(1) The appropriate regulator must act under section 185 within a period of 60 working days beginning with the day on which the appropriate regulator acknowledges receipt of the section 178 notice (“the assessment period”).
(1A) Where the appropriate regulator is the FCA and the section 178 notice relates to an acquisition or increase of control over a qualifying credit institution, investment firm or banking group company, the Bank of England, acting in the exercise of its functions under sections 6A to 6C of the Banking Act 2009 or under the special resolution regime under Part 1 of that Act, may direct the appropriate regulator to act under this Part in a timely manner, and to shorten the assessment period so far as reasonably practicable.
(1ZB) Where the appropriate regulator is the PRA and—
(a) the section 178 notice relates to an acquisition or increase of control over a qualifying credit institution, investment firm or banking group company, and
(b) the qualifying credit institution, investment firm or banking group company is one in relation to which the Bank of England is exercising its functions under sections 6A to 6C of the Banking Act 2009 or the special resolution regime under Part 1 of that Act,
the PRA must act under this Part in a timely manner, and shorten the assessment period so far as reasonably practicable.
(1B) In subsections (1A) and (1ZB) —
...
“banking group company” has the meaning given in section 81D of the Banking Act 2009.
(2) The assessment period may be interrupted, no more than once, in accordance with section 190.
(3) The appropriate regulator must inform the section 178 notice-giver in writing of—
(a) the duration of the assessment period;
(b) its expiry date; and
(c) any change to the expiry date by virtue of section 190.
(4) The appropriate regulator must, within two working days of acting under section 185 (and in any event no later than the expiry date of the assessment period)—
(a) notify the section 178 notice-giver that it has determined to approve the acquisition unconditionally; or
(b) give a warning notice stating that it proposes to—
(i) approve the acquisition subject to conditions; or
(ii) object to the acquisition.
(5) Where the appropriate regulator gives a warning notice stating that it proposes to approve the acquisition subject to conditions—
(a) it must, in the warning notice, specify those conditions; and
(b) the conditions take effect as interim conditions.
(6) Unless section 190A applies the appropriate regulator is treated as having approved the acquisition if, at the expiry of the assessment period, it has neither—
(a) given notice under subsection (4); nor
(b) informed the section 178 notice-giver that the section 178 notice is incomplete.
(7) If the appropriate regulator decides to approve an acquisition subject to conditions or to object to an acquisition it must give the section 178 notice-giver a decision notice.
(8) Following receipt of a decision notice under this section, the section 178 notice-giver may refer the appropriate regulator's decision to the Tribunal.
(1) The appropriate regulator may, no later than the 50th working day of the assessment period, in writing ask the section 178 notice-giver to provide any further information necessary to complete its assessment.
(1A) But where a direction has been given by the Bank of England under section 189(1A) or section 189(1ZB) applies, the appropriate regulator must, as soon as reasonably practicable, ask the section 178 notice-giver to provide any further information necessary to complete its assessment.
(2) On the first occasion that the appropriate regulator asks for further information, the assessment period is interrupted from the date of the request until the date the appropriate regulator receives the requested information (“the interruption period”).
(3) But the interruption period may not exceed 20 working days, unless subsection (4) applies.
(4) The interruption period may not exceed 30 working days if the notice-giver—
(a) is situated or regulated outside the United Kingdom or Gibraltar; or
(b) is not subject to supervision under the laws of the United Kingdom (or any part of the United Kingdom) or of Gibraltar relied on immediately before IP completion day to implement—
(i) the UCITS directive;
(ii) the Solvency 2 Directive;
(iii) the markets in financial instruments directive; or
(iv) the capital requirements directive,
including rules made by the appropriate regulator under this Act, in force on IP completion day, and, as amended from to time, in all other cases.
(5) The appropriate regulator may make further requests for information (but a further request does not result in a further interruption of the assessment period).
(6) The appropriate regulator must acknowledge in writing receipt of further information before the end of the second working day following receipt.
(1) This section applies if—
(a) the appropriate regulator receives a section 178 notice in relation to a qualifying credit institution, investment firm or banking group company,
(b) as a result of a direction under section 189(1A) or the application of section 189(1ZB), the appropriate regulator is required to act under this Part in a timely manner in relation to that notice, and
(c) the appropriate regulator does not complete the assessment required by section 185 before a relevant transfer instrument has been made by the Bank of England which transfers shares issued by, or voting power in, that qualifying credit institution, investment firm or banking group company.
