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U.K.

Statutory Instruments

2004 No. 1862

FINANCIAL SERVICES AND MARKETS

The Financial Conglomerates and Other Financial Groups Regulations 2004

Made

19th July 2004

Laid before Parliament

19th July 2004

Coming into force

10th August 2004

Whereas the Treasury are a government department designated for the purposes of section 2(2) of the European Communities Act 1972 F1 in relation to—

(a)

the authorisation of the carrying on of insurance business and the regulation of such business and its conduct F2;

(b)

credit and financial institutions and the taking of deposits or other repayable funds from the public F3;

(c)

measures relating to investment firms and to the provision of investment services F4; and

(d)

collective investment in transferable securities and other liquid assets F5;

Now therefore the Treasury, in exercise of the powers conferred upon them by section 2(2) of the European Communities Act 1972 and sections 183(2), 188(2), 417(1) F6 and 428(3) of the Financial Services and Markets Act 2000 F7 hereby make the following Regulations:

F11972 c. 68. By virtue of the amendment of section 1(2) made by section 1 of the European Economic Area Act 1993 (c. 51), regulations may be made under section 2(2) to implement obligations of the United Kingdom created by or arising under the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 (Cm 2073) and the Protocol adjusting the Agreement signed at Brussels on 17th March 1993 (Cm 2183).

F6See the definition of “prescribed”.

PART 1 U.K.Introduction

Citation, commencement and interpretationU.K.

1.—(1) These Regulations may be cited as the Financial Conglomerates and Other Financial Groups Regulations 2004 and come into force on 10th August 2004.

(2) In these Regulations—

the Act” means the Financial Services and Markets Act 2000;

[F8“the European Banking Committee” means the Committee established pursuant to a Commission Decision of 5 November 2003 establishing the European Banking Committee (No.2004/10/EC).]

F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F10“the capital requirements directive” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 relating to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC;

“the capital requirements regulation” means Regulation (EU) 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012;]

“competent authority”, except in the term “third-country competent authority” as defined in regulation 7(1), means any national authority of an EEA State which is empowered by law or regulation to supervise regulated entities, whether on an individual or group-wide basis;

the conglomerates directive” means Directive 2002/87/EC of the European Parliament and of the Council of 16th December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC, 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council [F11as last amended by Directive 2011/89/EU of the European Parliament and of the Council;]

co-ordinator” means the competent authority which has been appointed, for the purposes of Article 10 of the conglomerates directive, as the competent authority which is responsible for the co-ordination and exercise of supplementary supervision of a financial conglomerate;

directive requirement” means any procedural requirement (including a requirement to consult or obtain consent) imposed on a competent authority by—

(a)

the conglomerates directive; or

(b)

[F12Article 127 of the capital requirements directive;]

“financial conglomerate”, except in the term “third-country financial conglomerate” as defined in regulation 7(1), has the meaning given by Article 2(14) of the conglomerates directive;

[F13“the Joint Committee of the ESAs” means the Joint Committee of the European Supervisory Authorities established by Articles 54 of Regulation (EU) No. 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), of Regulation (EU) No. 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority) and of Regulation (EU) No. 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority);]

relevant competent authorities” means those competent authorities, within the meaning of Article 2(17) of the conglomerates directive, which are, or which have been appointed as, relevant competent authorities in relation to a financial conglomerate;

regulated entity” means—

(a)

a credit institution (within the meaning of F14... [F15Article 4(1)(1) of the capital requirements regulation]);

(b)

an insurance undertaking (within the meaning of [F16Article 13(1) of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II)) or a third-country insurance undertaking (within the meaning of Article 13(3) of that Directive);]

(c)

a management company (within the meaning of [F17Article 2.1(b)] of the UCITS directive) or an undertaking which is outside the EEA but which would require authorisation in accordance with [F18Article 6] of the UCITS directive if it had its registered office in the EEA; F19...

