The Financial Conglomerates and Other Financial Groups (Amendment etc.) (EU Exit) Regulations 2019

Amendment of the Financial Conglomerates and Other Financial Groups Regulations 2004 U.K.

2.—(1) The Financial Conglomerates and Other Financial Groups Regulations 2004 M1 are amended as follows.

(2) In regulation 1(2) (interpretation)—

(a) omit the definitions of “directive requirement”, “the European Banking Committee” and “the Joint Committee of the ESAs”;

(b) in the definition of “competent authority”, for “any national authority of an EEA State” substitute “ any authority in the United Kingdom ”;

(c) for the definition of “co-ordinator”, substitute—

““co-ordinator” means the competent authority which has been appointed as responsible for the co-ordination and exercise of supplementary supervision of a financial conglomerate based on the criteria in regulation 2A of these Regulations;”;

(d) in the definition of “financial conglomerate”, after “conglomerates directive” insert—

“as if—

(a) in that Article—

(i) in point (a)(i), for “by a relationship within the meaning of Article 12(1) of Directive 83/349/EEC” there were substituted “ by a common management relationship defined in Article 4(38A) of the capital requirements regulation ”,

(ii) in point (a)(i), “participation” had the meaning given in Article 4 (1)(35) of the capital requirements regulation,

(iii) references to “group”, “financial sector”, “regulated entity” and “parent undertaking” had the meaning given in these Regulations, and

(b) in Article 3(2)—

(i) in the third paragraph, “Asset management companies” had the same meaning given for “management company” in these Regulations;

(ii) in the fourth paragraph, “Alternative investment fund managers” had the same meaning given for “regulated entity” in these Regulations;”;

(e) in the definition of “relevant competent authorities”, omit “,within the meaning of Article 2(17) of the conglomerates directive,”;

(f) for the definition of “regulated entity” substitute—

““regulated entity” means—

(a) a credit institution (within the meaning of Article 4(1)(1) of the capital requirements regulation),

(b) an insurance undertaking or reinsurance undertaking (within the meaning of section 417 of the Financial Services and Markets Act 2000) or a third-country insurance undertaking or third country reinsurance undertaking (within the meaning of Regulation 2(1) of the Solvency 2 Regulations 2015),

(c) a company, the regular business of which is the management of UCITS (as specified in article 51ZA of the Regulated Activities Order) in the form of common funds or of investment companies (collective portfolio management of UCITS), or an undertaking which would require permission under Part 4A of FSMA to carry on the regulated activity of managing a UCITS (as specified in article 51ZA of the Regulated Activities Order) if its registered office were located in the United Kingdom,

(d) an investment firm within the meaning of Article 2(1A) of the Markets in Financial Instruments Regulations (EU) No 600/2014, or

(e) an alternative investment fund manager within the meaning of regulation 4(1) of the Alternative Investment Managers Regulations 2013 and which is not within the definition of ‘management company’ in this regulation, or an undertaking that would require permission to be an alternative investment fund manager if its registered office were located in the United Kingdom; and”;

(g) insert the following definitions in the appropriate place—

““financial sector” means a sector composed of one or more of the following entities—

(a)

a credit institution, a financial institution or an ancillary banking services undertaking within the meaning of Article 1(5) and (23) of Directive 2000/12/EC (the banking sector);

(b)

an insurance undertaking, a reinsurance undertaking or an insurance holding company within the insurance sector within the meaning given by the Financial Conglomerates part of the PRA Rulebook and the Glossary of the FCA Handbook;

(c)

an investment firm or a financial institution within the meaning of Article 2(7) of Directive 93/6/EEC (the investment services sector);

(d)

a mixed financial holding company;”;

““group” means a group of undertakings, which consist of—

(a) a parent undertaking and its subsidiaries;

(b) the entities in which the parent undertaking or its subsidiaries hold a participation as defined in article 4(1) (35) of the capital requirements regulation; and

(c) undertakings linked to each other by a relationship within the meaning of a common management relationship as defined in article 4(38A) of the capital requirements regulation, including any subgroup thereof;”;

““management company” has the same meaning as regulation 2(2)(f)(c) of these regulations;”;

““mixed financial holding company” means a parent undertaking, other than a regulated entity, which, together with its subsidiaries, at least one of which is a regulated entity which has its head office in the UK, and other entities, constitutes a financial conglomerate;”;

““parent undertaking” has the same meaning given in article 4(15)(a) of the capital requirements regulation and any undertaking which, in the opinion of the regulator, effectively exercises a dominant influence over another undertaking;”.