(2) The transfer of shares or voting takes effect in accordance with the terms of the relevant transfer instrument, but the right of the person who acquires shares under that instrument (“the acquirer”) to exercise the voting power represented by those shares is suspended.
(3) During the suspension, the voting power represented by the shares in question may be exercised by the Bank (and only by the Bank).
(4) If the appropriate regulator issues a decision notice under section 189(7) objecting to the acquisition, the Bank may direct the acquirer to sell the shares within a period specified by the Bank in the direction (“the sale period”).
(5) In determining the sale period, the Bank must take account of prevailing market conditions.
(6) The suspension provided for in subsection (2) ends—
(a) if the appropriate regulator gives notice under section 189(4)(a) or (b)(i) that it approves the acquisition, on the date of that notice, or
(b) if the Bank gives a direction under subsection (4), on the earlier of the day on which the sale period ends and the day on which the shares are sold.
(7) In this section a “relevant transfer instrument” means an instrument made by the Bank acting in the exercise of its functions under sections 6A to 6C of the Banking Act 2009 or under the special resolution regime under Part 1 of that Act, which transfers, or has the effect of transferring, shares issued by, or voting power in, the qualifying credit institution, investment firm or banking group company.
(1) Approval of an acquisition (whether granted unconditionally or subject to conditions) is effective for such period as the appropriate regulator may specify in writing.
(2) Where the appropriate regulator has specified a period under subsection (1), it may extend the period.
(3) Where the appropriate regulator has not specified a period, the approval is effective for one year beginning with the date—
(a) of the notice given under section 189(4)(a) or (b)(i);
(b) on which the appropriate regulator is treated as having given approval under section 189(6); or
(c) of a decision on a reference to the Tribunal which results in the person receiving approval.
(1) The appropriate regulator may object to a person's control over a UK authorised person in any of the circumstances specified in subsection (2).
(2) The circumstances are that the appropriate regulator reasonably believes that—
(a) the person acquired or increased control without giving notice under section 178(1) in circumstances where notice was required;
(b) the person is in breach of a condition imposed under section 187; or
(c) there are grounds for objecting to control on the basis of the matters in section 186.
(3) The appropriate regulator—
(a) must take into account whether influence exercised by the person is likely to operate to the detriment of the sound and prudent management of the UK authorised person; and
(b) may take into account whether the person has co-operated with any information requests made or requirements imposed by the appropriate regulator.
(4) If the appropriate regulator proposes to object to a person's control over a UK authorised person, it must give that person a warning notice.
(4A) Where the appropriate regulator is the PRA, it must consult the FCA before giving a warning notice under this section.
(4B) Where the appropriate regulator is the FCA, it must consult the PRA before giving a warning notice under this section if—
(a) the UK authorised person has as a member of its immediate group a PRA-authorised person, or
(b) the person to whom the warning notice is to be given is a PRA-authorised person.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) If the appropriate regulator decides to object to a person's control over a UK authorised person, it must give that person a decision notice.
(7) A person to whom the appropriate regulator gives a decision notice under this section may refer the matter to the Tribunal.
(1) The appropriate regulator may give notice in writing (a “restriction notice”) to a person in the following circumstances.
(2) The circumstances are that—
(a) the person has control over a UK authorised person by virtue of holding shares or voting power; and
(b) in relation to the shares or voting power, the appropriate regulator has given the person a warning notice or a decision notice under section 189 or 191A or a final notice which confirms a decision notice given under section 189 or 191A.
(2A) Where the appropriate regulator is the PRA, it must consult the FCA before giving a restriction notice under this section.
(2B) Where the appropriate regulator is the FCA, it must consult the PRA before giving a restriction notice under this section if—
(a) the UK authorised person has as a member of its immediate group a PRA-authorised person, or
(b) the person to whom the restriction notice is to be given is a PRA-authorised person.
(3) In a restriction notice, the appropriate regulator may direct that shares or voting power to which the notice relates are, until further notice, subject to one or more of the following restrictions—
(a) except by court order, an agreement to transfer or a transfer of any such shares or voting power or, in the case of unissued shares, any agreement to transfer or transfer of the right to be issued with them, is void;
(b) no voting power is to be exercisable;
(c) no further shares are to be issued in pursuance of any right of the holder of any such shares or voting power or in pursuance of any offer made to their holder;
(d) except in a liquidation, no payment is to be made of any sums due from the body corporate on any such shares, whether in respect of capital or otherwise.
