2021 c. 22
[29th April 2021]
An Act to make provision about financial services and markets; to make provision about debt respite schemes; to make provision about Help-to-Save accounts; and for connected purposes.
Article 4(1) of the Capital Requirements Regulation (definitions) is amended in accordance with subsections (2) to (6).
In point (2) (definition of “investment firm”), for the words from “excluding” to the end substitute “ other than a credit institution ”.
In point (2A) (definition of “CRR firm”), in paragraph (a)(ii), for “an investment firm” substitute “ a designated investment firm ”.
After point (2A) insert—
‘designated investment firm’ means an investment firm that is for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556), but is not—
a commodity and emission allowance dealer,
a collective investment undertaking, or
an insurance undertaking;
‘FCA investment firm’ means an investment firm that—
is an authorised person within the meaning of section 31(1)(a) of FSMA, and
is not a designated investment firm;
In point (3) (definition of “institution”), for “an investment firm” substitute “ a designated investment firm ”.
At the end insert—
‘commodity and emission allowance dealer’ means an undertaking the main business of which consists exclusively of the provision of investment services or activities in relation to—
commodity derivatives or commodity derivative contracts referred to in paragraphs 5, 6, 7, 9 and 10 of Part 1 of Schedule 2 to the Regulated Activities Order,
derivatives of emission allowances referred to in paragraph 4 of that Part of that Schedule, or
emission allowances referred to in paragraph 11 of that Part of that Schedule.
In Schedule 1—
Part 1 contains consequential amendments of the Capital Requirements Regulation, and
Part 2 contains consequential amendments of the Capital Requirements (Country-by-Country Reporting) Regulations 2013 (S.I. 2013/3118).
In Schedule 2—
Part 1 inserts Part 9C of the Financial Services and Markets Act 2000 (prudential regulation of FCA investment firms),
Part 2 contains minor and consequential amendments of the Financial Services and Markets Act 2000, and
Part 3 contains transitional provision.
The Treasury may by regulations revoke provisions of the Capital Requirements Regulation relating to the matters listed in subsection (2).
The matters are—
deductions from Common Equity Tier 1 items;
the following aspects of the standardised approach to credit risk—
exposure value;
risk weights for exposures to institutions;
exposures to corporates;
exposures secured by mortgages on immovable property;
retail exposures;
subordinated debt and equity exposures;
the use of credit assessments;
exposures with particularly high risk;
exposures in the form of units or shares in collective investment undertakings;
classification of off-balance sheet items;
the following aspects of the internal ratings based approach to credit risk—
the advanced internal ratings based approach for asset classes that cannot be modelled in a robust and prudent manner;
input parameters;
the requirement to use the internal ratings based approach for all significant exposure classes;
the 1.06 scaling factor for estimating risk-weighted assets;
exposures in the form of units or shares in collective investment undertakings;
risk-weighted exposure amounts for equity exposures;
the treatment of expected loss amounts by exposure types;
the use of credit risk mitigation techniques for exposures risk-weighted under the standardised approach to credit risk or the internal ratings based approach to credit risk;
the following aspects of own funds requirements for counterparty credit risk—
requirements to use particular methods for calculating the exposure value;
the mark-to-market method;
the original exposure method;
the standardised method;
own funds requirements for exposures to a central counterparty;
own funds requirements for operational risk;
the following aspects of own funds requirements for market risk—
the approaches for calculating the own funds requirements for market risk;
the scope and structure of the alternative standardised approach;
foreign exchange risk factors in the alternative standardised approach;
the scope and structure of the alternative internal model approach, including the use of alternative internal models;
regulatory back-testing requirements and multiplication factors in the alternative internal model approach;
requirements relating to risk measurement in the alternative internal model approach;
own funds requirements relating to—
derogations for small trading book business;
the trading book;
own funds requirements for credit valuation adjustment risk;
large exposures;
liquidity requirements;
the leverage ratio;
reporting requirements;
disclosure requirements;
any other matter which is the subject of a CRR Basel standard.
The Treasury may by regulations revoke a provision of the Capital Requirements Regulation where—
the provision is connected with provision relating to a matter listed in subsection (2), and
the Treasury consider the revocation necessary or desirable in order to maintain or improve the coherence of the prudential regime comprised in, and in provision made under, the Capital Requirements Regulation and in general rules made by the Prudential Regulation Authority.
The Treasury may only make regulations under subsection (1) or (3) revoking a provision if they consider that—
the provision has been, or will be, adequately replaced by general rules made, or to be made, by the Prudential Regulation Authority, or
it is appropriate for the provision not to be replaced.
The Treasury may by regulations make consequential, supplementary, incidental, transitional, transitory and saving provision in connection with the revocation of provisions under subsection (1) or (3), including provision amending, repealing or revoking provisions of the Capital Requirements Regulation or another enactment.
Regulations under this section may make different provision for different purposes.
Regulations under this section are subject to the affirmative procedure.
Where the Treasury make regulations in reliance on subsection (2)(p), the Treasury must, when laying a draft of the regulations before Parliament, also lay before Parliament a statement explaining which provisions are made in reliance on that paragraph and identifying the relevant CRR Basel standard.
The reference in subsection (2)(p) to a matter that is the subject of a CRR Basel standard includes such a matter as it relates to any CRR firm (even where the standard in question does not apply to all CRR firms).
In this section—
Terms used in this section and in the Capital Requirements Regulation have the same meaning in this section as they have in that Regulation (or any part of it).
For the purposes of section 3, “CRR Basel standard” means— subject to subsection (4).
a standard recommended in a document issued by the Basel Committee on Banking Supervision listed in subsection (2), or
a standard recommended in another document issued by that Committee where the recommended date for implementation of the standard falls on or before the date described in subsection (3),
The documents referred to in subsection (1)(a) are the documents entitled (and issued) as follows—
Capital requirements for banks' equity investments in funds (December 2013);
The standardised approach for measuring counterparty credit risk exposures (March 2014);
Capital requirements for bank exposures to central counterparties (April 2014);
Supervisory framework for measuring and controlling large exposures (April 2014);
Basel III: the net stable funding ratio (October 2014);
Revised Pillar 3 disclosure requirements (January 2015);
Pillar 3 disclosure requirements — consolidated and enhanced framework (March 2017);
Implementation of net stable funding ratio and treatment of derivative liabilities (October 2017);
Basel III: Finalising post-crisis reforms (December 2017);
Technical Amendment — Basel III: Treatment of extraordinary monetary policy operations in the Net Stable Funding Ratio (June 2018);
Pillar 3 disclosure requirements — regulatory treatment of accounting provisions (August 2018);
Pillar 3 disclosure requirements — updated framework (December 2018);
Minimum capital requirements for market risk (January 2019);
Targeted revisions to the credit valuation adjustment risk framework (July 2020).
The date referred to in subsection (1)(b) is whichever is the latest of the dates recommended by the Basel Committee on Banking Supervision in a document listed in subsection (2) for the implementation of a standard (or, where implementation is recommended to take place in phases, for the full implementation of a standard).
A recommended standard is not a CRR Basel standard to the extent that, immediately before the day on which this section comes into force, provision giving effect to the recommendation is included in an enactment.
References in this section to a document issued by the Basel Committee on Banking Supervision are to such a document as it has effect from time to time.
In Schedule 3—
Part 1 inserts Part 9D of the Financial Services and Markets Act 2000 (prudential regulation of credit institutions etc),
Part 2 amends the Prudential Regulation Authority's powers under Part 12B of that Act (approval of certain holding companies),
Part 3 contains minor and consequential amendments, and
Part 4 contains transitional provision.
Subsections (3) to (5) apply where a provision of the Capital Requirements Regulation, or of an instrument made under that Regulation, has been revoked by regulations under section 3.
In the Capital Requirements Regulation and in other enactments, except as otherwise provided—
pre-revocation references to the revoked provision are to be treated as references to the corresponding CRR rule, and
pre-revocation references to the Capital Requirements Regulation or the instrument, or to a division of that Regulation or instrument that included the revoked provision, are to be treated as including the corresponding CRR rule.
The Prudential Regulation Authority must—
prepare a document setting out whether and, if so, how CRR rules correspond to the revoked provision,
update the document from time to time, and
publish the document, and any update, in the manner best calculated to bring it to the attention of those likely to be affected by the Capital Requirements Regulation and CRR rules.
For the purposes of subsection (3), whether a CRR rule corresponds to a revoked provision is to be determined by reference to the document published under subsection (4), as updated from time to time.
In this section, references to instruments made under the Capital Requirements Regulation include EU tertiary legislation made under that Regulation which forms part of retained EU law.
In this section—
The Treasury may by regulations amend the Credit Rating Agencies Regulation by making provision related to the issuing and use of credit ratings which it considers necessary or desirable having regard to a CRR Basel standard.
Regulations under this section may—
make different provision for different purposes, and
make consequential, supplemental, incidental, transitional, transitory and saving provision.
Regulations under this section are subject to the affirmative procedure.
The power under subsection (1) includes power to make provision in relation to any CRR firm (even where the CRR Basel standard to which the Treasury have regard does not apply to all CRR firms).
In this section—
Schedule 4 contains amendments of the Capital Requirements Regulation.
Article A20 of the Benchmarks Regulation (review of critical benchmarks) is amended in accordance with subsections (2) to (5).
In paragraph 2, for point (a) (but not the “and” at the end) substitute—
whether an administrator located in the United Kingdom provides a benchmark that satisfies one or more of conditions (a), (b), (c) or (d) of paragraph 1 of Article 20;
In paragraph 2(b), for “point (a)(i) or (ii)” substitute “ point (a) ”.
In paragraph 3(b), for “point (a)(i) or (ii)” substitute “ point (a) ”.
In paragraph 6, for point (b) substitute—
the Treasury consider that the benchmark satisfies one or more of conditions (a), (b), (c) or (d) of paragraph 1 of Article 20.
In Article 20(1) of the Benchmarks Regulation (critical benchmarks: conditions and other matters)—
in the opening words of point (c), for “all” substitute “ both ”,
omit point (c)(i), and
after point (c) insert—
the benchmark has a sufficient number of appropriate market-led substitutes that it does not fulfil the criterion in point (c)(ii), but:
it is not reasonably practicable for one or more users of the benchmark to switch to one of those substitutes, and
the benchmark fulfils the criterion in point (c)(iii).
Article 21 of the Benchmarks Regulation (mandatory administration of a critical benchmark) is amended as follows.
In paragraph 3, for “five years” substitute “ 10 years ”.
After paragraph 3 insert—
If the FCA decides to compel the administrator to continue publishing the benchmark under paragraph 3, the FCA must assess the capability of the benchmark to measure the underlying market or economic reality, taking into account, among other things, the procedure established by the administrator in accordance with Article 28(1).
After making its assessment under paragraph 3A, the FCA must give the administrator—
a written notice stating that it considers that the benchmark is not representative of the market or economic reality that it is intended to measure or that the representativeness of the benchmark is at risk, or
a written notice stating that it considers that the representativeness of the benchmark is not at risk.
The FCA must make its assessment under paragraph 3A, and give the notice under paragraph 3B, before the end of the period of 28 days beginning with the day on which the FCA notifies the administrator of its decision to compel the administrator to continue publishing the benchmark.
In the Benchmarks Regulation, after Article 21 insert—
Where the FCA has completed an assessment of a critical benchmark under Article 21(2), the FCA may, by publishing a notice, prohibit some or all new use of the benchmark by supervised entities.
In paragraph 1, the reference to new use of a benchmark is to doing the following on or after the day on which the prohibition takes effect (“the prohibition day”)—
issuing a financial instrument which references the benchmark, or amending the terms of a financial instrument so as to include a reference to the benchmark where the instrument did not reference the benchmark immediately before the prohibition day;
determining the amount payable under a financial instrument or a financial contract by referencing the benchmark, where the instrument or contract did not reference the benchmark immediately before the prohibition day;
being a party to a financial contract which references the benchmark—
where the contract is formed on or after the prohibition day, or
where the contract was formed before the prohibition day but did not reference the benchmark immediately before that day;
providing a borrowing rate as described in point (7)(d) of Article 3(1) calculated by reference to the benchmark for the purposes of a financial contract—
where the contract is formed on or after the prohibition day, or
where the contract was formed before the prohibition day but did not use the borrowing rate immediately before that day;
measuring the performance of an investment fund through the benchmark for a purpose described in point (7)(e) of Article 3(1), where the fund's constitutional documents or prospectus did not provide for its performance to be measured through the benchmark immediately before the prohibition day.
The FCA may only exercise the power under paragraph 1 if it considers it desirable to do so in order to advance either or both of the following—
its consumer protection objective (see section 1C of FSMA);
its integrity objective (see section 1D of that Act).
In exercising the power under paragraph 1 in relation to a benchmark that is used outside the United Kingdom, the FCA may, among other things, have regard to the likely effect outside the United Kingdom of the exercise of the power.
A notice under this Article may—
make different provision for different purposes;
make provision by reference to any aspect of the new use, including the persons involved in the use;
provide that the prohibition has effect only during a period specified in the notice;
make such transitional provision as the FCA considers appropriate.
A notice under this Article must—
give reasons for the prohibition,
specify when the prohibition is to take effect,
explain how the FCA has taken account of the relevant policy statement (see Article 23F), and
provide any further information that the FCA considers appropriate for assisting supervised entities to understand the prohibition.
A notice under this Article must be published in the manner that appears to the FCA to be best calculated to bring it to the attention of—
supervised entities, and
the public.
The FCA—
must give a copy of a notice under this Article to the Treasury before publishing it, and
may charge a reasonable fee for providing a person with a copy of a notice published under this Article.
In paragraph 2(a) to (e), references to referencing, or measuring performance through, the benchmark (however expressed) include referencing, or measuring performance through, a combination of indices that include the benchmark.
In Article 3(1) of the Benchmarks Regulation (definitions)—
after point (10) insert—
‘supervised third country contributor’ means a supervised third country entity that contributes input data to an administrator located in the United Kingdom;
after point (17) insert—
‘supervised third country entity’ means an entity that would be a supervised entity by virtue of point (a) of the definition of that term (CRR firm that is a credit institution) but for the fact that it does not have its head office or registered office in the United Kingdom;
After Article 22 of the Benchmarks Regulation insert—
This Article applies to a critical benchmark that—
is based on submissions by contributors the majority of which are supervised entities or supervised third country entities, and
is not an Article 23A benchmark.
An administrator of a critical benchmark must submit to the FCA an assessment of the capability of the benchmark to measure the underlying market or economic reality—
at the end of the period of two years beginning with the day on which the benchmark became a critical benchmark, and
at the end of each subsequent two year period.
The FCA may, by written notice, require an administrator of a critical benchmark to submit to the FCA an assessment of the capability of the benchmark to measure the underlying market or economic reality.
The FCA may only impose a requirement under paragraph 3 if it considers that—
the benchmark does not, or may not, represent the underlying market or economic reality, or
the representativeness of the benchmark is or may be at risk.
A notice under paragraph 3 may require the administrator to submit the assessment before a date specified in the notice, provided that date falls after the end of the period of two weeks beginning with the day on which the notice was given.
If a supervised contributor or a supervised third country contributor intends to cease contributing input data to a critical benchmark—
the contributor must notify the benchmark administrator promptly in writing, and
the notification must state the date on which it intends to cease contributing, which must be after the end of the period of 15 weeks beginning with the first working day after the day on which it gives the notification.
If an administrator of a benchmark is notified under paragraph 6, it must—
inform the FCA promptly, stating the date on which the notification was given, and
submit to the FCA an assessment of the implications of the contributor's withdrawal for the capability of the benchmark to measure the underlying market or economic reality.
An assessment under paragraph 7(b) must be submitted to the FCA before the end of the period of 14 days beginning with the first working day after the day on which the notification under paragraph 6 was given.
An administrator of a critical benchmark that is required to provide an assessment under this Article must not change the market or economic reality intended to be measured by the benchmark (as defined in the benchmark statement referred to in Article 27) during the assessment period, unless the FCA gives it written permission to do so.
For the purposes of paragraph 9, the assessment period begins—
in the case of an assessment under paragraph 2, with the day falling one month before the end of the relevant two year period described in that paragraph;
in the case of an assessment under paragraph 3, when the administrator receives the FCA's notice requiring the assessment;
in the case of an assessment under paragraph 7(b), when the contributor notifies the administrator under paragraph 6.
For the purposes of paragraph 9, the assessment period ends—
when the FCA notifies the administrator that it considers that the representativeness of the benchmark is not at risk, whether by giving a notice under Article 22B(3)(b) or otherwise, or
when the benchmark becomes an Article 23A benchmark.
Where the FCA receives an assessment by a benchmark administrator under Article 22A within the period specified by or under that Article, the FCA must make its own assessment of the capability of the benchmark to measure the underlying market or economic reality, taking into account, among other things—
the procedure established by the administrator in accordance with Article 28(1), and
the administrator's assessment.
If a benchmark administrator does not submit an assessment under Article 22A within the period specified by or under that Article, the FCA may make its own assessment of the capability of the benchmark to measure the underlying market or economic reality and, if it does so—
must take into account the procedure established by the administrator in accordance with Article 28(1), and
may take into account, among other things, an assessment submitted by the administrator after the end of the specified period.
After making its assessment under this Article, the FCA must give the benchmark administrator—
a written notice stating that it considers that the benchmark is not representative of the market or economic reality that it is intended to measure or that the representativeness of the benchmark is at risk, or
a written notice stating that it considers that the representativeness of the benchmark is not at risk.
Where the administrator's assessment was made under Article 22A(7)(b) (contributor intends to cease contributing input data), the FCA must make its assessment under paragraph 1 or 2, and give the notice under paragraph 3, before the end of the period of 28 days beginning with the first working day after the day on which the administrator was notified under Article 22A(6).
Paragraph 2 of Article 22A of the Benchmarks Regulation (inserted by this section) applies in the case of a benchmark which became a critical benchmark before the day on which this section comes into force, but as if it only required the administrator to submit an assessment at the end of each two year period described in that paragraph which ends after that day.
Article 23 of the Benchmarks Regulation (mandatory contribution to a critical benchmark) is amended as follows.
Omit paragraphs 1 to 4.
For paragraph 5 substitute—
If a supervised contributor or supervised third country contributor gives a notification under Article 22A(6), the contributor may not cease contributing input data before the date specified in the notification as the date on which it intends to cease contributing, unless the FCA gives it written permission to do so.
Paragraph 5A does not require a contributor to trade or commit to trade.
In paragraph 6, for the opening words substitute “ If the FCA gives the administrator of a critical benchmark a notice under Article 21(3B)(a) or Article 22B(3)(a) (benchmark unrepresentative or representativeness at risk), it has the power to— ”.
In paragraph 6(a)—
after “supervised entities” insert “ and supervised third country entities ”, and
omit “from the date” to the end.
In paragraph 6(c), after “supervised entities” insert “ and supervised third country entities ”.
After paragraph 6 insert—
The FCA may only exercise the powers under paragraph 6 so far as it considers it appropriate to do so for the purpose of maintaining, restoring or improving the representativeness of the benchmark.
In paragraph 7—
after “supervised entities” insert “ and supervised third country entities ”, and
omit “supervised” (in the second place it occurs).
In paragraph 9(d), for “relevant supervised entities” substitute “ contributors mandated to contribute input data ”.
After paragraph 9 insert—
In the case of an Article 23A benchmark, any measures adopted under paragraph 6 in relation to the benchmark are to be treated as being revoked when the designation of the benchmark under Article 23A takes effect.
In paragraph 10—
after “supervised contributor” insert “ and supervised third country contributor ”, and
for “exceeding the maximum five year period laid down in the second subparagraph of paragraph 6” substitute “ extending beyond the end of the period of five years beginning with the day on which the administrator notified the FCA of its intention to cease providing the benchmark under Article 21(1) ”.
Omit paragraph 12.
In the Benchmarks Regulation, after Article 23 insert—
If the FCA gives the administrator of a critical benchmark a notice under Article 21(3B)(a) or Article 22B(3)(a) (benchmark unrepresentative or representativeness at risk), the FCA must, before the end of the period of 21 days beginning with the day on which it gave the notice—
consider whether it is appropriate for the FCA to designate the benchmark under this Article, and
if it proposes to do so, inform the benchmark administrator by written notice.
The FCA may not designate a benchmark under this Article if it considers that it is, and is likely to continue to be, the case that—
the representativeness of the benchmark can reasonably be restored and maintained by the administrator or by the FCA exercising its powers under Article 23(6), and
there are good reasons to restore and maintain its representativeness.
A notice under paragraph 1(b) must—
explain when the FCA proposes that the designation of the benchmark should take effect,
give reasons for the FCA's proposed decision, and
state that the administrator may make written representations to the FCA during the period of 14 days beginning with the day on which the notice is given.
If, after considering any representations made in accordance with paragraph 3(c), the FCA decides to designate the benchmark under this Article, it must give the administrator a written notice of its decision.
A notice under paragraph 4 must—
state when the designation of the benchmark takes effect,
give reasons for the FCA's decision,
explain how the FCA has taken account of the relevant policy statement (see Article 23F),
state that the prohibition on use of the benchmark under Article 23B will take effect when the designation of the benchmark takes effect, unless the FCA exercises its powers under Article 23B(2) or 23C,
inform the administrator of its right to refer the decision to the Upper Tribunal and of the procedure for doing so, and
provide any further information that the FCA considers appropriate for assisting supervised entities to understand the effects of the designation of the benchmark.
