Provident Insurance Plc & Ors v The Financial Services Authority (FSA)

For the purposes of Financial Services and Markets Act 2000 Part VII, a Gibraltar-authorised insurer using passporting rights is not an EEA firm where the Gibraltar Order’s deeming provisions are confined to authorisation under Part III. It may nevertheless have permission to carry on insurance business, so its transfer may fall within the statutory definition of an insurance business transfer scheme.

Waivers of policyholder notification require a fact-sensitive and proportionate assessment. Relevant considerations include practicability, utility, alternative information channels, the transfer’s purpose and effect, and collateral commercial interests. Commercial inconvenience cannot outweigh the important safeguard of enabling affected policyholders to decide for themselves whether to participate.

The court heard directions applications concerning two linked Part VII insurance business transfers. Provident and Gateway sought to transfer their UK general insurance business to MMA within the Covéa group. Gateway was authorised in Gibraltar and conducted business in the UK under the Financial Services and Markets Act 2000 (Gibraltar) Order 2001.

The court had to determine whether the Gateway transfer was within the compulsory Part VII jurisdiction. It also considered extensive applications to waive publication and individual notification requirements under the Financial Services and Markets Act 2000 (Control of Business Transfer) (Requirements on Applicants) Regulations 2001, including disputed waivers concerning heavily white-labelled policies arranged through BGL.

1. Jurisdiction. Gateway was not a UK authorised person or an EEA firm for the purposes of Part VII. Gibraltar was treated as part of the United Kingdom for EU and EEA purposes, rather than as an EEA State in its own right. Although the Gibraltar Order deemed Gibraltar firms to have rights corresponding to EEA rights for specified authorisation purposes, its enabling powers did not extend to modifying Part VII. The Treasury lacked vires to assimilate Gibraltar firms to EEA firms for Part VII purposes. Gateway nevertheless had permission to effect or carry out contracts of insurance under the Gibraltar Order. The third condition in section 105(2) was therefore satisfied, and the Gateway transfer was an insurance business transfer scheme subject to the court’s jurisdiction.
2. Notification waivers. The court’s discretion under regulation 3 and paragraph 4(2) of the Transfer Regulations was broad but had to be exercised against the statutory purpose. The relevant considerations included the possibility and practicality of contacting policyholders, the utility of notification, alternative information channels, proportionality, collateral commercial interests, the purpose of the transfer and its impact on policyholders. The list was non-exhaustive and each case was fact sensitive.
3. The court approved the unopposed waiver arrangements. They struck a reasonable and proportionate balance between the purpose of notification and the practical circumstances. The proposed arrangements were not imposed as formal conditions, since later non-compliance could be considered at the sanction stage.
4. The two disputed BGL waivers were refused. The court gave substantial weight to the policyholders’ right under section 110 of Financial Services and Markets Act 2000 to participate if they wished. The court’s protective role and the FSA’s involvement were additional safeguards, not substitutes for giving affected policyholders that opportunity. The opaque policy documentation and the large number of affected current and recent policyholders outweighed the asserted commercial risks and possible confusion.
5. The matter was adjourned briefly so that the parties could consider targeted advertising which might reduce both commercial risks and policyholder confusion, with liberty to restore or mention.