(3A) Subsection (3)(a) and (b) does not apply where the voting power represented by the shares in question is suspended under section 190A(2).
(4) A restriction notice takes effect—
(a) immediately; or
(b) on such date as may be specified in the notice.
(5) A restriction notice does not extinguish rights which would be enjoyable but for the notice.
(6) A copy of the restriction notice must be served on—
(a) the UK authorised person in question; and
(b) in the case of shares or voting power held in a parent undertaking of a UK authorised person, the parent undertaking.
(7) A person to whom the appropriate regulator gives a restriction notice may refer the matter to the Tribunal.
(1) The court may, on the application of the appropriate regulator, order the sale of shares or the disposition of voting power in the following circumstances.
(2) The circumstances are that—
(a) a person has control over a UK authorised person by virtue of holding the shares or voting power; and
(b) the acquisition or continued holding of the shares or voting power by that person is in contravention of a final notice which confirms a decision notice given under section 189 or section 191A.
(2A) Where the appropriate regulator is the PRA, it must consult the FCA before making an application to the court under this section.
(2B) Where the appropriate regulator is the FCA, it must consult the PRA before making an application to the court under this section if—
(a) the UK authorised person has as a member of its immediate group a PRA-authorised person, or
(b) the person holding the shares or voting power is a PRA-authorised person.
(3) Where the court orders the sale of shares or disposition of voting power it may—
(a) if a restriction notice has been given in relation to the shares or voting power, order that the restrictions cease to apply; and
(b) make any further order.
(4) Where the court makes an order under this section, it must take into account the level of holding that the person would have been entitled to acquire, or to continue to hold, without contravening the final notice.
(5) If shares are sold or voting power disposed of in pursuance of an order under this section, any proceeds, less the costs of the sale or disposition, must be paid into court for the benefit of the persons beneficially interested in them; and any such person may apply to the court for payment of a whole or part of the proceeds.
(6) The jurisdiction conferred by this section may be exercised by the High Court and the Court of Session.
(7) The appropriate regulator must obtain the consent of the Bank of England before making an application under this section in relation to shares if the Bank has the power to direct the sale of those shares under section 190A(4).
(8) The appropriate regulator may not make an application under this section in relation to shares if the Bank of England has given a direction for the sale of those shares under section 190A(4).
191D Obligation to notify the appropriate regulator: dispositions of control
(1) A person who decides to reduce or cease to have control over a UK authorised person must give the appropriate regulator notice in writing before making the disposition.
(1A) The PRA must give the FCA a copy of any notice it receives under this section.
(1B) The FCA must give the PRA a copy of any notice it receives under this section which—
(a) relates to a UK authorised person who has as a member of its immediate group a PRA-authorised person, or
(b) is given by a PRA-authorised person.
(2) For the purposes of calculations relating to this section, the holding of shares or voting power by a person (“A1”) includes any shares or voting power held by another (“A2”) if A1 and A2 are acting in concert.
(1) A notice under section 191D must be in such form, include such information and be accompanied by such documents as the appropriate regulator may reasonably require.
(2) Each regulator must publish a list of its requirements as to the form, information and accompanying documents for a notice under section 191D.
(3) The appropriate regulator may impose different requirements for different cases and may vary or waive requirements in particular cases.
(1) A person who fails to comply with an obligation to notify the appropriate regulator under section 178(1) or 191D(1) is guilty of an offence.
(2) A person who gives notice to the appropriate regulator under section 178(1) and makes the acquisition to which the notice relates before the expiry date of the assessment period is guilty of an offence unless the appropriate regulator has approved the acquisition or given a warning notice under section 189(4)(b)(i) or section 190A applies.
(3) A person who contravenes an interim condition in a warning notice given under section 189(4)(b)(i) or a condition in a decision notice given under section 189(7) or a final notice which confirms a decision notice under that section is guilty of an offence.
(4) A person who makes an acquisition in contravention of a warning notice given under section 189(4)(b)(ii) or a decision notice given under section 189(7) or a final notice which confirms a decision notice under that section is guilty of an offence.
(4A) A person who fails to comply with a direction given by the Bank of England under section 190A(4) is guilty of an offence.
