasury has made recommendations to the Prudential Regulation Committee about aspects
of the Government’s economic policy to which the Committee should have regard when considering how to advance the objectives of the PRA and apply the regulatory principles as set out in FSMA. The aspects of the Government’s economic policy most relevant to the proposals in this CP are the growth principle and the better outcome for consumers. These align respectively with the PRA’s general objectives of promoting the safety and soundness of firms and contributing to the securing of an appropriate degree of protection for policyholders. These have been considered in the compatibility with the PRA objectives and regulatory principles sections above.
10.15 The PRA does not consider that the impact of the proposal on mutual societies will be different
from the impact on other firms.
10.16 The PRA has considered the equality and diversity issues that may arise from the proposals in this
chapter. Overall, the PRA does not consider that the proposals raise concerns with regards to equality and
diversity issues.

27 Occasional Consultation Paper October 2017

Appendices
1 Draft Conditions Governing Business Instrument 2 Draft Internal Capital Adequacy Assessment Instrument 3 Draft Transitional Measures Instrument 4 Draft Groups (Level of Application) Instrument 5 Draft Whistleblowing Amendment Instrument 6 Draft MiFID II Amendment (No. 1) Instrument 7 Draft MiFID II Amendment Instrument 8 Draft MiFID II Passporting Amendment Instrument 9 Draft MiFID II, IMD, and BMR Consequential Amendment Instrument 10 Draft Benchmarking Regulation Instrument 11 Draft Form changes 12 Draft MiFID II Approved Persons and Senior Managers Forms Amendment Instrument 2017 13 Draft amendments to Supervisory Statement 13/13 ‘Market risk’ 14 Draft amendments to Supervisory Statement 36/15 'Life insurance product reporting codes' 15 Draft Administration Instrument

28 Occasional Consultation Paper October 2017

Appendix 1: Draft Conditions Governing Business Instrument
PRA RULEBOOK: SOLVENCY II FIRMS: CONDITIONS GOVERNING BUSINESS INSTRUMENT 2017 Powers exercised A. The Prudential Regulation Authority (“PRA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 137G (The PRA’s general rules); and (2) section 137T (General supplementary powers). B. The rule-making powers referred to above are specified for the purpose of section 138G(2) (Rule￾making instrument) of the Act. Pre-conditions to making
C. In accordance with section 138J of the Act (Consultation by the PRA), the PRA consulted the
Financial Conduct Authority. After consulting, the PRA published a draft of proposed rules and had regard to representations made. PRA Rulebook: Solvency II Firms: Conditions Governing Business Instrument 2017 D. The PRA makes the rules in the Annex to this instrument. Commencement E. This instrument comes into force on [DATE]. Citation F. This instrument may be cited as PRA Rulebook: Solvency II Firms: Conditions Governing Business Instrument [DATE]. By order of the Prudential Regulation Committee [DATE]

29 Occasional Consultation Paper October 2017

Annex A
Amendments to the Conditions Governing Business Part In this Annex new text is underlined and deleted text is struck through. … 3 RISK MANAGEMENT …
3.2 …
(3) …
…
(b) the impact of a reduction of the volatility volatility adjustment to zero. …

30 Occasional Consultation Paper October 2017

Appendix 2: Draft Internal Capital Adequacy Assessment Instrument
PRA RULEBOOK: CRR FIRMS: INTERNAL CAPITAL ADEQUACY ASSESSMENT (AMENDMENT) INSTRUMENT 2017 Powers exercised A. The Prudential Regulation Authority (“PRA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 137G (The PRA’s general rules); and (2) section 137T (General supplementary powers). B. The rule-making powers referred to above are specified for the purpose of section 138G(2) (Rule￾making instrument) of the Act. Pre-conditions to making
C. In accordance with section 138J of the Act (Consultation by the PRA), the PRA consulted the
Financial Conduct Authority. After consulting, the PRA published a draft of proposed rules and had regard to representations made. PRA Rulebook: CRR Firms: Internal Capital Adequacy Assessment (Amendment) Instrument [DATE] D. The PRA makes the rules in the Annex to this instrument. Commencement E. This instrument comes into force on [DATE]. Citation F. This instrument may be cited as the PRA Rulebook: CRR Firms: Internal Capital Adequacy Assessment (Amendment) Instrument [DATE]. By order of the Prudential Regulation Committee [DATE]

31 Occasional Consultation Paper October 2017

Annex A
Amendments to the Internal Capital Adequacy Assessment Part In this Annex new text is underlined. … 8 MARKET RISK …
8.4 A firm which has, in calculating own funds requirements for position risk in accordance with Part
Three, Title IV, Chapter 2 of the CRR, netted off its positions in one or more of the equities constituting a stock-index against one or more positions in the stock-index future or other stock￾index product, must have adequate financial resources and internal capital to cover the basis risk of loss caused by the future's or other product's value not moving fully in line with that of its constituent equities. 8.4A A firm must have such adequate internal capital where it holds opposite positions in stock-index futures which are not identical in respect of either their maturity or their composition or both. …

32 Occasional Consultation Paper October 2017

Appendix 3: Draft Transitional Measures Instrument
PRA RULEBOOK: SOLVENCY II FIRMS: TRANSITIONAL MEASURES: REPORT ON FINANCIAL AND SOLVENCY CONDITIONS INSTRUMENT [DATE] Powers exercised A. The Prudential Regulation Authority (“PRA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 137G (The PRA’s general rules);
(2) section 137T (General supplementary powers); and B. The rule-making powers referred to above are specified for the purpose of section 138G(2) (Rule￾making instrument) of the Act. Pre-conditions to making
C. In accordance with section 138J of the Act (Consultation by the PRA), the PRA consulted the
Financial Conduct Authority. After consulting, the PRA published a draft of proposed rules and had regard to representations made. PRA Rulebook: Solvency II Firms: Transitional Measures: Report on Financial and Solvency Conditions Instrument [DATE] D. The PRA makes the rules in the Annex to this instrument. Commencement E. This instrument comes into force on [DATE]. Citation F. This instrument may be cited as PRA Rulebook: Solvency II Firms: Transitional Measures: Report on Financial and Solvency Conditions Instrument [DATE]. By order of the Prudential Regulation Committee [DATE]

33 Occasional Consultation Paper October 2017

Annex A
Amendments to the Transitional Measures Part
In this Annex new text is underlined and deleted text is struck through.
13 REPORT ON FINANCIAL AND SOLVENCY CONDITIONS …
13.3 In the disclosure required by Reporting 3.1 as applied to a group by Group Supervision 18.1, the
participating Solvency II undertakings that are firms or, if there are none, the relevant insurance group undertakings may, unless required under other legal or regulatory requirements (including any Solvency II EEA implementing measure), opt not to disclose the following separately when disclosing the amount of the group SCR under Reporting 3.76:
(1) the information referred to in Reporting 3.76(2) on any capital add-on imposed on the group; and (2) the information referred to in Reporting 3.76(3) on any parameters specific to the group. [Note: Art. 256(1) and 51(2) of the Solvency II Directive]

34 Occasional Consultation Paper October 2017

Appendix 4: Draft Groups (Level of Application) Instrument
PRA RULEBOOK: CRR FIRMS: GROUPS (LEVEL OF APPLICATION) INSTRUMENT 2017 Powers exercised A. The Prudential Regulation Authority (“PRA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 137G (The PRA’s general rules);
(2) section 137T (General supplementary powers) B. The rule-making powers referred to above are specified for the purpose of section 138G(2) (Rule￾making instrument) of the Act. Pre-conditions to making
C. In accordance with section 138J of the Act (Consultation by the PRA), the PRA consulted the Financial
Conduct Authority. After consulting, the PRA published a draft of proposed rules and had regard to representations made. PRA Rulebook: CRR Firms: Groups (Level of Application) Instrument 2017 D. The PRA makes the rules in Annexes A – K to this instrument.
Part Annex
Glossary A
Capital Buffers B
General Organisational Requirements C
Internal Capital Adequacy Assessment D
Internal Liquidity Adequacy Assessment E
Leverage Ratio F
Liquidity Coverage Requirement- Designated Investment Firms G Regulatory Reporting H Reporting Pillar 2 I Risk Control J Skills, Knowledge and Expertise K Commencement E. This instrument comes into force on [DATE]. Citation F. This instrument may be cited as the PRA Rulebook: CRR Firms: Groups (Level of Application) Instrument 2017 By order of the Prudential Regulation Committee [DATE]

35 Occasional Consultation Paper October 2017

Annex A
Amendments to the Glossary
In this Annex new text is underlined and deleted text is struck through consolidation group means the undertakings that a firm is required to include included in the scope of consolidation pursuant to Articles 18(1), 18(8), 19(1), 19(3) and 23 of the CRR and Groups 2.1- 2.3.

36 Occasional Consultation Paper October 2017

Annex B
Amendments to the Capital Buffers Part
In this Annex new text is underlined and deleted text is struck through … 5 APPLICATION ON AN INDIVIDUAL AND CONSOLIDATED BASIS Application on an individual basis
5.1 This Part applies to a firm on an individual basis whether or not it also applies to the firm on
a consolidated basis or sub-consolidated basis.
5.1A If this Part applies to a firm on an individual basis, the firm must comply with the rules in this Part to the same extent and in the same manner as it is required to comply with the firm’s obligations laid down in Parts Two to Four and Part Seven of the CRR. …. Extent and manner of prudential consolidation
5.6 If this Part applies to a firm on a consolidated basis or on a sub-consolidated basis, the firm
must carry out consolidation to the same extent and in the same manner as it is required to comply with the obligations laid down in Parts Two to Four and Part Seven prescribed in Articles 18(1), 18(8), 19(1), 19(3), 23 and 24(1) of the CRR on a consolidated basis or sub-consolidated basis and Groups 2.1-2.3.

37 Occasional Consultation Paper October 2017

Annex C
Amendments to the General Organisational Requirements Part In this Annex new text is underlined and deleted text is struck through … 7 GROUP ARRANGEMENTS ... 7.1A If this Part applies to a firm on a consolidated basis or on a sub-consolidated basis, the firm must carry out consolidation to the same extent and in the same manner as it is required to comply with the obligations laid down in Parts Two to Eight of the CRR on a consolidated basis or sub-consolidated basis.

38 Occasional Consultation Paper October 2017

Annex D
Amendments to the Internal Capital Adequacy Assessment Part In this Annex new text is underlined and deleted text is struck through … 13 DOCUMENTATION OF RISK ASSESSMENTS
13.1 A firm must make a written record of the assessments required under this Part. These
assessments must include assessments carried out on a consolidated basis consolidated basis and on an individual basis. In particular it must make a written record of:
(a) the major sources of risk identified in accordance with the overall Pillar 2 rule in 3.1; (b) how it intends to deal with those risks; and (c) details of the stress tests and scenario analyses carried out, including any assumptions made in relation to scenario design, and the resulting financial resources estimated to be required in accordance with the general stress test and scenario analysis rule in 12.1. … 14 APPLICATION OF THIS PART ON AN INDIVIDUAL BASIS, A CONSOLIDATED BASIS AND A SUB-CONSOLIDATED BASIS
14.1 A firm that is neither a subsidiary of a parent undertaking incorporated in or formed under the law of
any part of the UK nor a parent undertaking must comply with the ICAAP rules on an individual basis.
14.2 A firm that is not a member of a consolidation group must comply with the ICAAP rules on an
individual basis.
14.2A If the ICAAP rules apply to a firm on an individual basis, the firm must comply with the ICAAP rules to the same extent and in the same manner as it is required to comply with the obligations laid down in Parts Two to Four and Part Seven of the CRR. …
14.6 If the ICAAP rules apply to a firm on a consolidated basis or on a sub-consolidated basis the firm
must carry out consolidation to the same extent and in the same manner as it is required to comply with the obligations laid down in Parts Two to Four and Part Seven of the CRR on a consolidated basis or sub-consolidated basis prescribed in Articles 18(1), 18(8), 19(1), 19(3), 23 and 24(1) of the CRR and Groups 2.1-2.3.  … 15 REVERSE STRESS TESTING
15.3 Where the firm is a member of:
(1) a UK consolidation group; or
(2) a third country sub-group; it must conduct the reverse stress test on an individual basis as well as on a consolidated basis consolidated basis in relation to the UK consolidation group or the third country sub-group, as the case may be.

39 Occasional Consultation Paper October 2017

Annex E
Amendments to Internal Liquidity Adequacy Assessment Part In this Annex new text is underlined and deleted text is struck through 1 APPLICATIONS AND DEFINITIONS … 1.2 … consolidation group means the undertakings that a firm is required to include included in the scope of consolidation pursuant to Articles 18(1), 19(1), 19(3), and 23 and 24(1) of the CRR. … 14 APPLICATION OF THIS PART ON AN INDIVIDUAL BASIS, A CONSOLIDATED BASIS AND A SUB-CONSOLIDATED BASIS … 14.1A If this Part applies to a firm on an individual basis, the firm must comply with the rules in this Part to the same extent and in the same manner as it is required to comply with the firm’s obligations laid down in Part Six of the CRR.
14.8 If this Part applies to a firm on a consolidated basis or on a sub-consolidated basis, the firm must
carry out consolidation to the same extent and in the same manner as it is required to comply with the obligations laid down in Part Six of the CRR on a consolidated basis or sub-consolidated basis prescribed in Articles 18(1), 18(8), 19(1), 19(3), 23 and 24(1) of the CRR.]

