The Financial Services Tribunal reconsidered the dismissal of an application for a life insurance business licence and found that one of the significant owners was not fit and proper in the sense of having the necessary financial standing required to support the business of the insurer.

A family investment trust owned 30% of the issued shares of the company which was applying for the life licence. The liabilities of the trust exceeded its assets and incurred a net deficit in each financial year disclosed. It was submitted that, because an equity fund which held 70% of the shares had undertaken to supply all funding required by the company, it was unnecessary for the trust to have access to capital. Section 6.4 of the Joint Standard 1 of 2020 requires the significant owner to have the necessary financial standing. As the 30% significant owner, the trust failed the test, the decision to refuse the licence was upheld. The court also dealt with a submission that where several pension funds were members of a commanditarian partnership, of which the equity fund was the general partner and they were limited partners, whether the pension funds’ financial position was relevant. The Tribunal held that, seeing the Financial Sector Regulation Act requires the significant owner to have the financial standing, there is no purpose in looking at the financial standing of those entities higher up the line. If the significant owner has sufficient financial standing, the enquiry stops there.

The Tribunal dealt with the Authority’s difficulty with the composition of the proposed board of directors. The applicant made the point that it is difficult to recruit directors while the licence application is pending. The Tribunal suggested that, in these circumstances, the Authority should consider the possibility of granting a licence subject to the condition that before business is commenced the appropriate keypersons must be appointed with the approval of the Authority.

[Moruo Life Limited v The Prudential Authority, The Financial Services Tribunal case no PA2/23 (8 March 2024)]

Decision – Moruo Life Ltd v The Prudential Authority.pdf (