The FCA may, before a designation under this Article takes effect, decide to change when it takes effect to a later time.
If it decides to make such a change—
the FCA must give the benchmark administrator a written notice of its decision, and
the notice must satisfy the requirements in paragraph 5(a) to (d) and (f).
The FCA may withdraw a designation of a benchmark under this Article if—
the designation has not taken effect,
paragraph 1 applies again in relation to the benchmark, and
the FCA designates the benchmark again under this Article with effect from an earlier date.
If the FCA decides to withdraw the designation of a benchmark under paragraph 8—
the FCA must include notice of the withdrawal in the notice under paragraph 4 of the further designation of the benchmark, and
the notice must satisfy the requirements in paragraph 5(b), (c) and (f) in relation to the decision to withdraw.
A notice under paragraph 4 or 7—
may identify when the designation takes effect in any manner that the FCA considers appropriate, including by specifying a day or by describing a day by reference to the process for a reference to the Upper Tribunal or another process or event, and
must be published by the FCA—
before the day on which the notice provides for the designation to take effect, and
in the manner that appears to the FCA to be best calculated to bring it to the attention of the public.
The FCA—
must give a copy of a notice under this Article to the Treasury before publishing it, and
may charge a reasonable fee for providing a person with a copy of a notice under this Article.
If the FCA decides to designate a benchmark under this Article and gives the administrator a notice under paragraph 4, the benchmark administrator may refer the matter to the Upper Tribunal.
Part 9 of FSMA (hearings and appeals) applies in relation to references to the Upper Tribunal made under this Article as it applies in relation to references made to that Tribunal under that Act.
In this Regulation, references to an “Article 23A benchmark” are to a benchmark in relation to which a designation under this Article has effect.
In the Benchmarks Regulation, after Article 23A (inserted by section 13) insert—
Supervised entities must not use an Article 23A benchmark, except where permitted to do so under paragraph 2 or Article 23C.
The FCA may, by publishing a notice before the day on which the designation of the benchmark under Article 23A takes effect, provide that the prohibition in paragraph 1 does not take effect until a date specified in the notice.
The date specified in a notice under paragraph 2 must fall before the end of the period of four months beginning with the day on which the designation of the benchmark under Article 23A takes effect.
A notice published under this Article must be published in the way appearing to the FCA to be best calculated to bring it to the attention of—
supervised entities, and
the public.
The FCA may charge a reasonable fee for providing a person with a copy of a notice published under this Article.
This Article applies to an Article 23A benchmark.
The FCA may, by publishing a notice, permit some or all legacy use of the benchmark by supervised entities.
The FCA may, by publishing a notice, alter or withdraw a permission under paragraph 2.
The FCA may only exercise a power under paragraph 2 or 3 if it considers it desirable to do so in order to advance either or both of the following—
its consumer protection objective (see section 1C of FSMA);
its integrity objective (see section 1D of that Act).
In exercising a power under paragraph 2 or 3 in relation to a benchmark that is used outside the United Kingdom, the FCA may, among other things, have regard to the likely effect outside the United Kingdom of the exercise of the power.
A notice under this Article may—
make provision by reference to any aspect of the legacy use of the benchmark, including the persons involved in the use;
provide that the permission has effect only during a period specified in the notice;
make different provision for different purposes;
make such transitional provision as the FCA considers appropriate.
A notice under this Article must—
give reasons for the permission, or the alteration or withdrawal of permission,
specify when the permission, or the alteration or withdrawal, is to take effect,
explain how the FCA has taken account of the relevant policy statement (see Article 23F), and
provide any further information that the FCA considers appropriate for assisting supervised entities to understand the permission or the alteration or withdrawal of permission.
A notice under this Article must be published in the manner that appears to the FCA to be best calculated to bring it to the attention of—
supervised entities, and
the public.
The FCA—
must give a copy of a notice under this Article to the Treasury before publishing it, and
may charge a reasonable fee for providing a person with a copy of a notice published under this Article.
In this Article—
references to legacy use of a benchmark are to use that is not new use, and
“new use” has the same meaning, in connection with the prohibition under Article 23B, as it has in connection with a prohibition under Article 21A (see Article 21A(2) and (9)).
In the Benchmarks Regulation, after Article 23C (inserted by section 14) insert—
This Article applies to an Article 23A benchmark.
The FCA may by written notice impose requirements on the benchmark administrator relating to any of the following—
the way in which the benchmark is determined, including the input data,
rules of the benchmark, and
where the benchmark is based on submissions by contributors, the code of conduct referred to in Article 15.
The FCA may only exercise the powers under paragraph 2 if—
it considers it appropriate to do so having regard to the desirability of securing that the cessation of the benchmark takes place in an orderly fashion, and
it considers it desirable to do so in order to advance either or both of the following—
its consumer protection objective (see section 1C of FSMA);
its integrity objective (see section 1D of that Act).
In exercising a power under paragraph 2 in relation to a benchmark that is used outside the United Kingdom, the FCA may, among other things, have regard to the likely effect outside the United Kingdom of the exercise of the power.
The powers under paragraph 2—
may be exercised so as to confer a discretion on the administrator,
include power to specify when a requirement must be satisfied, and
include power to vary or withdraw a requirement from time to time.
The powers under paragraph 2 are not limited by the market or economic reality that was intended to be measured by the benchmark immediately before it became an Article 23A benchmark (as defined in the benchmark statement referred to in Article 27), although the FCA may have regard to that when exercising those powers.
A notice under paragraph 2 must—
explain the exercise of the power,
give reasons for the decision to exercise the power,
specify when the requirement (or variation or withdrawal of a requirement) is to take effect,
explain how the FCA has taken account of the relevant policy statement (see Article 23F), and
provide any further information that the FCA considers appropriate for assisting supervised entities to understand the effects of the exercise of the power.
The benchmark administrator may not change anything described in paragraph 2 unless—
the FCA requires it to do so, or gives it a discretion to do so, under paragraph 2, or
the FCA has given a written notice permitting it to do so and has not given a written notice withdrawing the permission.
A notice under paragraph 2 or 8(b) must be published as soon as reasonably practicable in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
The FCA—
must give a copy of a notice under paragraph 2 or 8(b) to the Treasury before publishing it, and
may charge a reasonable fee for providing a person with a copy of a notice under paragraph 2 or 8(b).
In relation to an Article 23A benchmark, this Regulation applies with the modifications specified in or under Annex 4 (and see also Articles 22A(1)(b) and 23(9A)).
In the Benchmarks Regulation, after Annex 3 insert—
This Regulation applies in relation to an Article 23A benchmark with—
the modifications listed in paragraph 2, and
any modifications specified in a notice given by the FCA to the benchmark administrator under paragraph 6.
The modifications referred to in paragraph 1(a) are the following—
Article 11(1) has effect as if—
point (a) were omitted, and
in point (d), the words “and representative” (in the first place they occur) and “and representative of the market or economic reality that the benchmark is intended to measure” were omitted;
point (a) in Article 27(1) has effect as if for “and the circumstances in which such measurement may become unreliable” there were substituted “ immediately before it became an Article 23A benchmark ”.
The FCA may, in accordance with paragraphs 4 to 9, provide that this Regulation applies to an Article 23A benchmark with modifications, where it considers it appropriate to do so having regard to the effects of the designation under Article 23A or the FCA's exercise of its powers under Article 23D(2) (or both).
If the FCA proposes that this Regulation should apply to an Article 23A benchmark with modifications, or that existing modifications applied by a notice under paragraph 6 should be varied, it must inform the benchmark administrator by written notice.
A notice under paragraph 4 must—
explain the proposed modifications or variations,
give reasons for the FCA's proposed decision, and
state that the administrator may make written representations to the FCA during the period of 14 days beginning with the day on which the notice is given.
If, after considering any representations made in accordance with paragraph 5(c), the FCA decides to make the proposed modifications or variations, it must give the administrator a written notice of its decision.
A notice under paragraph 6 must—
specify the modifications or variations,
give reasons for the FCA's decision, and
provide any further information that the FCA considers appropriate for assisting supervised entities to understand the effects of the modifications or variations.
A notice under paragraph 6 must be published as soon as reasonably practicable in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
The FCA—
must give a copy of a notice under paragraph 6 to the Treasury before publishing it, and
may charge a reasonable fee for providing a person with a copy of a notice published under this Annex.
Paragraphs 11 to 13 apply where the FCA gives the administrator of an Article 23A benchmark a notice under Article 23D(2) or (8)(b).
The FCA must, before the end of the period of three months beginning with the day on which it gave the notice referred to in paragraph 10, consider whether to exercise its power under paragraph 3 in relation to the benchmark.
During the interim period, the benchmark administrator is only required to comply with this Regulation to the extent that, taking account of the changes made by the notice referred to in paragraph 10, it remains reasonably practicable to do so.
In paragraph 12, “interim period” means a period beginning when the notice referred to in paragraph 10 is given and ending—
at the end of the three month period referred to in paragraph 11, if that period ends without the FCA giving a notice under paragraph 4, or
when the FCA, having given the administrator a notice under paragraph 4, gives the administrator —
a written notice that it has decided not to make the proposed modifications or variations, or
a notice under paragraph 6.
References in this Annex to varying modifications (however expressed) include removing or replacing some or all modifications.
In the Benchmarks Regulation, after Article 23D (inserted by section 15) insert—
Where the FCA has exercised a power under Article 23D(2) in relation to a benchmark, the FCA must, for each review period—
review its exercise of its powers under Article 23D(2) in relation to that benchmark during the period, and
publish a report setting out the outcome of the review.
For the purposes of paragraph 1, the review periods are—
the period of two years beginning with the day on which the first notice under Article 23D(2) relating to the benchmark is published, and
each subsequent period of two years, excluding the period in which the benchmark ceases to be provided and subsequent periods.
The FCA must publish a report under paragraph 1(b) as soon as reasonably practicable after the end of the review period.
Where the FCA, having exercised a power under Article 23D(2) in relation to a benchmark, exercises a power under Article 23D(2) again in relation to the benchmark, it must—
carry out a review of the most recent previous exercise of that power in relation to that benchmark, and
publish a report setting out the outcome of the review.
The FCA must take the action described in paragraph 4—
before its subsequent exercise of a power under Article 23D(2), where that is reasonably practicable, or
otherwise, as soon as reasonably practicable afterwards.
The FCA may fulfil the duty in paragraph 1 and satisfy paragraph 4 by means of the same review and report.
In a review under this Article, the FCA must—
consider whether the exercise of the power has advanced, or is likely to advance, the objectives mentioned in Article 23D(3)(b), and
have regard to the policy statement with respect to the exercise of its powers under Article 23D (see Article 23F).
A report published under this Article must be published in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
The FCA—
must give a copy of a report of a review under this Article to the Treasury before publishing it, and
may charge a reasonable fee for providing a person with a copy of a report published in accordance with this Article.
In the Benchmarks Regulation, after Article 23E (inserted by section 16) insert—
The FCA must prepare and publish a statement of its policy with respect to—
the exercise of its power under Article 21A,
the designation of benchmarks under Article 23A,
the exercise of its powers under Article 23C, and
the exercise of its powers under Article 23D.
The FCA—
may alter or replace a statement published under this Article, and
if it does so, must publish the altered or replacement statement.
A statement published under this Article must be published in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
The FCA—
must give a copy of a statement under this Article to the Treasury before publishing it, and
may charge a reasonable fee for providing a person with a copy of a statement published under this Article.
In making a decision under Article 23A, or exercising its powers under any of Article 21A, 23C or 23D, the FCA must have regard to any relevant statement of policy published under this Article and in force at the time.
The FCA's duty under Article 23F(1) of the Benchmarks Regulation (inserted by subsection (1)) to prepare and publish a statement may be satisfied by things done by the FCA before subsection (1) comes into force (as well as by things done after that time).
In the Benchmarks Regulation, after Article 23F (inserted by section 17) insert—
This Article makes provision about critical benchmarks provided for different currencies, maturities or tenors (“umbrella benchmarks”).
References in this Article to a “version” of an umbrella benchmark are to the benchmark as provided for a particular currency, maturity or tenor or, where the benchmark is provided for a combination of two or more of those factors, the benchmark as provided for each combination.
Articles 11(4), (4A) and (4B), 21, 21A, 22A, 22B, 23 and 23A to 23E and Annex 4 apply in relation to an umbrella benchmark as if each version of the umbrella benchmark were— subject to the modifications in paragraph 4.
a separate critical benchmark, and
intended to measure the market or economic reality defined in the benchmark statement for the umbrella benchmark (whether defined there separately for different versions of the benchmark or for the umbrella benchmark taken as a whole),
The modifications are as follows—
the reference in point (c) of Article 21(3) to the benchmark ceasing to be critical is a reference to the umbrella benchmark ceasing to be critical;
the reference in Article 22A(1)(a) to a benchmark being based on particular submissions is a reference to the umbrella benchmark, taken as a whole but disregarding any versions that are Article 23A benchmarks, being based on such submissions;
the benchmark administrator's duty under Article 22A(2) is a duty to submit an assessment dealing separately with each version of the umbrella benchmark;
the FCA's duty under Article 23E(1) is a duty to carry out a review of its exercise of its powers under Article 23D(2) in relation to each version of the umbrella benchmark (and the first review period begins when the first notice under Article 23D(2) relating to any version of the benchmark is published).
Notices given under the provisions listed in paragraph 3 may relate to one version, several versions or all versions of the umbrella benchmark.
The FCA may exercise its functions under Articles 21, 21A, 22A, 22B, 23 and 23A to 23E and paragraph 3 of Annex 4 in different ways in relation to different versions of the umbrella benchmark.
Nothing in this Article is to be interpreted as implying anything about the operation, in relation to umbrella benchmarks, of provisions of this Regulation not mentioned in this Article.
The Treasury may by regulations make provision about the operation of this Regulation in relation to umbrella benchmarks, including provision amending or revoking provisions of this Article (other than this paragraph).
In Article 49 of the Benchmarks Regulation (regulations made by the Treasury)—
after paragraph 2 insert—
Regulations made under Article 23G may not be made unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of each House of Parliament.
in paragraph 3, at the beginning insert “ Subject to paragraph 2A, ”.
Article 28 of the Benchmarks Regulation (changes to and cessation of a benchmark) is amended as follows.
In paragraph 1—
omit “, together with the benchmark statement referred to in Article 27,”,
for “a procedure” substitute “ a robust procedure ”, and
omit “and shall be updated and published whenever a material change occurs”.
After paragraph 1 insert—
The procedure described in paragraph 1—
must be published with the benchmark statement for the benchmark when that statement is published in accordance with the first or second subparagraph of Article 27(1), and
must be updated and published whenever a material change occurs.
In the case of a critical benchmark—
on the day on which a procedure described in paragraph 1 is published in accordance with paragraph 1A(a), the administrator must give the FCA an assessment of the matters described in paragraph 1C,
the FCA must, before the end of the consideration period, consider whether a procedure published in accordance with paragraph 1A(a) satisfies paragraph 1,
before publishing an update of a procedure described in paragraph 1 (whether in accordance with paragraph 1A(b) or otherwise), an administrator must give the update to the FCA, together with an assessment of the matters described in paragraph 1C,
where the FCA is given an update of a procedure described in paragraph 1 by an administrator, it must, before the end of the consideration period, consider whether the update satisfies paragraph 1, and
an administrator must not publish an update of a procedure described in paragraph 1 unless—
the FCA has given a written notice to the administrator confirming that the update satisfies paragraph 1, or
the consideration period has expired without the FCA giving a written notice to the administrator stating that the update does not satisfy that paragraph.
An assessment provided by an administrator for the purposes of paragraph 1B(a) or (c) must assess the following matters—
the nature and extent of the current use of the benchmark,
the availability of suitable alternatives to the benchmark, and
how prepared users of the benchmark are for changes to, or the cessation of, the benchmark.
For the purposes of paragraph 1B, “the consideration period”, in relation to a procedure or an update of a procedure, means the period of 60 days beginning with the day on which the procedure is published or the update of the procedure is given to the FCA (as appropriate) (“the relevant day”), subject to any extension under paragraph 1E.
The FCA may extend the consideration period by giving a written notice to the administrator before its expiry but may not extend the period beyond the end of the period of six months beginning with the relevant day.
Article 51(5) of the Benchmarks Regulation (transitional provision for benchmarks with administrators located in a country outside the UK) is amended as follows.
In point (a), for “31 December 2022” substitute “ 31 December 2025 ”.
In point (b)—
for “1 January 2023” substitute “ 1 January 2026 ”, and
for “31 December 2022” substitute “ 31 December 2025 ”.
Schedule 5 contains minor and consequential amendments of the Benchmarks Regulation.
Part 3 of the Financial Services and Markets Act 2000 (authorisation and exemption) is amended in accordance with subsections (2) to (4).
In section 31(1) (authorised persons), after paragraph (a) insert—
a Gibraltar-based person who has a Schedule 2A permission to carry on one or more regulated activities;
After section 32 insert—
The Treasury must, for each reporting period, prepare a report about the operation of Schedule 2A during the period.
The report must, among other things, consider whether the conditions in paragraphs 7, 8 and 9 of Schedule 2A continue to be satisfied in connection with each regulated activity which is an approved activity for the purposes of that Schedule.
The Treasury must consult the FCA and the PRA during the preparation of the report.
The Treasury must lay a copy of the report before Parliament as soon as reasonably practicable after the end of the reporting period.
The reporting periods are—
the period of two years beginning with the day on which Schedule 2A comes fully into force, and
each subsequent period of two years.
After section 36 insert—
Schedule 2B makes provision about the carrying on of activities corresponding to regulated activities in Gibraltar by UK-based persons.
Schedule 6 inserts Schedule 2A to the Financial Services and Markets Act 2000 (Gibraltar-based persons carrying on activities in the UK).
Schedule 7 inserts Schedule 2B to the Financial Services and Markets Act 2000 (UK-based persons carrying on activities in Gibraltar).
Schedule 8 contains minor and consequential amendments.
The Treasury may by regulations—
amend Part 7 of the Financial Services and Markets Act 2000 (control of business transfers) to make provision about the operation of that Part in relation to cases involving a Gibraltar-based person;
amend Part 18A of the Financial Services and Markets Act 2000 (suspension and removal of financial instruments from trading) to make provision about the operation of that Part in relation to cases involving a Gibraltar-based person;
make provision relating to a Gibraltar-based person equivalent to provision in an enactment in force immediately before IP completion day relating to an EEA firm of a kind mentioned in Schedule 3 to the Financial Services and Markets Act 2000, with such modifications as the Treasury consider appropriate.
The powers to make regulations under subsection (8) do not restrict the Treasury's power to make consequential provision under section 45.
Section 45(3) to (5) apply in relation to regulations under subsection (8) as they apply to regulations under that section.
In this section, “Gibraltar-based person” has the same meaning as in Schedule 2A to the Financial Services and Markets Act 2000 (inserted by Schedule 6 to this Act) (see paragraph 1 of that Schedule).
The Treasury may by regulations—
repeal or revoke relevant Gibraltar provision and make changes described in subsection (5),
make provision with the same effect as relevant Gibraltar provision repealed or revoked under paragraph (a),
amend relevant Gibraltar provision so as to restore any aspect of the effect the provision had immediately before IP completion day, and
replace or supplement relevant Gibraltar provision with provision substantially similar to, or to a provision of, section 32A of, or Schedule 2A or 2B to, the Financial Services and Markets Act 2000 (inserted by section 22 of, and Schedules 6 and 7 to, this Act).
In this section—
“Gibraltar provision” means a provision or set of provisions in an enactment so far as it relates to—
the carrying on of activities in the United Kingdom by persons based in Gibraltar,
the carrying on of activities in Gibraltar by persons based in the United Kingdom, or
interaction of any other kind between the United Kingdom and Gibraltar, whether relating to persons, activities, financial instruments, other property or other matters,
Gibraltar provision is “relevant” if—
it is a provision of, or applied or modified by, regulations listed in subsection (3),
it was inserted, amended or otherwise modified by regulations listed in subsection (4),
it is, or is the subject of, saving provision included in regulations listed in subsection (4), or
in the case of a set of provisions, it includes provision falling within sub-paragraph (ii) or (iii), and
Gibraltar provision is also “relevant” if it was made by regulations under subsection (1)(b), (c) or (d) or, in the case of a set of provisions, it includes provision made by such regulations.
The regulations referred to in subsection (2)(b)(i) are the following, as amended from time to time—
the Electronic Money Regulations 2011 (S.I. 2011/99);
the Payment Services Regulations 2017 (S.I. 2017/752);
the Data Reporting Services Regulations 2017 (S.I. 2017/699).
The regulations referred to in subsection (2)(b)(ii) and (iii) are the following, as amended from time to time—
regulation 3 of the Building Societies Legislation (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1187);
Parts 2 and 3 of the Credit Transfers and Direct Debits in Euro (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1199);
Part 2 of the Greenhouse Gas Emissions Trading Scheme (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/107);
Chapters 1 and 2 of Part 2 of the Alternative Investment Fund Managers (Amendment etc) (EU Exit) Regulations 2019 (S.I. 2019/328);
the Gibraltar (Miscellaneous Amendments) (EU Exit) Regulations 2019 (S.I. 2019/680).
