Financial Services Authority
Change of legal status
Firms selling home finance and non-investment insurance contracts –
financial resources form
Full name of applicant firm
e of legal status: Firms selling home finance and
non-investment insurance contracts
- financial resources form
Important information you should read before completing this form
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.
Purpose of this form
This supplement collects information that is specific to the type of business the applicant firm is applying for.
You must ensure that you answer every question. If a question doesn't apply to the applicant firm,
then answer it 'Not Applicable'.
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Financial Resources
Financial Resources
Why we ask the questions in this section
All authorised firms must meet certain financial requirements. We need to be
satisfied that the applicant firm will meet these requirements from the date of
authorisation and will continue to meet them.
Client money
The rules and guidance about how applicant firms hold client money are designed to
provide an adequate level of protection for consumers.
Money held as agent for an insurance company (i.e. on a risk transfer basis) is not client
money under the appropriate regulator rules. Therefore where you have such an
agreement you may still require us to impose a requirement not to hold client money.
In relation to non-investment insurance contracts business these rules are in CASS 5:
www.fshandbook.info/FS/html/handbook/CASS/5. Specifically, the applicant firm must
ensure compliance with our minimum requirements for:
• risk transfer – broadly speaking, where there are arrangements in writing that mean
clients’ premiums held by the insurance intermediary are to be treated in law as having
been paid to the insurance company;
• segregating client money into a statutory trust (CASS 5.3); or
• segregating client money into a non-statutory trust (CASS 5.4).
1.1 Does the applicant firm intend to hold client money?
NoContinue to question 1.2
Yes, for mortgage and other home finance business onlyContinue to question 1.2
Yes, for non-investment business onlyGive details below about how the applicant
firm intends to deal with the segregation of client money or assets.
Yes, for both mortgage and other home finance and non-investment insurance
contracts businessGive details below about how the applicant firm intends to deal with
the segregation of client money or assets for its non-investment insurance contracts
business.
Statutory trust only
Non-statutory trust
Risk transfer
Mix of risk transfer and statutory trust
Mix of risk transfer and non-statutory trust
1.2 Which prudential categories apply to the applicant firm?
As the applicant firm is intending to carry on mortgages and non-investment insurance
contracts you must select a prudential category for each type of business. The
prudential categories determine how much capital the applicant firm will need to hold.
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Prudential category:
Home finance intermediary that does not hold client
money
Main regulated activities: a) advising on regulated mortgage contracts.
b) arranging (bringing about) regulated mortgage
contracts.
c) making arrangements with a view to regulated
mortgage contracts.
and/or;
d) advising on a home reversion plan;
e) arranging (bringing about) a home reversion plan;
f) making arrangements with a view to a home reversion plan;
and/or;
g) advising on a home purchase plan;
h) arranging (bringing about) a home purchase plan;
i) making arrangements with a view to a home purchase plan.
Requirement:
Not to hold or control client money.
Prudential Rule:
Maintain net assets, the greater of:
• £5,000; or
• 2.5% of its annual net brokerage income if not holding
client money or other client assets.
Prudential category:
Home finance intermediary that does hold client
money
Main regulated activities: a) advising on regulated mortgage contracts.
b) arranging (bringing about) regulated mortgage
contracts.
c) making arrangements with a view to regulated
mortgage contracts.
and/or;
d) advising on a home reversion plan;
e) arranging (bringing about) a home reversion plan;
f) making arrangements with a view to a home reversion plan;
and/or;
g) advising on a home purchase plan;
h) arranging (bringing about) a home purchase plan;
i) making arrangements with a view to a home purchase plan.
Prudential Rule:
Maintain net assets, the greater of:
• £10,000; or
• 5% of its annual net brokerage income.
Please refer to MIPRU 4 for further details.
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Financial Resources
Prudential category:
Insurance Intermediary that does not hold client
money
Prudential sub-category: not applicable
Main regulated activities: a) advising on investments in relation to non-investment
insurance contracts.
b) arranging (bringing about) deals in investments in
relation to non-investment insurance contracts.
c) making arrangements with a view to transactions in
investments in relation to non-investment insurance
contracts.
d) dealing as agent in non-investment insurance
contracts.
e) assisting in the administration and performance of a
non-investment insurance contract.
Requirement:
Not to hold or control client money.
Prudential Rule:
Maintain net assets, the greater of:
• £5,000; or
• 2.5% of its annual net brokerage income if not holding
client money or other client assets.
Please refer to MIPRU 4 for further details.
Prudential category:
Insurance Intermediary that holds client money
Prudential sub-category: not applicable
Main regulated activities: a) advising on investments in relation to non-investment
insurance contracts.
b) arranging (bringing about) deals in investments in
relation to non-investment insurance contracts.
c) making arrangements with a view to transactions in
investments in relation to non-investment insurance
contracts.
d) dealing as agent in non-investment insurance
contracts.
e) assisting in the administration and performance of a
non-investment insurance contract.
Requirement:
None
Prudential Rule:
Maintain capital resources, the greater of:
• £10,000; or
• 5% of its annual net brokerage income if holding
client money or other client assets.