(d)

an investment firm (within the meaning of [F20Article 4.1.1 of the markets in financial instruments directive], [F21including the undertakings referred to in] [F22Article 4(1)(2) of the capital requirements regulation])[F23; or

(e)

an alternative investment fund manager (as referred to in Article 4(1)(b), (l) or (ab) of the alternative investment fund managers directive) or an undertaking which is outside the EEA but which would require authorisation in accordance with that Directive if it had its registered office in the EEA; and]

[F24“regulator” means the Financial Conduct Authority or the Prudential Regulation Authority;]

supplementary supervision” means the supervision of a regulated entity to the extent and in the manner prescribed by the conglomerates directive.

(3) Save as is otherwise provided, any expression used in these Regulations which is defined for the purposes of the Act has the meaning given by the Act.

PART 2 U.K.Exercise of supplementary supervision of regulated entitiesin a financial conglomerate

Notification of identification as a financial conglomerate and choice of co-ordinatorU.K.

2.—(1) Where [F25a regulator] has become the co-ordinator for a financial conglomerate, it must notify—

(a)the relevant member of that financial conglomerate;

[F26(aa)the other regulator;]

(b)any competent authority which has given EEA authorisation to a regulated entity which is a member of that financial conglomerate;

(c)the competent authorities of the EEA State in which the parent undertaking of that financial conglomerate has its head office, unless that parent undertaking is a regulated entity; and

(d)[F27the Joint Committee of the ESAs],

that the group has been identified as a financial conglomerate for the purposes of Article 4 of the conglomerates directive and that [F28the regulator] is the co-ordinator for that financial conglomerate.

(2) Paragraph (3) applies if—

(a)[F29a regulator] is a relevant competent authority in relation to a financial conglomerate, and

(b)[F30that regulator], in conjunction with the other relevant competent authorities, proposes to waive the criteria specified in Article 10(2) of the conglomerates directive (selection of the co-ordinator) and appoint a different competent authority as co-ordinator.

(3) Before [F31the regulator], in conjunction with the other relevant competent authorities, waives the criteria specified in Article 10(2) of the conglomerates directive and appoints a different competent authority as co-ordinator, [F31the regulator] must, where there is a directive requirement to do so, give the financial conglomerate an opportunity to make representations.

(4) In this regulation, “the relevant member” of a financial conglomerate is—

(a)the parent undertaking at the head of the financial conglomerate; or

(b)where there is no parent undertaking at the head of the financial conglomerate, the regulated entity which—

(i)is in the most important financial sector (within the meaning given by Article 3(2) of the conglomerates directive); and

(ii)has the largest balance-sheet total in that sector.

Exercise of functions under Part IV of the Act for the purposes of carrying on supplementary supervisionU.K.

3.—(1) This regulation applies if [F32a regulator] is considering varying the Part IV permission of any person (“A”) where—

(a)A is a member of a financial conglomerate; and

(b)[F33that regulator] is acting in the course of carrying on supplementary supervision for the purposes of any provision (other than Article 11, 12, 16, 17 or 18(3)) of the conglomerates directive.

(2) [F34Section 55R(2)] of the Act (obligation to consult home state regulators of connected persons) does not apply.

(3) Before varying the Part IV permission of A, [F33that regulator] must, where there is a directive requirement to do so—

(a)consult the relevant competent authorities in relation to the financial conglomerate of which A is a member;

(b)obtain the consent of those competent authorities; and

(c)consult the financial conglomerate of which A is a member.

Exercise of functions under [F35section 138A] of the Act for the purposes of carrying on supplementary supervisionU.K.

4.—(1) Paragraph (2) applies if [F36a regulator] is considering exercising any of the powers conferred on it by [F37section 138A] of the Act (modification or waiver of rules) in the course of carrying on supplementary supervision of a financial conglomerate for the purposes of any provision (other than Article 11, 12, 16, 17 or 18(3)) of the conglomerates directive.

(2) Before [F38a regulator] exercises such a power in relation to an authorised person who is a member of a financial conglomerate, [F39the regulator] must, where there is a directive requirement to do so—

(a)consult the relevant competent authorities in relation to the financial conglomerate of which that person is a member;

(b)obtain the consent of those competent authorities; and

(c)consult the financial conglomerate of which that person is a member.