(5) A person who makes an acquisition after the appropriate regulator's approval for the acquisition has ceased to be effective by virtue of section 191 is guilty of an offence.
(6) A person who provides information to the appropriate regulator which is false in a material particular is guilty of an offence.
(7) A person who breaches a direction contained in a restriction notice given under section 191B is guilty of an offence.
(8) A person guilty of an offence under subsection (1) to (3) or (5) to (7) is liable—
(a) on summary conviction to a fine not exceeding the statutory maximum; or
(b) on conviction on indictment, to a fine.
(9) A person guilty of an offence under subsection (4) or (4A) is liable—
(a) on summary conviction, to a fine not exceeding the statutory maximum; or
(b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.
(1) In this Part—
“acquisition” means the acquisition of control or of an increase in control over a UK authorised person;
“the appropriate regulator” is to be read in accordance with section 178(2A);
...
“qualifying credit institution” includes a credit institution which is authorised under the law of Gibraltar relied on immediately before IP completion day to implement the capital requirements directive.
“shares” has the same meaning as in section 422;
“UK authorised person” means an authorised person who—
is a body incorporated in, or an unincorporated association formed under the law of, any part of the United Kingdom; and
is not a person authorised as a result of paragraph 1 of Schedule 5 , or a person treated as having a Part 4A permission to carry on a regulated activity by virtue of regulation 71 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019; and
“voting power” has the same meaning as in section 422.
(2) For the purposes of this Part, a “working day” is a day other than—
(a) a Saturday or a Sunday; or
(b) a day which is a bank holiday in England and Wales under the Banking and Financial Dealings Act 1971.
The Treasury may by order—
(a) provide for exemptions from the obligations to notify imposed by sections 178 and 191D;
(b) amend section 181 by varying, or removing, any of the cases in which a person is treated as acquiring control over a UK authorised person or by adding a case;
(c) amend section 182 by varying, or removing, any of the cases in which a person is treated as increasing control over a UK authorised person or by adding a case;
(d) amend section 183 by varying, or removing, any of the cases in which a person is treated as reducing or ceasing to have his control over a UK authorised person or by adding a case;
(e) amend section 422 by varying, or removing, any of the cases in which a person is treated as being a controller of a person or by adding a case.
(1) In this Part “qualifying authorised person” means an authorised person satisfying the following conditions.
(2) Condition A is that the authorised person is a body corporate incorporated in the United Kingdom.
(3) Condition B is that the authorised person is—
(a) a PRA-authorised person, or
(b) an investment firm.
(4) The Treasury may by order—
(a) amend subsection (3) so as to add to or restrict the descriptions of authorised person who can be qualifying authorised persons, or
(b) provide that while the order is in force subsection (3) is not to have effect.
(5) Except as provided by subsection (6), an order under subsection (4) is not to be made unless a draft of the order has been laid before Parliament and approved by a resolution of each House.
(6) An order under subsection (4) may be made without a draft having been laid and approved as mentioned in subsection (5) if the order contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without a draft being so laid and approved.
(7) An order under subsection (4) made in accordance with subsection (6)—
(a) must be laid before Parliament after being made, and
(b) ceases to have effect at the end of the relevant period unless before the end of that period the order is approved by a resolution of each House of Parliament (but without affecting anything done under the order or the power to make a new order).
(8) The “relevant period” is a period of 28 days beginning with the day on which the order is made.
(9) In calculating the relevant period no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.
(1) The parent undertaking of a qualifying authorised person or recognised UK investment exchange is for the purposes of this Part a “qualifying parent undertaking” if the following conditions are satisfied in relation to it.
(2) Condition A is that the parent undertaking is a body corporate which—
(a) is incorporated in the United Kingdom, or
(b) has a place of business in the United Kingdom.
(3) Condition B is that the parent undertaking is not itself an authorised person, a recognised investment exchange , a recognised clearing house or a recognised CSD.
(4) Condition C is that the parent undertaking is a financial institution of a kind prescribed by the Treasury by order.
(5) “Recognised UK investment exchange” means a recognised investment exchange that is not an overseas investment exchange as defined in section 313(1).
(6) The Treasury may by order—
(a) amend subsection (4) by omitting the words “a financial institution”, and
(b) make any amendment of subsection (2) that they consider desirable in connection with an amendment made under paragraph (a).
192C Power to direct qualifying parent undertaking
(1) The appropriate regulator may give a direction under this section to a qualifying parent undertaking if either the general condition or the consolidated supervision condition is satisfied.