There is a capital requirement for insurance intermediaries
wishing to segregate retail client money into a nonstatutory trust of £50,000, or if higher 5% of the firm's
annual income from regulated activities. Please see
Chapter 5 of the Client Asset Sourcebook (CASS) for
further details.
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Financial Resources
1.3 Which prudential category applies to the applicant firm?
As the applicant firm falls into more than one category (see question 1.2) it must apply
the category with the highest financial resource requirement. For example if mortgage
and other home finance intermediary that does not hold client money and insurance
intermediary (that holds client money for its non-investment insurance business only)
categories apply to the applicant firm, it must apply the financial resource requirement of
Insurance Intermediary (that holds client money for its non-investment insurance
business only)
Prudential
category
Financial resources
This section asks how the applicant firm will meet its financial resource requirement.
1.4 Which type of firm is the applicant firm?
Limited company
Sole trader
Partnership
Limited liability partnership
Other
Please continue to question 1.5
Please continue to question 1.7
Please continue to question 1.8
Please continue to question 1.9
Please continue to question 1.11
Limited Company
1.5 You must state the amounts of the different sources of the applicant firm's capital
Please Source
Amount
tick
Fully paid-up ordinary shares
Share premium account
Preference shares (allowable if
not redeemable within two
years)
(Audited) reserves *
(Verified) interim net profits *
Revaluation reserves
Debt capital
Subordinated loans
Total
* Audit may not be required if exempt under the Companies Act 1985
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Financial Resources
1.6 You must attach the following:
Companies House form SH01
Attached
Applicant firm not yet
capitalised
Continue to question 1.12
Sole trader
1.7 You must attach the following:
Statement of personal assets and liabilities (see notes)
Attached
Statement of business assets and liabilities (see notes)
Attached
Continue to question 1.12
Partnership
1.8 You must attach the following:
Statement of personal assets and liabilities (see notes)
(one per partner)
Attached
Statement of business assets and liabilities (see notes)
(one only)
Attached
Continue to question 1.12
Limited Liability Partnership
1.9 You must state the amounts of the different sources of the applicant firm's capital
Please Source
Amount
tick
Members' capital
agreement
Members' reserves
Subordinated loan(s)
Total
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Financial Resources
1.10 You must attach the following:
Members' capital agreement (see notes)
Attached
Continue to question 1.12
Other applicant firms
1.11
You must provide details of the applicant firm's constitution and the different
sources of the applicant firm's capital.
Sources of external funding
Subordinated loans
1.12 Does the applicant firm have any subordinated loans?
NoContinue to question 1.13
YesYou must give details below of any subordinated loans
If there is more than one subordinated loan please use a separate sheet of paper.
If you have used separate sheets of paper please indicate how many below.
Number of
additional sheets
Name of loan provider
Amount
Date of agreement
Nature of loan
Repayment terms, including number of instalments and final payment date
Interest payable
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Financial Resources
Other funding
1.13 Does the applicant firm have other external funding?
NoContinue to question 1.14
YesYou must give details of other external funding
If the applicant firm has external funding but has not drawn down on the external
funding, you must still answer the questions below.
If there is more than one source of external funding please use a separate sheet of
paper if required.
If you have used separate sheets of paper please indicate how many below.
Number of
additional sheets
Name of funding
provider(s)
Amount
Nature of funding
Repayment terms, including number of instalments and final payment date
Interest payable
%
Professional indemnity insurance (PII) Self certification
This question asks you to confirm whether your firm complies with the prudential requirements in
relation to professional indemnity insurance (PII). Authorised firms are required to ensure that
they maintain compliant PII cover at all times.
To complete this section you must have a quotation from a PII provider.
1.14
Will your firm have PII cover that complies with the minimum standards as set out in the
Handbook (refer to MIPRU 3) from the date of authorisation?
YesGo to 1.15
No You must provide an explanation in the box below
I am exempt  You must provide an explanation below as to why you believe your
firm is exempt
(NB: Please note that this exemption would apply to only a very limited number of firms; the vast
majority of regulated firms are required to hold PII cover.).
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Financial Resources
1.15 Details of cover*
Insurer name
Annual premium
Limit of indemnity (single claim)
Limit of indemnity (aggregate)
Policy excess
Increased excess(es) for specific
business types:
Business type:
Amount: £
Business type:
Amount: £
Business type:
Amount: £
Amount of additional capital required
for increased excesses(es)
£
*You may be asked to confirm these details before we authorise your firm.
Other documents
1.16 All applicant firms must provide the following:
An opening balance sheet to demonstrate how the applicant
firm will meet its financial resources requirement at the date
of authorisation.
Attached
A forecast closing balance sheet for the first 12 months
of trading.
Attached
A monthly cash flow forecast for the first 12 months of trading
Attached
A monthly profit and loss forecast for the first 12 months of
trading. As a minimum, the profit and loss forecast must
disclose the following on a monthly basis:
a) gross income, analysed between regulated and
un-regulated activities;
b) business expenditure, relevant annual expenditure,
analysis of the major overheads expenditure; and
c) profit before taxation.
Attached
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