PART 9C

Prudential regulation of FCA investment firms

Rules

Duty to make rules applying to parent undertakings
143D
1
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—
a
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);
b
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;
c
reporting requirements related to requirements described in paragraph (a) or (b);
d
public disclosure requirements related to requirements described in paragraph (a) or (b);
e
requirements in respect of governance arrangements related to the risks specified in or under subsection (2);
f
requirements in respect of remuneration policies and practices related to the risks specified in or under subsection (2).
2
The risks referred to in subsection (1)(a), (e) and (f) are—
a
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,
b
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,
c
the risks to which FCA investment firms are exposed by virtue of their relationship with their parent undertaking, and
d
any other risks specified by the Treasury by regulations.
3
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.
4
Rules made for the purpose of subsection (1) or under subsection (3) may, among other things—
a
impose requirements to be satisfied on an individual basis or on a consolidated basis;
b
impose requirements relating to the processes for consolidation;
c
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;
d
provide for exceptions from requirements;
e
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.
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7
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.
8
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—
a
the references in that section to authorised persons were references to non-authorised parent undertakings of FCA investment firms, and
b
subsection (7) of that section were omitted.
9
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.
10
This section is subject to section 143E.
S. 143D(6) omitted (1.1.2024) by virtue of The Financial Services and Markets Act 2023 (Consequential Amendments) Regulations 2023 (S.I. 2023/1410), regs. 1(2), 2(4)
Pt. 9C inserted (1.7.2021) by Financial Services Act 2021 (c. 22), s. 49(5), Sch. 2 para. 1; S.I. 2021/671, reg. 4(b)
S. 143D(5) omitted (1.1.2024) by virtue of The Financial Services and Markets Act 2023 (Consequential Amendments) Regulations 2023 (S.I. 2023/1410), regs. 1(2), 2(4)
S. 143D: power to amend conferred (29.8.2023) by Financial Services and Markets Act 2023 (c. 29), ss. 67(1)(b), 86(3); S.I. 2023/779, reg. 4(ss)