40 Occasional Consultation Paper October 2017

Annex F
Amendments to Leverage Ratio Part
In this Annex new text is underlined.
2 BASIS OF APPLICATION
...
2.1A If this Part applies to a firm on an individual basis, the firm must comply with the rules in this Part to the same extent and in the same manner as it is required to comply with the firm’s obligations laid down in Part Seven of the CRR.

41 Occasional Consultation Paper October 2017

Annex G
Amendments to the Liquidity Coverage Requirement UK Designated Investment Firms Part In this Annex new text is underlined and deleted text is struck through … 4 APPLICATION OF THIS PART ON AN INDIVIDUAL BASIS AND A CONSOLIDATED BASIS … 4.1A If this Part applies to a firm on an individual basis, the firm must comply with the rules in this Part to the same extent and in the same manner as it is required to comply with the firm’s obligations laid down in Part Six of the CRR.
4.4 If this Part applies to a firm on a consolidated basis or on a sub-consolidated basis, the firm must
carry out consolidation to the same extent and in the same manner as it is required to comply with the obligations laid down in Part Six prescribed in Articles 18(1), 18(8), 19(1), 19(3), 23 and 24(1) of the CRR on a consolidated basis or sub-consolidated basis and Groups 2.1-2.3.

42 Occasional Consultation Paper October 2017

Annex H
Amendments to the Regulatory Reporting Part
In this Annex new text is underlined and deleted text is struck through … 7 REGULATED ACTIVITY GROUP 1 7.1 … (13) A firm must complete this item separately on each of the following bases that are applicable. (a) It must complete it on an individual basis, which for the purposes of this item, means that. Therefore even if it has an individual consolidation permission it must complete the item on an unconsolidated basis by reference to the firm alone. … 9 REGULATED ACTIVITY GROUP 3 9.2 … (9) A firm must complete this item separately on each of the following bases that are applicable. (a) It must complete it on an individual basis, which for the purposes of this item, means that. Therefore even if it has an individual consolidation permission it must complete the item on an unconsolidated basis by reference to the firm alone.

43 Occasional Consultation Paper October 2017

Annex I
Amendments to the Reporting Pillar 2 Part
In this Annex new text is underlined and deleted text is struck through 1 APPLICATIONS AND DEFINITIONS … 1.6 ….  consolidation group means the undertakings included in the scope of consolidation pursuant to Articles 18(1), 18(8), 19(1), 19(3) and 23 of the CRR and Groups 2.1 to 2.3.

44 Occasional Consultation Paper October 2017

Annex J
Amendments to the Risk Control Part
In this Annex new text is underlined and deleted text is struck through … 4 GROUP ARRANGEMENTS … 4.1A If this Part applies to a firm on a consolidated basis or on a sub-consolidated basis, the firm must carry out consolidation to the same extent and in the same manner as it is required to comply with the obligations laid down in Parts Two to Eight of the CRR on a consolidated basis or sub￾consolidated basis.

45 Occasional Consultation Paper October 2017

Annex K
Amendments to the Skills, Knowledge and Expertise Part In this Annex new text is underlined and deleted text is struck through … 6 GROUP ARRANGEMENTS … 6.1A If this Part applies to a firm on a consolidated basis or on a sub-consolidated basis, the firm must carry out consolidation to the same extent and in the same manner as it is required to comply with the obligations laid down in Parts Two to Eight of the CRR on a consolidated basis or sub￾consolidated basis.

46 Occasional Consultation Paper October 2017

Appendix 5: Draft Whistleblowing Amendment Instrument
PRA RULEBOOK: CRR FIRMS: WHISTLEBLOWING AMENDMENT (No. X) INSTRUMENT 2017 Powers exercised A. The Prudential Regulation Authority (“PRA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 137G (The PRA’s general rules); and (2) section 137T (General supplementary powers). B. The rule-making powers referred to above are specified for the purpose of section 138G (2) (Rule￾making instruments) of the Act. Pre-conditions to making
C. In accordance with section 138J of the Act (Consultation by the PRA), the PRA consulted the
Financial Conduct Authority. After consulting, the PRA published a draft of proposed rules and had regard to representations made. PRA Rulebook: CRR Firms: Whistleblowing Amendment (No. X) Instrument 2017 D. The PRA makes the rules in the Annex to this instrument. Commencement E. This instrument comes into force on [DATE]. Citation F. This instrument may be cited as the PRA Rulebook: CRR Firms: Whistleblowing Amendment (No. X) Instrument 2017. By order of the Prudential Regulation Committee [DATE]

47 Occasional Consultation Paper October 2017

Annex A
Amendments to General Organisational Requirements Part In this Annex, the text is all new and is underlined. … 2A WHISTLEBLOWING … 2A.8 If (1) the third country firm is a subsidiary of a firm [P]; and (2) the third country firm also carries on regulated activities from an establishment in the UK the firm [P] must provide information to the third country firm in the UK on the channel in 2A.2 and make the channel available to workers in the third country firm’s UK establishment.

48 Occasional Consultation Paper October 2017

Appendix 6: Draft MiFID II Amendment (No. 1) Instrument
PRA RULEBOOK: CRR FIRMS: MIFID II AMENDMENT (NO. 1) INSTRUMENT 2017 Powers exercised A. The Prudential Regulation Authority (“PRA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 137G (The PRA’s general rules);
(2) section 137T (General supplementary powers).
B. The rule-making powers referred to above are specified for the purpose of section 138G(2) (Rule￾making instrument) of the Act. Pre-conditions to making
C. In accordance with section 138J of the Act (Consultation by the PRA), the PRA consulted the
Financial Conduct Authority. After consulting, the PRA published a draft of proposed rules and had regard to representations made. PRA Rulebook: CRR Firms: MIFID II Amendment (No. 1) Instrument 2017 D. The PRA makes the rules in Annexes A to G to this instrument:
Part Annex
Algorithmic Trading A
General Organisational Requirements B
Compliance and Internal Audit C
Glossary D
Outsourcing E
General Provisions F
Risk Control G
Commencement
E. The PRA Rulebook: CRR Firms: Algorithmic Trading Instrument 2016 as made by order of the Board of the Prudential Regulation Authority on 24 October 2016 comes into force on 3 January 2018. F. This instrument comes into force on 3 January 2018. Citation G. This instrument may be cited as the PRA Rulebook: CRR Firms: MIFID II Amendment (No. 1) Instrument 2017. By order of the Prudential Regulation Committee [DATE]

49 Occasional Consultation Paper October 2017

Annex A
Amendments to the Algorithmic Trading Part
In this Annex new text is underlined and deleted text is struck through.
…
2 ALGORITHMIC TRADING
2.3 A firm must make and retain the following records:
…
(6) any further relevant information about the firm’s algorithmic trading and systems used for that trading. [Note: Art. 17(2) of MiFID II. See Articles 28 and 29 of Commission Delegated Regulation (EU) No …/.. of [date] supplementing MiFID II with regard to regulatory technical standards specifying the organisational requirements of investment firms engaged in algorithmic trading, providing direct electronic access and acting as general clearing members for related provisions.] [Note: Article 17(2) of MiFID II. See Articles 28 and 29 of Commission Delegated Regulation (EU) No 2017/589 of 19 July 2016 supplementing MiFID II with regard to regulatory technical standards specifying the organisational requirements of investment firms engaged in algorithmic trading, providing direct electronic access and acting as general clearing members for related provisions.]

50 Occasional Consultation Paper October 2017

Annex B
Amendments to the General Organisational Requirements Part In this Annex new text is underlined and deleted text is struck through. … 3 PERSONS WHO EFFECTIVELY DIRECT THE BUSINESS
3.1 The senior personnel of a firm must be of sufficiently good repute and sufficiently experienced as
to ensure the sound and prudent management of the firm.
[Note: Art. 9(4) of MiFID II, Art. 91(1) of the CRD]

51 Occasional Consultation Paper October 2017

Annex C
Amendments to the Compliance and Internal Audit Part In this Annex new text is underlined and deleted text is struck through. 1 APPLICATION AND DEFINITIONS
1.2 In this Part, the following definitions shall apply:
… host Member State has the meaning given in Article 4(1)(556) of MiFID II.
…
2 COMPLIANCE
…
2.2A
…
D. references to “Article 25(2) of this Regulation” are references to General Organisational Requirements 4.21A. … 2.2B A firm that is not a MiFID investment firm must comply with Article 22 Compliance Requirements on the basis set out in 2.2A and as if references to “investment firm” refer to a firm. 2.3
2.63 (1) This rule applies to a firm conducting investment services and activities from a branch in
another EEA State.
…
3.1A
…
(3) references to “Article 25(2) of this Regulation” are references to General Organisational Requirements 4.21A.

52 Occasional Consultation Paper October 2017

Annex D
Amendments to the Glossary
In this Annex new text is underlined and deleted text is struck through.
… approved counterparty
…
(3) a MiFID investment firm whose authorisation (as referred to in aArticle 5 of MiFID II) authorises it to carry on activities of the kind referred to in (2); 8.1 … MTF has the meaning given in Article 4(1)(22) MiFID II. … transferable securities means as defined in aArticle 4(1)(44) of MiFID II .

53 Occasional Consultation Paper October 2017

Annex E
Amendments to the Outsourcing Part
In this Annex new text is underlined and deleted text is struck through.
2 OUTSOURCING
2.1 A firm must:
(1) when relying on a third party for the performance of operational functions which are critical for the performance of relevant services and activities on a continuous and satisfactory basis, ensure that it takes reasonable steps to avoid undue additional operational risk; and (2) not undertake the outsourcing of important operational functions in such a way as to impair materially:
(a) the quality of its internal control; and
(b) the ability of the PRA to monitor the firm's compliance with all obligations under the regulatory system and, if different, of a competent authority to monitor the firm's compliance with all obligations under MiFID II. [Note: Art.Article 116(5) first paragraph of MiFID II]

54 Occasional Consultation Paper October 2017

Annex F
Amendments to the General Provisions Part
In this Annex new text is underlined and deleted text is struck through.
1 APPLICATION AND DEFINITIONS
…
1.2
…
MTF has the meaning given in Article 4(1)(22) of MiFID II.

55 Occasional Consultation Paper October 2017

Annex G
Amendments to Risk Control Part
In this Annex new text is underlined.
…
2 RISK CONTROL
2.2A A MiFID investment firm must extend the arrangements required by the Article 23 Risk Control Requirements so they apply with respect to other matters on the following basis:
(1) references to “relevant persons” are references to relevant persons; (2) references to “investment services and activities” are references to regulated activities; (3) references to policies and procedures includes the policies and procedures set out in this
Part; and
(4) references to provision of reports and advice to senior management includes the provision of report and advice to senior personnel in accordance with General Organisational Requirements 4.21A.

56 Occasional Consultation Paper October 2017

Appendix 7: Draft MiFID II Amendment Instrument
PRA RULEBOOK: NON-CRR FIRMS: MiFID II AMENDMENT INSTRUMENT 2017 Powers exercised A. The Prudential Regulation Authority (“PRA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 137G (The PRA’s general rules); and (2) section 137T (General supplementary powers). B. The rule-making powers referred to above are specified for the purpose of section 138G(2) (Rule￾making instrument) of the Act. Pre-conditions to making
C. In accordance with section 138J of the Act (Consultation by the PRA), the PRA consulted the
Financial Conduct Authority. After consulting, the PRA published a draft of proposed rules and had regard to representations made. PRA Rulebook: Non-CRR Firms: MiFID II Amendment Instrument 2017 D. The PRA makes the rules in the Annex to this instrument. Commencement E. This instrument comes into force on [DATE]. Citation F. This instrument may be cited as the PRA Rulebook: Non-CRR Firms: MiFID II Amendment Instrument 2017. By order of the Prudential Regulation Committee [DATE]

57 Occasional Consultation Paper October 2017

Annex A
Amendments to the Internal Governance of Third Country Branches Part In this Annex new text is underlined and deleted text is struck through. … 2A.1 A firm must inform all workers:
…
(4) of the means available to make a protected disclosure to the PRA or the FCA. [Note: Article 73(2) of MiFID II] 2A.2 If the firm:
(1) is a member of a group which includes a CRR firm; and (2) the CRR firm is subject to General Organisations Requirements 2A; the firm must inform all its workers in the UK of the CRR firm’s staff disclosure channel and explain that the staff disclosure channel is available to them. [Note: Article 73(2) of MiFID II]