Consultation in the case of major sanctions or exceptional measuresU.K.

5.—(1) Before [F40a regulator]

(a)varies the Part IV permission of a member of a financial conglomerate (“D”);

(b)publishes a statement under section 205 of the Act (public censure) that it considers that D has contravened a requirement imposed on him by or under the Act;

(c)imposes a penalty on D in respect of such a contravention under section 206 of the Act (financial penalties); or

(d)exercises any of its powers (other than its powers under section 381, 383 or 384(2)) under Part XXV of the Act (injunctions and restitution) in relation to D,

it must, if it considers that the action constitutes a major sanction or an exceptional measure and is of importance for the supervisory tasks of the competent authority of any regulated entity which is a member of the same financial conglomerate as D, consult that competent authority.

(2) But paragraph (1) does not apply—

(a)where the [F41relevant regulator] considers that there is an urgent need to act;

(b)where [F41relevant regulator] considers that such consultation may jeopardise the effectiveness of the action mentioned in paragraph (1); or

(c)where regulation 3, 8(3) or (4), 9 or 10 applies.

(3) Where paragraph (1) does not apply by virtue of paragraph (2)(a) or (b), the [F42relevant regulator] must, as soon as is reasonably practicable, inform the competent authority referred to in paragraph (1) of the action that it has taken.

[F43Regulator] functions and service of notificationsU.K.

6.—(1) Any function carried out by [F44a regulator] (whether in the capacity of a co-ordinator, a relevant competent authority or otherwise) for the purposes of the conglomerates directive (including a function conferred by these Regulations) is to be treated as a function conferred on the [F45regulator] by a provision of the Act.

(2) The Financial Services and Markets Act 2000 (Service of Notices) Regulations 2001 F46 apply to any notifications given under regulation 2(1)(a) as they apply to any notice, direction or document of any kind given under the Act.

PART 3U.K.Supplementary supervision of third-country financial conglomeratesand third-country groups

Supervision of third-country financial conglomerates and third-country groups—interpretationU.K.

7.—(1) For the purposes of this Part—

[F47“alternative investment fund manager” means—

(a)

any EEA firm falling within paragraph 5(h) of Schedule 3 to the Act; or

(b)

any UK firm whose EEA right derives from the alternative investment fund managers directive]

asset management company” means—

(a)

any EEA firm falling within paragraph 5(f) of Schedule 3 to the Act F48; or

(b)

any UK firm whose EEA right derives from the UCITS directive;

credit institution” means—

(a)

any EEA firm falling within paragraph 5(b) of Schedule 3 to the Act; or

(b)

any UK firm whose EEA right derives from [F49capital requirements directive];

investment firm” means—

(a)

any EEA firm falling within paragraph 5(a) of Schedule 3 to the Act; or

(b)

any UK firm whose EEA right derives from the [F50markets in financial instruments directive];

third-country competent authority” means the authority of a country or territory which is not an EEA State which is empowered by law or regulation to supervise (whether on an individual or group-wide basis) regulated entities;

third-country financial conglomerate” means a group—

(a)

which, subject to Article 3 of the conglomerates directive, meets the conditions in Article 2(14) of that directive, and

(b)

in which the parent undertaking has its head office outside the EEA;

third-country group” means a group of which the parent undertaking has its head office outside the EEA.

(2) For the purposes of this Part a regulated entity is in a third-country group if the parent undertaking of the group in which it is a member has its head office outside the EEA.

Supervision of third-country financial conglomeratesU.K.

8.—(1) Where [F51a regulator] is, for the purposes of Article 18(1) of the conglomerates directive (parent undertakings outside the Community), 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 the conglomerates directive, it must, where there is a directive requirement to do so, before completing this verification—

(a)consult the other relevant competent authorities in relation to that third-county financial conglomerate; [F52and]

[F53(b)take into account any applicable guidelines prepared through the Joint Committee of the ESAs in accordance with Articles 16 and 56 of Regulation (EU) No. 1093/2010, of Regulation (EU) No. 1094/2010 and of Regulation (EU) No. 1095/2010.]

