Financial Services and Markets Act 2000, Schedule 12, paragraph 2

Certificates as to margin of solvency

SCHEDULE 12 Transfer schemes: certificates

2 (1) A certificate under this paragraph is to be given—

(a) by the relevant authority; or

(b) in a case in which there is no relevant authority, by the [F3739appropriate regulatorF3739] .

(2) A certificate given under sub-paragraph (1)(a) is one certifying that, taking the proposed transfer into account—

(a) the transferee possesses, or will possess before the scheme takes effect, the necessary margin of solvency; or

(b) there is no necessary margin of solvency applicable to the transferee.

(3) A certificate under sub-paragraph (1)(b) is one certifying that the [F3740appropriate regulatorF3740] has received from the authority which it considers to be the authority responsible for supervising persons who effect or carry out contracts of insurance in the place to which the business is to be transferred [F3741certificationF3741] that, taking the proposed transfer into account—

(a) the transferee possesses or will possess before the scheme takes effect the margin of solvency required under the law applicable in that place; or

(b) there is no such margin of solvency applicable to the transferee .

(4) “Necessary margin of solvency” means the margin of solvency required in relation to the transferee, taking the proposed transfer into account, under the law which it is the responsibility of the relevant authority to apply.

(5) “Margin of solvency” means the excess of the value of the assets of the transferee over the amount of its liabilities.

(6) “Relevant authority” means—

F3742 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3743 (aa) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) if the transferee is a Swiss general insurer, the authority responsible in Switzerland for supervising persons who effect or carry out contracts of insurance;

(c) if the transferee is an authorised person not falling within [F3744paragraph F3745... F3744] (b) [F3746—

(i) the PRA, if the transferee is a PRA-authorised person with a Part 4A permission F3747 ...;

(ii) the FCA, if the transferee is a person with a Part 4A permission F3748 ... but is not a PRA-authorised person.F3746]

(7) In sub-paragraph (6), any reference to a transferee of a particular description includes a reference to a transferee who will be of that description if the proposed scheme takes effect.

F3749 (7A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) “Swiss general insurer” means a body—

(a) whose head office is in Switzerland;

(b) which has permission to carry on regulated activities consisting of the effecting and carrying out of contracts of general insurance; and

(c) whose permission is not restricted to the effecting or carrying out of contracts of reinsurance.

F3750 (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Read Schedule 12, paragraph 2 in the full Act → Definitions (9) Cases (5)

Definitions used in Schedule 12, paragraph 2

appropriate regulator

(11) The FCA is the “appropriate regulator” in the case of a contravention of any other requirement , other than a case falling within paragraph 26 of Schedule 17A .

Defined in s.380(11) · see it in the full Act
Necessary margin of solvency

(6) “Necessary margin of solvency” means the margin of solvency which the transferee, taking the proposed transfer into account, is required by the FCA or the PRA to maintain.

Defined in Sch.12 para.10(6) · see it in the full Act
Swiss general insurer

(7) “Swiss general insurer” has the same meaning as in paragraph 2.

Defined in Sch.12 para.10(7) · see it in the full Act
authorised person

“authorised person” has the meaning given in section 31(2);

Defined in s.417(1) · see it in the full Act

(2) In this Act “authorised person” means a person who is authorised for the purposes of this Act.

Defined in s.31(2) · see it in the full Act
the PRA

“the PRA” means the Prudential Regulation Authority;

Defined in s.417(1) · see it in the full Act
PRA-authorised person

(5) In this Act “PRA-authorised person” means an authorised person who has permission—

(a)given under Part 4A, or

(b)resulting from any other provision of this Act,

Defined in s.2B(5) · see it in the full Act

“PRA-authorised person” has the meaning given in section 2B(5);

Defined in s.417(1) · see it in the full Act
Part 4A permission

“Part 4A permission” has the meaning given in section 55A(5);

Defined in s.417(1) · see it in the full Act
the FCA

(2) The Financial Conduct Authority is in this Act referred to as “the FCA”.