58 Occasional Consultation Paper October 2017

Appendix 8: Draft MiFID II Passporting Amendment Instrument
PRA RULEBOOK: MIFID II PASSPORTING AMENDMENT INSTRUMENT 2017 Powers exercised A. The Prudential Regulation Authority (“PRA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 137G (The PRA’s general rules);
(2) section 137T (General supplementary powers); and (3) Paragraphs 19(10) and 20(4C) of Part III (Exercise of Passport Rights by UK firms) of Schedule 3 (EEA Passport Rights). B. The rule-making powers referred to above are specified for the purpose of section 138G(2) (Rule￾making instrument) of the Act. Pre-conditions to making
C. In accordance with section 138J of the Act (Consultation by the PRA), the PRA consulted the
Financial Conduct Authority. After consulting, the PRA published a draft of proposed rules and had regard to representations made. PRA Rulebook: MIFID II Passporting Amendment Instrument 2017 D. The PRA makes the rules in the Annex. Commencement E. PRA Rulebook: Passporting Instrument 2016 as made by order of the Board of the Prudential Regulation Authority on 24 October 2016 (PRA 2016/42) comes into force on [DATE]. F. This instrument comes into force on [DATE] immediately after PRA Rulebook: Passporting Instrument 2016 comes into force. Citation G. This instrument may be cited as the PRA Rulebook: MIFID II Passporting Amendment Instrument 2017. By order of the Prudential Regulation Committee [DATE]

59 Occasional Consultation Paper October 2017

Annex A
Amendments to the Passporting Part as amended by PRA Rulebook: Passporting Instrument 2016 In this Annex new text is underlined and deleted text is struck through. …
2.4 This rule applies to a UK firm in relation to its EEA rights derived from MiFID II.
(1) A UK designated investment firm wishing to establish a branch within the territory of another EEA State must comply with the information requirements set out in Article 6 of Commission Delegated Regulation (EU) …/…2017/1018 and notify the PRA of its intention by submitting the form set out in Annex VI of Commission Implementing Regulation (EU) …/…. The firm must also submit the form set out in Annex VII of Commission Implementing Regulation (EU) …/… if it intends to use a tied agent in the same territory as the the branch. (2) A UK firm wishing to use a tied agent established in another EEA State in which it has not established a branch must comply with the information requirements set out in Article 6 Commission Delegated Regulation (EU) …/…2017/1018 and notify the PRA of its intention by submitting the form set out in Annex VII of Commission Implementing Regulation (EU) …/…. … …
4.3 This rule applies to a UK firm in relation to its EEA rights derived from MiFID II.
(1) A UK designated investment firm intending to provide cross border services within the territory of another EEA State for the first time must comply with the information requirements set out in
Article 3 (1) of Commission Delegated Regulation (EU) …/…2017/1018 and notify the PRA of its
intention by submitting the form set out in Annex I of Commission Implementing Regulation (EU) …/…. (2) A credit institution intending to provide cross border services within the territory of another EEA State through tied agents must comply with the information requirements set out in Article 3 (2) of Commission Delegated Regulation (EU) …/…2017/1018 and notify the PRA of its intention by submitting the form set out in Annex I of Commission Implementing Regulation (EU) …/…. (3) A UK firm operating an MTF or OTF that intends to provide appropriate arrangements to facilitate access to and trading on those systems by remote users, members or participants in another EEA State must comply with the information requirements set out in Article 5 of Commission Delegated Regulation (EU) …/…2017/1018 and notify the PRA of its intention by submitting the form set out in Annex IV of Commission Implementing Regulation (EU) …/…. … …
5.4 This rule applies to a UK firm in relation to its EEA rights under MiFID II.
(1) A UK designated investment firm that has established a branch in another EEA State must comply with the information requirements set out in Article 7(1) of Commission Delegated Regulation (EU) …/…2017/1018 and notify the PRA of a change to the branch by submitting the

60 Occasional Consultation Paper October 2017

form in Annex VI of Commission Implementing Regulation (EU) …/… except where the change relates to a planned termination of the operation of the branch. (2) A UK firm that uses a tied agent established in another EEA State must comply with the information requirements set out in Article 7(1) of Commission Delegated Regulation (EU) …/…2017/1018 and notify the PRA of a change to the particulars of the tied agent by submitting the form in Annex VII of Commission Implementing Regulation (EU) …/… except where the change relates to the cessation of the use of a tied agent. (3) A UK designated investment firm that plans to terminate the operation of a branch or that plans the cessation of the use of a tied agent, and a credit institution that plans the cessation of the use of a tied agent, must comply with the information requirements set out in Article 7(2) of Commission Delegated Regulation (EU) …/…2017/1018and notify the PRA by submitting the form in Annex X of Commission Implementing Regulation (EU) …/… … …
6.2 (1) A UK designated investment firm providing cross border services under MiFID II and a credit
institution providing cross border services under MiFID II through a tied agent and wishing to change the range of services provided or activities performed within the territory of another EEA State must comply with the information requirements in Commission Delegated Regulation …/…2017/1018 and notify the PRA by submitting the form in Annex I of Commission Implementing Regulation …/…. … …

61 Occasional Consultation Paper October 2017

Appendix 9: Draft MiFID II, IMD, and BMR Consequential Amendment Instrument
PRA RULEBOOK: MIFID II, IDD AND BMR CONSEQUENTIAL AMENDMENTS INSTRUMENT (No.[X]) 2017 Powers exercised A. The Prudential Regulation Authority (“PRA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 60 (Applications for approvals);
(2) section 137G (The PRA’s general rules);
(3) section 137T (General supplementary powers); and (4) paragraphs 19(10) and 20(4C) of Schedule 3 (EEA Passport Rights) Part III (Exercise of Passport Rights by UK firms). B. The rule-making powers referred to above are specified for the purpose of section 138G(2) (Rule￾making instruments) of the Act. Pre-conditions to making
C. In accordance with section 138J of the Act (consultation by the PRA), the PRA consulted the
Financial Conduct Authority. After consulting, the PRA published a draft of proposed rules and had regard to representations made. PRA RULEBOOK: MIFID II, IDD AND BMR CONSEQUENTIAL AMENDMENTS INSTRUMENT (No.[X]) 2017 D. The PRA makes the rules in the Annexes to this instrument. Commencement E. Annexes A, E and F to this instrument come into force on [DATE] F. Annexes B, C and Z to this instrument come into force on [DATE] G. Annex D and Annexes G to Y to this instrument come into force on [DATE] Citation H. This instrument may be cited as the PRA Rulebook: MIFID II, IDD and BMR Consequential Amendments Instrument (No.[X]) 2017. By order of the Prudential Regulation Committee [DATE]

62 Occasional Consultation Paper October 2017

Annex A
Amendments to the Senior Managers Regime - Applications and Notifications Part In this Annex new text is underlined and deleted text is struck through. … 2 APPLICATION TO PERFORM A PRA SENIOR MANAGEMENT FUNCTION … 2.7 … (2) A statement of responsibilities must be in the form set out:
(a) for a third country CRR firm, in the form set out here here; and (b) for all other firms, in the form set out here here. …

63 Occasional Consultation Paper October 2017

Annex B
Amendments to the Senior Managers Regime - Applications and Notifications Part In this Annex new text is underlined and deleted text is struck through. … 2 APPLICATION TO PERFORM A PRA SENIOR MANAGEMENT FUNCTION …
2.8 The PRA directs that the form submitted for a PRA senior management application by a
designated investment firm must be accompanied by the designated additional information. … 5 CEASING TO PERFORM A PRA SENIOR MANAGEMENT FUNCTION
5.1 (1) A firm must notify the PRA no later than seven ten business days after a person
ceases to perform a PRA senior management function, using:
…

64 Occasional Consultation Paper October 2017

Annex C
Amendments to the Fitness and Propriety Part
In this Annex new text is underlined and deleted text is struck through.
…
4.2 A firm must notify the PRA when a person becomes a notified non-executive director and shall
provide the PRA with all of the information needed to assess whether that person is fit and proper. The PRA directs that when such information is provided by a designated investment firm, it must be accompanied by the designated additional information. …

65 Occasional Consultation Paper October 2017

Annex D
Amendments to the Senior Managers Regime - Applications and Notifications Part In this Annex new text is underlined and deleted text is struck through. … 8 FORMS
8.1 (1) Form A (long form) may be found here here.
(2) Form A (shortened form) may be found here here.
…
(6) Form E may be found here here.
…

66 Occasional Consultation Paper October 2017

Annex E
Amendments to statement of responsibilities for a third country CRR firm New text is underlined and deleted text is struck through. Senior Management Regime: Statement of Responsibilities (Third Country Relevant Authorised Persons only) …
ANNEX A
SYSC 4 The main business activities and functions of a relevant authorised person
Annex 1G
…
(26) Providing information in relation to a specified benchmark Contributing input data to an EEA administrator (27) Administering a specified regulated benchmark …

67 Occasional Consultation Paper October 2017

Annex F
Amendments to statement of responsibilities for all other firms New text is underlined and deleted text is struck through. Senior Management Regime: Statement of Responsibilities …
ANNEX A
SYSC 4 The main business activities and functions of a relevant authorised person
Annex 1G
…
(26) Providing information in
…
Business areas and management functions relation to a specified benchmark Contributing input data to an EEA administrator (27) Administering a specified regulated benchmark …

68 Occasional Consultation Paper October 2017

Annex G
Amendments to Form A (long form)
New text is underlined and deleted text is struck through.
Long Form A – UK Relevant Authorised Persons and Third Country Relevant Authorised Persons only Application to perform senior management functions …
3.03 Job title
Insurance mediation distribution
Will the candidate be responsible for insurance mediation distribution at the firm? YES NO (Note: Yes can only be selected if the individual is applying for a governing function (other than a non￾executive director function))  I have supplied further information related to this page in Section 6 YES NO …

69 Occasional Consultation Paper October 2017

Annex H
Amendments to Form A (shortened form)
New text is underlined and deleted text is struck through.
Short Form A – UK Relevant Authorised Persons and Third Country Relevant Authorised Persons only …
3.03 Job title
Insurance mediation distribution
Will the candidate be responsible for Insurance mediation distribution at the firm? YES NO (Note: Yes can only be selected if the individual is applying for a governing function (other than a non￾executive director function)) … 5.2 Has the firm undertaken a criminal records check in accordance with the requirements of the FCA or PRA? Please note that a firm is required to request the fullest information that it is lawfully able to obtain about the candidate under Part V of the Police Act 1997 (Certificates of criminal records, etc) and related subordinated legislation of the UK or any part of the UK before making the application. (SUP 10C.10.16R and PRA Rulebook: Fitness and Propriety). If yes, please enter date the check was undertaken. YES NO Date (dd/mm/yy):
Note: if date is more than 3 months prior to current date or 3 months prior to date of application submission or the check has not been undertaken, please provide details why in section 6. …  I have supplied further information related to this page in Section 6 YES NO

70 Occasional Consultation Paper October 2017

Annex I
Amendments to the Change in Control Part
In this Annex new text is underlined and deleted text is struck through.
…
4 ONGOING NOTIFICATION REQUIREMENTS
4.1 A firm must notify the PRA as soon as immediately it becomes aware of any of the following
matters in respect of one or more of its controllers:
(1) if a controller, or any entity subject to his their control, is or has been the subject of any legal action or investigation which might put into question the integrity of the controller; (2) if there is a significant deterioration in the financial position of a controller; (3) if a corporate controller undergoes a substantial change or series of changes in its governing body; (4) if a controller, who is authorised in another EEA State as a MiFID investment firm, CRD credit institution or UCITS management company or under the Insurance Directives Solvency II Directive or the Insurance Mediation Directive Insurance Distribution Directive, ceases to be so authorised (registered in the case of an IMD insurance intermediary IDD insurance intermediary). …

71 Occasional Consultation Paper October 2017

Annex J
Amendments to the
Senior Insurance Managers Regime – Applications and Notifications Part In this Annex new text is underlined and deleted text is struck through. … 7 FORMS
7.1 (1) Form A (long form) may be found here here.
(2) Form A (shortened form) may be found here here.
…
(6) Form E may be found here here.
…

72 Occasional Consultation Paper October 2017

Annex K
Amendments to Long Form A – Solvency II Firms only New text is underlined and deleted text is struck through …
3.03 Job title
Insurance mediationdistribution
Will the candidate be responsible for mediationdistribution at the firm? YES NO (Note: Yes can only be selected if the individual is applying for a governing function (other than controlled functions CF2a and CF2b) (MIPRU 2.2.2)) …  I have supplied further information related to this page in Section 6† YES NO

73 Occasional Consultation Paper October 2017

Annex L
Amendments to Short Form A – Solvency II Firms only New text is underlined and deleted text is struck through …
3.03 Job title
Insurance mediationdistribution
Will the candidate be responsible for mediationdistribution at the firm? YES NO (Note: Yes can only be selected if the individual is applying for a governing function (other than controlled functions CF2a and CF2b) (MIPRU 2.2.2)). …  I have supplied further information related to this page in Section 6† YES NO

74 Occasional Consultation Paper October 2017

Annex M
Amendments to Form E – Internal transfer of an approved person (for Solvency II firms only) New text is underlined and deleted text is struck through …
4.03 Job title
Insurance mediationdistribution
Will the candidate be responsible for Insurance mediationdistribution at the firm? YES NO (Note: Yes can only be selected if the individual is applying for a governing function (other than controlled functions CF2a and CF2b) (MIPRU 2.2.2)) …

75 Occasional Consultation Paper October 2017

Annex N
Amendments to the
Large Non-Solvency II Firms - Senior Insurance Managers Regime – Applications and Notifications Part In this Annex new text is underlined and deleted text is struck through. … 7 FORMS
7.1 (1) Form A (long form) may be found here here.
(2) Form A (shortened form) may be found here here.
…
(6) Form E may be found here here.
…