(2) Paragraphs (3) and (4) apply if [F51a regulator], 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), exercises its powers to—

(a)vary the Part IV permission of a regulated entity in a third-country financial conglomerate;

(b)disapply from, or apply in a modified form to, such a regulated entity the rules specified in subsection (1) of [F54section 138A] of the Act (modification or waiver of rules) in accordance with that section;

(c)impose conditions under [F55section 187 of the Act (approval with conditions)] on a person who is, or proposes to be, a controller of such a regulated entity; or

(d)give a notice under [F56section 191A (objection by the appropriate regulator) or section 191B (restriction notices) of the Act] to a person who is, or proposes to be, a controller of such a regulated entity.

(3) Where there is a directive requirement to do so, [F57a regulator] must before taking the action specified in paragraph (2)—

(a)where [F58that regulator] is the co-ordinator, consult the relevant competent authorities in relation to that third-country financial conglomerate; or

(b)where [F58that regulator] is not the co-ordinator, obtain the consent of the co-ordinator for that third-country financial conglomerate to take that action.

(4) If [F59a regulator] decides to take that action, it must, where there is a directive requirement to do so, notify—

(a)the competent authority of each regulated entity in that third-country financial conglomerate, and

(b)the Commission,

that it has done so.

F53Reg. 8(1)(b) substituted for reg. 8(1)(b)(c) (16.4.2012) by The Financial Services (Omnibus 1 Directive) Regulations 2012 (S.I. 2012/916), regs. 1, 4(4)(b)

Supervision of third-country banking groupsU.K.

9.—(1) Where [F60a regulator] is, for the purposes of [F61Article 127 of the capital requirements directive (assessment of equivalence of third countries’ consolidated supervision)], verifying whether a credit institution in a third-country group is subject to supervision by a third-country competent authority which is equivalent to that governed by the principles laid down in [F62the capital requirements directive and Chapter 2 of Title II of Part 1of the capital requirements regulation], it must, where there is a directive requirement to do so, before completing this verification—

(a)consult any competent authority which supervises a credit institution in that third-country group;

(b)consult [F63the European Banking Committee] for the purposes of obtaining any applicable guidance prepared by that Committee in accordance with [F64the first sub-paragraph of Article 127(2) of the capital requirements directive]; and

(c)take into account any such guidance.

(2) Paragraphs (3) and (4) apply if [F60a regulator] exercises, for the purposes of [F65Article 127(3) of the capital requirements directive], its powers to—

(a)vary the Part IV permission of a credit institution in a third-country group;

(b)disapply from, or apply in modified form to, such a credit institution, the rules specified in subsection (1) of [F66section 138A] of the Act in accordance with that section;

(c)impose conditions under [F67section 187] of the Act on a person who is, or proposes to be, a controller of such a credit institution; or

(d)give a notice under [F68section 191A or 191B] of the Act to a person who is, or proposes to be, a controller of such a credit institution.

(3) Where there is a directive requirement to do so, [F69a regulator] must before exercising its powers to take the action specified in paragraph (2)—

(a)where [F70that regulator] would be responsible for supervising that third-country group for the purposes of [F71Article 111 of the capital requirements directive] (competent authorities responsible for exercising supervision on a consolidated basis) if alternative techniques were not applied, consult the competent authorities which are involved in the supervision of any of the credit institutions in that third-country group; and

(b)where [F70that regulator] would not be so responsible, obtain the consent of the competent authority which would be responsible for supervising that third-country group for the purposes of [F72Article 111 of the capital requirements directive] if alternative techniques were not applied.

(4) If [F73a regulator] decides to take that action, it must, where there is a directive requirement to do so, notify—

(a)any competent authority which supervises a credit institution in that third-country group; and

(b)the Commission,

that it has done so.

