The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025

Amendments to Part 3: prohibitions and exceptions

10.—(1) In article 13(11) (prohibitions: inter-bank payment systems), in the definition of “inter-bank payment system”, in paragraph (b), for “credit institution” substitute “payment service provider”.

(2) In article 14 (prohibitions: financial institution exposures)—

(a) in paragraph (1), for “19B” substitute “19C”;

(b) in paragraph (2), after sub-paragraph (bb), insert—

“(bc) any undertaking in which the ring-fenced body has a participating interest,”;

(c) in paragraph (3), after sub-paragraph (d), insert—

“(e) longevity risk;

(f) mortality risk.”;

(d) in paragraph (3A)(1), for the words from “Article 412” to the end, substitute “Article 412 of the Liquidity (CRR) Part of the PRA Rulebook, and other applicable requirements in relation to liquid assets set out in that Part of the PRA Rulebook published by the PRA containing rules made by that Authority under the Act, as it applies to CRR firms, and as amended from time to time”;

(e) after paragraph (6), insert—

“(7) A ring-fenced body may incur a financial institution exposure where—

(a) the relevant financial institution is an SME investment undertaking within the meaning of article 7A, and

(b) the transaction giving rise to the financial institution exposure satisfies the conditions in article 7A.

(8) A ring-fenced body may incur a financial institution exposure where the exposure arises as a result of the ring-fenced body dealing in investments as principal as permitted under article 6(8) or (9).”.

(3) In article 15 (financial institutions exposures: trade finance)—

(a) in paragraph (1)(b)—

(i) in the opening words, for the words from “an agreement” to the end, substitute “a relevant agreement, which specifies, or together with other connected agreements specifies”;

(ii) in paragraph (ii), for “the agreement” substitute “the relevant agreement and any connected agreements”;

(b) after paragraph (1), insert—

“(1A) For the purpose of paragraph (1)(b)—

(a) an agreement is a “relevant agreement” if—

(i) it gives effect to the transaction described in paragraph (1)(a) (“the finance transaction”),

(ii) it is made under a master agreement which gives effect to the finance transaction, or

(iii) it is one of a number of connected agreements entered into in relation to the finance transaction;

(b) an agreement is a “connected agreement” if it is one of a number of agreements which—

(i) are entered into by a party to the finance transaction, or to the supply of goods or services to which the finance transaction relates, with one or more other such parties; and

(ii) collectively give effect to the finance transaction.”.

(4) In article 19 (financial institution exposures: ancillary exposures)—

(a) omit paragraph (6);

(b) in paragraph (7)—

(i) after “trustee” insert “, or in Scotland as a nominee,”;

(ii) for “individual or charity” substitute “individual, minor, charity or CIO”.

(5) In article 19A(2)(b) (financial institution exposures: financing of infrastructure projects), omit “within the United Kingdom or the EEA”.

(6) In article 19B (financial institution exposures: changes in status of counterparties)—

(a) in paragraph (1), after “incurs a” insert “prohibited”;

(b) in paragraph (2), after “incur the” insert “prohibited”;

(c) after paragraph (2), insert—

“(3) In this article, “prohibited financial institution exposure” means a financial institution exposure which would be prohibited under article 14(1) if it was not permitted under this article.”.

(7) After article 19B, insert—

“Financial institution exposures: small exposures

19C.— (1) A ring-fenced body may incur a financial institution exposure where the total exposures of the ring-fenced body to the relevant financial institution are equal to or less than £100,000.

(2) The amount of a ring-fenced body’s exposure to a relevant financial institution must be determined in accordance with the fair value of the assets giving rise to that exposure, assessed in accordance with International Financial Reporting Standard 13 (fair value measurement) issued by the International Accounting Standards Board, as amended from time to time.”.

(8) Omit article 20 (prohibitions: non-UK and non-EEA branches and subsidiaries).

(1)

Paragraph (3A) was inserted by S.I. 2016/1032.