76 Occasional Consultation Paper October 2017

Annex O
Amendments to Long Form A – Large non-directive insurers only New text is underlined and deleted text is struck through …
3.03 Job title
Insurance mediationdistribution
Will the candidate be responsible for Insurance mediationdistribution at the firm? YES NO (Note: Yes can only be selected if the individual is applying for a governing function (other than controlled functions CF2a and CF2b) (MIPRU MIPRU 2.2.2)) …
Annex P

I have supplied further information related to this page in Section 6† YES NO

77 Occasional Consultation Paper October 2017

Amendments to Short Form A – Large non-directive insurers New text is underlined and deleted text is struck through …
3.03 Job title
Insurance mediationdistribution
Will the candidate be responsible for Insurance mediationdistribution at the firm? YES NO (Note: Yes can only be selected if the individual is applying for a governing function (other than controlled functions CF2a and CF2b) (MIPRU 2.2.2)). …
Annex Q

I have supplied further information related to this page in Section 6† YES NO

78 Occasional Consultation Paper October 2017

Amendments to Form E – Internal transfer of an approved person (for large non-directive insurers only) New text is underlined and deleted text is struck through …
4.03 Job title
Insurance mediationdistribution
Will the candidate be responsible for Insurance mediationdistribution at the firm? YES NO (Note: Yes can only be selected if the individual is applying for a governing function (other than controlled functions CF2a and CF2b) (MIPRU MIPRU 2.2.2)) …
Annex R

79 Occasional Consultation Paper October 2017

Amendments to the
Non-Solvency II Firms - Senior Insurance Managers Regime – Applications and Notifications Part … In this Annex new text is underlined and deleted text is struck through. 7 FORMS
7.1 (1) Form A (long form) may be found here here.
(2) Form A (shortened form) may be found here here.
…
(6) Form E may be found here here.
…

80 Occasional Consultation Paper October 2017

Annex S
Amendments to Long Form A – small non-directive insurers only New text is underlined and deleted text is struck through …
3.03 Job title
Insurance mediationdistribution
Will the candidate be responsible for Insurance mediationdistribution at the firm? YES NO (Note: Yes can only be selected if the individual is applying for a governing function (MIPRU 2.2.2)) …  I have supplied further information related to this page in Section 6† YES NO

81 Occasional Consultation Paper October 2017

Annex T
Amendments to Short Form A – Small non-directive insurers only New text is underlined and deleted text is struck through …
3.03 Job title
Insurance mediationdistribution
Will the candidate be responsible for Insurance mediationdistribution at the firm? YES NO (Note: Yes can only be selected if the individual is applying for a governing function (other than controlled functions CF2a and CF2b) (MIPRU 2.2.2)). …  I have supplied further information related to this page in Section 6† YES NO

82 Occasional Consultation Paper October 2017

Annex U
Amendments to Form E – Internal Transfer of an approved person (small non-directive insurers only) New text is underlined and deleted text is struck through …
4.03 Job title
Insurance mediationdistribution
Will the candidate be responsible for Insurance mediationdistribution at the firm? YES NO (Note: Yes can only be selected if the individual is applying for a governing function (other than controlled functions CF2a and CF2b) (MIPRU MIPRU 2.2.2)) …

83 Occasional Consultation Paper October 2017

Annex V
Amendments to the
Passporting Part
In this Annex new text is underlined and deleted text is struck through.
…
10 FORMS
10.1 The Branch Notification Form can be found here here (see Appendix 1a).
10.2 The Cross Border Services Notification Form can be found here here (see Appendix 1b).
10.3 The CRD Declaration can be found here (See Appendix 1c).
…

84 Occasional Consultation Paper October 2017

Annex W
Amendments to the Branch Notification Form
New text is underlined and deleted text is struck through …
3. Insurance Mediation Distribution Directive (IMDD)
3.1 Please confirm that the UK firm wishes to passport under the IMDD by ticking the box below

1. The firm intends to carry on insurance mediation distribution in the
   EEA State identified in section 2 by establishing a branch.
   3.2 Please indicate the firm’s category of intermediary †
   Insurance intermediary
   Ancillary insurance intermediary
   …

† These questions should be completed whether submission of this form is online or in one of the other ways set out in SUP 15.7 of the FCA Handbook or Passporting 7 in the PRA Rulebook.

85 Occasional Consultation Paper October 2017

Annex X
Amendments to the Cross Border Services Notification Form New text is underlined and deleted text is struck through …
6. Insurance Mediation Distribution Directive (IMDD)
6.1 You must confirm that the UK firm wishes to passport under the IMDD by ticking the box below.
2. The firm intends to carry on insurance mediation distribution in the
EEA State(s) identified in section 3 by providing cross border services.
6.2 Please indicate the firm’s category of intermediary †
Insurance intermediary
Ancillary insurance intermediary
6.23 If this form is in respect of one or more Appointed Representative(s) of the firm then please
list below the name(s) and firm reference number(s) of those Appointed Representatives:
3. Firm Reference Number 4.
5. Name of Company 6.
7. Address Line 1 8.
9. Address Line 2 10.
11. Address Line 3 12.
13. Address Line 4 14.
15. County 16.
17. Town 18.
19. Postcode/ZIP 20.

† These questions should be completed whether submission of this form is online or in one of the other ways set out in SUP 15.7 of the FCA Handbook or Passporting 7 in the PRA Rulebook.

86 Occasional Consultation Paper October 2017

21. EEA State 22.
23. Phone Number (incl STD code) 24.
25. Email Address 26.
27. Mobile Number 28.
29. Fax Number 30.
…

87 Occasional Consultation Paper October 2017

Annex Y
Amendments to the
Glossary
In this Annex new text is underlined and deleted text is struck through.
… branch means
…
(4) (in relation to an IMD insurance intermediary IDD insurance intermediary):
(a) a place of business which is part of an IMD insurance intermediary IDD insurance intermediary, not being the principal place of business, which has no separate legal personality and which provides insurance mediation insurance distribution for which the IMD insurance intermediary IDD insurance intermediary has been registered; (b) for the purposes of the Insurance Mediation Directive Insurance Distribution Directive, all the places of business set up in the same EEA State by an IMD insurance intermediary IDD insurance intermediary with headquarters in another EEA State are to be regarded as a single branch. (5) (in relation to an IMD reinsurance intermediary IDD reinsurance intermediary):
(a) a place of business which is part of an IMD reinsurance intermediary IDD reinsurance intermediary, not being the principal place of business, which has no separate legal personality and which provides reinsurance mediation reinsurance distribution for which the IMD reinsurance intermediary IDD reinsurance intermediary has been registered; (b) for the purposes of the Insurance Mediation Directive Insurance Distribution Directive, all the places of business set up in the same EEA State by an IMD reinsurance intermediary IDD reinsurance intermediary with headquarters in another EEA State are to be regarded as a single branch. … IDD insurance intermediary has the meaning given in article 2(3) of the Insurance Distribution Directive. IDD reinsurance intermediary has the meaning given in article 2(5) of the Insurance Distribution Directive. …

88 Occasional Consultation Paper October 2017

IMD insurance intermediary has the meaning given in article 2(5) of the Insurance Mediation Directive IMD reinsurance intermediary has the meaning given in article 2(6) of the Insurance Mediation Directive … insurance distribution has the meaning given in article 2(1) of the Insurance Distribution Directive. Insurance Distribution Directive means the European Parliament and Council Directive of 20 January 2016 on insurance distribution (No 2016/97/EC). … Insurance Mediation Directive means the European Parliament and Council Directive of 9 December 2002 on insurance mediation (No 2002/92/EC). … reinsurance distribution has the meaning given in article 2(2) of the Insurance Distribution Directive. … reinsurance mediation has the meaning given in article 2(6) of the Insurance Mediation Directive. …

89 Occasional Consultation Paper October 2017

Annex Z
Amendments to the
Glossary
In this Annex the text is all new and is not underlined.
… designated additional information means such information in such form as may be required pursuant to Article 4 of the Commission Delegated Regulation (EU) …..1 of 14 July 2016 supplementing MiFID II of the European Parliament and of the Council with regard to regulatory technical standards on information and requirements for the authorisation of investment firms as amended from time to time. …

1 Applicable reference to be inserted once published in the Official Journal.

90 Occasional Consultation Paper October 2017

Appendix 10: Draft Benchmarking Regulation Instrument
PRA RULEBOOK: CRR FIRMS: BENCHMARKING REGULATION INSTRUMENT 2017 Powers exercised A. The Prudential Regulation Authority (“PRA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(3) section 137G (The PRA’s general rules); and (2) section 137T (General supplementary powers). B. The rule-making powers referred to above are specified for the purpose of section 138G (2) (Rule￾making instruments) of the Act. Pre-conditions to making
C. In accordance with section 138J of the Act (Consultation by the PRA), the PRA consulted the Financial
Conduct Authority. After consulting, the PRA published a draft of the proposed rules and had regard to representations made. PRA Rulebook: CRR Firms: Benchmarking Regulation Instrument 2017 D. The PRA makes the rules in Annexes A to G to this instrument.
Part Annex
Glossary A
Compliance and Internal Audit B
General Organisational Requirements C
Outsourcing D
Record Keeping E
Risk Control F
Skills, Knowledge and Expertise G
Commencement
E. This instrument comes into force on [DATE].
Citation
F. This instrument may be cited as the PRA Rulebook: CRR Firms: Benchmarking Regulation Instrument 2017. By order of the Prudential Regulation Committee [DATE]

91 Occasional Consultation Paper October 2017

Annex A
Amendments to the Glossary
In this Annex, the text is all new and is not underlined. administering a regulated benchmark means the regulated activity specified in article [63OX]1 of the Regulated Activities Order. benchmark activities means the following activities:
(1) the regulated activity of administering a regulated benchmark; or (2) contribution of input data to an EEA administrator. benchmarks regulation means Regulation (EU) No. 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014. contribution of input data has the meaning given in article 3.1(8) of the benchmarks regulation. EEA administrator means a person who:
(1) (1) is an administrator within the meaning of article 3.1(6) of the benchmarks regulation; and (2) (2) has been authorised or registered in accordance with article 34 of the benchmarks regulation. regulated benchmark administrator a person who has a Part 4A permission to carry on the regulated activity of administering a regulated benchmark.

1 Reference to be inserted by The Financial Services and Markets Act (2000) (Benchmarks) Regulations 2017 (currently in draft).

92 Occasional Consultation Paper October 2017

Annex B
Amendments to the Compliance and Internal Audit Part In this Annex, new text is underlined. 1 APPLICATION AND DEFINITIONS …. 1.1A 2.1 to 2.6 do not apply to a firm with respect to the carrying on of benchmarking activities except to the extent that they transpose an EU instrument. …

93 Occasional Consultation Paper October 2017

Part
COMPLIANCE AND INTERNAL AUDIT
Externally defined glossary terms
Term Definition source
EEA State Schedule 1 Interpretation Act 1978
EU instrument Part II of Schedule 1 to the European Communities Act 1972 group s421 FSMA regulated activity s22 FSMA

94 Occasional Consultation Paper October 2017

Annex C
Amendments to the General Organisational Requirements Part In this Annex, new text is underlined. 1 APPLICATION AND DEFINITIONS … 1.1A 2.1 to 2.8 do not apply to a firm with respect to the carrying on of benchmarking activities except to the extent that they transpose an EU instrument.

95 Occasional Consultation Paper October 2017

Part
GENERAL ORGANISATIONAL REQUIREMENTS
Externally defined glossary terms
Term Definition source
EEA State Schedule 1 Interpretation Act 1978
EU instrument Part II of Schedule 1 to the European Communities Act 1972 group s421 FSMA regulated activity s22 FSMA

96 Occasional Consultation Paper October 2017

Annex D
Amendments to the Outsourcing Part
In this Annex, new text is underlined.
1 APPLICATION AND DEFINITIONS
…
1.1.A This Part does not apply to a firm with respect to the carrying on of benchmarking activities except to the extent that they transpose an EU instrument. …

97 Occasional Consultation Paper October 2017

Part
OUTSOURCING
Externally defined glossary terms
Term Definition source
EEA State Schedule 1 Interpretation Act 1978
EU instrument Part II of Schedule 1 to the European Communities Act 1972 group s421 FSMA regulated activity s22 FSMA

98 Occasional Consultation Paper October 2017

Annex E
Amendments to the Record Keeping Part
In this Annex, new text is underlined.
…
1 APPLICATION AND DEFINITIONS
…
1.1A This Part does not apply to a firm with respect to the carrying on of benchmarking activities except to the extent that they transpose an EU instrument.

99 Occasional Consultation Paper October 2017

Part
RECORD KEEPING
Externally defined glossary terms
Term Definition source
EEA State Schedule 1 Interpretation Act 1978
EU instrument Part II of Schedule 1 to the European Communities Act 1972 group s421 FSMA regulated activity s22 FSMA

100 Occasional Consultation Paper October 2017

Annex F
Amendments to the Risk Control Part
In this Annex, new text is underlined.
…
1 APPLICATION AND DEFINITIONS
…
1.1A 2.1 – 2.2B do not apply to a firm with respect to the carrying on of benchmarking activities except to the extent that they transpose an EU instrument.

