• Doing business with the FSA
  • Small Firms
    • Authorised professional firms
      • PII and capital resource

Related information

Handbook

 

 

Authorised Professional Firms (APFs) carrying on regulated investment activities are allocated to IPRU(INV) 2, unless they are in the list of types of firm at IPRU(INV) 2.1.2R. The latter will be allocated to another part of the sourcebook, depending on the nature of their activities. Firms subject to chapter 2 are required to remain solvent, hold adequate PII cover and (in the case of accountants) have bonding arrangements in place if necessary.

In assessing what is adequate PII, we may take into account the requirements of the firm's DPB. But the cover obtained also has to cover the firm for any non-professional business activities it carries on, i.e. investment business.

Mortgage Mediation

APFs carrying on mortgage mediation on an incidental basis can satisfy PII requirements by complying with IPRU(INV) 2.3.1R. Otherwise, firms will need to comply with PRU 9.2.

PRU 9.3 does not apply capital resources requirements on firms carrying on mortgage mediation on an incidental basis and whose main business is the practice of its profession. Otherwise, the capital resources requirements of PRU 9.3 will apply. For these purposes, your firm's 'main business' is measured on the basis of the total income that it receives from the regulated activities it conducts. If this exceeds 50% of the firm's income from its professional activities in a 12 month period (allowing for temporary variations of 5%), the firm's main business is no longer carrying on their profession(s).

Insurance Mediation

APFs carrying on insurance mediation activities have to comply with the PII requirements found at PRU 9.2.10R; there is no exemption.
This means that APFs may need to demonstrate that they are holding additional capital if the level of excess is higher than permitted in PRU 9.2.17R (or 18R) in line with the reference table in PRU 9.2.21R (or 22R).

PRU 9.3 does not apply capital resources requirements on firms carrying on insurance mediation on an incidental basis and whose main business is the practice of its profession. Otherwise, the capital resources requirements of PRU 9.3 will apply. See above for how to identify what a firm's 'main business' is.