Schedule 12: Write-down orders Part 1 – Write-down orders: main provisions
Paragraph 1 of Schedule 12 amends Part 24 of FSMA 2000. It amends section 360 of FSMA 2000 to require that a person may not be appointed as administrator of an insurer in relation to which a write-down order under new section 377A of FSMA 2000 is in effect without the consent of the Prudential Regulation Authority (PRA). It also omits section 377 of FSMA 2000 and inserts sections 377A to 377J. The effects of each of the new sections inserted into FSMA 2000 are detailed below. Nothing inserted by these provisions affects the requirement for an insurer to comply with its broader obligations as an authorised person once a write-down order is made.
	Section 377A provides more detail on write-down orders. In particular, the section explains what a write-down order is, sets out the test which the court must consider when deciding whether to make a write-down order, makes provision about when a write-down order takes and ceases to have effect (cross-referencing section 377H),provides that a write-down order cannot be made in respect of an insurer in administration or in liquidation and provides that liabilities under write-down orders are, to the extent of their reduction, to be treated as extinguished unless and until they are revived (cross-referencing section 377H and 377I).
	Section 377B sets out the liabilities which cannot be written-down under a write-down order.
	Section 377C sets out the parties able to apply to the court to make a write-down order. It also sets out, in particular, the consent which certain applicants must obtain before making an application.
	Section 377D gives the FCA and the PRA the right to be heard at court hearings relating to a write-down order and to receive documents related to those hearings.
	Section 377E sets out the court’s powers once an application for a write-down order has been received.
	Section 377F requires an insurer subject to a write-down order to notify "affected persons" (the meaning of which will be specified in Rules made by the PRA) and the FCA and the PRA as soon as possible after the order is made. The broader regulatory obligations on an insurer as an authorised person may require additional notifications separate from this legislative requirement.
	Section 377G sets out the court’s powers to appoint an eligible person or persons to act as a ‘manager of a write-down order’ (the manager). The section includes provision that the court can only appoint a person as a manager if the PRA provides a statement confirming they are suitably qualified (for example if they are an actuary, a licensed insolvency practitioner, or a suitably qualified insurance professional). The majority of the procedural provisions in sections 337C and 377D apply in relation to a manager, as they apply in relation to a write-down order.
	Section 377H provides that a write-down order ceases to have effect on the date specified in the order or on the date a "termination event" occurs (the latter only if the termination event is earlier than the date specified or no date is specified). Termination events include the making of a winding up order against the insurer and the insurer entering administration, among others set out in the section.
	Section 377I sets out how the court can revoke or vary a write-down order, including broadening or narrowing the scope of the order. When deciding whether to revoke or vary a write-down order, the court must apply the same test it applies when deciding whether to make an order. Subject to certain differences, the procedural provisions relating to the making of a write-down order and the appointment of a manager under sections 377C to 377G also apply to termination or variation of a write-down.
	Section 377J is self-explanatory.