101 Occasional Consultation Paper October 2017

Part
RISK CONTROL
Externally defined glossary terms
Term Definition source
EEA State Schedule 1 Interpretation Act 1978
EU instrument Part II of Schedule 1 to the European Communities Act 1972 regulated activity s22 FSMA

102 Occasional Consultation Paper October 2017

Annex G
Amendments to the Skills, Knowledge and Expertise Part In this Annex, new text is underlined. 1 APPLICATION AND DEFINITIONS … 1.1A 2.1A to 2.1B do not apply to a firm with respect to the carrying on of benchmarking activities except to the extent that they transpose an EU instrument.

103 Occasional Consultation Paper October 2017

Part
SKILLS, KNOWLEDGE AND EXPERTISE
Externally defined glossary terms
Term Definition source
EEA State Schedule 1 Interpretation Act 1978
EU instrument Part II of Schedule 1 to the European Communities Act 1972 regulated activity s22 FSMA

104 Occasional Consultation Paper October 2017

Appendix 11: Draft Form changes
Amendments to the Waiver Application Form
New text is underlined and deleted text is struck through.
…
4 What types of client would be affected if we granted your application? (tick all that apply) † Retail Clients Professional Clients Eligible Counterparty Retail Customers (insurance mediation distribution activities only) Commercial Customers (insurance mediation distribution activities only) Customers (home finance business only) …

105 Occasional Consultation Paper October 2017

Amendments to the Application for authorisation – Application form for banks New text is underlined and deleted text is struck through. …
3.10.5 Is the applicant firm seeking permission to hold and/or control client money in relation
to home finance activities or insurance mediation distribution business?
Hold client monies
Control client monies
Home finance activities
Insurance distribution activities
...
9.10 Fee block A.19 – General insurance mediation distribution
How much annual income does the applicant firm estimate for the first year of authorisation in relation to its non-investment insurance contracts (including pure protection) business only? Amount Confirm amount in words …
9.20 The ombudsman service’s industry block I017 – General insurance mediation
distribution
How much relevant annual income does the applicant firm estimate for the first year of authorisation in relation to its non-investment insurance contracts (including pure protection) business only? Amount Confirm amount in words …
9.22 Class SB02 – General insurance mediation distribution
How much annual eligible income does the applicant firm estimate for the first year of authorisation in relation to its non-investment insurance contracts (excluding pure protection) business only? Amount Confirm amount in words …

106 Occasional Consultation Paper October 2017

Amendments to the Application for authorisation – Supplement for insurance companies New text is underlined and deleted text is struck through. …
2.3 Insurance mediation distribution business
2.3.1 Will the applicant firm be conducting insurance mediation distribution business?
1 No  Continue to question 2.4
2 Yes  Continue to question 2.3.2
…
2.5 Agreeing to carry on a regulated activity
Under the permission regime, 'agreeing to carry on a regulated activity' is a regulated activity in its own right. If the applicant firm is proposing to carry on the regulated activity of 'dealing in investments as principal' and any of the insurance mediation distribution activities then, as a matter of course, it will also carry on this regulated activity (which will be limited to agreeing to carry on only the other regulated activities specified in the applicant firm's Scope of Permission Notice). …

107 Occasional Consultation Paper October 2017

Amendments to the Application for Authorisation – Supplement for Lloyd’s managing agents New text is underlined and deleted text is struck through. …
2.2 Lloyd's managing agents also carrying on insurance mediation distribution business
If the applicant firm will also be carrying on insurance mediation distribution activities in addition to or in conjunction with its main activity of managing the underwriting capacity of a Lloyd's syndicate as a managing agent it must apply for permission for these activities. You must do this by completing the insurance mediation distribution business permission profile table. You must confirm whether the applicant firm has completed the general insurance business permission profile table:
Yes
No, the applicant firm is not seeking permission to carry on insurance mediation distribution business INSURANCE MEDIATION DISTRIBUTION BUSINESS PERMISSION PROFILE TABLE …

108 Occasional Consultation Paper October 2017

Amendments to the Application for Authorisation – Controllers appendices – Corporate New text is underlined and deleted text is struck through. …
1.8 Do all of the following statements apply:
i. The controller is an EEA firm (as defined in paragraph 5 of Schedule 3 of the Financial
Services and Markets Act 2000 ("FSMA");
ii. The applicant firm is connected with the controller because it is a subsidiary undertaking
of the controller or a subsidiary undertaking of a parent undertaking of the controller ("subsidiary undertaking" and "parent undertaking" have the meaning given by s.420A of FSMA); and
iii. The applicant firm's application relates to a regulated activity other than an insurance
mediation distribution activity (within the meaning given by paragraph 2(5) of Schedule 6A of FSMA) or a regulated activity involving a regulated mortgage contract. No  Continue to question 1.9 YesGive details below …

109 Occasional Consultation Paper October 2017

Amendments to the Application for Authorisation – Controllers appendices – Partnership New text is underlined and deleted text is struck through. …
1.5 Do all of the following statements apply:
i. The controller is an EEA firm (as defined in paragraph 5 of Schedule 3 of the Financial
Services and Markets Act 2000 ("FSMA");
ii. The applicant firm is connected with the controller because it is a subsidiary undertaking
of the controller or a subsidiary undertaking of a parent undertaking of the controller ("subsidiary undertaking" and "parent undertaking" have the meaning given by s.420A of FSMA); and
iii. The applicant firm's application relates to a regulated activity other than an insurance
mediation distribution activity (within the meaning given by paragraph 2(5) of Schedule 6A of FSMA) or a regulated activity involving a regulated mortgage contract. NoContinue to question 1.6 YesGive details below …

110 Occasional Consultation Paper October 2017

Amendments to the Application for Authorisation – Owners and influencers appendix New text is underlined and deleted text is struck through. … 1 Who controls (i.e. owns) the applicant firm? This section helps us to understand who controls/owns the applicant firm i.e. its controllers and the relationships, close links the applicant firm might have with other individuals or entities. Often there will be some overlap between the applicant firm's controllers and close links. For example, an individual who owns or controls 10% (20% for mortgage and insurance mediation distribution) or more of the voting rights or capital of the applicant firm is both a controller and a close link of that firm. …

111 Occasional Consultation Paper October 2017

Amendments to the CRR Permission – Application Form New text is underlined and deleted text is struck through. … 3 Group applications Where applicable, please list the group firms on behalf of which this application is also being made:
Firm Reference Number Firm Name
4 What types of client would be affected if we granted your application? (tick all that apply) † Retail Clients Professional Clients Eligible Counterparty Retail Customers(insurance mediation distribution activities only) Commercial Customers(insurance mediation distribution activities only) Customers(home finance business only) …

112 Occasional Consultation Paper October 2017

Appendix 12: Draft MiFID II Approved Persons and Senior Managers Forms
Amendment Instrument 2017
MiFID II APPROVED PERSONS AND SENIOR MANAGERS FORMS AMENDMENT INSTRUMENT 2017 Powers exercised A. The Financial Conduct Authority makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (the “Act”):
(1) section 55A (Application for permission);
(2) section 55U (Applications under this Part); (3) section 59 (Approval for particular arrangements); (4) section 60 (Applications for approval); (5) section 60A (Vetting candidates by relevant authorised persons); (6) section 61 (Determination of applications); (7) section 62A (Changes to responsibilities of senior managers); (8) section 64A (Rules of conduct); (9) section 137A (The FCA’s general rules); (10) section 137T (General supplementary powers); (11) section 138D (Action for damages); (12) section 139A (Power of the FCA to give guidance); and (13) section 226 (Compulsory jurisdiction). B. The rule-making powers listed above are specified for the purpose of section 138G(2) (Rule￾making instruments) of the Act. Commencement
C. This instrument comes into force on 3 January 2018.
Amendments to the Handbook
D. The Glossary of definitions is amended in accordance with Annex A to this instrument. E. The Supervision manual (SUP) is amended in accordance with Annex B to this instrument. Citation F. This instrument may be cited as the MiFID II Approved Persons and Senior Managers Forms Amendment Instrument 2017. By order of the Board [date]

113 Occasional Consultation Paper October 2017

Annex A
Amendments to the Glossary of definitions
Insert the following new definition in the appropriate alphabetical position. The text is not underlined. MiFID II ITS MiFID II/MiFIR draft Technical Standards ESMA/2015/1006 of 29 June 2015 on authorisation, passporting, registration of third country firms and cooperation between competent authorities.

114 Occasional Consultation Paper October 2017

Annex B
Amendments to the Supervision manual (SUP)
In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated. 10A FCA Approved Persons … 10A.13 Application for approval and withdrawing an application for approval … How to apply for approval … 10A.13.4 D … 10A.13.4 A G When a MiFID investment firm, (except a credit institution), notifies the FCA of a change using Form A or Form E, they must also submit the MiFID Article 4 APER Information Form. The details can be found in SUP 10A.14.4BD. 10A.14 Changes to an FCA-approved person’s details … Moving within a firm 10A.14.4 D … 10A.14.4 A G (1) The MiFID II ITS requires that MiFID investment firms (except credit institutions) submit the Annex III information on the ESMA template available at https://www.fca.org.uk/publication/forms/mifid-changes￾management-body-form.docx (“Annex III template”) where there is a change to a member of the management body or a person who effectively directs the business. (2) MiFID investment firms (except credit institutions) need to submit this
Annex III template within ten business days of the change in the online
notification and application system (also known as Connect).
(3) In summary, where there is a change to a member of the management body or a person who effectively directs the business of a MiFID investment firm (excluding a credit institution) then the firm is required to submit the following forms (in addition to the relevant Form A, C, or E about a candidate):
(a) Where a new member of the management body or a person

115 Occasional Consultation Paper October 2017

who effectively directs the business is appointed:
(i) The Annex III template; and
(ii) MiFID Article 4 APER Information Form.
(b) Where a person ceases being a member of the management body or a person who effectively directs the business, the Annex III template (in addition to the relevant Form E). (4) Where the Annex III template requires the firm to provide information which is also contained in Form A and/or E, the firm may, instead of duplicating the information, cross-refer to the information in the relevant Form A or E and annex those forms to the Annex III template (see SUP 10A.14.4C). 10A.14.4 B D Where there is a change to a member of the management body or person who directs the business, MiFID investment firms (except credit institutions) must submit to the FCA the completed form found in SUP 10A Annex 10D “MiFID Article 4 APER Information Form” at the same time as submitting Form A and/or E about a candidate. [Editor’s note: This is in accordance with the information required in article 4 of the Commission Delegated Regulation of 14 July 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards on information and requirements for the authorisation of investment firms.]

10A.14.4
C
G
Therefore, MiFID investment firms (except credit institutions) who submit:
(a) Form A and/or E; and
… (b) the MiFID Article 4 APER Information Form about a candidate may complete the Annex III template outlined in SUP 10A.14.4A(1) by cross-referring to the information in the relevant Form A and/or E where it has already been provided by the firm, and this would then be annexed to the relevant Form A and/or Form E. Ceasing to perform an FCA controlled function 10A.14. 8 R (1) A firm must submit to the FCA a completed Form C, in the form set out in SUP 10A Annex 6R, no later than seven ten business days after an FCA￾approved person ceases to perform an FCA controlled function. … … 10A.14.1 3 G A firm can submit Form C or Form E and the MiFID Article 4 APER Information Form to the FCA in advance of the cessation date. When a person ceases the arrangement under which he performs they perform an FCA controlled function, he they will automatically cease to be an FCA-approved person in relation to that

116 Occasional Consultation Paper October 2017

FCA controlled function. A person can only be an FCA-approved person in relation to a specific FCA controlled function. Therefore, a person is not an FCA-approved person during any period between ceasing to perform one FCA controlled function (when he is they are performing no other FCA controlled function) and being approved in respect of another FCA controlled function. … After SUP 10A Annex 9 Form G (The Retail Investment Adviser Complaints Alerts Form) insert the following new annex SUP 10A Annex 10D (MiFID APER Article 4 Information Form). The text is not underlined.