(5) Where [F73a regulator] has, for the purposes of Article 30 of the conglomerates directive (asset management companies), included an asset management company in the scope of supervision of a credit institution in a third-country group, each reference in this regulation to a “credit institution” is to be treated as including a reference to that asset management company.

[F74(6) Where a regulator has, for the purposes of Article 30a of the conglomerates directive (alternative investment fund managers), included an alternative investment fund manager in the scope of supervision of a credit institution in a third-country group, each reference in this regulation to a “credit institution” is to be treated as including a reference to that alternative investment fund manager.]

[F75Supervision of third-country groups subject to the capital requirements regulation and capital requirement directive]U.K.

10.[F76(1) Paragraph (2) applies if a regulator is, for the purposes of Article 127 of the capital requirements directive, verifying whether an institution is subject to supervision by a third-country competent authority which is equivalent to that governed by the principles laid down in the capital requirements directive and Chapter 2 of Title II of Part 1 of the capital requirements regulation.]

(2) [F77A regulator] must, where there is a directive requirement to do so, before completing the verification referred to in paragraph (1)—

(a)consult any competent authority which supervises an investment firm or a credit institution (if any) in that third-country group;

(b)consult [F78the European Banking Committee] for the purposes of obtaining any applicable guidance prepared by that Committee in accordance with [F79Article 127(2) of the capital requirements directive]; and

(c)take into account any such guidance.

(3) Paragraphs (4) and (5) apply if [F77a regulator] exercises, for the purposes of [F80Article 127(3) of the capital requirements directive], its powers to—

(a)vary the Part IV permission of an investment firm or credit institution in a third-country group;

(b)disapply from or apply in modified form to, such an investment firm or credit institution the rules specified in subsection (1) of [F81section 138A] of the Act in accordance with that section;

(c)impose conditions under [F82section 187] of the Act on a person who is, or proposes to be, a controller of such an investment firm or credit institution; or

(d)give a notice under [F83section 191A or 191B] of the Act to a person who is, or proposes to be, a controller of such an investment firm or credit institution.

(4) Where there is a directive requirement to do so, [F84a regulator] must, before exercising its powers to take the action specified in paragraph (3)—

(a)where [F85that regulator] would be responsible for supervision of that third-country group for the purposes of [F86Article 111 of the capital requirements directive], if alternative techniques were not applied, consult the competent authorities which are involved in the supervision of any of the investment firms or credit institutions (if any) in that third-country group; and

(b)where [F85that regulator] would not be so responsible, obtain the consent of the competent authority which would be responsible for supervision of that third-country group for the purposes of [F87Article 111 of the capital requirements directive], if alternative techniques were not applied.

(5) If [F88a regulator] decides to take that action, it must, where there is a directive requirement to do so, notify—

(a)any competent authority which supervises an investment firm or a credit institution (if any) in that third-country group; and

(b)the Commission,

that it has done so.

(6) If [F88a regulator] has, for the purposes of Article 30 of the conglomerates directive, included an asset management company in the scope of supervision of—

(a)credit institutions and investment firms in a third-country group; or

(b)investment firms in a third-country group,

each reference in this regulation to an “investment firm” is to be treated as including a reference to that asset management company.

[F89(7) Where a regulator has, for the purposes of Article 30a of the conglomerates directive, included an alternative investment fund manager in the scope of supervision of—

(a)credit institutions and investment firms in a third-country group; or

(b)investment firms in a third-country group,

each reference in this regulation to an “investment firm” is to be treated as including a reference to that alternative investment fund manager.]

PART 4 U.K.Provisions relating to information

Disclosure of confidential informationU.K.

11.  In regulation 2 of the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 F90 (interpretation)—

(a)after the definition of “Authority worker”, insert—

conglomerates directive” means Directive 2002/87/EC of the European Parliament and of the Council of 16th December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC, 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council F91;;

(b)in the definition of “single market directive information”, after “single market directives”, insert “ or the conglomerates directive ”.