(3) In regulation 2 (notification of identification as a financial conglomerate and choice of co-ordinator)—

(a) in paragraph (1)—

(i) omit sub-paragraphs (b), (c) and (d);

(ii) omit “for the purposes of Article 4 of the conglomerates directive”;

(b) in paragraph (2)(b), for “Article 10(2) of the conglomerates directive (selection of the co-ordinator)”, substitute “ paragraph (2A) ”;

(c) after paragraph (2) insert—

“(2A) The criteria are—

(a) where the financial conglomerate is headed by a regulated entity, the task of the co-ordinator must be exercised by the competent authority which has authorised that regulated entity;

(b) where a financial conglomerate is not headed by a regulated entity, the task of coordinator must be exercised by the competent authority identified in accordance with the following principles—

(i) where the parent of a regulated entity is a mixed financial holding company, the task of coordinator must be exercised by the competent authority which has authorised that regulated entity;

(ii) where the financial conglomerate is a group without a parent undertaking at the top, or in any other case, the task of coordinator must be exercised by the competent authority which authorised the regulated entity with the largest balance sheet total in the most important financial sector.”;

(d) in paragraph (3)—

(i) for “Article 10(2) of the conglomerates directive”, substitute “ paragraph (2A) ”;

(ii) omit “,where there is a directive requirement to do so,”;

(e) after paragraph (3) insert—

“(3A) The relevant competent authorities may by common agreement waive the criteria referred to in paragraph (2A) if the authorities consider that their application would be inappropriate, taking into account the structure of the conglomerate and the relative importance of its activities.

(3B) Before the authorities waive the criteria in accordance with paragraph (3A), the authorities must give the financial conglomerate an opportunity to make representations.”;

(f) in paragraph (4)(b)(i), omit “(within the meaning given by Article 3(2) of the conglomerates directive)”.

(4) In regulation 3 (exercise of functions under Part IV of the Act for the purposes of carrying on supplementary supervision)—

(a) in paragraph (1)(b), omit “for the purposes of any provision (other than Article 11, 12, 16, 17 or 18(3)) of the conglomerates directive”;

(b) in paragraph (3)—

(i) omit “, where there is a directive requirement to do so”;

(ii) in sub-paragraph (a), after “member;”, insert “ and ”;

(iii) omit sub-paragraph (b).

(5) In regulation 4 (exercise of functions under section 138A of the Act for the purposes of carrying on supplementary supervision)—

(a) in paragraph (1), omit “for the purposes of any provision (other than Article 11, 12, 16, 17 or 18(3)) of the conglomerates directive”;

(b) in paragraph (2)—

(i) omit “, where there is a directive requirement to do so”;

(ii) at the end of paragraph (a), insert “ and ”;

(iii) omit sub-paragraph (b).

(6) In regulation 6 (regulator functions and service of notifications), in paragraph (1), for “the conglomerates directive (including a function conferred by these Regulations)”, substitute “ these Regulations ”.

(7) In regulation 7 (supervision of third-country financial conglomerates and third-country groups - interpretation)—

(a) omit the definitions of “asset management company”, “alternative investment fund manager”, “credit institution”, “investment firm” and “third-country group”;

(b) in the definition of “third-country competent authority”, for “an EEA State”, substitute “ part of the United Kingdom ”;

(c) in the definition of “third-country financial conglomerate”—

(i) in sub-paragraph (a), after “that directive” insert “ as amended by regulation 2(2)(d) of the Financial Conglomerates and other Financial Groups (Amendment etc.) (EU Exit) Regulations 2019 ”;

(ii) in sub-paragraph (b) for “EEA” substitute “ UK ”;

(d) omit paragraph (2).

(8) In regulation 8 (supervision of third-country financial conglomerates)—

(a) for paragraph (1) substitute—

“(1) Where a regulator is verifying whether the regulated entities in a third-country financial conglomerate are subject to supervision by a third-country competent authority, which is equivalent to that provided for by the provisions of these Regulations, it must, before completing the verification, consult the other relevant competent authorities in relation to the third-country financial conglomerate.”;

(b) in paragraph (2), omit “, for the purposes of Article 18(3) of the conglomerates directive (application of other methods for the purposes of ensuring appropriate supplementary supervision of the regulated entities in a third-country financial conglomerate),”;

(c) in paragraph (3)—

(i) omit “Where there is a directive requirement to do so”;

(ii) for “a regulator”, substitute “ A regulator ”;

(d) for paragraph (4) substitute—

“(4) If a regulator decides to take that action, it must notify the competent authority of each regulated entity in that third-country financial conglomerate that it has done so.”.

(9) Omit regulation 9 (supervision of third-country banking groups).

(10) Omit regulation 10 (Supervision of third-country groups subject to the capital requirements regulation and capital requirement directive).

(11) In regulation 15(1) (extension of power to vary Part IV permissions)—

(a) in sub-paragraph (a), for “the conglomerates directive” substitute “ these Regulations ”;

(b) omit sub-paragraphs (b) and (c).

Commencement Information

I1 Reg. 2 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1

Marginal Citations

M1 S.I. 2004/1862 as amended by S.I. 2013/1162.