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

Amendments to Part 1: general

8.—(1) In article 1 (interpretation)—

(a) in paragraph (4)—

(i) for the definition of “correspondent banking” substitute—

““correspondent banking” means an arrangement between two or more payment service providers pursuant to which one payment service provider provides payment services to the clients of one or more other payment service providers on behalf of those other payment service providers;”;

(ii) after the definition of “financial institution exposure” insert—

““financial year” has the meaning given in article 1(3) of the Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) Order 2014;”;

(iii) omit the definition of “global systemically important insurer”;

(iv) after the definition of “liquidity risk”, insert—

““longevity risk” means that risk that a person to whom an undertaking has loaned money dies later than anticipated by the undertaking at the time when the loan was agreed;”;

(v) after the definition of “mixed financial holding company”, insert—

““mortality risk” means the risk that a person to whom an undertaking has loaned money dies earlier than anticipated by the undertaking at the time when the loan was agreed;”;

(vi) after the definition of “own funds” insert—

““participating interest” has the meaning given in section 421A of the Act(1);”;

(vii) after the definition of “payment exposures”, insert—

““payment service provider” means—

(a)

a payment service provider as defined by regulation 2(1) of the Payment Services Regulations 2017(2), or

(b)

an undertaking which—

(i)

performs similar functions to an undertaking listed in paragraphs (a) to (g) of that definition,

(ii)

carries out payment services, and

(iii)

has a registered office or head office outside the United Kingdom;”;

(viii) for the definition of “related undertaking” substitute—

““related undertaking means—

(a)

any subsidiary undertaking of a parent undertaking, other than a subsidiary undertaking that is a ring-fenced body, or

(b)

any undertaking in which a parent undertaking or a subsidiary undertaking of a parent undertaking has a participating interest, other than an undertaking which is a ring-fenced body,

where the parent undertaking is subject to rules made by the appropriate regulator pursuant to section 192JA of the Act(3);;”;

(ix) after the definition of “shares”, insert—

““SME” means an undertaking which satisfies the condition in paragraph (6);”;

(b) in paragraph (5), for “on 1 January 2022” substitute “from time to time”;

(c) after paragraph (5), insert—

“(6) Subject to paragraphs (7), (8) and (9), an undertaking is an SME for the purposes of this Order—

(a) where the undertaking is not a member of a group, if the turnover for the undertaking in the relevant financial year was less than or equal to £50 million,

(b) where—

(i) the undertaking is a member of a group, and

(ii) the undertaking is included in the consolidated group accounts of that group for the relevant financial year,

if the turnover included in the consolidated group accounts for that financial year is less than or equal to £50 million, or

(c) where the undertaking is a member of a group and either—

(i) the group did not produce consolidated group accounts for the relevant financial year, or

(ii) the undertaking is not included in the consolidated group accounts of that group for that financial year,

if the sum of the turnover of each undertaking in the group for the relevant financial year of the undertaking concerned is less than or equal to £50 million.

(7) Where an undertaking has existed for less than one financial year, the maximum figure for turnover in paragraph (6)(a) is to be proportionately reduced.

(8) Where no undertaking in a group has existed for more than one financial year, the maximum figure for turnover in paragraph (6)(c) is to be reduced in proportion to the period for which the oldest undertaking in that group has existed.

(9) An undertaking does not cease to be an SME unless it exceeds one of the thresholds in paragraph (6) for two consecutive financial years, and for these purposes the threshold exceeded need not be the same in both financial years.

(10) For the purposes of paragraph (6)—

“included in the consolidated group accounts” is to be construed in accordance with section 474(1) of the Companies Act 2006(4);

“relevant financial year”—

(a)

in relation to an undertaking, means—

(i)

the last completed financial year for which accounts are available, or

(ii)

where the undertaking has existed for less than one financial year, the period for which the undertaking has existed, and

(b)

in relation to a group, means—

(i)

the last completed financial year of the parent undertaking of the group for which accounts are available, or

(ii)

where the parent undertaking of the group has existed for less than one financial year—

(aa)

if a majority of undertakings in the group have the same financial year, the last completed financial year of that majority for which accounts are available, or

(bb)

in any other case, the most recently completed financial year of any undertaking in the group for which accounts are available, or

(iii)

where no undertaking in the group has existed for at least a full financial year, the period for which the oldest undertaking in the group has existed;

“turnover”, in relation to an undertaking, means the amounts derived from the provision of goods and services (“the gross receipts”), after deduction of—

(a)

trade discounts,

(b)

value added tax, and

(c)

any other taxes based on the gross receipts.”.

(2) In article 2 (relevant financial institution)—

(a) in paragraph (2), omit sub-paragraph (d);

(b) in paragraph (3)—

(i) in sub-paragraph (c)—

(aa) at the end of paragraph (i), omit “and”;

(bb) omit paragraph (ii);

(ii) in sub-paragraph (g)(ii), for “to 20” substitute “to 19C”;

(iii) after sub-paragraph (g), insert—

“(ga) an institution referred to in paragraph (2)(b), (e), (f) or (g) which is an SME;”.

(3) In article 3(2)(a) (securitisation companies and structured finance vehicles: definitions), for the words from “or a” to the end, substitute “, another ring-fenced body which is a member of the group of companies to which the first ring-fenced body belongs (a “group ring-fenced body”), or a subsidiary of either ring-fenced body”.

(4) In article 3(2)(b)—

(a) in the opening words, after “created by,” insert “acquired by,”;

(b) in paragraph (i), after “body” insert “or a group ring-fenced body”;

(c) in paragraph (ii)—

(i) after “created by” insert “or acquired by”;

(ii) for “or any of its” substitute “, a group ring-fenced body or any of their”;

(iii) for “the ring-fenced body itself” substitute “a ring-fenced body”;

(d) in paragraph (iii)—

(i) after “ring-fenced body”, the first time it appears, insert “or of a group ring-fenced body”;

(ii) for “the ring-fenced body itself” substitute “a ring-fenced body”;

(e) in paragraph (iv)—

(i) in the opening words, after “(“A”)” insert “or a group ring-fenced body (“B”)”;

(ii) in sub-paragraph (aa), after “created” insert “or acquired”;

(iii) in each of sub-paragraphs (aa) and (bb), after “A” insert “or B”;

(iv) in sub-paragraph (cc), for “A itself” substitute “a ring-fenced body”.

(1)

Section 421A was inserted by S.I. 2008/948.

(2)

S.I. 2017/752. The definition of “payment service provider” was amended by S.I. 2018/1201.

(3)

Section 192JA was inserted by section 133(1) of the Financial Services (Banking Reform) Act 2013 (c. 33).

(4)

2006 c. 46. There are amendments to section 474(1) which are not relevant to this instrument.