Tax and Unit Pricing ABI Guide to Good Practice

A companion piece to my blog of 18th October on the FCAs thematic review of unit pricing.  As mentioned previously the ABI is to revise its guide to good practice in light of the thematic review.

What I hadn't noticed previously was that the ABI revised the guide in 2012.  A link to the updated guidance is below.

ABI Good practice guide

The tax section is at 4.5.9 but there are also references to tax at 2.1.9, 3.1.6,4.1.3,4.3.6 and 4.5.9.

Interestingly one requirement in the 2006 guidance seems to have been removed from the 2012 guidance.  The 2006 guidance required that

"The basis of taxation chosen should aim to achieve broad equity between generations of policyholders and fairness between the company and the fund, supported by appropriate reconciliation to help ensure that a fair outcome has been achieved."

The 2012 guidance simply requires that "The firm should document how its chosen basis of taxation meets its aims, including if appropriate broad equity between generations of policyholders and fairness between the company and the fund"

 

So the need to produce a reconciliation has been taken out of the "good practice guide". It will be interesting to see what is in the new guidance.