(2) The general condition is that the appropriate regulator considers that it is desirable to give the direction in order to advance—
(a) in the case of the FCA, one or more of its operational objectives;
(b) in the case of the PRA, any of its objectives.
(3) The consolidated supervision condition is that—
(a) the appropriate regulator is the competent authority for the purpose of consolidated supervision that is required, in relation to some or all of the members of the group of a qualifying authorised person, in pursuance of—
(i) any implementing provision contained in subordinate legislation (within the meaning of the Interpretation Act 1978) made otherwise than by any of the following—
(aa) statutory instrument, and
(bb) statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)); ...
(ii) any other implementing provision (as amended from time to time), ...
(iii) Part 9C rules;
(iv) CRR rules; or
(v) rules made under section 192XA, and
(b) the appropriate regulator considers that the giving of the direction is desirable for the purpose of the effective consolidated supervision of the group.
(4) In subsection (3)(a)—
“consolidated supervision” includes supplemental supervision;
“implementing provision” has the same meaning as in section 3M.
(5) In deciding whether to give a direction under this section, a regulator must have regard—
(a) to the desirability where practicable of exercising its powers in relation to authorised persons or recognised investment exchanges rather than its powers under this section, and
(b) to the principle that a burden or restriction which is imposed on a person should be proportionate to the benefits, considered in general terms, which are expected to result from its imposition.
(6) “The appropriate regulator” means—
(a) where a direction relates to a qualifying authorised person or recognised investment exchange who is a PRA-authorised person, the FCA or the PRA;
(b) in any other case, the FCA.
(1) A direction under section 192C may require the parent undertaking—
(a) to take specified action, or
(b) to refrain from taking specified action.
(2) A requirement may be imposed by reference to the parent undertaking's relationship with—
(a) its group, or
(b) other members of its group.
(3) A requirement may refer to the past conduct of the parent undertaking (for example, by requiring the parent undertaking to review or take remedial action in respect of past conduct).
(4) A requirement imposed by the direction may be expressed to expire at the end of a specified period, but the imposition of a requirement that expires at the end of a specified period does not affect the power to give a further direction imposing a new requirement.
(5) The direction—
(a) may be revoked by the regulator which gave it by written notice to the body to which it is given, and
(b) ceases to be in force if the body to which it is given ceases to be a qualifying parent undertaking.
(1) If a regulator proposes to give a direction under section 192C, or gives such a direction with immediate effect, it must give written notice to—
(a) the parent undertaking to which the direction is given (or to be given) (“P”), and
(b) any authorised person or recognised investment exchange who will, in the opinion of the regulator, be significantly affected by the direction.
(2) In the following provisions of this section “notified person” means a person to whom notice under subsection (1) is given.
(3) A direction under section 192C takes effect—
(a) immediately, if the notice under subsection (1) states that that is the case,
(b) on such other date as may be specified in the notice, or
(c) if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.
(4) A direction may be expressed to take effect immediately (or on a specified date) only if the regulator reasonably considers that it is necessary for the direction to take effect immediately (or on that date).
(5) The notice under subsection (1) must—
(a) give details of the direction,
(b) state the regulator's reasons for the direction and for its determination as to when the direction takes effect,
(c) inform the notified person that the person may make representations to the regulator within such period as may be specified in the notice (whether or not the notified person has referred the matter to the Tribunal), and
(d) inform the notified person of the person's right to refer the matter to the Tribunal.
(6) The regulator may extend the period allowed under the notice for making representations.
(7) If, having considered any representations made by any notified person, the regulator decides—
(a) to give the direction proposed, or
(b) if the direction has been given, not to revoke the direction,
it must give each of the notified persons written notice.
(8) If, having considered any representations made by any notified person, the regulator decides—
(a) not to give the direction proposed,
(b) to give a different direction, or
(c) to revoke a direction which has effect,
it must give each of the notified persons written notice.
(9) A notice given under subsection (7) must inform the notified person of the person's right to refer the matter to the Tribunal.
(10) A notice under subsection (8)(b) must comply with subsection (5).
(11) If a notice informs the notified person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(12) For the purposes of subsection (3)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
(1) Before the PRA gives a notice under section 192E(1) or (8)(b), it must consult the FCA.
