IPTM7765 - Personal portfolio bonds (PPB): permitted property: cash: insurers' internal currency accounts

Insurers may use internal currency accounts for dealing transactions. These accounts contain the pooled funds of a number of different policyholders and pay interest according to each policyholder’s share of the balance. The cash in the accounts is derived from sale proceeds and income and is used to pay fees and expenses. It follows that at times the balance attributable to a particular policyholder may be negative.

The insurer may not give a choice to a policyholder whether cash balances arising in the policy are dealt with through such an account. In that case the account would not be property that may be selected by the policyholder under the terms of the policy and the policy would not be a PPB.

Even if the policyholder has the ability to select the type of cash account used for these purposes, it will not cause the policy to be a PPB unless the cash account is selected for speculative purposes. Provided the account’s purpose is specified in the policy terms and it excludes acquisition of cash for the purpose of realising a gain, it will not be viewed as selected for speculative purposes.