The changes referred to in subsection (1)(a) are changes that the Treasury consider appropriate to secure that, after the repeal or revocation of the relevant Gibraltar provision, the same provision is made in connection with Gibraltar as is made in connection with most or all other countries or territories outside the United Kingdom.
The Treasury may not make regulations under subsection (1)(b), (c) or (d) unless they are satisfied that doing so is compatible with each of the following objectives—
to protect and enhance the soundness, stability and resilience of the UK financial system;
to protect and enhance public confidence in the UK financial system;
to prevent the use of the UK financial system for a purpose connected with financial crime;
to ensure that, in the United Kingdom, financial markets and significant markets for financial services function well;
to protect consumers;
to protect the operation of the Financial Services Compensation Scheme;
to protect public funds;
to maintain and improve relations between the United Kingdom and other countries and territories with significant financial markets or significant markets for financial services.
Before making regulations under subsection (1)(d), the Treasury must consult—
the government of Gibraltar,
the Financial Conduct Authority, and
the Prudential Regulation Authority.
The powers under subsection (1)(b), (c) and (d) include—
power to make such modifications as the Treasury consider appropriate having regard to changes in the law of any part of the United Kingdom since the relevant regulations listed in subsection (3) or (4) were made, and
power to restate relevant Gibraltar provision in a clearer or more accessible way.
Where provision saving or modifying a provision is repealed or revoked under subsection (1)(a), the power under subsection (1)(b) includes power to make provision with the same effect as the provision that was the subject of the saving or modification, read with the saving or modification.
The power under subsection (1)(d) includes power to make provision applying provisions of section 32A of, or Schedule 2A or 2B to, the Financial Services and Markets Act 2000, with or without modifications.
Regulations under this section may—
make different provision for different purposes;
confer functions on a person, including functions involving the exercise of a discretion;
amend, revoke, repeal or otherwise modify an enactment;
make consequential, incidental, supplementary, transitional, transitory or saving provision.
Regulations under this section are subject to the affirmative procedure.
For the purposes of this section, provision that is saved or modified by regulations listed in subsection (3) or (4) is Gibraltar provision if, when read with the saving or modification, it relates to a matter described in subsection (2)(a).
In this section—
In Part 17 of the Financial Services and Markets Act 2000 (collective investment schemes), in section 237(3)—
in the definition of “a recognised scheme”, after “means” insert “ a section 271A scheme or ”, and
after that definition insert—
In Schedule 9—
Part 1 inserts sections 271A to 271S (collective investment schemes authorised in approved countries or territories) in Chapter 5 of Part 17 of the Financial Services and Markets Act 2000 (recognised overseas schemes), and
Part 2 contains minor and consequential amendments.
The Financial Services and Markets Act 2000 is amended as follows.
Chapter 5 of Part 17 (recognised overseas schemes) is amended in accordance with subsections (3) to (5).
In section 272 (individually recognised overseas schemes)—
in subsection (1)—
in paragraph (a) omit the “and” at the end,
before paragraph (d) insert—
does not have the benefit of section 271A, and
in paragraph (d), for “the following provisions of this section” substitute “ subsections (2) to (15) ”,
after that subsection insert—
For the purposes of subsection (1)(ca), a collective investment scheme has the benefit of section 271A if—
it is authorised under the law of a country or territory which is for the time being approved by regulations under section 271A, and
it falls within a description of schemes specified in the regulations.
in subsection (5)(b) omit “, or could be,”.
In section 277 (requirement to notify the FCA of proposed alteration to recognised scheme)—
in subsection (1), at the end insert “ which, if made, would be a material alteration ”,
in subsection (3) omit “At least one month”,
after that subsection insert—
A notice under subsection (3) must be given—
at least one month before the proposed replacement, or
if that is not reasonably practicable, as soon as is reasonably practicable in the period of one month before the proposed replacement.
The operator of such a scheme must give written notice to the FCA, as soon as reasonably practicable, of any change to—
the name or address of the operator of the scheme,
the name or address of any trustee or depositary of the scheme,
the name or address of any representative of the operator in the United Kingdom, and
the address of the place in the United Kingdom for service of notices, or other documents, required or authorised to be served on the operator under this Act.
after subsection (5) insert—
The FCA may make rules specifying when a proposed alteration is a material alteration for the purposes of subsection (1).
After section 282 insert—
This section applies where—
the FCA gives a decision notice under section 280(2) in relation to a scheme recognised under section 272, or
a direction given by the FCA under section 281(2) in relation to such a scheme takes effect.
The operator of the scheme must notify such persons as the FCA may direct that the FCA has revoked an order under section 272 for recognition of the scheme or given a direction under section 281 in relation to the scheme (as applicable).
A notification under subsection (2) that relates to a direction under section 281 must set out the terms of the direction.
A notification under subsection (2) must—
contain such information as the FCA may direct, and
be made in such form and manner as the FCA may direct.
Different directions may be given under subsection (2) or (4) in relation to—
different schemes or different descriptions of schemes;
different persons or descriptions of persons to whom a notification under subsection (2) must be given.
This section applies where the FCA considers that—
rules made under section 278 have been contravened,
the operator of a scheme recognised under section 272 has contravened section 277, 277A or 282A, or
the operator of a scheme recognised under section 272 has contravened a rule made, or a requirement imposed, under section 283.
The FCA may publish a statement to that effect.
Where the FCA proposes to publish a statement under subsection (2) in relation to a scheme or the operator of a scheme, it must give the operator a warning notice setting out the terms of the statement.
If the FCA decides to publish the statement—
it must give the operator, without delay, a decision notice setting out the terms of the statement, and
the operator may refer the matter to the Tribunal.
After a statement under subsection (2) is published, the FCA must send a copy of it to the operator and to any person to whom a copy of the decision notice was given under section 393(4).
Section 272(1) applies in relation to a part of a collective investment scheme as it applies in relation to such a scheme.
Accordingly, the following include a part of a scheme recognised under section 272—
the reference to a scheme recognised under section 272 in the definition of “recognised scheme” in section 237(3), and
other references to such a scheme (however expressed) in or in provision made under this Part of this Act (unless the contrary intention appears).
Provisions of or made under this Part of this Act have effect in relation to parts of schemes recognised, or seeking recognition, under section 272 with appropriate modifications.
The Treasury may by regulations—
make provision about what are, or are not, appropriate modifications for the purposes of subsection (3);
make provision so that a relevant enactment has effect in relation to parts of schemes recognised, or seeking recognition, under section 272 with such modifications as the Treasury consider appropriate;
make provision so that a relevant enactment does not have effect in relation to such parts of schemes.
Regulations under subsection (4)(b) or (c) may amend, repeal or revoke an enactment.
In this section—
In section 237(3), in the definition of “a recognised scheme”, at the end insert “ (and see also section 282C) ”.
In section 392 (application of third party rights to notices)—
in paragraph (a), after “280(1),” insert “ 282B(3), ”, and
in paragraph (b), after “280(2),” insert “ 282B(4), ”.
In section 429(2) (regulations subject to affirmative procedure), before “284A” insert “ 282C, ”.
Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds is amended as follows.
In Article 4 (authorisation of MMFs)—
in paragraph 1, after point (a) insert—
it is authorised and supervised in a country or territory approved by regulations under Article 4A and satisfies the condition in paragraph 1ZA;
after paragraph 1 insert—
An undertaking satisfies the condition in this paragraph if the FCA has received written notification that the undertaking intends to be marketed in the United Kingdom as an MMF.
A notification under paragraph 1ZA must—
be made by such person, and in such form and manner, as the FCA may direct, and
contain or be accompanied by such information as the FCA may direct.
Different directions may be given under paragraph 1ZB in relation to different undertakings or categories of undertaking.
After Article 4 insert—
The Treasury may make regulations for the purposes of Article 4(1)(aa) approving a country or territory in relation to MMFs.
The Treasury may not make regulations under paragraph 1 unless satisfied that the law and practice of the country or territory imposes requirements on MMFs which have equivalent effect to the requirements imposed by this Regulation.
In making regulations under this Article, the Treasury may have regard to any matter that they consider relevant.
When considering whether to make, vary or revoke regulations under this Article, the Treasury may ask the FCA to prepare a report on the law and practice of the country or territory under which MMFs are authorised and supervised, or particular aspects of such law and practice.
A request for a report under paragraph 4 must be made in writing.
If the Treasury ask for a report under paragraph 4, the FCA must provide the Treasury with the report.
In Article 6(1) (use of designation as MMF), in each subparagraph, after point (a) insert—
the UCITS or AIF is authorised and supervised in a country or territory approved by regulations under Article 4A and satisfies the condition in Article 4(1ZA); or
Schedule 10 contains amendments of the Markets in Financial Instruments Regulation relating to the provision of investment services, and the performance of investment activities, in the United Kingdom by third country firms.
In this section and Schedule 10, “the Markets in Financial Instruments Regulation” means Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments.
Schedule 11 amends Part 4A of the Financial Services and Markets Act 2000 (permission to carry on regulated activities) and other provisions in that Act for connected purposes.
The Financial Conduct Authority must carry out a public consultation about whether it should make general rules providing that authorised persons owe a duty of care to consumers.
The consultation must include consultation about—
whether the Financial Conduct Authority should make other provision in general rules about the level of care that must be provided to consumers by authorised persons, either instead of or in addition to a duty of care,
whether a duty of care should be owed, or other provision should apply, to all consumers or to particular classes of consumer, and
the extent to which a duty of care, or other provision, would advance the Financial Conduct Authority's consumer protection objective (see section 1C of the Financial Services and Markets Act 2000).
The Financial Conduct Authority—
must carry out the consultation, and publish its analysis of the responses, before 1 January 2022, and
must, before 1 August 2022, make such general rules about the level of care that must be provided to consumers, or particular classes of consumer, by authorised persons as it considers appropriate, having regard to that analysis.
The duties to consult under this section may be satisfied by consultation carried out after 1 January 2021 but before this section comes into force (as well as by consultation carried out after this section comes into force).
In this section—
Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse is amended as follows.
In Article 18 (insider lists)—
in paragraph 1, in the opening words—
for “or any person” substitute “ , and any person ”, and
after “shall” insert “ each ”,
in paragraph 2, in the first subparagraph—
for “or any person” substitute “ , and any person ”,
after “shall” insert “ each ”, and
for “the insider list” substitute “ their insider list ”,
in paragraph 2, for the second subparagraph substitute—
in paragraph 4—
for “or any person” substitute “ , and any person ”, and
for “shall update the” substitute “ , shall each update their ”, and
in paragraph 5—
for “or any person” substitute “ , and any person ”, and
for “shall retain the” substitute “ , shall each retain their ”.
In Article 19 (managers' transactions)—
in paragraph 1, in the second subparagraph, for “business days” substitute “ working days ”,
in paragraph 3, in the first subparagraph, for the words from the beginning to “transaction” substitute “ The issuer or emission allowance market participant must make public the information contained in a notification referred to in paragraph 1 within two working days of receipt of such a notification ”, and
at the end insert—
In this Article, “working day” means a day other than—
Saturday or Sunday,
Christmas Day or Good Friday, or
a day which is a bank holiday in England and Wales under the Banking and Financial Dealings Act 1971.
In section 61(1)(b) of the Criminal Justice Act 1993 (penalty for conviction on indictment for insider dealing), for “seven years” substitute “ ten years ”.
In section 92(1)(b) of the Financial Services Act 2012 (penalty for conviction on indictment for financial services offences), for “7 years” substitute “ 10 years ”.
The amendment made by subsection (1) or (2) does not apply in relation to offences committed before the subsection comes into force.
Where an offence is found to have been committed over a period of 2 or more days, or at some time during a period of 2 or more days, it must be taken for the purposes of subsection (3) to have been committed on the first of those days.
Part 7 of the Proceeds of Crime Act 2002 (money laundering) is amended in accordance with subsections (2) to (6).
In section 327(2C) (conversion or transfer of criminal property: exceptions), after “deposit-taking body” insert “ , electronic money institution or payment institution ”.
In section 328(5) (arrangements: exceptions), after “deposit-taking body” insert “ , electronic money institution or payment institution ”.
In section 329(2C) (acquisition, use and possession: exceptions), after “deposit-taking body” insert “ , electronic money institution or payment institution ”.
In section 339A (threshold amounts)—
in subsection (2), after “deposit-taking body” insert “ , electronic money institution or payment institution ”,
in subsection (3), in the opening words, after “deposit-taking body” insert “ , electronic money institution or payment institution ”,
in subsection (3)(a), for “deposit-taking body's” substitute “body's or institution's”,
in subsection (3)(b), for “deposit-taking body” substitute “ body or institution ”,
in subsection (4), after “deposit-taking body” insert “ , electronic money institution or payment institution ”, and
in subsection (8)—
after “deposit-taking body” insert “ , electronic money institution or payment institution ”, and
after “the body” insert “ or institution ”.
In section 340 (interpretation)—
in subsection (14)—
omit “or” at the end of paragraph (a), and
after paragraph (b) insert
a person specified, or of a description specified, in regulations made by the Treasury or the Secretary of State.
after subsection (14) insert—
In subsection (14)(a)—
the reference to the activity of accepting deposits is a reference to that activity so far as it is, for the time being, a regulated activity for the purposes of the Financial Services and Markets Act 2000 by virtue of an order under section 22 of that Act, but
the reference to a business which engages in that activity does not include a person specified, or of a description specified, in regulations made by the Treasury or the Secretary of State.
Before making regulations under subsection (14A)(b), the Treasury or the Secretary of State (as appropriate) must consult such persons likely to be affected by the regulations, or such representatives of such persons, as they consider appropriate.
“Electronic money institution” has the same meaning as in the Electronic Money Regulations 2011 (S.I. 2011/99) (see regulation 2 of those Regulations).
at the end insert—
“Payment institution” means an authorised payment institution or a small payment institution (each as defined in regulation 2 of the Payment Services Regulations 2017 (S.I. 2017/752)).
In section 459 of the Proceeds of Crime Act 2002 (orders and regulations)—
in subsection (4), before paragraph (aa), insert—
regulations under section 340(14)(c) or (14A)(b),
before subsection (6A) insert—
No regulations may be made by the Treasury or the Secretary of State under section 340(14)(c) or (14A)(b) unless a draft of the regulations has been laid before Parliament and approved by a resolution of each House.
in subsection (6A), before “would” insert “ or of regulations under section 340(14)(c) or (14A)(b) ”.
Schedule 12 amends provisions in the Anti-terrorism, Crime and Security Act 2001 and the Proceeds of Crime Act 2002 about the forfeiture of money so that they apply to money held in accounts maintained with electronic money institutions and payment institutions.
Subject to subsection (3), the amendments made by that Schedule are to be treated as having come into force at the same time as the provisions they amend.
Subsection (2) does not apply to the amendments of Part 5 of the Proceeds of Crime Act 2002 as they extend to Northern Ireland.
Regulations made, before this section comes into force, under— apply (and are to be treated as having always applied) for the purposes of notices relating to money held in accounts maintained with electronic money institutions and payment institutions, as well as for the purposes of notices relating to money held in accounts maintained with banks and building societies.
paragraph 10X of Schedule 1 to the Anti-Terrorism, Crime and Security Act 2001, or
section 303Z10 of the Proceeds of Crime Act 2002,
Schedule 2 to the Sanctions and Anti-Money Laundering Act 2018 (money laundering and terrorist financing: further provision about section 49 regulations) is amended as follows.
In paragraph 22(2) (extra-territorial application of section 49 regulations: meaning of “United Kingdom person”)—
in paragraph (b), omit the “or” at the end, and
after paragraph (c) insert
a person—
who does not fall within any of paragraphs (a) to (c), and
who is a trustee with links to the United Kingdom (see paragraph 22A).
After paragraph 22 insert—
Sub-paragraphs (2) and (3) have effect for the purposes of paragraph 22(2)(d).
A person who is a trustee of a trust has links to the United Kingdom if—
any property subject to the trust is situated in the United Kingdom,
a trustee of the trust enters into a business, professional or commercial relationship with a relevant person, or
the income of the trust includes income which, directly or indirectly, is from a source in the United Kingdom.
A person who is a trustee of a trust also has links to the United Kingdom if—
at least one other person is a trustee of the trust,
the other trustee (or at least one of the other trustees if the trust has more than two trustees) is resident in the United Kingdom, and
a person makes, at a time when the person is resident in the United Kingdom, a gift of property which becomes subject to the trust.
In this paragraph “property” has the meaning given by section 436 of the Insolvency Act 1986.
In section 6(2)(c) of the Financial Guidance and Claims Act 2018 (debt respite scheme), omit “and their creditors”.
In section 7 of that Act (debt respite scheme: regulations), after subsection (4) insert—
The regulations may include the following as part of the scheme so far as it applies in England and Wales—
provision about the involvement of creditors in the process of devising a plan for the repayment of some or all of an individual's debts;
provision to protect an individual, during the period of a repayment plan, from being required to repay a debt to which the plan applies otherwise than in accordance with the plan;
provision for an amount payable in respect of a debt in accordance with a repayment plan—
to be payable instead towards the costs of operating the repayment plan, other repayment plans or the debt respite scheme, and
to be treated, so far as paid towards those costs, as permanently reducing a debt to which the plan applies.
In section 7(5) of that Act, after paragraph (b) insert—
make provision binding the Crown,
The amendment in subsection (1) does not have the effect that further advice on the establishment of a debt respite scheme has to be sought, provided or published under section 6(1), (4) or (5) of the Financial Guidance and Claims Act 2018 (such advice having been sought, provided and published in accordance with those provisions before the day on which this Act is passed).
In Schedule 2 to the Savings (Government Contributions) Act 2017 (Help-to-Save accounts), after paragraph 13 insert—
In this paragraph “matured account” means an account provided by the Director of Savings which has been, but has ceased to be, a Help-to-Save account.
Treasury regulations may make provision for, or in connection with, the transfer of the balance in a matured account to another account provided by the Director of Savings (a “successor account”).
Regulations under sub-paragraph (2) must require the successor account to be an account in the National Savings Bank.
Regulations under sub-paragraph (2) may not include provision for a transfer which overrides an instruction for dealing with the balance in a matured account where—
the instruction is given by, or by a person acting on behalf of, the individual for whom the matured account was opened, and
the Director of Savings receives the instruction before the transfer is made and considers that it is reasonably practicable to implement it.
Regulations under sub-paragraph (2) may make provision about the balance in a matured account opened before the regulations are made.
Where regulations under sub-paragraph (2) provide for a transfer from a matured account to a successor account—
the successor account may be a new or existing account, and
no charge for the transfer may be imposed on the individual for whom the matured account was opened.
This section applies on or at any time after the making of an order under section 22 of the Financial Services and Markets Act 2000, after this section comes into force, which has the effect that a relevant credit activity becomes a regulated activity for the purposes of that Act.
Section 107(6) of the Financial Services Act 2012 (power to make provision about the application of the Consumer Credit Act 1974) has effect as if—
the reference to an order of the kind mentioned in subsection (1) of that section included an order of the kind mentioned in subsection (1) of this section, and
the references to a transferred activity included a relevant credit activity which is the subject of an order of the kind mentioned in subsection (1) of this section.
“Relevant credit activity” means the activity of— so far as the activity is not a transferred activity (as defined in section 107(1) of the Financial Services Act 2012).
entering into an agreement described in article 60F(2) or (3) of the Regulated Activities Order (certain borrower-lender-supplier agreements for fixed-sum credit or running-account credit) as lender, or
exercising, or having the right to exercise, the lender's rights and duties under such an agreement,
“The Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) as it has effect on the passing of this Act.
In this section “the PRIIPs Regulation” means Regulation (EU) No. 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs).
After Article 4 of the PRIIPs Regulation insert—
The FCA may make rules specifying whether or not a product, or category of product, falls within the definition of a PRIIP for the purposes of this Regulation.
The provisions of Part 9A of FSMA listed in paragraph 3 apply to rules made under this Article as they apply to rules made by the FCA under that Act, subject to the modifications in that paragraph (if any).
The provisions are—
section 137T (general supplementary powers), as if—
the reference in paragraph (a) to authorised persons were a reference to persons, and
paragraph (b) were omitted;
section 138F (notification of rules), as if subsection (2) were omitted;
section 138G (rule-making instruments);
section 138I (consultation by the FCA), as if—
subsection (1)(a) (and the “and” after it) were omitted,
in subsection (1)(b), “after doing so,” were omitted,
in subsection (2), paragraphs (c) and (d) were omitted, and
subsections (5)(b) and (10) were omitted;
section 138L (consultation: general exemptions), as if—
in subsection (1), for “Sections 138I(1)(b) and (2) to (5) and 138K do” there were substituted “ Section 138I(1)(b) and (2) to (5) does ”,
subsections (2) and (4)(b) were omitted,
in subsection (5)(a), “or 138J(2)(a)” were omitted, and
in subsection (5)(b), “or 138J(5)(a)” were omitted;
section 141A (power to make consequential amendments of references to rules etc).
Any requirement that arises by virtue of Article 4A(3)(d) of the PRIIPs Regulation, as inserted by subsection (2), may be satisfied by things done before that subsection comes into force (as well as by things done after that time).
In paragraph 3 of Article 8 of the PRIIPs Regulation (information to be contained in key information document), in point (d)(iii), for “performance scenarios and the assumptions made to produce them” substitute “ information on performance ”.
The Treasury may by regulations substitute a later date for the date that is for the time being mentioned in Article 32(1) of the PRIIPs Regulation (exemption of UCITS).
