Objectives 1 and 3: PPTAs: set-off and nettingI131
1
A PPTA may not provide for the transfer of some (but not all) of the protected rights and liabilities (“PRL”) between the institution and—
a
a user or holder (“U”), or
b
another person (“P”).
2
PRL are—
a
rights and liabilities which U or P or the institution is entitled to set off or net under a particular set-off arrangement, netting arrangement or title transfer financial collateral arrangement which U or P has entered into with the institution, and
b
not excluded rights (“ER”) or excluded liabilities (“EL”).
3
ER, in relation to rights between U or P and the institution, means “excluded rights” within the meaning of the Banking Act 2009 (Restriction of Partial Property Transfers) Order 200921 (see article 1(3)), subject as follows—
Provision | Modification |
|---|---|
Paragraph (a) | To be read as if for “relate to a retail deposit” there were substituted “conferred by a PI or EMI contract”. |
Paragraph (b) | To be read as if for “relate to a retail liability owed to a banking institution” there were substituted “are conferred, in relation to relevant funds, by an enactment”. |
Paragraphs (c) and (d) | Omitted. |
Paragraph (e) | To be read as if after “subordinated debt” there were inserted “issued by U or P or the institution”. |
Paragraph (f) | To be read as if after “article 3(1)” there were inserted “issued by U or P or the institution”. |
4
“EL” is to be read in light of paragraph (3).
5
It is immaterial whether or not—
a
the arrangement which permits U or P or the institution to set off or net rights and liabilities also permits U or P or the institution to set off or net rights and liabilities with another person, or
b
the right of U or P or the institution to set off or net is exercisable only on the occurrence of a particular event.
6
A PPTA made in contravention of this regulation does not affect the exercise of the right to set off or net.
7
If a PPTA purports to transfer all of the PRL between U or P and the institution despite a possibility that any of the PRL are foreign property (and might not have been effectively transferred), the administrator may assume it is a PPTA which is not subject to the restriction in paragraph (1).
8
In this regulation—
“netting arrangement” has the same meaning as in the IBSAR 2011 (see regulation 10D(6));
“set-off arrangement” means an arrangement under which two or more debts, claims or obligations can be set off against each other;
“title transfer financial collateral arrangement” has the same meaning as in the Financial Collateral Arrangements (No 2) Regulations 200322 (see regulation 3(1)).