Part VII Insights - What is a Part VII transfer?
A Part VII transfer is the common name for the transfer of a portfolio of contracts from one entity to another under Part VII (Control of Business Transfers) of the Financial Services and Markets Act 2000 (FSMA 2000). This section relates to insurance, reinsurance companies and banks operating from the EEA states (European Economic Area) - Lloyds syndicates are also included as insurers. Part VII transfers are also referred to as Schemes.
The transfer allows a portfolio of contracts (the entire business or a subset of it) and the associated assets and liabilities to be legally transferred (novated) from one entity to another, either within the same group or to an external party. Multiple transferor and transferee companies are allowed to enable individual and multiple portfolios to be split or combined as required. A transfer is typically used to consolidate acquisitions or run-off portfolios and to generate capital and operational efficiencies.
Transfers typically take between 9m and 15m depending on the complexity, size and extent of operational change required. The resource commitment and timescale should not be underestimated as even the simplest of transfers still require a significant amount of effort and documentation to successfully complete the process.
The overall process is highly complex and requires a considerable amount of technical expertise as
well as extensive knowledge of the transferring business and its history. Transfer projects are often high in impact, cost, risk and benefit and need dedicated project management to ensure successful delivery and avoid spiralling costs from less experienced advisors, external project resources and the inevitable regulatory issues which arise.
If you would like to know more about the process and how we can help please Contact Us.