The date as substituted under subsection (5) must be no later than 31 December 2026.
Regulations under subsection (5) are subject to the negative procedure.
In Article 28 of Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (data protection), omit “Personal data is to be retained for a maximum period of five years.”
Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (the “European Market Infrastructure Regulation”) is amended as follows.
In Article 4 (clearing obligation)—
after paragraph 3 insert—
Clearing members and clients which provide clearing services, whether directly or indirectly, must—
provide those services under fair, reasonable, non-discriminatory and transparent commercial terms, and
take all reasonable measures to identify, prevent, manage and monitor conflicts of interest, in particular between the trading unit and the clearing unit, that may adversely affect the fair, reasonable, non-discriminatory and transparent provision of clearing services.
The duty under paragraph 3A(a)—
does not oblige clearing members or clients to contract, and
does not prevent clearing members or clients from taking steps to control the risks related to the clearing services offered.
The duty to take the measures described in paragraph 3A(b) includes a duty to do so where trading and clearing services are provided by different legal entities belonging to the same group.
The duties under paragraph 3A (read with paragraphs 3B and 3C) apply in relation to an undertaking with an indirect contractual arrangement with a clearing member of a CCP which enables that undertaking to clear its transactions with a CCP as they apply in relation to a client.
after paragraph 4 insert—
The FCA may make rules specifying the conditions under which the commercial terms referred to in paragraph 3A(a) are to be considered fair, reasonable, non-discriminatory and transparent.
In Article 78 (general requirements), at the end insert—
A trade repository must establish the following procedures and policies—
procedures for the effective reconciliation of data between trade repositories;
procedures to verify the completeness and correctness of the data reported;
policies for the orderly transfer of data to other trade repositories where requested by the counterparties or CCPs referred to in Article 9 or where otherwise necessary.
The FCA may make rules applying to trade repositories relating to—
procedures described in paragraph 9(a) and (b),
procedures to be applied to verify compliance by counterparties and CCPs with the reporting obligation under Article 9, and
policies described in paragraph 9(c).
After Article 84a insert—
The provisions of Part 9A of FSMA (rules and guidance) listed in paragraph 2 apply in relation to rules made by the FCA under Article 4(4A) or 78(10) as they apply in relation to rules made by the FCA under that Part of that Act, subject to the modification in paragraph 3.
The provisions are—
section 137T (general supplementary powers);
section 138C (evidential provision);
section 138E (limits on effect of contravening rules);
sections 138F, 138G and 138H (notification and verification etc);
sections 138I and 138L (consultation);
section 141A (power to make consequential amendments of references to rules).
Section 137T applies as if the reference to authorised persons were—
for the purposes of rules made under Article 4(4A), a reference to clearing members, clients and undertakings described in Article 4(3D), and
for the purposes of rules made under Article 78(10), a reference to trade repositories.
The requirements of section 138I of the Financial Services and Markets Act 2000, in so far as they apply in connection with rules made under Article 4(4A) or 78(10) of the European Market Infrastructure Regulation, may be satisfied by things done before the relevant provision of this section comes into force (as well as by things done after that time).
The Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226) as originally made, and all amendments made to them, have effect, and are to be treated as having had effect, despite any lack of power to make the regulations and amendments.
Accordingly, the validity of anything done under or in reliance on those regulations (whether as originally made or as amended) is to be treated as unaffected by any such lack of power.
The Banking Act 2009 is amended in accordance with subsections (4) to (6).
In section 255 (regulations about financial collateral arrangements)—
in subsection (3)(b) omit “or purported to be done”,
omit subsection (5), and
after that subsection insert—
Regulations under this section are to be made by statutory instrument.
A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.
Section 41 of the Financial Services Act 2021 makes further provision in relation to the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226).
Omit section 256 (procedure for making regulations under section 255).
In the table in section 259(3) (procedure applying to statutory instruments), in the entry for section 255, for “affirmative resolution” substitute “ draft affirmative resolution ”.
Schedule 1ZA to the Financial Services and Markets Act 2000 (Financial Conduct Authority) is amended as follows.
In paragraph 2A—
after sub-paragraph (1) insert—
Appointment as chief executive under paragraph 2(2)(b) is to be for a period of 5 years.
in sub-paragraph (2), for “Sub-paragraph (1) does” substitute “ Sub-paragraphs (1) and (1A) do ”.
After paragraph 2A insert—
A person may not be appointed as chief executive under paragraph 2(2)(b) more than twice.
For this purpose an appointment as chief executive on an acting basis, pending a further appointment being made, is to be ignored.
The Financial Services and Markets Act 2000 is amended as follows.
In section 425C (“qualifying provision”)—
the existing text becomes subsection (1),
after paragraph (b) of that subsection insert—
other subordinate legislation made under retained direct EU legislation;
in paragraph (c) of that subsection omit “(within the meaning of the Interpretation Act 1978)”, and
after that subsection insert—
In this section, “subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act).
In paragraph 8(3) of Schedule 1ZA (Financial Conduct Authority's arrangements for discharging functions: legislative functions), in paragraph (a), after “rules” insert “ under this Act or under retained direct EU legislation ”.
In Part 2 of Schedule 1 to the Payment Services Regulations (S.I. 2017/752) (activities which do not constitute payment services), after paragraph 2 insert—
The provision of cash otherwise than through an automatic teller machine does not constitute a payment service where—
there is a transfer of a corresponding amount from a payment account held by the recipient of the cash to a relevant person, and
the payment account is not provided by a relevant person.
In sub-paragraph (1), “relevant person” means—
where the cash is provided by a person (“P1”) through one or more persons acting on P1's behalf, P1 and each person acting (directly or indirectly) on P1's behalf;
where the cash is provided by a person (“P2”) otherwise than on behalf of another person or through one or more persons acting on P2's behalf, P2.
The execution of the transfer referred to in sub-paragraph (1)(a), and other services enabling that transfer, are not excluded from the meaning of payment services by this paragraph.
The Treasury may by regulations make provision that is consequential on any provision made by this Act.
The Secretary of State may by regulations make provision that is consequential on provision made by section 32 or 33 or Schedule 12.
Regulations under this section may—
make different provision for different purposes;
include transitional, transitory or saving provision;
amend, repeal, revoke or otherwise modify an enactment.
Regulations under this section are subject to the affirmative procedure if they amend, repeal or revoke any provision of—
an Act,
retained direct principal EU legislation,
a Measure or Act of Senedd Cymru,
an Act of the Scottish Parliament, or
Northern Ireland legislation.
Regulations under this section to which subsection (4) does not apply are subject to the negative procedure.
Regulations under this Act are to be made by statutory instrument.
Where regulations under this Act are subject to “the negative procedure”, the statutory instrument containing the regulations is subject to annulment in pursuance of a resolution of either House of Parliament.
Where regulations under this Act are subject to “the affirmative procedure”, the regulations may not be made unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of each House of Parliament.
Any provision that may be included in regulations under this Act subject to the negative procedure may be made by regulations subject to the affirmative procedure.
In this Act—
This Act extends to England and Wales, Scotland and Northern Ireland, subject to subsections (2) and (3).
In section 35—
subsections (1), (2) and (4) extend to England and Wales only, and
subsection (3) extends to England and Wales and Northern Ireland only.
In Schedule 12, paragraph 14(4) extends to Northern Ireland only.
The power under section 79(10) of the Criminal Justice Act 1993 may be exercised so as to extend to any of the British overseas territories the amendment of that Act made by section 31 of this Act (with or without exceptions or modifications).
The power under section 430(3) of the Financial Services and Markets Act 2000 may be exercised so as to extend to any of the Channel Islands or the Isle of Man any amendment or repeal made by or under this Act of any part of that Act (with or without modifications).
This section and the following provisions come into force on the day on which this Act is passed—
section 33 and Schedule 12, except for paragraphs 10 to 21 of that Schedule as they extend to Northern Ireland,
section 36,
section 41,
section 45,
section 46,
section 47,
section 48, and
section 50.
The following provisions come into force at the end of the period of two months beginning with the day on which this Act is passed—
section 30,
section 32,
section 35,
section 42, and
section 44.
Paragraphs 10 to 21 of Schedule 12 as they extend to Northern Ireland come into force on such day as the Treasury or the Secretary of State may by regulations appoint.
Section 34 comes into force on such day as the Treasury or the Secretary of State may by regulations appoint.
The other provisions of this Act come into force on such day as the Treasury may by regulations appoint.
Regulations under subsection (3), (4) or (5) may appoint different days for different purposes.
The Treasury or the Secretary of State may by regulations make transitional, transitory or saving provision in connection with the coming into force of a provision of this Act.
Regulations under subsection (7) may make different provision for different purposes.
This Act may be cited as the Financial Services Act 2021.
Section 1
The Capital Requirements Regulation is amended as follows.
Article 4(1) (definitions) is amended as follows.
Omit point (4) (definition of “local firm”).
After point (22) insert—
‘investment holding company’ means a financial institution which is not a financial holding company and whose subsidiaries—
are exclusively or mainly investment firms or financial institutions, and
include at least one investment firm;
In point (26) (definition of “financial institution”)—
after “including” insert “ an investment firm, ”, and
after “a mixed financial holding company,” insert “ an investment holding company, ”.
For point (29a) substitute—
‘UK parent investment firm’ means a parent undertaking in the United Kingdom that is an investment firm;
For point (51) substitute—
‘initial capital’, in relation to an institution, means the amount and types of own funds specified in rule 12.1 of the Definition of Capital Part of the PRA rulebook;
In point (60) (definition of “cash assimilated instrument”), after “institution” (in each place) insert “ or investment firm ”.
Article 4A (definitions: regulators' rules) is amended as follows.
In paragraph 1(b) (references to FCA sourcebook), for “as the sourcebook has effect on IP completion day” substitute “ as amended from time to time ”.
At the end insert—
In this Regulation, “Part 9C rules” has the same meaning as in FSMA (see section 417 of that Act).
For Article 4B substitute—
Before Article 11 (and the Section and Chapter headings before it) insert—
Omit Article 15 (derogation from the application of own funds requirements on a consolidated basis for groups of investment firms).
Omit Article 16 (derogation from the application of the leverage ratio requirements on a consolidated basis for groups of investment firms).
Omit Article 17 (supervision of investment firms waived from the application of own funds requirements on a consolidated basis).
In Article 47c(5) (deduction for non-performing exposures), omit “and the FCA”.
In Article 49(6) (requirement for deduction where consolidation, supplementary supervision or institutional protection schemes are applied) omit “and Annex 1 of Chapter 3 of the FCA General Prudential sourcebook”.
Article 81(1)(a) (minority interests that qualify for inclusion in consolidated Common Equity Tier 1 capital) is amended as follows.
After point (ii) insert—
an intermediate financial holding company or intermediate mixed financial holding company that is subject to the requirements of this Regulation on a sub-consolidated basis;
an intermediate investment holding company that is subject to the requirements of Part 9C rules on a consolidated basis;
an FCA investment firm;
In point (iii)—
after “subject to prudential requirements” insert “ which are ”,
for “where” substitute “ which ”, and
omit “that those prudential requirements”.
Article 82(a) (Qualifying Additional Tier 1, Tier 1, Tier 2 capital and qualifying own funds) is amended as follows.
After point (ii) insert—
an intermediate financial holding company or intermediate mixed financial holding company that is subject to the requirements of this Regulation on a sub-consolidated basis;
an intermediate investment holding company that is subject to the requirements of Part 9C rules on a consolidated basis;
an FCA investment firm;
In point (iii)—
after “subject to prudential requirements” insert “ which are ”,
for “where” substitute “ which ”, and
omit “that those prudential requirements”.
Article 84 (minority interests included in consolidated Common Equity Tier 1 capital) is amended as follows.
In paragraph 1(a), for point (i) substitute—
the amount of Common Equity Tier 1 capital of that subsidiary required to meet the following:
In paragraph 3—
for “a competent authority” substitute “ the PRA ”, and
for “interest” substitute “ interests ”.
After paragraph 3 insert—
Where Part 9C rules provide that, in relation to any subsidiaries which are FCA investment firms, the calculation referred to in paragraph 1 is to be undertaken on a consolidated basis so as to include those subsidiaries, minority interests within those subsidiaries shall not be recognised in own funds at the sub-consolidated or consolidated level, as applicable.
Article 85 (qualifying Tier 1 instruments included in consolidated Tier 1 capital) is amended as follows.
In paragraph 1(a), for point (i) substitute—
the amount of Tier 1 capital of the subsidiary required to meet the following:
In paragraph 3, for “a competent authority” substitute “ the PRA ”.
After paragraph 3 insert—
Where Part 9C rules provide that, in relation to any subsidiaries which are FCA investment firms, the calculation referred to in paragraph 1 is to be undertaken on a consolidated basis so as to include those subsidiaries, Tier 1 instruments within those subsidiaries shall not be recognised in own funds at the sub-consolidated or consolidated level, as applicable.
Article 87 (qualifying own funds included in consolidated own funds) is amended as follows.
In paragraph 1(a), for point (i) substitute—
the amount of own funds of the subsidiary required to meet the following—
In paragraph 3, for “a competent authority” substitute “ the PRA ”.
After paragraph 3 insert—
Where Part 9C rules provide that, in relation to any subsidiaries which are FCA investment firms, the calculation referred to in paragraph 1 is to be undertaken on a consolidated basis so as to include those subsidiaries, own funds instruments within those subsidiaries shall not be recognised in own funds at the sub-consolidated or consolidated level, as applicable.
In Article 93 (initial capital requirement on going concern)—
omit paragraph 3,
in paragraphs 4 and 5, omit “or 3”, and
in paragraph 6, for “2 to 5” substitute “ 2, 4 and 5 ”.
Omit Article 95 (own funds requirements for investment firms with limited authorisation to provide investment services).
Omit Article 96 (own funds requirements for IFPRU 730k firms).
Omit Article 97 (own funds based on fixed overheads).
Omit Article 98 (own funds for investment firms on a consolidated basis).
In Article 100 (additional reporting requirements), in the second subparagraph, for “The FCA or the PRA (as the case may be)” substitute “ The PRA ”.
In Article 115(2) (exposures to regional governments or local authorities), in the second subparagraph, omit “and FCA”.
In Article 119 (exposures to institutions), after paragraph 5 insert—
For the purposes of paragraph 5, the requirements laid down in Part 9C rules are to be treated as being comparable to those applied to institutions in terms of robustness.
Article 136 (mapping of ECAI's credit assessments) is amended as follows.
In paragraph 1, for “The FCA and the PRA may each” substitute “ The PRA may ”.
In paragraph 2—
for “the FCA and the PRA”, in each place it occurs, substitute “ the PRA ”, and
in point (e), for “have” substitute “ has ”.
In paragraph 3, for “The FCA and the PRA may each” substitute “ The PRA may ”.
In Article 162(3) (maturity), in the second subparagraph, in point (a), after “institutions” insert “ or investment firms ”.
Article 197 (eligibility of collateral under all approaches and methods) is amended as follows.
In paragraph 1(c), after “issued by institutions” insert “ or investment firms ”.
In paragraph 4, after “other institutions” insert “ or investment firms ”.
In Article 199(8) (additional eligibility for collateral under the IRB Approach), omit “and the FCA”.
In Article 200 (other funded credit protection), for point (c) substitute—
instruments issued by a third party institution, or an investment firm, which will be repurchased by that institution, or that investment firm, on request.
In Article 202 (eligibility of protection providers under the IRB Approach which qualify for Article 153(3) treatment), after “institutions,” insert “ investment firms, ”.
In Article 224(6) (supervisory volatility adjustment under Financial Collateral Comprehensive Method), after “institutions”, in the first place it occurs, insert “ or investment firms ”.
In Article 227(3) (conditions for applying 0% volatility adjustment under Financial Collateral Comprehensive Method), after point (b) insert—
investment firms;
In Article 243(1) (criteria for STS securitisations qualifying for differentiated capital treatment), in the second subparagraph, after “an institution,” insert “ an investment firm, ”.
Article 270e (securitisation mapping) is amended as follows.
For “The FCA and the PRA may each” substitute “ The PRA may ”.
For the words from “For” to “shall” substitute “ For the purposes of this Article, the PRA shall ”.
In Article 290(3) (stress testing), for the words from “the relevant regulatory rules” to the end substitute “ rule 6.1 of the Internal Capital Adequacy Part of the PRA rulebook ”.
Article 304(5) (treatment of clearing members' exposure to clients) is amended as follows.
In the first subparagraph, for “The FCA and the PRA may each” substitute “ The PRA may ”.
In the second subparagraph, for “the FCA or the PRA (as the case may be)” substitute “ the PRA ”.
Article 325u(5) (own funds requirements for residual risks) is amended as follows.
In the first subparagraph, for “The FCA and PRA may each” substitute “ The PRA may ”.
In the second subparagraph, for “the FCA and PRA” substitute “ the PRA ”.
Article 325az (alternative internal model approach and permission to use alternative internal models) is amended as follows.
In paragraph 8, for “The FCA and PRA may each” substitute “ The PRA may ”.
In paragraph 9—
for “The FCA and the PRA may each” substitute “ The PRA may ”, and
for “they” substitute “ it ”.
Article 325bk(3) (calculation of stress scenario risk measure) is amended as follows.
In the first subparagraph, for “The FCA and PRA may each” substitute “ The PRA may ”.
In the second subparagraph, for “the FCA and PRA” substitute “ the PRA ”.
In Article 382(4) (scope of own funds requirements for CVA risk), in point (b), for “institutions” substitute “ entities ”.
Article 441(2) (indicators of global systemic importance) is amended as follows.
For “The FCA and the PRA may each” substitute “ The PRA may ”.
For “the FCA or the PRA (as the case may be)” substitute “ the PRA ”.
In Article 450(1)(d) (remuneration policy) omit “19A.3.44R to 44DR and”.
In Article 456(1) (regulations modifying this Regulation) omit points (f) and (g).
Article 464B (power to make technical standards) is amended as follows.
Omit paragraph 1.
In paragraph 2, for “the PRA and FCA may both” substitute “ the PRA may ”.
In paragraph 3 omit “alone”.
In Article 522(1)(b) (savings provisions: pre-exit decisions)—
omit “and FCA”, and
omit the words from “in relation to” to “other person”.
In Annex 1 (classification of off-balance sheet items), in point 1(d), at the end insert “ or an investment firm ”.
Annex 3 (items subject to supplementary reporting of liquid assets) is amended as follows.
In point 3(b), for “of an institution or any of its affiliated entities” substitute “ of, or of an affiliated entity of, an institution or an investment firm ”.
In point 5(b), for “of an institution or any of its affiliated entities” substitute “ of, or of an affiliated entity of, an institution or an investment firm ”.
In point 6(a), for “on an SSPE, an institution or any of its affiliated entities” substitute “ on, or on an affiliated entity of, an SSPE, an institution or an investment firm ”.
In point 7, for “on an SSPE, an institution or any of its affiliated entities” substitute “ on, or on an affiliated entity of, an SSPE, an institution or an investment firm ”.
In point 11, for “by an institution or any of its affiliates” substitute “ by, or by an affiliate of, an institution or an investment firm ”.
In the following provisions, for “FCA and PRA may each” or “FCA and the PRA may each” (as appropriate) substitute “ PRA may ”
The Capital Requirements (Country-by-Country Reporting) Regulations 2013 (S.I. 2013/3118) are amended as follows.
Regulation 1(2) (interpretation) is amended as follows.
For the definition of “capital requirements regulation” substitute—
After that definition insert—
After the definition of “period of account” insert—
In regulation 1, after paragraph (2) insert—
For the purposes of these Regulations, an FCA investment firm is “relevant” if— subject to paragraphs (2B) and (2C).
it has a branch or subsidiary in a country or territory outside the United Kingdom that is a financial institution, and
it is not a small and non-interconnected firm,
Where an FCA investment firm which has not been a small and non-interconnected firm for a period becomes a small and non-interconnected firm, it only ceases to be a relevant FCA investment firm once—
it has been a small and non-interconnected firm for a continuous period of six months, and
it has notified the Financial Conduct Authority.
Where an FCA investment firm which has been a small and non-interconnected firm for a period determines that it is no longer a small and non-interconnected firm—
it must notify the Financial Conduct Authority, and
it does not become a relevant FCA investment firm until—
the end of the period of 12 months beginning with the day on which it made the determination, or
if the notification specifies an earlier date, that date.
In regulation 1(3) (interpretation of references to EU legislation), for “any EU regulation,” substitute “ any EU regulation other than the capital requirements regulation or to any ”.
Regulation 2 (ongoing reporting obligation) is amended as follows.
In paragraph (1), after “Institutions” insert “ and relevant FCA investment firms ”.
In paragraph (2), after “institution” insert “ or relevant FCA investment firm ”.
In paragraph (3), for “institution's period of account” substitute “ period of account for the institution or relevant FCA investment firm ”.
In paragraph (4)—
in the opening words, after “institution” insert “ or relevant FCA investment firm ”, and
in sub-paragraph (a), after “institution” insert “ or relevant FCA investment firm ”.
In paragraph (8), after “institution” insert “ or relevant FCA investment firm ”.
In regulation 3(1) (interim reporting obligation), after “Institutions” insert “ and relevant FCA investment firms ”.
Regulation 4 (group disclosure) is amended as follows.
In paragraph (1), after “institution” insert “ or relevant FCA investment firm ”.
In paragraph (2), after “institution” insert “ or relevant FCA investment firm ”.
