Reclaim Fund Ltd

Limits on the record

• Dormant account fund operator Requirement 1

  Requirement 1. The firm is required to adhere to the rules in: (i) SYSC 4.1.1 R to 4.1.2 R and 7.1.16 R as if it were a BIPRU firm;(ii)GENPRU sections 1.2, 1.3 (subject to other requirements in this permission) and 2.1 as if it were a BIPRU firm;(iii) BIPRU section 3, apart from rules 3.1.2 to 3.1.4, 3.2.1 to 3.2.8, 3.2.20, 3.2.21, 3.2.24, 3.2.26 to 3.2.37, 3.3, 3.4.1 to 3.4.5, 3.4.7 to 3.4.15, 3.4.18, 3.4.20 to 3.4.23, 3.4.25, 3.4.27, 3.4.29, 3.4.31 to 3.4.94, 3.4.97 to 3.4.102, 3.4.106 to 3.4.109, 3.4.111 to 3.4.126, 3.4.132,3.4.133, 3.5.2, 3.5.6 to 3.5.8, section 6, apart from rule 6.2.1, and rules 7.1.3(2), 7.2.3(3), 7.4 and 7.5 of section 7 as if it were a BIPRU firm; and(iv) INSPRU section 7.1, apart from rules 7.1.1 to 7.1.3, 7.1.22 to 7.1.24, 7.1.28 and 7.1.74 to 7.1.90, as if it were an insurer. The firm is required to adhere to the guidance in SUP App 2.7.1G as if that guidance were a rule and as if the firm were an insurer. The firm is required to adhere to the following rules as if it were a BIPRU firm with modifications to those rules as noted here:(i) BIPRU rule 3.2.20, with the modifications that the reference in paragraph (1) to BIPRU 3.4 is replaced by BIPRU 3.5, and the words after exposure is assigned in paragraph (2) are deleted; and(ii) BIPRU rules 3.2.21 and 3.2.24, with the modification in both that the word standardised is replaced by the word simplified. The firm is required to adhere to the following guidance as if that guidance were a rule and as if the firm were a BIPRU firm:(i) BIPRU 3.5.3 G, with the modification that, in the first sentence, the word should is deleted and replaced by must, and the second sentence is deleted;(ii) BIPRU 3.5.4 G, with the modification that the word should is deleted and replaced by must; and(iii) the table in BIPRU 3.5.5 G, with the following modifications:(a) the provisions relating to the exposure classes of mortgages on residential or commercial property are deleted;(b) in relation to securitisation exposures, the words generally and may look through to underlying expo sures if BIPRU 9 allows in the provisions regarding risk weight and the words in the comments column are deleted; and (c) CIU exposures must be given a risk weight at 100% unless the CIU is deemed a high risk under BIPRU 3.4.118 R, in which case it shall be given a risk weight of 150%. Requirement 1 must be read in conjunction with Requirement 2.

• Dormant account fund operator Requirement 2

  Requirement 2. This is to be read in conjunction with Requirement 1. The firm must not incur exposures to mortgages on residential or commercial property.The firm must calculate its operational risk capital as a normalised income indicator equal to the three-year average of the total amount of monies held (calculated as monies held at the beginning of the year, plus monies received during the year and less monies paid out during the year) multiplied by:(i) 0.035, and then, (ii) 15%, representing the sum equivalent to the percentage specified for the basic indicator approach. Where the firm does not have sufficient data to meet the three-year requirement, it may use its forecasted fund projections for all or part of the three year time period when calculating its normalised income indicator.The firm is required to calculate its best estimate of the dormant account fund operator's liabilities on the basis that those must equal the present value of the probability-weighted average of future cash flows discounted in accordance with the relevant risk-free interest rate term structure.The firm must calculate its capital resources on the basis that those are the excess of its assets over its foreseeable liabilities. The firm must ensure that effective arrangements are in place with the bank or building society prior to consenting to any transfer of dormant account funds.Such arrangements must ensure that:i. effective repayment claims by those entitled to balances from dormant accounts can be made;ii. following the transfer of balances from dormant accounts, complaints can be made where appropriate to the Financial Ombudsman Service;iii. the bank or building society, which transferred the balance from a dormant account appropriately provides for the possibility of the dormant account fund operator going into default and/or the bank or building society who transferred the balance going into default, in relation to the liaising with the Financial Services Compensation Scheme. Requirement 2 must be read in conjunction with Requirement 1.