(2) Before the FCA gives a notice under section 192E(1) or (8)(b) in relation to the parent undertaking of a PRA-authorised person, the FCA must consult the PRA.
(3) Before the FCA gives a notice under section 192E(1) or (8)(b) in relation to the parent undertaking of a recognised clearing house or a recognised CSD, it must consult the Bank of England.
(1) A notified person who is aggrieved by the exercise by either regulator of its powers in relation to directions under section 192C may refer the matter to the Tribunal.
(2) “Notified person” is to be read in accordance with subsection (2) of section 192E, except that it includes a person to whom a notice under subsection (1) of that section ought to have been given.
192H Statement of policy: directions under section 192C
(1) Each regulator must prepare and issue a statement of policy with respect to the giving of directions under section 192C.
(2) A regulator may at any time alter or replace a statement issued under this section.
(3) If a statement issued under this section is altered or replaced, the regulator must issue the altered or replacement statement.
(4) In exercising or deciding whether to exercise its power under section 192C in any particular case, a regulator must have regard to any statement published under this section and for the time being in force.
(5) A statement under this section must be published by the regulator concerned in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(6) A regulator may charge a reasonable fee for providing a person with a copy of a statement published under this section.
(7) A regulator must, without delay, give the Treasury a copy of any statement which the regulator publishes under this section.
192I Statement of policy relating to directions: procedure
(1) Before issuing a statement of policy under section 192H, a regulator (“the issuing regulator”) must—
(a) consult the other regulator and , where the issuing regulator is the FCA, the Bank of England, and
(b) publish a draft of the proposed statement in the way appearing to the issuing regulator to be best calculated to bring it to the attention of the public.
(2) The draft must be accompanied by notice that representations about the proposal may be made to the issuing regulator within a specified time.
(3) Before issuing the proposed statement, the issuing regulator must have regard to any representations made to it in accordance with subsection (2).
(4) If the issuing regulator issues the proposed statement it must publish an account, in general terms, of—
(a) the representations made to it in accordance with subsection (2), and
(b) its response to them.
(5) If the statement differs from the draft published under subsection (2) in a way which is, in the opinion of the issuing regulator, significant, the issuing regulator—
(a) must before issuing it consult the other regulator again, and
(b) must (in addition to complying with subsection (4)), publish details of the difference.
(6) The issuing regulator may charge a reasonable fee for providing a person with a draft published under subsection (1)(b).
(7) This section also applies to a proposal to alter or replace a statement.
192J Rules requiring provision of information by parent undertakings
(1) The appropriate regulator may make rules requiring qualifying parent undertakings—
(a) to provide to the regulator information of a specified description;
(b) to produce to the regulator documents of a specified description.
(2) The rules may only specify a description of information or documents that is relevant to the exercise by the regulator of its functions.
(3) The rules may make provision—
(a) as to the time within which information must be provided or documents produced;
(b) about the form in which any information is to provided;
(c) about the place where any documents are to be produced;
(d) requiring information provided to be verified in a specified manner;
(e) requiring documents produced to be authenticated in a specified manner.
(4) “The appropriate regulator” means—
(a) in relation to the parent undertaking of a qualifying authorised person who is a PRA-authorised person, the FCA or the PRA;
(b) in any other case, the FCA.
192JA Rules applying to parent undertakings of ring-fenced bodies
(1) The appropriate regulator may make such rules applying to bodies corporate falling within subsection (2) as appear to the regulator to be necessary or expedient for the group ring-fencing purposes.
(2) A body corporate falls within this subsection if—
(a) it is incorporated in the United Kingdom or has a place of business in the United Kingdom,
(b) it is a parent undertaking of a ring-fenced body, and
(c) it is not itself an authorised person.
(3) The “group ring-fencing purposes” are the purposes set out in section 142H(4).
(4) “The appropriate regulator” means—
(a) in relation to the parent undertaking of a ring-fenced body that is a PRA-authorised person, the PRA;
(b) in any other case, the FCA.
192JB Rules requiring parent undertakings to facilitate resolution
(1) The appropriate regulator may make rules requiring a qualifying parent undertaking to make arrangements that in the opinion of the regulator—
(a) would facilitate the preparation, maintenance, implementation and review of a recovery plan in relation to the group of the qualifying parent undertaking,
(b) are required in relation to the provision of financial support to other members of the group of the qualifying parent undertaking which encounter or are likely to encounter financial difficulties, or
(c) would allow or facilitate the exercise of the resolution powers in relation to the qualifying parent undertaking or any of its subsidiary undertakings in the event of a situation arising where all or part of the business of the parent undertaking or the subsidiary undertaking encounters or is likely to encounter financial difficulties.