Regulation 5 (prior disclosure: prevention of duplication) is amended as follows.
In paragraph (3)—
after “an institution” insert “ or relevant FCA investment firm ”, and
after “the institution” (in both places) insert “ or firm ”.
In paragraph (4)—
after “an institution” insert “ or relevant FCA investment firm ”, and
after “the institution” (in both places) insert “ or firm ”.
In regulation 6(2) (enforcement)—
in sub-paragraph (a) omit “which is a PRA-authorised person within the meaning of section 2B(5) of the 2000 Act”, and
in sub-paragraph (b), for “any other institution” substitute “ a relevant FCA investment firm ”.
Section 2
In the Financial Services and Markets Act 2000, after Part 9B insert—
In this Part, “FCA investment firm” means an investment firm that—
is an authorised person within the meaning of section 31(1)(a),
is not for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556), and
has its registered office or, if it has no registered office, its head office in the United Kingdom.
But the following are not FCA investment firms—
a person excluded from the definition of “investment firm” in Article 3(1) of the Financial Services and Markets 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) by paragraph (a) or (b) of that definition;
an investment firm which has a Part 4A permission to carry on regulated activities as an exempt investment firm within the meaning of regulation 8 of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701).
In this Part—
The Treasury may by regulations make provision about the meaning of the following terms for the purposes of this Part—
Regulations under subsection (2) may, among other things, amend, repeal or otherwise modify provisions of this Act.
In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of retained EU law.
In the exercise of its power to make general rules, the FCA must make rules applying to FCA investment firms which impose the following types of prudential requirements—
requirements relating to the types and amounts of capital and liquid assets that such firms must hold in order to manage the risks specified in or under subsection (2);
requirements relating to the management of risks arising from the strength or extent of such firms' relationships with, or direct exposure to, a single client or group of connected clients;
reporting requirements related to requirements described in paragraph (a) or (b);
public disclosure requirements related to requirements described in paragraph (a) or (b);
requirements in respect of governance arrangements related to the risks specified in or under subsection (2);
requirements in respect of remuneration policies and practices related to the risks specified in or under subsection (2).
The risks referred to in subsection (1)(a), (e) and (f) are—
the risks to consumers (as defined in section 1G) arising from FCA investment firms,
the risks to the integrity of the UK financial system arising from FCA investment firms,
the risks to which FCA investment firms are exposed, and
any other risks specified by the Treasury by regulations.
General rules made for the purpose of subsection (1) may, among other things—
impose requirements to be satisfied on an individual basis or on a consolidated basis;
impose requirements relating to the processes for consolidation;
make provision relating to transactions between an FCA investment firm and a member of its group, including provision requiring the disclosure of information;
provide for exceptions from requirements;
make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.
General rules made for the purpose of subsection (1) may, despite section 137A(6), include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke a provision of that regulation or such an instrument).
In the exercise of its power to make general rules, the FCA must make rules applying to authorised parent undertakings of FCA investment firms which impose the following types of prudential requirements—
requirements relating to the types and amounts of capital and liquid assets that such undertakings must hold in order to manage the risks specified in or under subsection (2);
requirements relating to the management of risks arising from the strength or extent of such undertakings' relationships with, or direct exposure to, a single client or group of connected clients;
reporting requirements related to requirements described in paragraph (a) or (b);
public disclosure requirements related to requirements described in paragraph (a) or (b);
requirements in respect of governance arrangements related to the risks specified in or under subsection (2);
requirements in respect of remuneration policies and practices related to the risks specified in or under subsection (2).
The risks referred to in subsection (1)(a), (e) and (f) are—
the risks to consumers (as defined in section 1G) arising from FCA investment firms, from parent undertakings of FCA investment firms and from FCA investment firms belonging to groups,
the risks to the integrity of the UK financial system arising from FCA investment firms, from parent undertakings of FCA investment firms and from FCA investment firms belonging to groups,
the risks to which FCA investment firms are exposed by virtue of their relationship with their parent undertaking, and
any other risks specified by the Treasury by regulations.
The FCA must make rules applying to non-authorised parent undertakings of FCA investment firms which impose requirements described in subsection (1), where such rules appear to it to be necessary or expedient for the purpose of advancing one or more of its operational objectives.
Rules made for the purpose of subsection (1) or under subsection (3) may, among other things—
impose requirements to be satisfied on an individual basis or on a consolidated basis;
impose requirements relating to the processes for consolidation;
make provision relating to transactions between a parent undertaking of an FCA investment firm and a member of its group, including provision requiring the disclosure of information;
provide for exceptions from requirements;
make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.
Section 137A(6) and (7) (restriction on modifying etc retained direct EU legislation) apply to rules made by the FCA under subsection (3) as they apply to general rules made by the FCA.
Rules made for the purpose of subsection (1) or under subsection (3) may, despite section 137A(6), include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke a provision of that regulation or such an instrument).
Section 137H (rules about remuneration) applies where the FCA makes rules under subsection (3) prohibiting persons, or persons of a specified description, from being remunerated in a specified way as it applies where the FCA makes general rules imposing such a prohibition.
Section 137I (Treasury direction to consider compliance with remuneration policies) applies where the FCA makes rules under subsection (3) requiring non-authorised parent undertakings, or non-authorised parent undertakings of a specified description, to act in accordance with a remuneration policy as it applies where the FCA makes general rules imposing such requirements on authorised persons, but as if—
the references in that section to authorised persons were references to non-authorised parent undertakings of FCA investment firms, and
subsection (7) of that section were omitted.
Section 141A (power to make consequential amendments of references to rules etc) applies to the exercise by the FCA of its power to make, alter or revoke rules under subsection (3) as it applies in relation to the exercise by the FCA of its power to make, alter or revoke rules under Part 9A.
This section is subject to section 143E.
Subsections (1) and (3) of section 143D do not require the FCA to make rules applying to parent undertakings of FCA investment firms which belong to a group which includes a relevant body, but the FCA may make rules described in those subsections applying to such parent undertakings.
In subsection (1), “relevant body” means—
an undertaking (as defined in section 1161(1) of the Companies Act 2006) that has its head office in the United Kingdom and that has permission under Part 4A to accept deposits, other than—
an undertaking that also has permission under Part 4A to effect or carry out contracts of insurance, or
a credit union within the meaning of section 1 of the Credit Unions Act 1979;
an investment firm that is for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556).
The FCA may make rules applying to parent undertakings of FCA investment firms which impose requirements for the disclosure of information about such undertakings' branches and subsidiary undertakings outside the United Kingdom.
The FCA's powers to make rules under subsections (1) and (3) are powers to do so—
in relation to authorised parent undertakings, in exercise of its power to make general rules, and
in relation to non-authorised parent undertakings, where such rules appear to it to be necessary or expedient for the purpose of advancing one or more of its operational objectives.
Section 143D(4) and (6) apply in relation to rules made by the FCA in exercise of the powers conferred by, or described in, this section as they apply in relation to rules made in the performance of the FCA's duties under that section.
Section 143D(5), (7), (8) and (9) apply in relation to rules made under this section applying to non-authorised parent undertakings as they apply in relation to rules made under section 143D(3).
In this Act, “Part 9C rules” means rules made, or to be made, by the FCA—
in the performance of its duties under section 143C or 143D, or
in exercise of the powers conferred by, or described in, section 143E.
The FCA must publish a list of all Part 9C rules in force in the way appearing to the FCA to be best calculated to bring it to the attention of people likely to be affected by the rules.
The FCA's opinion as to whether a rule is a Part 9C rule is conclusive for all purposes.
When making Part 9C rules, the FCA must, among other things, have regard to—
any relevant standards set by an international standard-setting body,
the likely effect of the rules on the relative standing of the United Kingdom as a place for internationally active investment firms to be based or to carry on activities,
the target in section 1 of the Climate Change Act 2008 (carbon target for 2050), and
any other matter specified by the Treasury by regulations.
For the purposes of subsection (1)(b), the FCA must consider the United Kingdom's standing in relation to the other countries and territories in which, in its opinion, internationally active investment firms are most likely to choose to be based or carry on activities.
When making Part 9C rules, the FCA must consider, and consult the Treasury about, the likely effect of the rules on relevant equivalence decisions.
For the purpose of this section, an equivalence decision is “relevant” if the Treasury have, by notice in writing, informed the FCA that it is relevant for that purpose.
In this section—
This section is subject to section 143I.
A draft of proposed Part 9C rules published in accordance with section 138I(1)(b) must be accompanied by— (as well as being accompanied by the information listed in section 138I(2)).
an explanation of the provision that the FCA has considered it appropriate to include in the rules given the risks specified in or under section 143C(2) or 143D(2), and
an explanation of the ways in which having regard to the matters specified in or under section 143G(1) has affected the proposed rules,
If the FCA makes the proposed Part 9C rules, it must publish— (as well as the information required by section 138I(4) and (5)).
a summary of the purpose of the proposed rules, and
explanations complying with subsection (1),
This section is subject to section 143I.
Sections 143G and 143H do not apply where the FCA makes Part 9C rules—
in order to comply with a direction given by the Financial Policy Committee of the Bank of England under section 9H of the Bank of England Act 1998 (directions requiring macro-prudential measures), or
in order to act in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of the FCA's functions).
Section 143H does not apply in relation to Part 9C rules if the FCA considers that the delay involved in complying with that section would be prejudicial to the interests of consumers (as defined in section 425A).
If the FCA proposes Part 9C rules that change existing Part 9C rules and the changes consist of or include changes which, in the FCA's opinion, are not material—
the explanations described in section 143H(1) are not required in relation to the rules to the extent that they make those changes, but
the draft of the rules must be accompanied by a statement of the FCA's opinion.
If the FCA makes Part 9C rules that change existing Part 9C rules and the changes consist of or include changes which, in the FCA's opinion, are not material—
the summary and explanations described in section 143H(2) are not required in relation to the rules to the extent that they make those changes, but
the FCA must publish a statement of its opinion.
For the purposes of this section, whether a change to Part 9C rules is material is to be determined by the FCA by reference to, among other things, the risks specified in or under section 143C(2) or 143D(2) and the matters specified in or under section 143G(1).
This section applies where—
two or more FCA investment firms are subsidiary undertakings of the same parent undertaking,
the parent undertaking's head office is in a country or territory outside the United Kingdom, and
in the FCA's opinion, the law and practice in the other country or territory does not impose requirements on the parent undertaking which have equivalent effect to requirements imposed by Part 9C rules.
Where this section applies, the FCA may exercise its power under section 55L(3) to impose a requirement on the FCA investment firms to secure that a parent undertaking with its head office in the United Kingdom is established.
The FCA may, on the application of a non-authorised parent undertaking of an FCA investment firm—
impose a requirement on the parent undertaking,
vary a requirement imposed on the parent undertaking under this section, or
cancel such a requirement.
The FCA may exercise its power under subsection (3) in relation to a non-authorised parent undertaking of an FCA investment firm if it appears to the FCA that—
it is necessary or expedient to do so in order to manage risks specified in or under section 143D(2), and
it is desirable to do so in order to advance one or more of its operational objectives.
The FCA's power under this subsection is a power—
to impose a requirement,
to vary a requirement imposed under this section, or
to cancel such a requirement.
The FCA may refuse an application under subsection (1) if it appears to the FCA that it is desirable to do so in order to advance one or more of the FCA's operational objectives.
A requirement may, in particular, be imposed under this section—
so as to require the parent undertaking to take specified action, or
so as to require the parent undertaking to refrain from taking specified action.
A requirement may be imposed by reference to the parent undertaking's relationship with—
its group, or
other members of its group.
A requirement may refer to the past conduct of the parent undertaking (for example, by requiring the parent undertaking to review or take remedial action in respect of past conduct).
A requirement may be expressed to expire at the end of a specified period, but the imposition of a requirement that expires at the end of a specified period does not affect the FCA's power to impose a new requirement.
A requirement ceases to be in force if the person on whom it is imposed ceases to be a non-authorised parent undertaking of an FCA investment firm.
For the purposes of a provision of this section which refers to the FCA's operational objectives, in relation to the exercise of a power in relation to a particular parent undertaking, it does not matter whether there is a relationship between the parent undertaking and the persons whose interests will be protected by the exercise of the power.
An application under section 143K(1) for the imposition or variation of a requirement must contain a statement of the desired requirement or variation.
An application under section 143K(1)—
must be made in such manner as the FCA may direct, and
must contain, or be accompanied by, such other information as the FCA may reasonably require.
At any time after the application is received and before it is determined, the FCA may require the applicant to provide it with such further information as the FCA reasonably considers necessary to enable it to determine the application.
The FCA may require an applicant to provide information which the applicant is required to provide the FCA under this section in such form, or to verify it in such a way, as the FCA may direct.
Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.
The FCA must determine an application under section 143K(1)—
if the application is complete, before the end of the period of six months beginning with the day on which the FCA received the application, or
if the application is incomplete, before the end of the period of 12 months beginning with the day on which the FCA received the application.
The applicant may withdraw the application, by giving the FCA a written notice, at any time before the FCA determines it.
If the FCA grants an application under section 143K(1), it must give the applicant a written notice.
The notice must state the date from which the requirement or variation has effect.
If the FCA proposes to refuse an application under section 143K(1), it must give the applicant a warning notice.
If the FCA decides to refuse an application under section 143K(1), it must give the applicant a decision notice.
The imposition or variation of a requirement by the FCA under section 143K(2) takes effect—
immediately, if the notice given under subsection (3) states that is the case,
on such date as may be specified in the notice, or
if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.
The imposition or variation of the requirement may be expressed to take effect immediately, or on a specified date, only if the FCA reasonably considers that it is necessary for it to take effect immediately or on that date, having regard to the ground on which it is exercising its power under section 143K(2).
If the FCA— it must give the parent undertaking a written notice.
proposes to exercise its power under section 143K(2) so as to impose a requirement on a parent undertaking or to vary a requirement imposed on a parent undertaking, or
exercises that power so as to impose a requirement on a parent undertaking, or to vary a requirement imposed on a parent undertaking, with immediate effect,
The notice must—
give details of the requirement or its variation,
state the FCA's reasons for imposing or varying the requirement,
inform the parent undertaking that it may make representations to the FCA within the period specified in the notice (whether or not the parent undertaking has referred the matter to the Tribunal),
inform the parent undertaking of when the imposition or variation of the requirement takes effect, and
inform the parent undertaking of its right to refer the matter to the Tribunal.
The FCA may extend the period allowed under the notice for making representations.
If, having considered any representations made by the parent undertaking, the FCA decides— it must give the parent undertaking a written notice.
to impose the requirement or vary the requirement in the way proposed, or
if the requirement has been imposed or varied, not to rescind its imposition or variation,
A notice under subsection (6) must inform the parent undertaking of its right to refer the matter to the Tribunal.
If, having considered any representations made by the parent undertaking, the FCA decides— it must give the parent undertaking a written notice.
not to impose the requirement or vary the requirement in the way proposed,
to impose a different requirement or vary the requirement in a different way, or
to rescind a requirement or variation which has effect,
A notice under subsection (8)(b) must comply with subsection (4).
If a notice under this section informs a person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure for such a reference.
For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
An applicant who is aggrieved by the determination of an application under section 143K(1) may refer the matter to the Tribunal.
A parent undertaking aggrieved by the exercise by the FCA of its power under section 143K(2) to impose a requirement on the parent undertaking, or vary a requirement imposed on the parent undertaking, may refer the matter to the Tribunal.
This section makes provision about a requirement imposed on a non-authorised parent undertaking of an FCA investment firm (“N”) under section 143K—
prohibiting the disposal of, or other dealing with, any of N's assets (whether in the United Kingdom or elsewhere) or restricting such disposals or dealings, or
requiring that some or all of N's assets, or some or all assets belonging to consumers (as defined in section 1G) but held by N or to N's order, must be transferred to and held by a trustee approved by the FCA.
If the FCA— the notice has the effects set out in subsection (3).
imposes a requirement described in subsection (1)(a), and
gives notice of the requirement to an institution with whom N keeps an account,
Those effects are that—
the institution does not act in breach of a contract with N if, having been instructed by N (or on N's behalf) to transfer a sum or otherwise make a payment out of N's account, it refuses to do so in the reasonably held belief that complying with the instruction would be incompatible with the requirement, and
if the institution complies with such an instruction, it is liable to pay to the FCA an amount equal to the amount transferred from, or otherwise paid out of, N's account in contravention of the requirement.
If the FCA imposes a requirement described in subsection (1)(b), no assets held by a person as trustee in accordance with the requirement may, while the requirement is in force, be released or dealt with except with the consent of the FCA.
If, while a requirement described in subsection (1)(b) is in force, N creates a charge over any assets of N held in accordance with the requirement, the charge is (to the extent that it confers security over the assets) void against the liquidator and N's creditors.
Assets held by a person as trustee are to be taken to be held by the trustee in accordance with a requirement mentioned in subsection (1)(b) only if—
N has given the trustee a written notice that those assets are to be held by the trustee in accordance with the requirement, or
they are assets into which assets to which paragraph (a) applies have been transposed by the trustee on the instruction of N.
A person who contravenes subsection (4) commits an offence and is liable—
on summary conviction in England and Wales, to a fine;
on summary conviction in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.
In this section, references to imposing a requirement (however expressed) include imposing a requirement by varying an existing requirement.
In this paragraph, “charge” includes a mortgage (or, in Scotland, a security over property).
Subsections (4) and (6) do not affect any equitable interest or remedy in favour of a person who is a beneficiary of a trust as a result of a requirement described in subsection (1)(b).
A non-authorised parent undertaking of an FCA investment firm must take reasonable care to ensure that members of its management body—
are of sufficiently good repute, and
possess sufficient knowledge, skills and experience to perform their duties effectively.
Subsection (2) applies where it appears to the FCA that an individual— to perform a function in relation to an activity carried on by a non-authorised parent undertaking of an FCA investment firm.
is not of sufficiently good repute, or
does not possess sufficient knowledge, skills and experience,
The FCA may make an order (“a Part 9C prohibition order”) prohibiting the individual from performing the function.
A Part 9C prohibition order may relate to—
all functions in relation to an activity carried on by a non-authorised parent undertaking of an FCA investment firm, or
a function specified in the order or of a description specified in the order.
A Part 9C prohibition order may relate to—
all activities of a non-authorised parent undertaking of an FCA investment firm, or
an activity specified in the order or of a description specified in the order.
A Part 9C prohibition order may relate to—
all non-authorised parent undertakings of FCA investment firms, or
an undertaking specified, or within a description specified, in the order.
A non-authorised parent undertaking of an FCA investment firm must take reasonable care to ensure that none of its functions is performed by a person who is prohibited from performing that function by a Part 9C prohibition order.
If the FCA proposes to make a Part 9C prohibition order it must give the individual to whom the order would apply a warning notice.
The warning notice must set out the terms of the prohibition.
If the FCA decides to make a Part 9C prohibition order it must give the individual to whom the order applies a decision notice.
The decision notice must—
name the individual to whom the Part 9C prohibition order applies, and
set out the terms of the order.
If the FCA decides to make a Part 9C prohibition order, the individual to whom the order applies may refer the matter to the Tribunal.
The FCA may vary or revoke a Part 9C prohibition order on the application of the individual named in the order.
On an application for the variation or revocation of a Part 9C prohibition order—
if the FCA decides to grant the application, it must give the applicant written notice of its decision,
if the FCA proposes to refuse the application, it must give the applicant a warning notice, and
if the FCA decides to refuse the application, it must give the applicant a decision notice.
If the FCA gives the applicant a decision notice under subsection (2)(c), the applicant may refer the matter to the Tribunal.
An individual who performs a function, or agrees to perform a function, in breach of a Part 9C prohibition order commits an offence.
An individual who commits an offence under this section is liable—
on summary conviction in England and Wales, to a fine, and
on summary conviction in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.
In proceedings for an offence under this section, it is a defence for the individual to show that they took all reasonable precautions and exercised all due diligence to avoid committing the offence.
This section applies if the FCA is satisfied that a non-authorised parent undertaking of an FCA investment firm has contravened—
a provision of Part 9C rules,
a requirement imposed under section 143K,
section 143R, or
section 143S(6).
The FCA may impose a penalty of such amount as it considers appropriate on any of the following—
the non-authorised parent undertaking;
a person who was knowingly concerned in the contravention.
The FCA may (instead of or in addition to imposing a penalty under subsection (2)) publish a statement to the effect that the person has contravened, or been knowingly concerned in a contravention of, a provision of Part 9C rules.
Subsection (5) applies to— who was, at any time, knowingly concerned in the contravention.
a member of the management body of the non-authorised parent undertaking, or
a person not falling within paragraph (a) who is an employee of the non-authorised parent undertaking,
The FCA may impose, for such period as it considers appropriate, restrictions (including a ban) on the exercise by the person of functions of an FCA investment firm or a parent undertaking of an FCA investment firm.
The FCA may—
vary a restriction imposed under subsection (5) so as to reduce the period for which it has effect or otherwise to limit its effect, or
cancel the restriction.
The FCA may not take action against a person under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the person under section 143X.
In subsection (7), “the limitation period” means the period of six years beginning with the first day on which the FCA knew of the contravention.
For the purpose of subsection (8), the FCA is to be treated as knowing of a contravention if it has information from which the contravention can reasonably be inferred.
In this section, “management body” means the board of directors or, if there is no such board, the equivalent body responsible for the management of the undertaking concerned.