Defined in s.1A(2) · see it in the full Act

“the FCA” means the Financial Conduct Authority;

Defined in s.417(1) · see it in the full Act
regulated activity

“regulated activity” has the meaning given in section 22;

Defined in s.417(1) · see it in the full Act

Cases considering Schedule 12, paragraph 2 (5)

In the matter of USAA Limited

[2022] EWHC 3161 (Ch) · 21 November 2022

Applies the margin of solvency certificate requirement. The court accepted the evidence that the transferee possessed, or would possess before the scheme took effect, the necessary margin of solvency. (see para [19])

Royal London Mutual Insurance Society Ltd, Re

[2019] EWHC 185 (Ch) · 5 February 2019

Applies the solvency-margin certificate requirement to the transferee. The Central Bank of Ireland duly provided the certificate. (see para [48])

Society of Lloyd's, Re (Part VII of the Financial Services and Markets Act 2000)

[2020] EWHC 3266 (Ch) · 30 November 2020

The court confirmed that the certificate from the National Bank of Belgium established that the transferee would possess the necessary margin of solvency after the proposed transfer (see para [164]).

What each judgment says about Schedule 12, paragraph 2 is in the case-law panel in the full Act.

Amendments and notes

14 notes from legislation.gov.uk

Amendments

  1. F3739Words in Sch. 12 para. 2(1)(b) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 6 para. 11(2)(a) (with Sch. 20); S.I. 2013/423, art. 3, Sch.
  2. F3740Words in Sch. 12 para. 2(3) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 6 para. 11(2)(b) (with Sch. 20); S.I. 2013/423, art. 3, Sch.
  3. F3741Word in Sch. 12 para. 2(3) inserted (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 6 para. 11(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.
  4. F3742Sch. 12 para. 2(6)(a) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 106(3)(a) (with transitional provisions in S.I. 2019/710, regs. 1(4), 36, Sch. para. 3); 2020 c. 1, Sch. 5 para. 1(1) this amendment is subject to savings and/or transitional provisions, see the commentary.
  5. F3743Sch. 12 para. 2(6)(aa) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 106(3)(a) (with transitional provisions in S.I. 2019/710, regs. 1(4), 36, Sch. para. 3); 2020 c. 1, Sch. 5 para. 1(1) this amendment is subject to savings and/or transitional provisions, see the commentary.
  6. F3744Words in Sch. 12 para. 2(6)(c) substituted (10.12.2007) by The Reinsurance Directive Regulations 2007 (S.I. 2007/3253), reg. 2(1), Sch. 1 para. 2(5)(e)(iii)
  7. F3745Words in Sch. 12 para. 2(6)(c) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 106(3)(b) (with transitional provisions in S.I. 2019/710, regs. 1(4), 36, Sch. para. 3); 2020 c. 1, Sch. 5 para. 1(1) this amendment is subject to savings and/or transitional provisions, see the commentary.
  8. F3746Sch. 12 para. 2(6)(c)(i)(ii) substituted for words (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 6 para. 11(4) (with Sch. 20); S.I. 2013/423, art. 3, Sch.
  9. F3747Words in Sch. 12 para. 2(6)(c)(i) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 106(3)(c) (with transitional provisions in S.I. 2019/710, regs. 1(4), 36, Sch. para. 3); 2020 c. 1, Sch. 5 para. 1(1) this amendment is subject to savings and/or transitional provisions, see the commentary.
  10. F3748Words in Sch. 12 para. 2(6)(c)(ii) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 106(3)(c) (with transitional provisions in S.I. 2019/710, regs. 1(4), 36, Sch. para. 3); 2020 c. 1, Sch. 5 para. 1(1) this amendment is subject to savings and/or transitional provisions, see the commentary.
  11. F3749Sch. 12 para. 2(7A) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 106(4) (with transitional provisions in S.I. 2019/710, regs. 1(4), 36, Sch. para. 3); 2020 c. 1, Sch. 5 para. 1(1) this amendment is subject to savings and/or transitional provisions, see the commentary.
  12. F3750Sch. 12 para. 2(9) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 106(4) (with transitional provisions in S.I. 2019/710, regs. 1(4), 36, Sch. para. 3); 2020 c. 1, Sch. 5 para. 1(1) this amendment is subject to savings and/or transitional provisions, see the commentary.

Modifications

  1. C1693Sch. 12 paras. 2, 3 applied (with modifications) by S.I. 2001/3626, art. 5(2A) (as inserted (1.9.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) (No. 3) Order 2013 (S.I. 2013/1765), arts. 1, 5(4)(c))
  2. C1694Sch. 12 para. 2 modified (31.12.2020) by The Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/710), reg. 1(3), Sch. para. 4, 5, 7(3) (as amended by S.I. 2020/1301, regs. 1, 3, Sch. para. 43(m)(v)(vii)); 2020 c. 1, Sch. 5 para. 1(1)