F91OJ No. L35 11.2.2003, p.1; applied to the EEA by Joint Committee Decision 104/2004 of 9th July 2004 (not yet published in the Official Journal of the European Communities).

Obtaining information—avoidance of duplication of reportingU.K.

12.—(1) Paragraph (2) applies if [F92a regulator] is the co-ordinator in relation to any financial conglomerate.

(2) If [F93a regulator] requires any disclosed information in connection with its functions as the co-ordinator, it must so far as possible obtain that information by requesting the competent authority which holds that information to disclose it to [F94that regulator].

(3) In this regulation, “disclosed information” means information which a regulated entity in a financial conglomerate has disclosed to its competent authority.

PART 5 U.K.Miscellaneous

Consultation on change of controlU.K.

F9513.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References to existing directivesU.K.

14.—(1) In section 119(2B) of the Building Societies Act 1986 (definition of “Banking Consolidation Directive”) F96, at the end insert “ (as last amended by Directive 2002/87/EC of the European Parliament and of the Council) ”.

(2) In section 17(7C) of the Bank of England Act 1998 (power to obtain information) F97, after “Council Directive 2000/12/EC of the European Parliament and the Council”, insert “ (as last amended by Directive 2002/87/EC of the European Parliament and of the Council) ”.

(3) In article 2(3) of the Cash Ratio Deposits (Eligible Liabilities) Order 1998 (interpretation) F98, at the end, insert “ (as last amended by Directive 2002/87/EC of the European Parliament and of the Council) ”.

(4) In the Financial Services and Markets Act 2000 (EEA Passport Rights) Regulations 2001 F99, in regulation 2(5)(e)(i) and regulation 3(3)(e)(i) (content of consent and regulator’s notice), after “first non-life insurance directive”, insert “ (as last amended by Directive 2002/87/EC of the European Parliament and of the Council) ”.

F961986 c. 53; definition inserted by S.I. 1996/1669, substituted by S.I. 2000/2952.

F99S.I. 2001/2511; regulation 2 was amended by S.I. 2002/765 and S.I. 2003/2066 and regulation 3 was amended by S.I. 2003/1473 and S.I. 2003/2066.

Extension of power to vary Part IV permissionsU.K.

15.—(1) Subject to paragraph (2), [F100a regulator] may exercise its [F101own-initiate variation power or own-initiative requirement power (within the meaning of Part 4A of the Act)] in relation to an authorised person, if it appears to it that it is desirable to do so for the purpose of—

(a)carrying out supplementary supervision in accordance with the conglomerates directive;

[F102(b)acting in accordance with any of Articles 65(2), 104, 118, 123, 126 or 127 of the capital requirements directive or Article 18 of the capital requirements regulation;] or

(c)acting in accordance with [F103Articles 221, 245, 246 or 258(1) of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).]

(2) [F104A regulator] may exercise its own-initiative power, for the purposes set out in paragraph (1), to vary a Part IV permission in any of the ways mentioned in [F105sections 55H(2), 55I(1), 55L(5)(b) or (c) or 55M(5)(b) or (c) of the Act]; and this extends to including any provision in the permission as varied that could be included if a fresh permission were given in response to an application under [F106section 55A] of the Act (application for permission).

(3) The duty imposed by [F107subsection (3) of section 55B] of the Act (the threshold conditions) does not prevent [F108a regulator] from exercising its own-initiative power for the purposes set out in paragraph (1).

F103Words in reg. 15(1)(c) substituted (1.1.2016) by The Solvency 2 Regulations 2015 (S.I. 2015/575), reg. 1(2), Sch. 2 para. 19(3)

John Heppell,

Nick Ainger

Two of the Lords Commissioners of Her Majesty’s Treasury

Explanatory Note

(This note is not part of the Regulations)

These Regulations implement, in part, Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/EEC, 92/96/EEC, 93/6/EEC, 93/22/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council (“the conglomerates directive”) (OJ No. L 35 11.2.2003 p.1).