The reference in subsection (4) to an employee of a person (“P”) includes a person who—
personally provides, or is under an obligation personally to provide, services to P under an arrangement made between P and the person providing the services or another person, and
is subject to (or to the right of) supervision, direction or control by P as to the manner in which those services are provided.
If the FCA proposes to take action against a person under section 143W(2), (3) or (5) it must give the person a warning notice.
A warning notice about a proposal to impose a penalty must state the amount of the penalty.
A warning notice about a proposal to publish a statement must set out the terms of the statement.
A warning notice about a proposal to impose a restriction under section 143W(5) must state—
the terms of the restriction, and
the period for which the restriction is to have effect.
If the FCA decides to take action against a person under section 143W(2), (3) or (5) it must give the person a decision notice.
A decision notice about the imposition of a penalty must state the amount of the penalty.
A decision notice about the publication of a statement must state the terms of the statement.
After the statement is published, the FCA must send a copy of the statement to—
the person in respect of whom it is made, and
any person to whom a copy of the decision notice was given under section 393(4).
A decision notice about the imposition of a restriction under section 143W(5) must state—
the terms of the restriction, and
the period for which the restriction is to have effect.
If the FCA decides to take action against a person under section 143W(2), (3) or (5), the person may refer the matter to the Tribunal.
If the FCA decides to vary or cancel a restriction under section 143W(6), it must give written notice of its decision to the applicant.
The FCA must prepare and issue a statement of policy with respect to—
the imposition of penalties under section 143W, and
the amount of penalties under that section.
The FCA's policy in determining what the amount of a penalty should be must include having regard to—
the seriousness of the contravention,
the extent to which the contravention was deliberate or reckless, and
whether the person on whom the penalty is to be imposed is an individual.
The FCA may at any time alter or replace a statement issued under this section.
If a statement issued under this section is altered or replaced, the FCA must issue the altered or replacement statement.
In exercising, or deciding whether to exercise, a power under section 143W(2) in the case of any particular contravention, the FCA must have regard to any statement of policy published under this section and in force at a time when the contravention occurred.
A statement under this section must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
The FCA must, without delay, give the Treasury a copy of any statement which it publishes under this section.
The FCA may charge a reasonable fee for providing a person with a copy of a statement published under this section.
Before issuing a statement of policy under section 143Y, the FCA must publish a draft of the proposed statement in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
The draft must be accompanied by notice that representations about the proposal may be made to the FCA within a specified time.
Before issuing the proposed statement, the FCA must have regard to any representations made to it in accordance with subsection (2).
If the FCA issues the proposed statement, it must publish an account in general terms of—
the representations made to it in accordance with subsection (2), and
its response to them.
If the statement differs from the draft published under subsection (1) in a way which is, in the FCA's opinion, significant, the FCA must publish details of the difference (in addition to complying with subsection (4)).
The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
This section also applies to a proposal to alter or replace a statement.
The Financial Services and Markets Act 2000 is amended as follows.
In section 133(7A) (proceedings before the Tribunal: meaning of “disciplinary reference”), after paragraph (ia) insert—
a decision to take action under section 143W;
In section 137A (the FCA's general rules), at the end insert—
Subsection (6) is subject to sections 143C(4) and 143D(6).
In section 165(7) (regulators' power to require information), after paragraph (d) insert—
by the FCA, to impose requirements on a person who provides, or has provided, a service to an FCA investment firm or to a relevant parent undertaking of such a firm;
Section 166 (regulators' power to require reports by skilled persons) is amended as follows.
In subsection (10), after “subsection (11)” insert “ or (12) ”.
After subsection (11) insert—
This subsection applies to a person who provides, or has provided, a service to an FCA investment firm or to a relevant parent undertaking of such a firm.
Section 167 (regulators' power to appoint investigators) is amended as follows.
In subsection (1)—
in paragraph (a), for “a recognised investment exchange or an authorised person or of” substitute “ a person to whom subsection (1A) applies or ”, and
in paragraph (c), for “a recognised investment exchange or an authorised person” substitute “ a person to whom subsection (1A) applies ”.
After subsection (1) insert—
This subsection applies to the following persons—
a recognised investment exchange;
an authorised person;
a relevant parent undertaking of an FCA investment firm;
a person who provides a service to an FCA investment firm or to a relevant parent undertaking of such a firm.
For subsection (4) substitute—
The power conferred by this section may be exercised in relation to a person who has at any time been an authorised person or a person described in subsection (1A)(c) or (d) but only in relation to—
business carried on at any time when the person was an authorised person or a person described in subsection (1A)(c) or (d), or
the ownership or control of the person at such a time.
The power conferred by this section may be exercised in relation to a person who has at any time been an appointed representative but only in relation to business carried on at any time when the person was an appointed representative.
In subsection (5A), at the end insert—
in relation to a person who is, or has at any time been, a person described in subsection (1A)(c) or (d) who is not an authorised person, the FCA.
In section 168(4), after paragraph (i) insert—
a person may have failed to comply with section 143R;
an individual may have performed or agreed to perform a function in breach of a Part 9C prohibition order;
a person may have failed to comply with section 143S(6);
Section 171 (powers of person appointed under section 167) is amended as follows.
In subsection (1), for the words before paragraph (a) substitute “ An investigator may require a person to whom subsection (1A) applies— ”.
After subsection (1) insert—
This subsection applies to the following persons—
the person who is the subject of the investigation (“the person under investigation”);
any person connected with the person under investigation;
where the person under investigation is an FCA investment firm, a person who provides, or has provided, a service to the firm or to a relevant parent undertaking of the firm;
where the person under investigation is a relevant parent undertaking of an FCA investment firm, a person who provides, or has provided, a service to the parent undertaking or to the firm.
Section 176 (entry of premises under warrant) is amended as follows.
In subsection (3)(a), for “an authorised person or an appointed representative” substitute “ a person to whom subsection (3A) applies ”.
After subsection (3) insert—
This subsection applies to the following persons—
an authorised person;
an appointed representative;
a relevant parent undertaking of an FCA investment firm;
a person who provides a service to an FCA investment firm or to a relevant parent undertaking of such a firm.
After section 177 insert—
In this Part—
In section 347(1)(g) (record of authorised persons etc), after “order” insert “ or Part 9C prohibition order ”.
In section 391(1ZB) (publication of warning notices), after paragraph (ia) insert—
section 143T;
section 143X;
In section 392 (application of third party rights to notices)—
in paragraph (a), after “142T(1),” insert “ 143N(1), 143T(1), 143U(2), 143X(1), ”, and
in paragraph (b), after “142T(4),” insert “ 143N(2), 143T(3), 143U(2), 143X(5), ”.
In section 395(13) (meaning of supervisory notice), after paragraph (bba) insert—
section 143O(3), (6) or (8)(b);
Section 417(1) (definitions) is amended as follows.
At the appropriate place insert—
In the definition of “prohibition order”, after “order”” insert “ (except in the expression “Part 9C prohibition order”) ”.
In section 424A(1) (investment firm), after “this Act” insert “ (except as otherwise provided) ”.
Section 429 (parliamentary control of statutory instruments) is amended as follows.
In subsection (2), after “142W,” insert “ 143C(2), 143D(2), 143G(1), ”.
In subsection (2B), after paragraph (b) insert—
provision made under section 143B(2) which amends this Act;
In paragraph 20(4) of Schedule 1ZA (enforcement costs), after paragraph (b) insert—
its powers under section 143S (Part 9C prohibition orders),
The Financial Conduct Authority may identify general rules made under section 137A of the Financial Services and Markets Act 2000 before Part 1 of this Schedule comes into force and without complying with sections 143G and 143H of that Act (“pre-commencement rules”) that are to be Part 9C rules.
Where the Financial Conduct Authority identifies such rules, it must, as soon as reasonably practicable after Part 1 of this Schedule comes into force, publish—
a list of the pre-commencement rules that are to be Part 9C rules, and
a statement confirming that, in deciding that those pre-commencement rules should be Part 9C rules, the Financial Conduct Authority has—
considered the risks specified in or under section 143C(2) or 143D(2) and the matters specified in or under section 143G(1), and
considered, and consulted the Treasury about, the likely effect of the rules on relevant equivalence decisions (as defined in section 143G).
Rules included in the list published in accordance with sub-paragraph (2)(a) are to be treated for all purposes as Part 9C rules.
In relation to Part 9C rules, the requirements of the provisions listed in sub-paragraph (2) may be satisfied by things done before Part 1 of this Schedule comes into force (as well as by things done after that time).
Those provisions are—
section 138I of the Financial Services and Markets Act 2000 (consultation);
sections 143G to 143I of that Act (inserted by Part 1 of this Schedule).
For the purposes of section 143G of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), an equivalence decision may be a relevant equivalence decision by virtue of a notice in writing given by the Treasury before Part 1 of this Schedule comes into force (as well as by a notice given after that time).
In relation to the making of Part 9C rules that are made on or before 1 January 2022—
paragraph (c) of section 143G(1) of the Financial Services and Markets Act 2000 (duty to have regard to carbon target for 2050) does not apply, and
section 143H(1)(b) of that Act does not require an explanation in respect of matters specified in that paragraph.
In this Part of this Schedule, “Part 9C rules” has the same meaning as in the Financial Services and Markets Act 2000 (see section 143F of that Act, inserted by Part 1 of this Schedule).
Section 5
In the Financial Services and Markets Act 2000, after Part 9C (inserted by Schedule 2 to this Act) insert—
In this Act, “CRR rules” means rules of a type described in subsection (2) to the extent that they make provision about a matter described in subsection (3).
The types of rules are—
general rules made, or to be made, by the PRA applying to CRR firms or a description of CRR firm;
rules made, or to be made, under section 192XA.
The matters are any matter that is the subject of—
a relevant provision of the capital requirements regulation, or
a CRR Basel standard.
For the purposes of subsection (3)(a), a provision is “relevant” if—
it has been or may be revoked by regulations made under section 3(1) of the Financial Services Act 2021, or
it has been revoked by regulations made under section 3(3) or (5) of that Act.
In subsection (3)—
the reference to a matter that is the subject of a provision of the capital requirements regulation includes a matter that is the subject of an instrument made under the provision, and
the reference to a matter that is the subject of a CRR Basel standard includes such a matter as it relates to any CRR firm (even where the standard in question does not apply to all CRR firms).
In this Part—
In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of retained EU law.
When making CRR rules, the PRA must, among other things, have regard to—
relevant standards recommended by the Basel Committee on Banking Supervision from time to time,
the likely effect of the rules on the relative standing of the United Kingdom as a place for internationally active credit institutions and investment firms to be based or to carry on activities,
the likely effect of the rules on the ability of CRR firms to continue to provide finance to businesses and consumers in the United Kingdom on a sustainable basis in the medium and long term,
the target in section 1 of the Climate Change Act 2008 (carbon target for 2050), and
any other matter specified by the Treasury by regulations.
For the purposes of subsection (1)(b), the PRA must consider the United Kingdom's standing in relation to the other countries and territories in which, in its opinion, internationally active credit institutions and investment firms are most likely to choose to be based or carry on activities.
When making CRR rules, the PRA must consider, and consult the Treasury about, the likely effect of the rules on relevant equivalence decisions.
For the purpose of this section, an equivalence decision is “relevant” if the Treasury have, by notice in writing, informed the PRA that it is relevant for that purpose.
In this section—
This section is subject to section 144E.
A draft of proposed CRR rules published in accordance with section 138J(1)(b) must be accompanied by an explanation of the ways in which having regard to the matters specified in or under section 144C(1) has affected the proposed rules (as well as being accompanied by the information listed in section 138J(2)).
If the PRA makes the proposed CRR rules, it must publish— (as well as the information required by section 138J(4) and (5)).
a summary of the purpose of the proposed rules, and
an explanation complying with subsection (1),
This section is subject to section 144E.
Sections 144C and 144D do not apply where the PRA makes CRR rules—
in order to comply with a direction given by the Financial Policy Committee of the Bank of England under section 9H of the Bank of England Act 1998 (directions requiring macro-prudential measures), or
in order to act in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of the PRA's functions).
Section 144C does not apply where the PRA makes CRR rules to the extent that they make provision (“CRR restatement provision”) reproducing without any changes which, in the PRA's opinion, are material—
a provision of the capital requirements regulation as it had effect immediately before it was revoked by regulations made under section 3 of the Financial Services Act 2021, or
a provision of an instrument made under the capital requirements regulation as it had effect immediately before it was revoked by such regulations.
The following do not apply in relation to CRR rules to the extent that they make CRR restatement provision— but, if it makes rules making such provision, the PRA must publish a statement of which provisions of the capital requirements regulation, or of the instrument made under that regulation, are reproduced and what changes (if any) are made.
section 138J, other than subsection (1)(a),
section 138K, and
section 144D,
Section 144D does not apply in relation to CRR rules if the PRA considers that the delay involved in complying with that section would be prejudicial to the safety and soundness of PRA-authorised persons.
If the PRA proposes CRR rules that change existing CRR rules and the changes consist of or include changes which, in the PRA's opinion, are not material—
the explanation described in section 144D(1) is not required in relation to the rules to the extent that they make those changes, but
the draft of the rules must be accompanied by a statement of the PRA's opinion.
If the PRA makes CRR rules that change existing CRR rules and the changes consist of or include changes which, in the PRA's opinion, are not material—
the summary and explanation described in section 144D(2) are not required in relation to the rules to the extent that they make those changes, but
the PRA must publish a statement of its opinion.
For the purposes of this section, whether a change is material is to be determined by the PRA by reference to, among other things, the matters specified in or under section 144C(1).
The Treasury may by regulations make provision amending an enactment that is consequential on CRR rules.
In this section—
This section applies to a CRR rule if, or to the extent that, CRR rules provide for it to apply to the rule.
The PRA may, on the application of or with the consent of a person who is subject to CRR rules, give the person a permission that enables the person—
not to apply the CRR rule, or
to apply the CRR rule with the modifications specified in the permission.
The PRA may—
give permission under this section subject to conditions, and
revoke or vary permission under this section.
CRR rules may make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.
CRR rules may, despite section 137G(6), include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke a provision of that regulation or such an instrument).
In this section, “Directive 2013/36/EU UK law” means the law of the United Kingdom which was relied on immediately before IP completion day to implement the capital requirements directive and its implementing measures as it has effect—
on IP completion day, in the case of rules made by the PRA or the FCA under this Act, and
as amended from time to time, in all other cases.
Part 12B of the Financial Services and Markets Act 2000 (approval of certain holding companies by the PRA) is amended as follows.
Before section 192O insert— “ Interpretation ”.
Section 192O(1) (interpretation) is amended as follows.
Omit the definition of “section 192V rules”.
After that definition insert—
Before section 192P insert— “ Approval ”.
Omit section 192V (rules imposing consolidated or sub-consolidated requirements).
After section 192X insert—
The PRA may make rules described in subsection (2) applying to financial holding companies and mixed financial holding companies that are— where it appears to the PRA to be necessary or expedient to make the rules for the purpose of advancing any of its objectives.
approved under section 192R, or
designated under section 192T(2)(c),
Those rules are—
rules imposing requirements to be complied with by holding companies on a consolidated or sub-consolidated basis;
rules imposing requirements which, in the PRA's opinion, are likely to mitigate group risk;
rules imposing reporting requirements related to requirements described in paragraph (a) or (b);
rules imposing public disclosure requirements related to requirements described in paragraph (a) or (b);
rules imposing requirements in respect of governance arrangements;
rules imposing requirements in respect of remuneration policies and practices.
Subject to subsection (4), rules made under this section may not modify, amend or revoke any retained direct EU legislation, except retained direct EU legislation which takes the form of PRA rules.
Rules made under this section may include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke provisions of that regulation or such an instrument).
Rules made under this section may make provision by reference to the capital requirements regulation, to instruments made under that regulation or to Directive 2013/36/EU UK law, as amended from time to time.
Section 137H (rules about remuneration) applies where the PRA makes rules under this section prohibiting persons, or persons of a specified description, from being remunerated in a specified way as it applies where the PRA makes general rules imposing such a prohibition.
Section 137I (Treasury direction to consider compliance with remuneration policies) applies where the PRA makes rules under this section requiring financial holding companies or mixed financial holding companies, or a specified description of such companies, to act in accordance with a remuneration policy as it applies where the PRA makes general rules imposing such requirements on authorised persons, but as if—
the references in that section to authorised persons were references to financial holding companies or mixed financial holding companies, and
subsection (7) of that section were omitted.
Section 141A (power to make consequential amendments of references to rules etc) applies to the exercise by the PRA of its power to make, alter or revoke rules under this section as it applies in relation to the exercise by the PRA of its power to make, alter or revoke rules under Part 9A.
In this section—
For provision about the making of section 192XA rules that are CRR rules, see Part 9D.
The following provisions of Part 9D apply in relation to section 192XA rules that are not CRR rules as if they were CRR rules—
section 144C (matters to consider when making rules);
section 144D (explanation to accompany consultation on rules);
section 144E(1) and (4) to (7) (exceptions from sections 144C and 144D).
This section applies to a section 192XA rule if, or to the extent that, section 192XA rules provide for it to apply to the rule.
The PRA may, on the application of or with the consent of a person who is subject to section 192XA rules, give the person a permission that enables the person—
not to apply the section 192XA rule, or
to apply the section 192XA rule with the modifications specified in the permission.
The PRA may—
give permission under this section subject to conditions, and
revoke or vary permission under this section.
In section 192Y(1) (power to impose penalty or issue censure), for paragraph (d) substitute—
the capital requirements regulation or an instrument made under that regulation.”
Section 9H of the Bank of England Act 1998 (directions to FCA or PRA requiring macro-prudential measures) is amended as follows.
In subsection (2) (definition of “regulated person”), for paragraph (b) substitute—
in relation to the PRA—
a PRA-authorised person within the meaning of that Act, or
a financial holding company or mixed financial holding company that is approved under section 192R of that Act or designated under section 192T(2)(c) of that Act.
At the end insert—
In this section—
The Financial Services and Markets Act 2000 is amended as follows.
In section 137G (the PRA's general rules), at the end insert—
Subsection (6) is subject to section 144H(2).
In section 138J(10) (consultation by the PRA), for “section 138L” substitute “ sections 138L and 144E(3). ”
In section 138K (consultation: mutual societies), at the end insert—
This section is subject to section 144E(3).
Section 192O (interpretation of Part 12B) is amended as follows.
In subsection (1)—
in the definition of “Directive 2013/36/EU UK law”, omit the words following paragraph (b), and
after that definition insert—
At the end insert—
In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of retained EU law.
In section 192R(3) (grant of approval)—
in paragraph (a) omit “, section 192V rules” and the “and” at the end, and
after that paragraph insert—
adequate for the purpose of complying with section 192XA rules, and
Section 192T (measures) is amended as follows.
In subsection (1)—
omit the “and” at the end of paragraph (a),
in paragraph (b) omit “, section 192V rules”, and
at the end of paragraph (b) insert
to ensure that the relevant group complies with section 192XA rules.
In subsection (2)(c)—
omit “, section 192V rules”, and
at the end insert “ and with section 192XA rules ”.
In section 192Y(1) (power to impose penalty or issue censure)—
omit paragraph (c) (including the “or” at the end), and
after that paragraph insert—
section 192XA rules; or
In section 417(1) (definitions), at the appropriate place, insert—
In section 429(2) (parliamentary control of statutory instruments: affirmative procedure), before “214A” insert “ 144C(1), 144F, ”.
The Capital Requirements Regulations 2013 (meaning of “permission” etc) is amended as follows.
In regulation 2(1), in the definition of “appropriate regulator”, at the end insert “ , subject to regulation 39(2) ”.
Regulation 39 (meaning of “permission” etc) is amended as follows.
The existing text becomes paragraph (1).
In that paragraph, in the definition of “permission”, after paragraph (a) insert—
section 144G of FSMA and CRR rules (as defined in Part 9D of FSMA);
section 192XC of FSMA and section 192XA rules (as defined in Part 12B of FSMA);
After that paragraph insert—
In this Part, in relation to— “appropriate regulator” means the PRA.
a decision made under a power conferred by section 144G of FSMA and CRR rules (as defined in Part 9D of FSMA) that are section 192XA rules (as defined in Part 12B of FSMA), or
a decision made under a power conferred by section 192XC of FSMA and section 192XA rules (as defined in Part 12B of FSMA),
In relation to general rules that are CRR rules, the requirements of the provisions listed in sub-paragraph (3) may be satisfied by things done before Part 1 of this Schedule comes into force (as well as by things done after that time).
In relation to section 192XA rules, the requirements of the provisions listed in sub-paragraph (3) may be satisfied by things done before Part 2 of this Schedule comes into force (as well as by things done after that time).
Those provisions are—
sections 138J and 138K of the Financial Services and Markets Act 2000 (consultation);
sections 144C to 144E of that Act (inserted by Part 1 of this Schedule).
For the purposes of section 144C of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), an equivalence decision may be a relevant equivalence decision by virtue of a notice in writing given by the Treasury before Part 1 of this Schedule comes into force (as well as by a notice given after that time).
In relation to the making of CRR rules or section 192XA rules that are made on or before 1 January 2022—
paragraph (d) of section 144C(1) of the Financial Services and Markets Act 2000 (duty to have regard to carbon target for 2050) does not apply, and
section 144D(1) of that Act does not require an explanation in respect of matters specified in that paragraph.