(1A) A “recovery plan” in relation to a group, is a document which provides for measures to be taken to achieve the stabilisation of the group as a whole, or any institution within the group, where the group or institution is in a situation of financial stress, in order to address or remove the causes of the financial stress and restore the financial position of the group or the institution.
(2) The “resolution powers” are—
(a) the powers conferred on the Treasury and the Bank of England by or under Parts 1 to 3 of the Banking Act 2009, and
(b) any similar powers exercisable by an authority outside the United Kingdom.
(3) The arrangements that may be required include arrangements relating to—
(a) the issue of debt instruments by the parent undertaking;
(b) the provision to a subsidiary undertaking (“S”) or a transferee by the parent undertaking, or by any other subsidiary undertaking of the parent undertaking, of such services and facilities as would be required to enable S or the transferee to operate the business, or part of the business, effectively.
(c) the review of a recovery plan by the PRA;
(d) the entry by the parent undertaking into a group financial support agreement and provision of financial support by the parent undertaking in accordance with that agreement.
(4) In subsection (3)—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) “group financial support agreement” means an agreement for the provision of financial support, by a member of the group of the parent undertaking, to an institution in the group which, at any time after the agreement is concluded, comes to need financial support;
(c) “transferee” means a person to whom all or part of the business of the parent undertaking or the subsidiary undertaking could be transferred as a result of the exercise of the resolution powers.
(5) “Debt instrument” has the same meaning as in section 142Y.
(6) “The appropriate regulator” means—
(a) where the subsidiary undertakings of the qualifying parent undertaking include a ring-fenced body that is a PRA-authorised person, the PRA;
(b) where the subsidiary undertakings of the qualifying parent undertaking include one or more PRA-authorised persons but do not include any authorised person that is not a PRA-authorised person, the PRA;
(c) where the subsidiary undertakings of the qualifying parent undertaking do not include any PRA-authorised person, the FCA;
(d) in any other case, the PRA or the FCA.
(1) This section applies if a regulator is satisfied that a person who is or has been a qualifying parent undertaking (“P”) has contravened—
(a) a requirement of a direction given to P by that regulator under section 192C, ...
(b) a provision of rules made by that regulator under section 192J or 192JB, or
(c) a requirement imposed by a qualifying provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order.
(1A) This section also applies if a regulator is satisfied that a person (“P”) who is or has been a parent undertaking of a ring-fenced body has contravened a provision of rules made by that regulator under section 192JA.
(2) The regulator may impose a penalty of such amount as it considers appropriate on—
(a) P, or
(b) any person who was knowingly concerned in the contravention.
(3) The regulator may, instead of imposing a penalty on a person, publish a statement censuring the person.
(3A) The regulator may impose, for such period as it considers appropriate, restrictions (including a temporary ban) on the exercise by any member of the management body or senior management of, or other person who works for, a qualifying parent undertaking of any functions in a PRA-authorised person, an investment firm or a qualifying parent undertaking.
(3B) The regulator may only impose restrictions under subsection (3A) on a person who was, at any time, knowingly concerned in the contravention.
(4) The regulator may not take action against a person under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the person under section 192L.
(5) “The limitation period” means the period of 3 years beginning with the first day on which the regulator knew of the contravention.
(6) For this purpose a regulator is to be treated as knowing of a contravention if it has information from which the contravention can reasonably be inferred.
(7) In this section—
“management body” means the board of directors, or if there is no such board, the equivalent body responsible for the management of the undertaking concerned;
“member of the senior management” means a person who—
exercises executive functions within a qualifying parent undertaking, and
is responsible, and directly accountable to the management body, for the day to day management of that qualifying parent undertaking.
(8) A regulator which imposes a restriction on any person under subsection (3A) may—
(a) vary the restriction so as to reduce the period for which it has effect or otherwise to limit its effect, or
(b) cancel the restriction.
(1) If a regulator proposes to take action against a person under section 192K, it must give the person a warning notice.
(2) A warning notice about a proposal to impose a penalty must state the amount of the penalty.
(3) A warning notice about a proposal to publish a statement must set out the terms of the statement.
