Following the establishment of the specific form of financial provision, ongoing maintenance and monitoring of the financial provision during the lifetime of the operation is necessary. This may be as simple as ensuring that financial provision, such as an insurance or guarantee, is renewed or it may involve a more in-depth investigation as to whether the operator continues to satisfy the financial tests, for example, in the case of self-provision. Regulators should consider the benefits of engaging in dissemination and sharing of good practice in this area and of joined-up working with other authorities involved in the permitting, regulation and monitoring of an activity.
Practices that should be considered by regulators for checking and monitoring each of the different types of financial provision are detailed below. Before considering these, two more general points applicable to all the measures covered below may be made:
- The operator could, if they are not so already, be placed under an obligation to inform the regulator of any material change in their financial strength or petition being presented, or resolution being passed, to wind up the company. This would give the regulator advance notice of any entry of the operator, or potential entry, into insolvency or winding up proceedings.
- Regulators should have a clear, pre-prepared plan of action should the operator or their parent company no longer be in a position to deliver the financial provision that they originally presented. For instance, a plan should be in place as to the appropriate course of action should a self-insuring operator, or a parent company that provides a parent company guarantee, be no longer able to meet the financial tests.
Key factors for monitoring of the individual financial provisions are provided in the sections:
- Financial institution guarantee
- Cash deposits
- Charge on asset
- Parent company guarantee and self-provision
- Mutual fund/pool
- Environmental impairment liability insurance.