Rules made by the Prudential Regulation Authority under section 192V of the Financial Services and Markets Act 2000 and in force immediately before the day on which the repeal of that section by Part 2 of this Schedule comes into force (“the repeal day”) are to be treated, on and after that day—
as validly made section 192XA rules, and
to the extent that they make provision about a matter described in section 144A(3) of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), as validly made CRR rules.
Sections 192Y, 192Z and 192Z1 of the Financial Services and Markets Act 2000 (disciplinary measures) continue to have effect in relation to a contravention, before the repeal day, of a rule made under section 192V of that Act, despite the repeal of section 192Y(1)(c) of that Act.
In this Part of this Schedule—
Section 7
The Capital Requirements Regulation is amended as follows.
In Article 4A(1)(a) (definitions: references to PRA rulebook), for “as the rulebook has effect on IP completion day” substitute “ as amended from time to time ”.
In Article 92(3) (own funds requirements), for points (b) and (c) substitute—
the own funds requirements for the trading-book business of an institution for the following—
market risk as determined in accordance with Title IV of this Part, excluding the approaches set out in Chapters 1a and 1b of that Title;
large exposures exceeding the limits specified in Articles 395 to 401, to the extent that an institution is permitted to exceed those limits, as determined in accordance with Part Four;
the own funds requirements for market risk as determined in accordance with Title IV of this Part, excluding the approaches set out in Chapters 1a and 1b of that Title, for all business activities that are subject to foreign exchange risk or commodity risk;
the own funds requirements for settlement risk calculated in accordance with Title V of this Part, with the exception of Article 379;
In Article 107(3) (approaches to credit risk), for “third-country investment firms and exposures to third country credit institutions and exposures to third country clearing houses and exchanges” substitute “ a third-country investment firm, a third-country credit institution and a third-country exchange ”.
In Article 144(1)(g) (competent authorities' assessment of an application to use an IRB Approach), for “Article 99” substitute “ Article 430 ”.
In Article 201(1) (eligibility of protection providers under all approaches), for point (h) substitute—
qualifying central counterparties.
Article 223 (Financial Collateral Comprehensive Method) is amended as follows.
In paragraph 3, in the second subparagraph, for “institutions” substitute “ , institutions using the method laid down in Section 6 of Chapter 6 ”.
After paragraph 5 insert—
For the purposes of the calculation under paragraph 5, in the case of OTC derivative transactions, institutions using the methods laid down in Sections 3, 4 and 5 of Chapter 6 shall take into account the risk-mitigating effects of collateral in accordance with the provisions laid down in Sections 3, 4 and 5 of Chapter 6, as applicable.
In Article 283 (permission to use the Internal Model Method), for paragraph 4 substitute—
For all OTC derivative transactions, and for long settlement transactions for which an institution has not received permission under paragraph 1 to use the IMM, the institution shall use the methods set out in Section 3. Those methods may be used in combination on a permanent basis within a group.
For Article 298 substitute—
In Article 299(2) (items in the trading book), omit point (a).
In Article 384(1) (standardised method), in the definition of “EADitotal”—
for “Title II, Chapter 6” (in the first place those words occur) substitute “ Chapter 6 of Title II ”, and
omit the words from “An institution using” to the end of the definition.
Article 500d (temporary calculation of exposure value of regular-way purchases and sales awaiting settlement in view of COVID-19 pandemic) is amended as follows.
In the heading, omit “Temporary”.
In paragraph 1, omit “until 27 June 2021,”.
Annex 2 (types of derivatives) is amended as follows.
In point 1, for point (e) substitute—
interest-rate options;
In point 2, for point (d) substitute—
currency options;
For point 3 substitute—
Contracts of a nature similar to those in points 1(a) to (e) and 2(a) to (d) of this Annex concerning other reference items or indices. This includes as a minimum all instruments specified in paragraphs 4 to 7, 9, 10 and 11 of Part 1 of Schedule 2 to the Regulated Activities Order not otherwise included in point 1 or 2 of this Annex.
Section 21
The Benchmarks Regulation is amended as follows.
Article 3(1) (definitions) is amended as follows.
In point (6) (administrator)—
after “means” insert—
at the end insert
in the case of an Article 23A benchmark, a natural or legal person that would have control over the provision of the benchmark but for Article 23D;
After point (25) insert—
‘Article 23A benchmark’ has the meaning given in Article 23A(14);
After point (36) insert—
‘working day’ means a day other than—
Saturday or Sunday,
Christmas Day or Good Friday, or
a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in England and Wales.
In Article 3, after paragraph 1 insert—
References in this Regulation to the capability of a benchmark to measure the underlying market or economic reality are references to both its current capability to do so and its capability to do so in the future.
In Article 11 (input data), after paragraph 4 insert—
In the case of a critical benchmark, paragraph 4 does not require the administrator to cease providing the benchmark before the end of a period during which the administrator is required to continue publishing the benchmark by Article 21(1) or (2) or by a decision of the FCA under Article 21(3).
In the case of a critical benchmark in respect of which measures adopted under Article 23(6) have effect—
paragraph 4 does not require the administrator to cease providing the benchmark while those measures have effect, and
the administrator's duty under paragraph 4 to make changes is a duty to make changes so far as compatible with those measures.
In Article A20(5)(b) (review of critical benchmarks), for “determines” substitute “ determine ”.
Article 20 (critical benchmarks: conditions and other matters) is amended as follows.
In paragraph 5(b), for “determines” substitute “ determine ”.
In paragraph 5A(a)—
for “the values in points (a) and (c)(i) of paragraph 1 (the “thresholds”)” substitute “ the value in point (a) of paragraph 1 (“the paragraph 1(a) value”) ”, and
for “to the thresholds” substitute “ to the paragraph 1(a) value ”.
In paragraph 5A(b), for “the thresholds” substitute “ the paragraph 1(a) value ”.
In paragraph 6(a), for “thresholds” substitute “ values ”.
In paragraph 6(b), for “the thresholds in points (a) and (c)(i)” substitute “ the value in point (a) ”.
In Article 21(3) (mandatory administration of a critical benchmark), in the first subparagraph, in point (b), at the end insert “ (whether by the exercise of the FCA's powers under Article 23D or otherwise) ”.
After Article 26 insert—
In Article 29 (use of a benchmark), after paragraph 1 insert—
Paragraph 1 does not enable a supervised entity to use a benchmark in the United Kingdom in breach of a prohibition under Article 21A or 23B.
The use of a benchmark by a supervised entity for a financial contract, financial instrument or investment fund in breach of a prohibition under Article 21A or 23B does not affect the validity or enforceability of a contract or other arrangement.
In Article 36(1) (register of administrators and benchmarks), after point (d) insert—
any prohibitions under Article 21A or 23B on the use of benchmarks by supervised entities that are in force;
any benchmarks that are Article 23A benchmarks.
After Article 48 insert—
Article 3(2)(c) (periods expressed in weeks, months or years);
Article 3(4) (periods ending with a weekend or public holiday).
Section 22
Section 22
Section 22
The Financial Services and Markets Act 2000 is amended as follows.
In section 3A(3)(a) (expressions in which general definition of “regulator” does not apply), at the end insert—
In section 33(1)(a) (withdrawal of authorisation), after “permission” insert “ or Schedule 2A permission ”.
In Part 5 (performance of regulated activities), after section 71I insert—
This section applies to an authorised person that—
has a Schedule 2A permission, but
does not have a Part 4A permission.
The person is only required to comply with the provisions listed in subsection (3) if the person has a branch in the United Kingdom.
Those provisions are—
section 59(1) or (2) (approval for particular arrangements), or
section 63E(1) (certification of employees).
In this section, “branch” has the same meaning as in Schedule 2A (see paragraph 3 of that Schedule).
After section 137A insert—
The FCA's general rules may not make provision prohibiting a Gibraltar-based person from carrying on, or holding itself out as carrying on, an activity which it has a Schedule 2A permission to carry on in the United Kingdom.
Subsection (1) does not apply to rules described in section 137C, 137D or 137FD.
The Treasury may by regulations impose other limitations on what provision applying to Gibraltar-based persons with a Schedule 2A permission to carry on a regulated activity may be made in the FCA's general rules, but may not impose limitations relating to rules described in section 137C, 137D or 137FD.
Before making regulations under subsection (3), the Treasury must consult the FCA.
After section 137G insert—
The PRA's general rules may not make provision prohibiting a Gibraltar-based person from carrying on, or holding itself out as carrying on, an activity which it has a Schedule 2A permission to carry on in the United Kingdom.
The Treasury may by regulations impose other limitations on what provision applying to Gibraltar-based persons with a Schedule 2A permission to carry on a regulated activity may be made in the PRA's general rules.
Before making regulations under subsection (2), the Treasury must consult the PRA.
In section 213 (the compensation scheme), after subsection (9) insert—
But a person is not to be regarded as a relevant person in relation to a regulated activity if, at that time, the person—
was a Gibraltar-based person with a Schedule 2A permission to carry on the activity, and
fell within a prescribed category, either generally or in relation to the activity.
Regulations prescribing a category of person for the purposes of subsection (10A) may, among other things, make provision by reference to—
whether the activity is carried on through a branch in the United Kingdom;
the level of protection provided by the compensation scheme and by any comparable scheme operating in Gibraltar.
In section 214 (provisions of the compensation scheme: general), before subsection (6) insert—
The scheme may make different provision according to whether or not a relevant person is a member of both the compensation scheme and another comparable scheme.
In section 224 (scheme manager's power to inspect documents held by Official Receiver etc), before subsection (4A) insert—
But a person is not to be regarded as a relevant person in relation to a regulated activity if, at that time, the person—
was a Gibraltar-based person with a Schedule 2A permission to carry on the activity, and
fell within a prescribed category, either generally or in relation to the activity.
Regulations prescribing a category of person for the purposes of subsection (4ZA) may, among other things, make provision by reference to—
whether the activity is carried on through a branch in the United Kingdom;
the level of protection provided by the compensation scheme and by any comparable scheme operating in Gibraltar.
After section 367 insert—
A regulator may not present a petition to the court under section 367 for the winding up of a Gibraltar-based person who has a Schedule 2A permission unless either regulator has been asked to do so by the Gibraltar regulator.
If a regulator receives a request from the Gibraltar regulator to present a petition to the court under section 367 for the winding up of a Gibraltar-based person who has a Schedule 2A permission, it must—
notify the other regulator of the request, and
provide the other regulator with such information relating to the request as it thinks fit.
In this section, “the Gibraltar regulator” has the meaning given in Schedule 2A (see paragraph 2 of that Schedule).
Section 392 (application of sections 393 and 394: warning notices and decision notices) is amended as follows.
In paragraph (a), after “412B(4) or (8)” insert “ or paragraph 38, 42 or 69 of Schedule 2A or paragraph 11, 16 or 20 of Schedule 2B ”.
In paragraph (b), after “412B(5) or (9)” insert “ or paragraph 38, 42 or 69 of Schedule 2A or paragraph 11, 16 or 20 of Schedule 2B ”.
Section 395 (the FCA's and PRA's procedures) is amended as follows.
In subsection (13) (meaning of “supervisory notice”)—
for “section” (in the first place it occurs) substitute “ any of the following ”,
at the beginning of each of paragraphs (za) to (g), other than paragraphs (bzb), (bzc), (bbzb) and (bba), paragraph (bbb) (inserted by Schedule 2 to this Act) and paragraph (ea) (inserted by Schedule 9 to this Act), insert “ section ”, and
at the end insert—
a provision of Schedule 2A listed in subsection (14);
paragraph 18(3), (6) or (8)(b) of Schedule 2B.
After subsection (13) insert—
The provisions of Schedule 2A mentioned in subsection (13)(h) are—
paragraph 29(3), (6) or (8)(b);
paragraph 50(3), (6) or (8)(b);
paragraph 60(3) or (6).
Omit section 409 (Gibraltar).
In section 417(1) (definitions), at the appropriate places insert—
In section 418 (carrying on regulated activities in the United Kingdom), after subsection (5B) insert—
The eighth case is where—
the person's head office or registered office is in the United Kingdom, and
the person is carrying on a restricted activity (as defined in paragraph 3 of Schedule 2B) in Gibraltar.
Section 429 (parliamentary control of statutory instruments) is amended as follows.
In subsection (2) (affirmative procedure)—
after “90B” insert “ , 137AA(3), 137GA(2) ”, and
after “333T” insert “ or paragraph 5, 6, 58(3)(a), 59(3)(a) or 60(8) of Schedule 2A ”.
At the end insert—
Any provision that may be made in a statutory instrument under this Act subject to annulment in pursuance of a resolution of either House of Parliament may be made in a statutory instrument which includes regulations under Schedule 2A a draft of which has been laid before Parliament and approved by a resolution of each House.
In paragraph 24 of Schedule 1ZA (services for which the FCA may not charge fees), after paragraph (b) insert
a fee to be charged in respect of the discharge of the FCA's functions under paragraph 16 of Schedule 2A or paragraph 10 or 11 of Schedule 2B.
In paragraph 32 of Schedule 1ZB (services for which the PRA may not charge fees), after paragraph (b) insert
a fee to be charged in respect of the discharge of any of the PRA's functions under paragraph 16 of Schedule 2A or paragraph 10 or 11 of Schedule 2B.
The Financial Services and Markets Act 2000 (Gibraltar) Order 2001 is revoked.
Section 24
In Chapter 5 of Part 17 of the Financial Services and Markets Act 2000 (recognised overseas schemes), before section 272 (and the italic heading before that section) insert—
A collective investment scheme which is authorised under the law of a country or territory outside the United Kingdom is a recognised scheme if—
regulations made by the Treasury approving the country or territory for the purposes of this section are in force,
the scheme is of a description specified in the regulations in relation to which the country or territory is approved,
the operator of the scheme has applied to the FCA for recognition of the scheme,
the FCA has made (and has not revoked) an order granting the application, and
no direction under section 271L (suspension of recognition) has effect in relation to the scheme.
In making regulations under this section, the Treasury may have regard to any matter that they consider relevant (and see the restrictions in sections 271B and 271C).
The Treasury may not make regulations under section 271A approving a country or territory and specifying a description of collective investment scheme unless satisfied that the equivalent protection test is met.
The equivalent protection test is met if the protection afforded to participants or potential participants in the schemes by the law and practice of the country or territory is at least equivalent to that afforded to participants or potential participants in comparable authorised schemes by the law and practice of the United Kingdom under which such schemes are authorised and supervised.
In this section—
The Treasury may not make regulations under section 271A approving a country or territory and specifying a description of collective investment scheme unless satisfied that adequate arrangements exist, or will exist, for co-operation between the FCA and the overseas regulator.
In this section, “the overseas regulator” means the authority responsible for the authorisation and supervision of schemes of that description in the country or territory.
When considering whether to make, vary or revoke regulations under section 271A approving a country or territory and specifying a description of collective investment scheme, the Treasury may ask the FCA to prepare a report on—
the law and practice of the country or territory under which such schemes are authorised and supervised, or particular aspects of such law and practice, and
any existing or proposed arrangements for co-operation between the FCA and the overseas regulator.
A request for a report under subsection (1) must be made in writing.
If the Treasury ask for a report under subsection (1), the FCA must provide the Treasury with the report.
In this section, “the overseas regulator” has the same meaning as in section 271C.
The Treasury may by regulations—
provide that a section 271A scheme of a description specified in the regulations must comply with requirements specified in the regulations, and
impose requirements on the operator of such a scheme.
In making regulations under this section in relation to a description of section 271A scheme, the Treasury must have regard to any requirements imposed in relation to comparable authorised schemes by or under this Act.
Regulations under this section may describe requirements by reference to—
rules made or to be made by the FCA, or
other enactments.
The power under subsection (3) includes power to make provision by reference to rules or other enactments as amended from time to time.
The FCA may make, amend or revoke a rule if it considers it necessary or appropriate to do so for the purposes of a requirement imposed (or varied or withdrawn) by regulations under this section which is described by reference to a rule made or to be made by the FCA.
If, for the purposes of a requirement imposed (or varied or withdrawn) by regulations under this section which is described by reference to a rule made or to be made by the FCA, the Treasury consider that it is necessary or appropriate for the FCA to make, amend or revoke a rule, they may direct the FCA to do so.
If the Treasury give a direction under subsection (6), the FCA must comply with the direction within such time as the Treasury may specify in the direction.
The references in paragraphs (5) and (6) to the amendment or revocation of rules are to the amendment or revocation of rules made by the FCA.
Section 141A (power to make consequential amendments of references to rules) applies in relation to the FCA's power to make, amend or revoke rules under this section as it applies in relation to its power to make, amend or revoke rules under Part 9A.
In this section—
An application for recognition of a collective investment scheme under section 271A—
must be made in such manner as the FCA may direct,
must contain the address of a place in the United Kingdom for service of notices, or other documents, required or authorised to be served on the operator under this Act, and
must contain or be accompanied by such information as the FCA may reasonably require for the purpose of determining the application.
Where requirements imposed by regulations under section 271E would apply to the scheme or its operator if the application were granted, the application must contain an explanation of how each requirement would be satisfied.
At any time after the application is received and before it is determined, the FCA may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application.
The FCA may require the applicant to present information provided under this section in such form, or to verify the information in such a way, as the FCA may direct.
Different directions may be given, and different requirements imposed, in relation to different applications.
The FCA—
may only make an order under section 271A granting an application under that section if it is satisfied that the conditions in subsection (2) are met, and
if it is so satisfied, must make such an order unless it is permitted to refuse the application under subsection (3) or required to do so under subsection (4).
Those conditions are—
that the scheme is authorised in a country or territory which is approved by the Treasury in regulations under section 271A,
that the scheme is of a description of scheme specified in the regulations,
that adequate arrangements exist for co-operation between the FCA and the overseas regulator, and
that, where requirements imposed by regulations under section 271E would apply to the scheme or its operator if the application were granted, each such requirement would be satisfied.
The FCA may refuse an application under section 271A if it appears to the FCA that the operator of the scheme—
has contravened a requirement imposed on them by or under this Act, or would contravene such a requirement if the application were granted, or
has, in purported compliance with such a requirement, knowingly or recklessly given the FCA information which is false or misleading in a material particular.
The FCA must refuse an application under section 271A if it considers it desirable to do so in order to protect the interests of participants or potential participants in the scheme in the United Kingdom.
Where the FCA receives an application under section 271A which is complete, it must give the applicant a notice under section 271H(1) or (2) before the end of the period of two months beginning with the day on which the FCA receives the application.
An application under section 271A is complete if the FCA considers that the application satisfies section 271F(1) and (2).
Where the FCA receives an application under section 271A which is not complete, it must—
notify the operator of the scheme that it does not consider that the application satisfies section 271F(1) or (2) (as applicable), and
identify the information needed to complete the application.
In this section, “the overseas regulator” has the same meaning as in section 271C.
If the FCA decides to make an order under section 271A granting an application under that section, it must give written notice of its decision to the applicant.
If the FCA proposes to refuse an application under section 271A, it must give the applicant a warning notice.
If the FCA decides to refuse the application, it must give the applicant a decision notice.
If the FCA gives the applicant a decision notice under subsection (3), the applicant may refer the matter to the Tribunal, except where the FCA refuses the application on the ground that it is not satisfied that a condition in section 271G(2)(a) or (c) is met.
The operator of a section 271A scheme must notify the FCA if the operator becomes aware that it has contravened, or expects to contravene, a requirement imposed on it by or under this Act.
The operator of a section 271A scheme must notify the FCA of any change to—
the name or address of the operator of the scheme,
the name or address of any trustee or depositary of the scheme,
the name or address of any representative of the operator in the United Kingdom, and
the address of the place in the United Kingdom for service of notices, or other documents, required or authorised to be served on the operator under this Act.
A notification under subsection (1) or (2) must be made in writing as soon as reasonably practicable.
The operator of a section 271A scheme must provide to the FCA such information as the FCA may direct, at such times as the FCA may direct, for the purpose of determining whether—
the conditions set out in section 271G(2)(a) to (c) are met, and
any requirements relating to the scheme or its operator imposed by or under this Act are satisfied.
The FCA may require the operator to present information provided under this section in such form, or to verify the information in such a way, as the FCA may direct.
Different directions may be given in relation to different schemes or different descriptions of scheme.
The FCA may make rules in relation to section 271A schemes for purposes corresponding to those for which rules may be made under section 248 in relation to authorised unit trust schemes.
For the purposes of subsection (1), a reference in section 248 to the manager of an authorised unit trust scheme is to be read as a reference to the operator of a section 271A scheme.
Rules made under this section do not affect any liability which a person may incur apart from the rules.
The FCA may direct that a section 271A scheme is not to be a recognised scheme—
for a specified period,
until the occurrence of a specified event, or
until specified conditions are complied with.
The FCA may give a direction under subsection (1) only if—
the FCA is no longer satisfied that the conditions set out in section 271G(2)(a) to (c) are met,
it appears to the FCA that a requirement relating to the scheme or its operator imposed by or under this Act has not been satisfied, or is likely not to be satisfied,
it appears to the FCA that the operator of the scheme has, in purported compliance with any such requirement, knowingly or recklessly given the FCA information which is false or misleading in a material particular, or
although none of paragraphs (a) to (c) applies, the FCA considers it desirable to do so in order to protect the interests of participants or potential participants in the United Kingdom.