117 Occasional Consultation Paper October 2017

MiFID Article 4 APER Information form
Full name of applicant firm and Firm Reference Number (FRN) Purpose of this form MiFID II requires certain information to be provided by the applicant firm when making changes to their management body or key function holders. The information required is detailed in the MiFID II Regulatory Technical Standards (RTS)1 and Implementing Technical Standards (ITS)2 . The information in this form is required to enable us to fulfil our obligations in obtaining this information. Contents of this form Page 1 Long Form A 5 2 Form E 8

118 Occasional Consultation Paper October 2017

Important information you should read before completing this form We require all MiFID investment firms (except credit institutions) making changes to their management body or key function holders to provide these details as part of their application for the individual to hold a controlled function or internal transfer of an approved person. Please keep a copy of the forms you complete and the supporting documents that you include with the application for your future reference. The notes that accompany this form will help you complete the questions and they also explain why we require the information we ask you for. For the purposes of complying with the Data Protection Act 1998, please note that any personal information provided to us will be used to discharge our statutory functions under the Financial Services and Markets Act 2000 (FSMA) and other relevant legislation and may be disclosed to third parties for those purposes. It is important that you provide accurate and complete information and disclose all relevant information. If you do not, it will call into question your suitability to be authorised, and you may be committing a criminal offence and could face prosecution under section 398A of the FSMA regardless of the status of your application. Terms in this form In this application pack we use the following terms:
 'you' refers to the person(s) signing the form on behalf of the applicant firm;  ‘the individual’ refers to the person holding the controlled function  'the applicant firm' refers to the firm applying for authorisation of the individual;  ‘we’, ‘us’ or ‘our’ refers to the appropriate regulator;  ‘the FCA' refers to the Financial Conduct Authority;  FSMA refers to the Financial Services and Markets Act 2000. Contents of this form 1 Contact details and timings for this application 4 3 Personnel 13 2 About the applicant firm 6 4 Systems and controls 14

119 Occasional Consultation Paper October 2017

Filling in the form using Connect
1 If you are using your computer to complete the form:
 use the TAB key to move from Question to Question and press SHIFT TAB to move back to the previous Question; and  save all the parts of the form you have completed and attach to your application. 2 If you think a Question is not relevant to you, write 'not applicable' and explain why. When completing the Annex III ESMA template , you may cross refer to this form for any information already provided. 3 If you leave a Question blank or do not attach the required supporting information without telling us why, we will have to treat the application as incomplete. This will increase the time taken to assess your application. 4 If there is not enough space on the forms, you may need to use separate sheets of paper. Clearly mark each separate sheet of paper with the relevant Question number. 5 Ensure you have:
 completed the relevant Long Form A or Form E  completed the Annex III ESMA template and attached;  completed this additional information form; and  attached any supporting documents. When you are required to attach supporting documents (e.g. Disclosure and Barring Service check where relevant) to your application, failure to do so will mean your application will not be progressed and you will be prevented from being able to submit your application through Connect.

120 Occasional Consultation Paper October 2017

Filling in the form using the paper application forms on the FCA website 1 If you are using your computer to complete the form:
 use the TAB key to move from Question to Question and press SHIFT TAB to move back to the previous Question; and 2 If you are filling in the form by hand:-  use black ink;  write clearly; and  sign the declaration in the 'checklist and declaration' form. 3 If you think a Question is not relevant to you, write 'not applicable' and explain why. 4 If you leave a Question blank, do not sign the declaration or do not attach the required supporting information without telling us why, we will have to treat the application as incomplete. This will increase the time taken to assess your application. 5 If there is not enough space on the forms, you may need to use separate sheets of paper. Clearly mark each separate sheet of paper with the relevant Question number. 6 Post the application consisting of:
 completed the relevant Long Form A or Form E  completed the Annex III ESMA template;  completed this additional information form; and  attached any supporting documents. For Solo Regulated Firms:- Permissions Department The Financial Conduct Authority 25 The North Colonnade Canary Wharf LONDON E14 5HS For Dual Regulated Firms:- The Prudential Regulation Authority 20 Moorgate London EC2R 6DA Filling in the form using the paper application forms on the FCA website 1 If you are using your computer to complete the form:
 use the TAB key to move from Question to Question and press SHIFT TAB to move back to the previous Question; and 2 If you are filling in the form by hand:-  use black ink;  write clearly; and  sign the declaration in the 'checklist and declaration' form. 3 If you think a Question is not relevant to you, write 'not applicable' and explain why. 4 If you leave a Question blank, do not sign the declaration or do not attach the required supporting information without telling us why, we will have to treat the application as incomplete. This will increase the time taken to assess your application. 5 If there is not enough space on the forms, you may need to use separate sheets of paper. Clearly mark each separate sheet of paper with the relevant Question number. 6 Post the application consisting of:
 completed the relevant Long Form A or Form E  completed the Annex III ESMA template;  completed this additional information form; and  attached any supporting documents. For Solo Regulated Firms:- Permissions Department The Financial Conduct Authority 25 The North Colonnade Canary Wharf LONDON E14 5HS For Dual Regulated Firms:- The Prudential Regulation Authority 20 Moorgate London EC2R 6DA

121 Occasional Consultation Paper October 2017

1 Personal details
Phone number (including STD code)
Email address
2 Curriculum Vitae
2.1 Relevant education and professional training
This information may already have been included in the CV or page 4 of the Annex III ESMA template. If already provided, there is no need to detail here. Complete any information not already provided Relevant Education Professional Training
2.2 Professional experience, including the names of all organisation for which the
person has worked and nature and duration of the functions performed This information may already have been included in the CV or page 4 of the Annex III ESMA template. If already provided, there is no need to detail here. Complete any information not already provided Name of organisation Nature of functions performed Duration

2.3 For positions held in the previous 10 years, when describing those activities, details
shall be included on all delegated powers and internal decision-making powers held and the areas of operations under control This information may already have been included in the Long Form A (Section 4) or CV. 1 If you have completed a Long Form A, please provide the information below

122 Occasional Consultation Paper October 2017

The Long Form A requests employment history for the past 5 years. If you have not provided the information above, or need to provide information for a further 5 years, you can detail below. Period (mm/yyyy) From - To Name of employer Delegated powers and internal decision making powers Areas of operation under control

3 Reputation and experience
3.1 Please provide a list of reference persons including contact information
Reference Contact information

3.2 Please attach any letters of recommendation to the application as supporting
documents
4 Investigations
If answered positively, the information could be provided through an official certificate (if and so far as it is available from the relevant Member State or third country), or through another equivalent document. In the United Kingdom, this could be a Disclosure and Barring Service check (DBS) and attached as a supporting document to the application. For on-going investigations information could be provided through a declaration of honour. 5 Assessment of reputation and experience MiFID II requires information on whether an assessment of reputation and experience as an acquirer or as a person who directs the business has already been conducted (including the date of the assessment, the identity of that authority and evidence of the outcome of this assessment).
5.1 Please provide details of:
Date of assessment
Identity of the authority that conducted the assessment

123 Occasional Consultation Paper October 2017

Evidence of the outcome of assessment (please detail if this evidence is attached as a supporting document) 6 Financial and non-financial interests If you have not already provided this information in section 5 of the Long Form A, please provide information on any financial and non-financial interests or relationships of the person and his/her close relatives to members of the management body and key function holders in the same institution, the parent institution and subsidiaries and shareholders 7 Time devoted to the performance of functions MiFID II requires information on the minimum time that will be devoted to the performance of the individual's functions within the firm (annual and monthly indications). Please provide this information below:
8 Human and financial resources
MiFID II requires information on human and financial resources devoted to the induction and training of the members (annual indication). Please provide this information below:

124 Occasional Consultation Paper October 2017

1 Personal details
Phone number (including STD code)
Email address
2 Curriculum Vitae
2.1 Relevant education and professional training
This information may already have been included in the CV or page 4 of the Annex III ESMA template. If already provided, there is no need to detail here. Complete any information not already provided Relevant Education Professional Training
2.2 Professional experience, including the names of all organisation for which the
person has worked and nature and duration of the functions performed This information may already have been included in a CV or page 4 of the Annex III ESMA template. If already provided, there is no need to detail here. Complete any information not already provided Name of organisation Nature of functions performed Duration

2.3 For positions held in the previous 10 years, when describing those activities, details
shall be included on all delegated powers and internal decision-making powers held and the areas of operations under control This information may already have been included in the CV. 2 If you have completed a Form E, please provide the information below

125 Occasional Consultation Paper October 2017

If you have not provided the information above, or need to provide information further information for positions held in the previous 10 years, you can detail below. Period (mm/yyyy) From - To Name of employer Delegated powers and internal decision making powers Areas of operation under control

3 Reputation and experience
3.1 Please provide a list of reference persons including contact information
Reference Contact information

3.2 Please attach any letters of recommendation to the application as supporting
documents
4 Investigations
MiFID II requires information on:
 criminal records and information on criminal investigations and proceedings  relevant civil and administrative cases, and  disciplinary actions opened against them (including disqualifications as a company director, bankruptcy, insolvency and similar procedures). The information could be provided through an official certificate (if and so far as it is available from the relevant Member State or third country), or through another equivalent document. In the United Kingdom, this could be a Disclosure and Barring Service check (DBS) and attached as a supporting document to the application. For on-going investigations information could be provided through a declaration of honour.
4.1 If not already provided, please provide information on:
criminal records and information on criminal investigations and proceedings relevant civil and administrative cases, and

126 Occasional Consultation Paper October 2017

disciplinary actions opened against them (including disqualifications as a company director, bankruptcy, insolvency and similar procedures). 5 Previous registration, authorisation, membership or licence MiFID II requires information on:
 refusal of registration, authorisation, membership or licence to carry out a trade, business or profession; or  the withdrawal, revocation or termination of such a registration, authorisation, membership or licence; or  expulsion by a regulatory or government body or by a professional body or association If not already provided, please provide information on:
refusal of registration, authorisation, membership or licence to carry out a trade, business or profession the withdrawal, revocation or termination of such a registration, authorisation, membership or licence expulsion by a regulatory or government body or by a professional body or association 6 Previous dismissals

127 Occasional Consultation Paper October 2017

6 Previous dismissals
MiFID II requires information on dismissal from employment or a position of trust, fiduciary relationship, or similar situation. If not already provided, please provide information on:
dismissal from employment or a position of trust, fiduciary relationship, or similar situation 7 Assessment of reputation and experience MiFID II requires information on whether an assessment of reputation and experience as an acquirer or as a person who directs the business has already been conducted (including the date of the assessment, the identity of that authority and evidence of the outcome of this assessment). Please provide details of:
Date of assessment
Identity of the authority that conducted the assessment Evidence of the outcome of assessment (please detail if this evidence is attached as a supporting document) 8 Financial and non-financial interests If you have not already provided, please provide information on any financial and non-financial interests or relationships of the person and his/her close relatives to members of the management body and key function holders in the same institution, the parent institution and subsidiaries and shareholders

128 Occasional Consultation Paper October 2017

9 Suitability assessment
If you have not already provided, please provide details of the result of any assessment of the suitability of the members of the management body, performed by the applicant firm itself 10 Time devoted to the performance of functions MiFID II requires information on the minimum time that will be devoted to the performance of the individual's functions within the firm (annual and monthly indications). Please provide this information below:
11 Human and financial resources
MiFID II requires information on human and financial resources devoted to the induction and training of the members (annual indication). Please provide this information below:

129 Occasional Consultation Paper October 2017

12 Executive and non executive directorships
MiFID II requires a list of executive and non-executive directorships currently held by the person. If not already provided, please provide a list of executive and non-executive directorships held by the person:
Amend the following as shown.
10C FCA senior management regime for approved persons in relevant authorised persons … 10C.10 Application for approval and withdrawing an application for approval … How to apply for approval … 10C.10.9 D … 10C.10.9 A G (1) The MiFID II ITS requires that MiFID investment firms (except credit institutions) submit the Annex III information on the ESMA template available at https://www.fca.org.uk/publication/forms/mifid-changes￾management-body-form.doc (“Annex III template”) where there is a change to a member of the management body or a person who effectively directs the business. (2) MiFID investment firms (except credit institutions) need to submit this Annex III template within ten business days of the change in the online notification and application system (also known as Connect). (3) In summary, where there is a change to a member of the management body or a person who effectively directs the business of a MiFID investment firm (except a credit institution) then the firm is required to submit the following forms (in addition to the relevant Form A, C, or E about a candidate):
Organisation name Type of directorship

130 Occasional Consultation Paper October 2017

(a) Where a new member of the management body or a person who effectively directs the business is appointed:
(i) The Annex III template; and
(ii) MiFID Article 4 SMR Information Form.
(b) Where a person ceases being a member of the management body or a person who effectively directs the business, then the firm must submit the Annex III template (in addition to the relevant Form E). (4) Where the Annex III template requires the firm to provide information which is also contained in Form A and/or E, the firm may, instead of duplicating the information, cross-refer to the information in the relevant Form A or E and annex those forms to the Annex III template (see SUP 10C.10.9C). 10C.10.9 B D Where there is a change to a member of the management body or person who directs the business, MiFID investment firms (except credit institutions) must submit to the FCA the completed form found in SUP 10C Annex 7D “MiFID Article 4 SMR Information Form” at the same time as submitting Form A and/or E about a candidate. [Editor’s note: This is in accordance with the information required in article 4 of the Commission Delegated Regulation of 14 July 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards on information and requirements for the authorisation of investment firms.] 10C.10.9 C G MiFID investment firms (except credit institutions) who submit:
(a) Form A and/or E; and
(b) the MiFID Article 4 SMR Information Form about a candidate can complete the Annex III template outlined in SUP 10C.10.9A by cross-referring to the information in the relevant Form A and/or E where it has already been provided by the firm, and this would then be annexed to the relevant Form A and/or Form E. … 10C.10.1 8 G Subject to SUP 10C.10.18A, The the firm should not send a copy of the certificate to the FCA. 10C.10.1 8A G MiFID investment firms (except credit institutions) should provide a copy of the certificate in cases where they disclose the existence of a criminal conviction in response to the questions in:

131 Occasional Consultation Paper October 2017

(a) Long Form A; and
(b) The MiFID Article 4 SMR Information Form accompanied by Form E.
10C.11 Statements of responsibilities: Procedure … Revised statements of responsibilities … 10C.11.8 G Broadly, the intention of SUP 10C.11.7D(2) is that there is no need for Form J if the revised statement of responsibilities is being submitted together with Form A, Form E, the MiFID Article 4 SMR Information Form or Form I for the same firm. … 10C.14 Changes to an FCA-approved person’s details Moving within a firm … 10C.14.2 G (1) A firm should generally use Form E where an approved person is both ceasing to perform one or more controlled functions and needs to be approved in relation to one or more FCA-designated senior management functions within the same firm or group. (2) In certain cases, a firm should use Form A. (2A) When a MiFID investment firm, (except a credit institution), notifies the FCA of a change using Form A or Form E, they must also submit the MiFID Article 4 SMR Information Form (see SUP 10C.10.9BD). (3) The details can be found in SUP 10C.10.8D to SUP 10C.10.9CG. … Ceasing to perform an FCA-designated senior management function 10C.14.5 R (1) A firm must notify the FCA no later than seven ten business days after an FCA-approved SMF manager ceases to perform an FCA￾designated senior management function. … … 10C.14.1 0 G (1) A firm can submit Form C or Form E and the MiFID Article 4 SMR Information Form to the FCA in advance of the cessation date. (2) If the actual cessation date turns out to be different from the one

132 Occasional Consultation Paper October 2017

notified in advance, the firm should notify the FCA.
(3) If the firm does not submit Form C (including a qualified one), MiFID Article 4 SMR Information Form, or Form E, it should inform the FCA in due course of the reason. This could be done using Form D, if appropriate. … 10C.15 Forms and other documents and how to submit them to the FCA … Forms and documents 10C.15.3 G Table: FCA approved persons forms and other documents Form or other document Purpose Handbook requirement Relevant statement of responsibi lities SUP 10C
Annex 5D
SUP 10C.11
MiFID
Article 4
SMR
Informatio n Form
SUP 10C
Annex 7D
SUP 10C.11
Annex III
template https://ww w.fca.org. uk/publica tion/forms /mifid￾changes￾manageme nt-body￾form.docx As required by MiFID II ITS SUP 10C.10.9B …

133 Occasional Consultation Paper October 2017

10C.15.1
0
R Table: Method of submission
Form or other document
Firms that are not credit unions
Credit unions
Relevant statement of responsibilities
In accordance with the requirements for the form with which it is submitted In accordance with the requirements for the form with which it is submitted MiFID Article 4 SMR Information Form Submit at the same time as Form A and/or E Not applicable
Annex III template Submit at the same
time as Form A, C and/or E
Not applicable
…
After SUP 10C Annex 6D (Form J: Notification of significant change to a statement of responsibilities) insert the following new annex SUP 10C Annex 7D (MiFID addition to the Supervision manual). The text is not underlined.

134 Occasional Consultation Paper October 2017

MiFID Article 4 SMR Information Form
Full name of applicant firm and Firm Reference Number (FRN) Important information you should read before completing this form We require all MiFID investment firms (except credit institutions) making changes to their management body or key function holders to provide these details as part of their application for the individual to hold a controlled function or internal transfer of an approved person. Please keep a copy of the forms you complete and the supporting documents that you include with the application for your future reference. The notes that accompany this form will help you complete the questions and they also explain why we require the information we ask you for. For the purposes of complying with the Data Protection Act 1998, please note that any personal information provided to us will be used to discharge our statutory functions under the Financial Services and Markets Act 2000 (FSMA) and other relevant legislation and may be disclosed to third parties for those purposes. It is important that you provide accurate and complete information and disclose all relevant information. If you do not, it will call into question your suitability to be authorised, and you may be committing a criminal offence and could face prosecution under section 398A of the FSMA regardless of the status of your application. Terms in this form In this application pack we use the following terms:
 'you' refers to the person(s) signing the form on behalf of the applicant firm;  ‘the individual’ refers to the person holding the controlled function  'the applicant firm' refers to the firm applying for authorisation of the individual;  ‘we’, ‘us’ or ‘our’ refers to the appropriate regulator;  ‘the FCA' refers to the Financial Conduct Authority;  ‘the PRA’ refers to the Prudential Regulation Authority; and  FSMA refers to the Financial Services and Markets Act 2000.

135 Occasional Consultation Paper October 2017

Purpose of this form
MIFID II requires certain information to be provided by the applicant firm when making changes to their management body or key function holders. The information required is detailed in the MiFID II Regulatory Technical Standards (RTS)1 and Implementing Technical Standards (ITS)2 . The information in this form is required to enable us to fulfil our obligations in obtaining this information. Contents of this form Page 1 Long Form A completed 5 2 Form E completed 9 3 Form M (PRA only) completed 14

136 Occasional Consultation Paper October 2017

Filling in the form using the paper application forms on the FCA website 1 If you are using your computer to complete the form:
 use the TAB key to move from Question to Question and press SHIFT TAB to move back to the previous Question; and 2 If you are filling in the form by hand:-  use black ink;  write clearly; and  sign the declaration in the 'checklist and declaration' form. 3 If you think a Question is not relevant to you, write 'not applicable' and explain why. When completing the Annex III ESMA template, you may cross refer to this form for any information already provided. 4 If you leave a Question blank, do not sign the declaration or do not attach the required supporting information without telling us why, we will have to treat the application as incomplete. This will increase the time taken to assess your application. 5 If there is not enough space on the forms, you may need to use separate sheets of paper. Clearly mark each separate sheet of paper with the relevant Question number. 6 Post the application consisting of:
 completed the relevant Long Form A or Form E  completed the Annex III ESMA template;  completed this additional information form; and  attached any supporting documents. For Solo Regulated Firms:- Permissions Department The Financial Conduct Authority 25 The North Colonnade Canary Wharf LONDON E14 5HS For Dual Regulated Firms:- The Prudential Regulation Authority 20 Moorgate London Filling in the form using Connect 1 If you are using your computer to complete the form:
 use the TAB key to move from Question to Question and press SHIFT TAB to move back to the previous Question; and

137 Occasional Consultation Paper October 2017

 save all the parts of the form you have completed and attach to your application. 2 If you think a Question is not relevant to you, write 'not applicable' and explain why. When completing the Annex III ESMA template , you may cross refer to this form for any information already provided. 3 If you leave a Question blank or do not attach the required supporting information without telling us why, we will have to treat the application as incomplete. This will increase the time taken to assess your application. 4 If there is not enough space on the forms, you may need to use separate sheets of paper. Clearly mark each separate sheet of paper with the relevant Question number. 5 Ensure you have:
 completed the relevant Long Form A, Form E or Form M  completed the Annex III ESMA template;  completed this additional information form; and  attached any supporting documents. When you are required to attach supporting documents (e.g. Disclosure and Barring Service check where relevant) to your application, failure to do so will mean your application will not be progressed and you will be prevented from being able to submit your application through Connect.

138 Occasional Consultation Paper October 2017

1 Personal details
Phone number (including STD code)
Email address
2 Curriculum Vitae a.Relevant education and professional training This information may already have been included in the CV or page 4 of the Annex III ESMA template. If already provided, there is no need to detail here. Complete any information not already provided Relevant Education Professional Training b. Professional experience, including the names of all organisation for which the person has worked and nature and duration of the functions performed This information may already have been included in the CV or page 4 of the Annex III ESMA template. If already provided, there is no need to detail here. Complete any information not already provided Name of organisation Nature of functions performed Duration

c For positions held in the previous 10 years, when describing those activities, details shall be included on all delegated powers and internal decision-making powers held and the areas of operations under control This information may already have been included in the Long Form A (Section 4) or CV. The Long Form A requests employment history for the past 5 years. If you have not provided the information above, or need to provide information for a further 5 years, you can detail below. Period (mm/yyyy) From - To Name of employer Delegated powers and internal decision making powers Areas of operation under control

1
If you have completed a Long Form A, please provide the information below

139 Occasional Consultation Paper October 2017

3 Reputation and experience
The Long Form A queries if you have obtained a reference/references from current or previous employers (Section 5.05) during the last six years in accordance with SYSC 22 and Fitness and Propriety 2 in the PRA Rulebook. a. Please provide a list of reference persons including contact information Reference Contact information

b. Please attach any letters of recommendation to the application 4 Investigations If a question in section 5 of the Long Form A is answered positively, the information could be provided through an official certificate (if and so far as it is available from the relevant Member State or third country), or through another equivalent document. In the Long form A (Section 5) firms are asked to confirm if they have undertaken a criminal records check in accordance with the requirements of the FCA or PRA. In the United Kingdom, a copy of this check could be provided as the official certificate requested. For on-going investigations information could be provided through a declaration of honour. 5 Assessment of reputation and experience MiFID II requires information on whether an assessment of reputation and experience as an acquirer or as a person who directs the business has already been conducted (including the date of the assessment, the identity of that authority and evidence of the outcome of this assessment). If an assessment of reputation and experience as an acquirer or as a person who directs the business already been conducted please provide details of:
Date of assessment
Identity of the authority that conducted the assessment Evidence of the outcome of assessment (please detail if this evidence is attached as a supporting document)

140 Occasional Consultation Paper October 2017

6 Financial and non-financial interests
If you have not already provided this information in section 5 of the Long Form A, please provide information on any financial and non-financial interests or relationships of the person and his/her close relatives to members of the management body and key function holders in the same institution, the parent institution and subsidiaries and shareholders 7 Time devoted to the performance of functions MiFID II requires information on the minimum time that will be devoted to the performance of the individual's functions within the firm (annual and monthly indications). Please provide this information below:
8 Human and financial resources
MiFID II requires information on human and financial resources devoted to the induction and training of the members (annual indication). Please provide this information below:

141 Occasional Consultation Paper October 2017

1Personal details
Phone number (including STD code)
Email address
2 Curriculum Vitae a.Relevant education and professional training This information may already have been included in any CV provided or page 4 of the Annex III ESMA template. If already provided, there is no need to detail here. Complete any information not already provided Relevant Education Professional Training b. Professional experience, including the names of all organisation for which the person has worked and nature and duration of the functions performed This information may already have been included in the CV or page 4 of the Annex III ESMA template. If already provided, there is no need to detail here. Complete any information not already provided Name of organisation Nature of functions performed Duration

c For positions held in the previous 10 years, when describing those activities, details shall be included on all delegated powers and internal decision-making powers held and the areas of operations under control This information may already have been included in the CV. If you have not provided the information above, or need to provide further information about positions held in the previous 10 years, you can detail below. Period (mm/yyyy) From - To Name of employer Delegated powers and internal decision making powers Areas of operation under control

2
If you have completed a Form E, please provide the information below

142 Occasional Consultation Paper October 2017

3 Reputation and experience a. Please provide a list of reference persons including contact information Reference Contact information

b. Please attach any letters of recommendation to the application 4 Investigations MiFID II requires information on:
 criminal records and information on criminal investigations and proceedings  relevant civil and administrative cases, and  disciplinary actions opened against them (including disqualifications as a company director, bankruptcy, insolvency and similar procedures). This information could be provided through an official certificate (if and so far as it is available from the relevant Member State or third country), or through another equivalent document. In the Form E (Section 4.3) firms are asked to confirm if they have undertaken a criminal records check in accordance with the requirements of the FCA or PRA. In the United Kingdom, a copy of this check could be provided as the official certificate requested. For on-going investigations information could be provided through a declaration of honour. If not already provided, please provide information on:
criminal records and information on criminal investigations and proceedings relevant civil and administrative cases, and disciplinary actions opened against them (including disqualifications as a company director, bankruptcy, insolvency and similar procedures). 5 Previous registration, authorisation, membership or licence 5 Previous registration, authorisation, membership or licence MiFID II requires information on:

143 Occasional Consultation Paper October 2017

 refusal of registration, authorisation, membership or licence to carry out a trade, business or profession; or  the withdrawal, revocation or termination of such a registration, authorisation, membership or licence; or  expulsion by a regulatory or government body or by a professional body or association If not already provided, please provide information on:
refusal of registration, authorisation, membership or licence to carry out a trade, business or profession the withdrawal, revocation or termination of such a registration, authorisation, membership or licence expulsion by a regulatory or government body or by a professional body or association 6 Previous dismissals MiFID II requires information on dismissal from employment or a position of trust, fiduciary relationship, or similar situation. If not already provided, please provide this information:
7 Assessment of reputation and experience
MiFID II requires information on whether an assessment of reputation and experience as an acquirer or as a person who directs the business has already been conducted (including the date of the assessment, the identity of that authority and evidence of the outcome of this assessment). If an assessment of reputation and experience as an acquirer or as a person who directs the business already been conducted please provide details of:
Date of assessment

144 Occasional Consultation Paper October 2017

Identity of the authority that conducted the assessment Evidence of the outcome of assessment (please detail if this evidence is attached as a supporting document) 8 Financial and non-financial interests If you have not already provided this information, please provide information on any financial and non-financial interests or relationships of the person and his/her close relatives to members of the management body and key function holders in the same institution, the parent institution and subsidiaries and shareholders 9 Time devoted to the performance of functions MiFID II requires information on the minimum time that will be devoted to the performance of the individual's functions within the firm (annual and monthly indications). Please provide this information below:
10 Human and financial resources
MiFID II requires information on human and financial resources devoted to the induction and training of the members (annual indication). Please provide this information below:
11 Executive and non executive directorships
MiFID II requires a list of executive and non-executive directorships currently held by the person.