A Transposition Table setting out how the main elements of the conglomerates directive will be transposed into UK law is available from the Financial Stability and Regulatory Policy Team, HM Treasury, 1 Horse Guards Road, London SWIA 2HQ. The Transposition Table is also available on HM Treasury’s website (www.hm-treasury.gov.uk).

A full regulatory impact assessment has not been produced for this instrument as it has no impact on the costs of business.

The conglomerates directive includes certain procedural requirements that competent authorities of EEA States must carry out. These requirements include consulting other competent authorities and notifying regulated entities that, for example, they are members of financial conglomerates. These Regulations impose obligations upon the Financial Services Authority, the competent authority for the United Kingdom, for the purpose of implementing these procedural requirements.

Part 2 of the Regulations makes provision in relation to the exercise of supplementary supervision of regulated entities in a financial conglomerate. Regulation 2 deals with procedural requirements relating to the notification of identification as a financial conglomerate and choice of co-ordinator. Regulation 3 deals with procedural requirements relating to the exercise of functions under Part IV of the Financial Services and Markets Act 2000 (c. 8.) (“the Act”) for the purposes of carrying out supplementary supervision. Regulation 4 deals with procedural requirements relating to the exercise of functions under section 148 of the Act for the purposes of carrying on supplementary supervision. Regulation 5 makes provision in respect of the carrying out of consultation in the case of major sanctions or exceptional measures. Regulation 6 provides that any function carried out by the Financial Services Authority for the purposes of the conglomerates directive is to be treated as a function conferred on that Authority by a provision of the Act. Regulation 6 also applies the effect of the Financial Services and Markets Act 2000 (Service of Notices) Regulations 2001 (S.I. 2001/1420) to any notifications given under regulation 2(1)(a) of these Regulations.

Part 3 of the Regulations makes provision in relation to the supplementary or consolidated supervision of third-country financial conglomerates and third-country groups. Regulation 8 deals with procedural requirements relating to the supervision of third-country financial conglomerates. Regulation 9 deals with procedural requirements relating to the supervision of third-country banking groups. Regulation 10 deals with procedural requirements in relation to the supervision of third-country groups subject to Council Directive 93/6/EEC of 15 March 1993 on the capital adequacy of investment firms and credit institutions (OJ L141 11.6.1993 p.1).

Part 4 of the Regulations makes provision relating to information. Regulation 11 amends the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 (S.I. 2001/2188), so as to extend the effect of those Regulations to information necessary for the purposes of the conglomerates directive. Regulation 12 provides that the Financial Services Authority must, where it requires information that a regulated entity has disclosed to its competent authority, obtain that information from that competent authority.

Part 5 of the Regulations makes other miscellaneous provision. Regulation 13 amends the Financial Services and Markets Act 2000 (Consultation with Competent Authorities) Regulations 2001 (S.I. 2001/2509) so as to extend the effect of those Regulations to consultation required for the purpose of the conglomerates directive. Regulation 14 makes consequential amendments to references in UK legislation to Community legislation that is amended by the conglomerates directive. Regulation 15 extends the Financial Services Authority’s own-initiative power (within the meaning of section 45 of the Act) so as to enable it to vary a Part IV permission where it considers that this is desirable to do so for the purpose of carrying out supplementary supervision in accordance with the conglomerates directive, acting in accordance with articles 55a or 56a of Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions (OJ L126, 26.5.2000, p.1) or acting in accordance with Article 8(2) or Annex I.1.B of Directive 98/78/EC of the European Parliament and of the Council of 27 October 1998 on the supplementary supervision of insurance undertakings in an insurance group (OJ No. L 330 5.12.98 p.1).

Regulations 2 to 12 and 14 and 15 are made in accordance with the powers conferred on the Treasury by section 2(2) of the European Communities Act 1972 (c. 68.). Regulation 13 is made in accordance with the powers conferred on the Treasury by sections 183(2), 188(2), 417(1) and 428(3) of the Act. Regulation 1 is made in accordance with section 2(2) of the European Communities Act 1972 and sections 183(2), 188(2), 417(1) and 428(3) of the Act.

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