A direction under section 271L takes effect—
immediately, if the notice given under subsection (3) states that to be the case,
on a day specified in the notice, or
if no day is specified in the notice, when the matter to which it relates is no longer open to review.
A direction under section 271L may be expressed to take effect immediately or on a specified day only if the FCA, having regard to its reason for giving the direction, reasonably considers that it is necessary for the direction to take effect immediately or on that day (as appropriate).
If the FCA proposes to give a direction under section 271L, or gives such a direction with immediate effect, it must give written notice to—
the operator of the scheme, and
the trustee or depositary of the scheme (if any).
The notice must—
set out details of the direction,
set out when the direction takes effect,
state the FCA's reasons for giving the direction and for its determination as to when the direction takes effect,
state that the recipient of the notice may make representations to the FCA within such period as may be specified in the notice (whether or not the matter has been referred to the Tribunal), and
set out the recipient's right to refer the matter to the Tribunal.
The FCA may extend the period allowed under the notice for making representations.
The FCA must give written notice to the operator and (if any) the trustee or depositary of the scheme concerned if, having considered any representations made, the FCA decides—
to give the direction in the way proposed, or
if it has been given, not to revoke the direction.
The FCA must give written notice to the operator and (if any) the trustee or depositary of the scheme concerned if, having considered any representations made, the FCA decides—
not to give the direction in the way proposed,
to give the direction in a way other than that proposed, or
where the direction has been given, to revoke it.
A notice under subsection (6) must set out the recipient's right to refer the matter to the Tribunal.
A notice under subsection (7)(b) must comply with subsection (4).
Where a notice sets out the right of the recipient to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
This section applies to the variation of a direction as it applies to the giving of a direction.
For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
The FCA may revoke an order made under section 271A in relation to a collective investment scheme if—
the FCA is no longer satisfied that the conditions set out in section 271G(2)(a) to (c) are met,
it appears to the FCA that a requirement relating to the scheme or its operator imposed by or under this Act has not been satisfied,
it appears to the FCA that the operator of the scheme has, in purported compliance with any such requirement, knowingly or recklessly given the FCA information which is false or misleading in a material particular, or
although none of paragraphs (a) to (c) applies, the FCA considers it desirable to revoke the order to protect the interests of participants or potential participants in the United Kingdom.
If the FCA proposes to revoke an order made under section 271A, it must give a warning notice to—
the operator of the scheme, and
the trustee or depositary of the scheme (if any).
If the FCA decides to revoke the order—
it must without delay give a decision notice to the operator and (if any) the trustee or depositary of the scheme, and
the operator, trustee or depository may refer the matter to the Tribunal.
The FCA may revoke an order made under section 271A in relation to a collective investment scheme at the request of the scheme's operator.
If the FCA decides to do so, it must give written notice to the operator and (if any) the trustee or depositary of the scheme.
The FCA may refuse a request under this section if it considers that—
the public interest requires that any matter concerning the scheme should be investigated before a decision is taken as to whether the order should be revoked, or
revocation would not be in the interests of participants in the scheme.
If the FCA proposes to refuse a request under this section, it must give a warning notice to the operator and (if any) the trustee or depositary of the scheme.
If the FCA decides to refuse the request—
it must without delay give a decision notice to the operator and (if any) the trustee or depositary of the scheme, and
the operator, trustee or depositary may refer the matter to the Tribunal.
This section applies where—
the FCA gives a decision notice under section 271N(3), or a written notice under section 271O(2), in relation to a section 271A scheme, or
a direction given by the FCA under section 271L(1) in relation to a section 271A scheme takes effect.
The operator of the scheme must notify such persons as the FCA may direct that the FCA has revoked an order under section 271A for recognition of the scheme or given a direction under section 271L in relation to the scheme (as applicable).
A notification under subsection (2) that relates to a direction under section 271L must set out the terms of the direction.
A notification under subsection (2) must—
contain such information as the FCA may direct, and
be made in such form and manner as the FCA may direct.
Different directions may be given under subsection (2) or (4) in relation to—
different schemes or different descriptions of scheme;
different persons or descriptions of persons to whom a notification under subsection (2) must be given.
This section applies, in relation to a section 271A scheme, where the Treasury vary or revoke regulations under section 271A and, as a result, the scheme ceases to be a recognised scheme because—
the country or territory in which the scheme is authorised is no longer approved for the purposes of that section, or
the scheme is no longer of a description of scheme specified in regulations under that section.
Where this section applies, the order given by the FCA under section 271A in relation to the scheme is revoked.
The Treasury may by regulations make provision, in relation to a scheme which has ceased to be recognised under section 271A by virtue of this section—
requiring an application under section 272 by such a scheme to be made during a period specified in the regulations or in a direction given by the FCA, and
modifying or disapplying section 275(1) and (2) (time limits for determining applications under section 272) for the purposes of an application under section 272 relating to such a scheme.
This section applies where the FCA considers that—
a requirement imposed by regulations under section 271E has been contravened,
rules made under section 271K have been contravened,
the operator of a section 271A scheme has contravened section 271I, 271J or 271P, or
the operator of a section 271A scheme has contravened a rule made, or a requirement imposed, under section 283.
The FCA may publish a statement to that effect.
Where the FCA proposes to publish a statement under subsection (2) relating to a scheme or the operator of a scheme, it must give the operator a warning notice setting out the terms of the statement.
If the FCA decides to publish the statement—
it must give the operator, without delay, a decision notice setting out the terms of the statement, and
the operator may refer the matter to the Tribunal.
After a statement under subsection (2) is published, the FCA must send a copy of it to the operator and to any person to whom a copy of the decision notice was given under section 393(4).
Section 271A(1) applies in relation to a part of a collective investment scheme as it applies in relation to such a scheme.
Accordingly, the following include a part of a scheme recognised under section 271A—
the reference to a scheme recognised under section 271A in the definition of “section 271A scheme” in section 237(3), and
other references to such a scheme (however expressed) in or in provision made under this Part of this Act (unless the contrary intention appears).
Provisions of or made under this Part of this Act have effect in relation to parts of schemes recognised, or seeking recognition, under section 271A with appropriate modifications.
The Treasury may by regulations—
make provision about what are, or are not, appropriate modifications for the purposes of subsection (3);
make provision so that a relevant enactment has effect in relation to parts of schemes recognised, or seeking recognition, under section 271A with such modifications as the Treasury consider appropriate;
make provision so that a relevant enactment does not have effect in relation to such parts of schemes.
Regulations under subsection (4)(b) or (c) may amend, repeal or revoke an enactment.
In this section—
The Financial Services and Markets Act 2000 is amended as follows.
In section 138I (consultation by the FCA), after subsection (9) insert—
This section does not apply to rules made by the FCA under section 271E.
Section 165 (regulators' powers to require information) is amended as follows.
In subsection (7)(b), after “section” insert “ 271A or ”.
At the end insert—
In subsection (7)(b), the reference to a scheme that is recognised includes a scheme a part of which is recognised.
In section 237(2) (Part 17 definitions), in the definition of “the operator”—
in paragraph (ab) omit “and”, and
after paragraph (b) insert
in relation to a recognised scheme, means the legal entity with overall responsibility for the management and performance of the functions of the scheme.
In section 392 (application of third party rights to notices)—
in paragraph (a), before “280(1)” insert “ 271N(2), 271R(3), ”, and
in paragraph (b), before “280(2)” insert “ 271N(3), 271R(4), ”.
In section 395(13) (meaning of supervisory notice), before paragraph (f) insert—
section 271M(3), (6) or (7)(b);
In section 429(2) (regulations subject to affirmative procedure), after “262,” insert “ 271S, ”.
Part 6 of the Alternative Investment Fund Managers Regulations 2013 (marketing of alternative investment funds) is amended as follows.
In regulation 57 (marketing of third country AIFs by full-scope UK AIFMs), after paragraph (1) insert—
An AIF does not fall within paragraph (1) if it is recognised under section 271A of the Act.
In regulation 58(1) (marketing of AIFs managed by small third country AIFMs), at the end insert “ , except where the AIF is recognised under section 271A of the Act ”.
In regulation 59 (marketing of AIFs managed by other third country AIFMs)—
in paragraph (1), at the end insert “ , except where the AIF is recognised under section 271A of the Act ”, and
in paragraph (4A), for “collective investment scheme” substitute “ AIF ”.
Part 6 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (temporary recognition of collective investment schemes) is amended as follows.
In regulation 62(3) (end of temporary recognition)—
in sub-paragraph (a)(i)—
before “275(3)” insert “ 271H(1) or ”, and
for “section 272 of that Act” substitute “ section 271A or 272 of that Act (as applicable) ”,
in sub-paragraph (a)(ii)—
before “276(2)(a)” insert “ 271H(3) or ”, and
for “section 272 of that Act” substitute “ section 271A or 272 of that Act (as applicable) ”,
in sub-paragraph (b)(ii), after “section” insert “ 271A or ”,
in sub-paragraph (c)(i), after “section” insert “ 271A or ”,
in sub-paragraph (c)(ii), for “that section” substitute “ either of those sections ”, and
in sub-paragraph (d), for “3” substitute “ 5 ”.
In regulation 67 (power to extend the period for temporary recognition), omit paragraph (2).
After regulation 67 insert—
Section 27
The Markets in Financial Instruments Regulation is amended as follows.
In Article 1 (subject matter and scope), after paragraph 4 insert—
Chapter 1 of Title 7 of this Regulation also applies to third-country firms providing investment services or performing investment activities in the United Kingdom.
In Article 2(1) (definitions), after point (61) insert—
“Directive 2013/36/EU” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms;
In the heading of Title 8, for “DECISION” substitute “ DETERMINATION ”.
Article 46 (general provision about provision of services etc by third-country firms following an equivalence decision) is amended as follows.
In paragraph 1, for “Article 47” substitute “ Article 48 ”.
In paragraph 2—
for point (a) substitute—
the Treasury has made a determination under Article 47(1) in respect of the third country;
the firm, and the services or activities, fall within the scope of the determination;
after point (c) insert—
the firm has established the necessary arrangements and procedures to provide the information required by rules made under paragraph 6B of this Article;
the firm has established the necessary arrangements and procedures to comply with requirements imposed under Article 48A.
Omit paragraph 2A.
In paragraph 4—
in the first subparagraph, for the words from “adoption” to the end substitute “ making of a determination by the Treasury under Article 47(1) that the legal and supervisory arrangements of the third country in which the third-country firm is authorised satisfy the requirements described in Article 47(1). ”,
after the first subparagraph insert—
be made in such form and manner as the FCA may direct, and
contain, or be accompanied by, such information as the FCA may direct.
in the following subparagraph, after “all” insert “ further ”.
In paragraph 5, in the second subparagraph, for “in writing and in a prominent way” substitute “ in writing, in a prominent way and in such form as the FCA may direct ”.
After paragraph 5 insert—
For the purposes of paragraph 5, where a third-country firm or a person acting on behalf of a third-country firm solicits a person, the provision of an investment service or activity by the third-country firm to the person is not initiated at the person's own exclusive initiative.
After paragraph 6 insert—
Third-country firms providing services or performing activities in accordance with this Article must—
keep the data relating to all orders and transactions in the United Kingdom in financial instruments which they have carried out, whether on own account or on behalf of a client, for a period of five years, and
make that data available to the FCA on request.
The FCA may make rules requiring third-country firms providing services or performing activities in accordance with this Article to provide information specified in the rules to the FCA at intervals specified in the rules.
Omit paragraph 7.
Article 47 (equivalence determination) is amended as follows.
For paragraph 1 substitute—
The Treasury may by regulations determine that the legal and supervisory arrangements of a third country ensure all of the following—
that firms authorised in that third country to provide investment services or perform investment activities comply with legally binding prudential, organisational and business conduct requirements which have equivalent effect to the relevant UK requirements,
that such firms are subject to effective supervision and enforcement ensuring compliance with the applicable legally binding prudential, organisational and business conduct requirements, and
that the legal framework of that third country provides for an effective equivalent system for the recognition of investment firms authorised under third country legal regimes.
For the purposes of paragraph 1(a), the relevant UK requirements are the following, as they apply on the day on which the Treasury makes the regulations—
the requirements set out in this Regulation;
the requirements set out in Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms;
the requirements set out in CRR rules (as defined in section 144A of FSMA);
the requirements set out in Part 9C rules (as defined in section 143F of FSMA);
the requirements set out in Directive 2013/36/EU UK law and Directive 2014/65/EU UK law.
The prudential, organisational and business conduct framework of a third country may be considered to have equivalent effect where that framework fulfils all of the following conditions—
firms providing investment services or performing investment activities in that third country are subject to authorisation and to effective supervision and enforcement on an on-going basis;
such firms are subject to sufficient capital requirements and, in particular, where they provide services or carry out the activities referred to in paragraph 3 or 6 of Part 3 of Schedule 2 to the Regulated Activities Order they are subject to comparable capital requirements to those that would apply if they were established in the United Kingdom;
such firms are subject to appropriate requirements applicable to shareholders and members of their management body;
such firms are subject to adequate business conduct and organisational requirements;
market transparency and integrity is ensured by preventing market abuse in the form of insider dealing and market manipulation.
When making regulations under paragraph 1, the Treasury must take into account whether the third country is a high-risk third country within the meaning of regulation 33 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692).
In paragraph 2—
omit point (c), and
at the end insert—
the procedures concerning the coordination of investigations and on-site inspections that the FCA considers necessary for the purposes of carrying out its functions under this Regulation, which must include a requirement for the FCA to give prior notice to the competent authority of the third country;
the procedures concerning the coordination of other supervisory activities;
the procedures concerning a request for data by the FCA under Article 46(6A)(b);
the mechanism for the FCA to obtain from a third-country firm providing services or performing activities in accordance with Article 46 further information in respect of the firm's operations by making a request to the competent authority of the third country concerned.
At the end insert—
The FCA must—
monitor the regulatory and supervisory developments, the enforcement practices and other relevant market developments in third countries for which determinations made by the Treasury in accordance with paragraph 1 are in force in order to verify that the conditions on the basis of which those determinations were made are still fulfilled, and
provide a report of its findings to the Treasury on request.
In this Article, “Directive 2013/36/EU UK law” and “Directive 2014/65/EU UK law” mean the law of the United Kingdom which was relied on by the United Kingdom before IP completion day to implement Directive 2013/36/EU or Directive 2014/65/EU (as appropriate), as amended from time to time.
After Article 48 insert—
Article 49 (withdrawal of registration) is amended as follows.
For the heading substitute— “ Temporary prohibitions and restrictions and withdrawal of registration ”.
Before paragraph 1 insert—
The FCA may temporarily prohibit a third-country firm from providing investment services, or performing investment activities, in the United Kingdom, or place temporary restrictions on a third-country firm's provision of such services or performance of such activities in the United Kingdom, where the third-country firm—
has failed to comply with a prohibition or restriction imposed on it by the FCA under Article 42,
has failed to comply with a request for data made by the FCA under Article 46(6A)(b) in accordance with the cooperation arrangements established under Article 47(2),
has failed to provide information in accordance with rules made under Article 46(6B),
has failed to provide information requested by the FCA in accordance with the cooperation arrangements established under Article 47(2),
has failed to cooperate with an investigation or on-site inspection carried out in accordance with the cooperation arrangements established under Article 47(2), or
has failed to comply with a requirement imposed by regulations under Article 48A.
The FCA may impose more than one temporary prohibition or restriction under paragraph A1 in respect of the same failure.
In paragraph 1—
in the opening words, for “shall” substitute “ may ”,
for points (a) and (b) substitute—
the FCA has well-founded reasons based on documented evidence to believe that—
in the provision of investment services and the performance of investment activities in the United Kingdom, the third-country firm is acting in a manner which is clearly prejudicial to the interests of investors or the orderly functioning of markets,
in the provision of such services and activities in the United Kingdom, the third-country firm has seriously infringed a provision applicable to it in the third country and on the basis of which the Treasury made regulations under Article 47(1),
in the provision of such services and activities in the United Kingdom, the third-country firm has seriously infringed a requirement imposed under Article 48A, or
the third-country firm is not maintaining the necessary arrangements and procedures to provide the information required by rules made under Article 46(6B) or to comply with requirements under Article 48A, and
omit point (d) (and the “and” before it).
After paragraph 1 insert—
In deciding the appropriate action to take under this Article, the FCA must, among other things, take into account the nature and seriousness of the risk posed to the interests of investors and the orderly functioning of markets in the United Kingdom, having regard to—
the duration and frequency of the risk arising,
whether the risk has revealed serious or systemic weaknesses in the third-country firm's procedures,
whether financial crime has been occasioned or facilitated by, or is otherwise attributable to, the risk, and
whether the risk has arisen intentionally or negligently.
The FCA must inform the competent authority of the third country in due course of its intention to take action in accordance with paragraph A1 or 1.
At the end insert—
In this Article, “documented evidence” includes, but is not limited to, information provided in accordance with rules made under Article 46(6B).
After Article 49 insert—
In the heading of Title 9, after “DIRECTIONS” insert “ , RULES ”.
In the heading of Article 50B (FCA Directions), at the end insert “ identifying relevant area of the UK ”.
After that Article insert—
The requirements of section 138I of the Financial Services and Markets Act 2000, in so far as they apply in connection with rules made under Article 46(6B) or 48A of the Markets in Financial Instruments Regulation, may be satisfied by things done before paragraph 12 of this Schedule comes into force (as well as by things done after that time).
Omit Article 54 (transitional provisions).
Section 28
The Financial Services and Markets Act 2000 is amended as follows.
After section 55J insert—
Schedule 6A confers an additional power on the FCA to vary or cancel an FCA-authorised person's Part 4A permission.
In this section and that Schedule “FCA-authorised person” means an authorised person who is not a PRA-authorised person.
After Schedule 6 insert—
In section 133 (proceedings before Tribunal: general provision), after subsection (5) insert—
In the case of a reference under paragraph 7 of Schedule 6A, the Tribunal—
must determine what (if any) is the appropriate action that must be taken in relation to the matter, and
on determining the reference, must give such directions (if any) to such persons as the Tribunal considers appropriate for giving effect to its determination.
In section 392 (application of sections 393 and 394)—
in paragraph (a), at the end insert “ or paragraph 5(6) of Schedule 6A ”, and
in paragraph (b), at the end insert “ or paragraph 5(7) of Schedule 6A ”.
Section 33
Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 (forfeiture of terrorist property) is amended as follows.
Part 4B (forfeiture of terrorist money held in bank and building society accounts) is amended in accordance with paragraphs 3 to 8.
In the Part heading, for “bank and building society” substitute “ certain ”.
Paragraph 10Q (application for account freezing order) is amended as follows.
In sub-paragraph (1), for “bank or building society” substitute “ relevant financial institution ”.
After that sub-paragraph insert—
In this Part of this Schedule, “relevant financial institution” means—
a bank,
a building society,
an electronic money institution, or
a payment institution.
In sub-paragraph (7), at the appropriate places insert—
In paragraph 10V(1) (restriction on proceedings and remedies), for “bank or building society” substitute “ relevant financial institution ”.
In paragraph 10W(6)(b) (account forfeiture notice), for “bank or building society” substitute “ relevant financial institution ”.
Paragraph 10Y (lapse of account forfeiture notice) is amended as follows.
In sub-paragraph (6), for “bank or building society” substitute “ relevant financial institution ”.
In sub-paragraph (7)—
for “If the bank or building society” substitute “ If the relevant financial institution ”, and
for “on the bank or building society” substitute “ on the institution ”.
In paragraph 10Z2(7)(a) (forfeiture order), for “bank or building society” substitute “ relevant financial institution ”.
In Part 6 (interpretation), in paragraph 19(1), at the appropriate places insert—
Part 5 of the Proceeds of Crime Act 2002 (civil recovery of the proceeds etc of unlawful conduct) is amended as follows.
Chapter 3B (forfeiture of money held in bank and building society accounts) is amended in accordance with paragraphs 12 to 20.
In the Chapter heading, for “bank and building society” substitute “ certain ”.
In the italic heading before section 303Z1, for “bank and building society” substitute “ certain ”.
Section 303Z1 (application for account freezing order) is amended as follows.
In subsection (1), for “bank or building society” substitute “ relevant financial institution ”.
After subsection (5) insert—
In this Chapter as it extends to England and Wales and Scotland, “relevant financial institution” means—
a bank,
a building society,
an electronic money institution, or
a payment institution.
After subsection (5A) insert—
In this Chapter as it extends to Northern Ireland, “relevant financial institution” means—
a bank, or
a building society.
In subsection (6), at the appropriate places insert—
In section 303Z2(3) (restrictions on making of application under section 303Z1), for “bank or building society” substitute “ relevant financial institution ”.
In section 303Z6(1), for “bank or building society” substitute “ relevant financial institution ”.
In section 303Z8(4), for “bank or building society” substitute “ relevant financial institution ”.
In section 303Z9(6)(b) (account forfeiture notice: England and Wales and Northern Ireland), for “bank or building society” substitute “ relevant financial institution ”.
Section 303Z11 (lapse of account forfeiture notice) is amended as follows.
In subsection (6), for “bank or building society” substitute “ relevant financial institution ”.
In subsection (7)—
for “If the bank or building society” substitute “ If the relevant financial institution ”, and
for “on the bank or building society” substitute “ on the institution ”.
In section 303Z14(7)(a) (forfeiture order), for “bank or building society” substitute “ relevant financial institution ”.
In section 316(1) (general interpretation of Part 5), at the appropriate places insert—