145 Occasional Consultation Paper October 2017

If not already provided, please provide a list of executive and non-executive directorships held by the person:
Organisation name Type of directorship

146 Occasional Consultation Paper October 2017

1 Personal details
Phone number (including STD code)
Email address
2 Curriculum Vitae a. Relevant education and professional training This information may already have been included in any CV provided or page 4 of the Annex III ESMA template. If already provided, there is no need to detail here. Complete any information not already provided Relevant Education Professional Training b. Professional experience, including the names of all organisation for which the person has worked and nature and duration of the functions performed This information may already have been included in any CV provided or page 4 of the Annex III ESMA template. If already provided, there is no need to detail here. Complete any information not already provided Name of organisation Nature of functions performed Duration

c For positions held in the previous 10 years, when describing those activities, details shall be included on all delegated powers and internal decision-making powers held and the areas of operations under control This information may already have been included in any CV provided. If you have not provided the information above, or need to provide information for a further 5 years, you can detail below. Period (mm/yyyy) From - To Name of employer Delegated powers and internal decision making powers Areas of operation under control

3
If you have completed a Form M (PRA only), please provide the information below

147 Occasional Consultation Paper October 2017

3 Reputation and experience a. Please provide a list of reference persons including contact information Reference Contact information

b. Please attach any letters of recommendation to the application 4 Investigations If a question in section 4 of the Form M is answered positively, the information could be provided through an official certificate (if and so far as it is available from the relevant Member State or third country), or through another equivalent document. In the United Kingdom, a copy of any criminal records check could be provided as the official certificate requested. For on-going investigations information could be provided through a declaration of honour. 5 Time devoted to the performance of functions MiFID II requires information on the minimum time that will be devoted to the performance of the individual's functions within the firm (annual and monthly indications). Please provide this information below:
6 Human and financial resources
MiFID II requires information on human and financial resources devoted to the induction and training of the members (annual indication). Please provide this information below:

148 Occasional Consultation Paper October 2017

Appendix 13: Draft amendments to Supervisory Statement 13/13 ‘Market risk’
In this appendix, new text is underlined.
1.3 This statement details the PRA’s expectations with regard to the following:
 Standardised approach for options.
 Netting a convertible with its underlying instrument.
 Offsetting derivative instruments.
 Corrections to modified duration for debt instruments subject to prepayment risk.  Exclusion of back-testing exceptions when determining multiplication factor addends. … 5A Corrections to modified duration for debt instruments under Article 340 of CRR. 5A.1 The PRA expects firms making corrections to the calculation of modified duration for debt instruments which are subject to prepayment risk, to comply with the EBA’s Guidelines on corrections to modified duration for debt instruments.1

1 www.eba.europa.eu/regulation-and-policy/market-risk/guidelines-on-corrections-to-modified-duration-for-debt-instruments/-/regulatory￾activity/consultation-paper

149 Occasional Consultation Paper October 2017

Appendix 14: Draft amendments to Supervisory Statement 36/15 'Life insurance
product reporting codes'
In this appendix, new text is underlined and deleted text is struck through. 1 Introduction
1.1 This supervisory statement is addressed to all UK insurance firms within the scope of Solvency II,
and to the Society of Lloyd’s, that carry out life insurance business or have annuities stemming from non-life insurance business.
1.2 The Solvency II supervisory reporting Implementing Technical Standards expects firms to use a
defined list of product codes where attributed by the supervisory authority in the instructions to the template S.14.011. 2 Codes for firms that carry out life insurance business or have annuities stemming from non-life insurance business
2.1 This supervisory statement sets out how the Prudential Regulation Authority (PRA) expects firms to
submit information using life product reporting codes. The Appendix lists the codes which the PRA expects firms to use.
2.2 In these product codes the third digit of the code is used to distinguish varieties of the same
product. This separates conventional and unitised with-profit, unit-linked and index-linked as well as retaining data for industrial branch business.
2.3 Miscellaneous codes have only been assigned for protection business where there are minor
products that do not fit into the named codes. For the other main categories the product codes are intended to be sufficiently generic to cover all the products within that main category. 3 The PRA’s expectations relating to instructions for templates S.14.01
3.1 To achieve consistency of reporting between firms the PRA sets out in this section how it expects
firms to interpret the instructions to the template S.14.01.
3.2 Where firms show the number of contracts in C0040 and C0050 the PRA expects firms to count
multiple policies issued as part of the same premium, identifiable increments and rider benefits as being a single contract. Deleted
3.3 Where a contract offers a choice of investment in with-profits funds and unit-linked funds, the
contract count should be included in C0040 and C0050 under a unitised with-profits product code if all the premiums are invested in with-profits units and the plan is written in a with-profits fund, otherwise the contract count should be included under a unit-linked product code. Deleted
3.4 For products which are reported with a ‘collective’ classification in C0100 the number of contracts
to be reported in C0040 and C0050 is the number of members of the scheme where this is known to the firm.
3.5 Where a product has been written in both single life and joint life form the product classification in
C0100 is ‘5 – other’.

1 Annex 2 of Commission Implementing Regulation (EU) 2015/2450

150 Occasional Consultation Paper October 2017

3.6 Where at least one version of a product is available to new policyholders it should be shown in
C0130 as ‘1’. C0130 is ‘2’ for run-off which includes products only available as new business due to options. The PRA does not expect firms to report at a lower level of granularity than the product codes. This will avoid the need for firms to seek historic information on product brand names.
3.7 Where premiums cease for a regular premium product the contract C0140 should continue to be
reported as ‘1 – Regular premiums’. Where a product allows a flexible combination of regular and single premiums C0140 should be reported as ‘4 - Other’.
3.8 The PRA expects that the first three characters of the homogeneous risk group in C0170 and C0230
will be one of the three digit codes in the Appendix. The PRA expects that the fourth character of the homogeneous risk group will be D for direct business or R for reinsurance accepted. Homogeneous risk groups should only cover a single product code as indicated by the first three characters in C0170 and C0230.
Appendix 1
List of life insurance product reporting codes This appendix sets out how the PRA expects firms to derive the data item ‘product ID code’ C0010 in template S.14.01 as a 3 character string. PRA Solvency II product codes Description Savings and investments 100 Whole of life OB CWP 101 Whole of life OB UWP 102 Whole of life OB UL 104 Whole of life OB NP 105 Whole of life IB CWP 106 Whole of life IB NP 111 Single premium bond UWP 112 Single premium bond UL 113 Single premium bond IL 114 Single premium bond NP 120yes Endowment OB CWP 121 Endowment OB UWP 122 Endowment OB UL 124 Endowment OB NP 125 Endowment IB CWP 126 Endowment IB NP 131 Investment only reinsurance UWP 132 Investment only reinsurance UL Individual pensions 200 Individual defined contribution pensions CWP 201 Individual defined contribution pensions UWP 202 Individual defined contribution pensions UL 204 Individual defined contribution pensions NP 210 Workplace defined contribution pensions CWP 211 Workplace defined contribution pensions UWP 212 Workplace defined contribution pensions UL 214 Workplace defined contribution pensions NP 221 Income drawdown UWP 222 Income drawdown UL 224 Income drawdown NP 231 Individual pensions investment only reinsurance UWP

151 Occasional Consultation Paper October 2017

232 Individual pensions investment only reinsurance UL Corporate pensions 300 Corporate defined benefit pensions CWP 301 Corporate defined benefit pensions UWP 302 Corporate defined benefit pensions UL 304 Corporate defined benefit pensions NP 310 Corporate defined contribution pensions WP 311 Corporate defined contribution pensions UWP 312 Corporate defined contribution pensions UL 314 Corporate defined contribution pensions NP 321 Corporate pensions investment only reinsurance UWP 322 Corporate pensions investment only reinsurance UL Protection 404 Level term regular premium 414 Level term single premium 424 Decreasing term regular premium 434 Decreasing term single premium 444 Accelerated critical illness (guaranteed premiums) 454 Accelerated critical illness (reviewable premiums) 464 Stand-alone critical illness (guaranteed premiums) 474 Stand-alone critical illness (reviewable premiums) 480 Income protection CWP 481 Income protection Holloway accounts UWP 494 Income protection (guaranteed premiums) 504 Income protection (reviewable premiums) 514 Income protection single premium 524 Income protection claims in payment 534 Group life 544 Group death in service dependants' annuities 554 Collective life 564 Group income protection 574 Group income protection claims in payment 584 Group critical illness 594 Risk premium mortality reinsurance 604 Risk premium critical illness reinsurance 614 Risk premium income protection reinsurance 620 Miscellaneous protection CWP 621 Miscellaneous protection UWP 622 Miscellaneous protection UL 624 Miscellaneous protection NP Annuities 700 Purchased life annuity WP 704 Purchased life annuity NP 710 Individual deferred annuity WP 714 Individual deferred annuity NP 720 Individual pension annuity WP 722 Individual pension annuity UL 724 Individual pension annuity NP 734 Individual enhanced pension annuity NP 740 Bulk purchase deferred annuity WP 744 Bulk purchase deferred annuity NP 754 Bulk purchase pension annuity NP 764 Purchased temporary annuity NP 774 Pension temporary annuity NP 784 Annuity stemming from non-life 794 Longevity swap accepted

152 Occasional Consultation Paper October 2017

Appendix 15: Draft Administration Instrument
PRA RULEBOOK: ADMINISTRATION (No. 1) INSTRUMENT 2017 Powers exercised G. The Prudential Regulation Authority (“PRA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(4) section 137G (The PRA’s general rules);
(5) section 137T (General supplementary powers); and (6) paragraph 31 of Schedule 1ZB (Fees); H. The rule-making powers referred to above are specified for the purpose of section 138G(2) (Rule￾making instrument) of the Act. Pre-conditions to making
I. In accordance with section 138J of the Act (Consultation by the PRA), the PRA consulted the Financial
Conduct Authority. After consulting, the PRA published a draft of proposed rules and had regard to representations made. PRA Rulebook: Administration Instrument 2017 J. The PRA makes the rules in Annexes A to E to this instrument.
Part Annex
Conduct Rules A
Insurance – Senior Insurance Management Functions B Regulatory Reporting C Regulatory Reporting D Fees E Commencement K. This instrument comes into force on [DATE]. Citation
L. This instrument may be cited as the PRA Rulebook: Administration Instrument 2017.
By order of the Prudential Regulation Committee [DATE]

153 Occasional Consultation Paper October 2017

Annex A
Amendments to the Conduct Rules Part
In this Annex new text is underlined and deleted text is struck through.
…
2 APPLICATIONS AND DEFINITIONS
1.2 In this Part, the following definitions shall apply:
director means, in relation to a firm, a person who is a member of the board of directors of the firm or, if there is no such board, the equivalent body responsible for the management of the firm;. …

154 Occasional Consultation Paper October 2017

Annex B
Amendments to the Insurance – Senior Insurance Management Functions Part In this Annex new text is underlined and deleted text is struck through. … 6A HEAD OF SMALL RUN-OFF FIRM … 6A.2 The Head of small run-off firm function (SIMF 26) is the function of:
(1) having responsibility for the conduct of the regulated activities; or (2) chairing the governing body of a small run-off firm. …

155 Occasional Consultation Paper October 2017

Annex C
Amendments to the Regulatory Reporting Part
In this Annex new text is underlined and deleted text is struck through.
1 APPLICATIONS AND DEFINITIONS
… initial Capital+ reference date means:
(1) In relation to a data item which a ring-fenced body must submit on a sub￾consolidated basis in accordance with 20.22A, the first of the firm’s Capital+ reference dates after the firm became subject to the Ring-Fenced Bodies Part of the PRA Handbook; or …

156 Occasional Consultation Paper October 2017

Annex D
Amendments to the Regulatory Reporting Part
…
7 REGULATED ACTIVITY GROUP 1
…
(27) Firms in a UK consolidation group are exempt from individually reporting this data item where they satisfy each of the following conditions:
(a) during the two most recent successive reporting periods set out in 7.2, one firm in the UK consolidation group (“Firm A”) contributed more than 95% of the consolidated total assets in the UK consolidation group (where the contribution to consolidated total assets is calculated as Firm A’s total assets less any assets resulting from intra-group transactions with the other members of the UK consolidation group); (b) a representative member of the UK consolidation group notifies the PRA within 30 business days of the end of the previous reporting period; and (c) this data item is reported at the level of the UK consolidation group. The contribution of Firm A to the consolidated total assets in the UK consolidation group must be reassessed at the end of each reporting period. If, for a given reporting period, Firm A ceases to contribute more than 95% of the consolidated total assets in the UK consolidation group, this exemption is no longer available to the members of the UK consolidation group, and a representative member of the UK consolidation group must notify the PRA of that fact within 30 business days of the end of that reporting period. …

157 Occasional Consultation Paper October 2017

Annex E
Amendments to the Fees Part
…
4 REGULATORY TRANSACTION FEES
…
4.14B (1) Where a UK Solvency II firm or a Solvency II undertaking seeks permission for an internal model, the fee payable is as set out in Table E below, subject to 4.14B(2) and 4.14B(3). (2) Where a firm or a group falls within both the general insurance fee block and the life insurance fee block, the fee payable is the greater of the fees due under each fee block. (2) Where a Solvency II undertaking seeks permission for a group internal model which includes one or more UK Solvency II firms within its scope, the fee is calculated using aggregated tariff data for all in-scope UK Solvency II firms, and is payable by such of those firms and in such proportions as the PRA directs . …