(3A) A warning notice about a proposal to impose a restriction under section 192K(3A) must state—
(a) the terms of the restriction, and
(b) the period for which the restriction is to have effect.
(4) If the regulator decides to take action against a person under section 192K, it must give the person a decision notice.
(5) A decision notice about the imposition of a penalty must state the amount of the penalty.
(6) A decision notice about the publication of a statement must set out the terms of the statement.
(6B) A decision notice about the imposition of a restriction under section 192K(3A) must state—
(a) the terms of the restriction, and
(b) the period for which the restriction is to have effect.
(7) If the regulator decides to take action against a person under section 192K, the person may refer the matter to the Tribunal.
After a statement under section 192K(3) is published, the regulator must send a copy of the statement to—
(a) the person in respect of whom it is made, and
(b) any person to whom a copy of the decision notice was given under section 393(4).
192N Imposition of penalties under section 192K: statement of policy
(1) Each regulator must prepare and issue a statement of policy with respect to—
(a) the imposition of penalties under section 192K, and
(b) the amount of penalties under that section.
(2) A regulator's policy in determining what the amount of a penalty should be must include having regard to—
(a) the seriousness of the contravention,
(b) the extent to which the contravention was deliberate or reckless, and
(c) whether the person on whom the penalty is to be imposed is an individual.
(3) A regulator may at any time alter or replace a statement issued under this section.
(4) If a statement issued under this section is altered or replaced, the regulator must issue the altered or replacement statement.
(5) In exercising, or deciding whether to exercise, a power under section 192K(2) in the case of any particular contravention, a regulator must have regard to any statement of policy published under this section and in force at a time when the contravention occurred.
(6) A statement under this section must be published by the regulator concerned in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(7) A regulator may charge a reasonable fee for providing a person with a copy of the statement published under this section.
(8) A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.
(9) Section 192I applies in relation to a statement under this section as it applies in relation to a statement under section 192H.
(1) In this Part—
...
“on a consolidated basis” means on the basis of the consolidated situation;
“consolidated situation” means the situation that results from an entity being treated, for the purposes of the capital requirements regulation or CRR rules (as appropriate), as if that entity and one or more other entities formed a single entity;
“designated investment firm” means an investment firm which is for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013;
“Directive 2013/36/EU UK law” means—
before IP completion day, the law of the United Kingdom which is relied on by the United Kingdom to implement the capital requirements directive and its implementing measures (“the relevant EU provisions”); and
after IP completion day, the law of the United Kingdom which was relied on immediately before that date to implement the relevant EU provisions as it has effect—
on 1 January 2022, in the case of rules made by the FCA or by the PRA under this Act, and
as amended from time to time, in all other cases,
...
“EU tertiary legislation” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018;
“financial holding company” has the meaning given in Article 4(1)(20) of the capital requirements regulation;
“financial institution” has the meaning given in Article 4(1)(26) of the capital requirements regulation;
“institution” means a credit institution or an investment firm;
“investment firm” has the meaning given in Article 4(1)(2) of the capital requirements regulation;
“mixed financial holding company” has the meaning given in Article 4(1)(21) of the capital requirements regulation;
“parent institution” means an institution which is a parent undertaking;
“parent undertaking” has the meaning given in section 420;
...
“section 192XA rules” means rules made under section 192XA;
“on a sub-consolidated basis” means—
on the basis of the consolidated situation of a parent institution, financial holding company or mixed financial holding company, excluding a sub-group of entities, or
on the basis of the consolidated situation of a parent institution, financial holding company or mixed financial holding company that is not the ultimate parent institution, financial holding company or mixed financial holding company;
“subsidiary institution” means an institution which is a subsidiary undertaking.
(2) A “parent financial holding company” or “parent mixed financial holding company” means a financial holding company or a mixed financial holding company which—
(a) is a UK parent financial holding company or a UK parent mixed financial holding company, within the meaning given in Article 4(1)(30) and 4(1)(32) respectively of the capital requirements regulation; or
(b) is required, whether by the PRA by direction under section 192C or otherwise, to comply with the capital requirements regulation , CRR rules and Directive 2013/36/EU UK law on a sub-consolidated basis.
(3) In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of assimilated law.
(1) No company may be established in the United Kingdom as a parent financial holding company or a parent mixed financial holding company unless—
(a) the company is approved by the PRA;
(b) the PRA has confirmed that the company is exempt from the requirement for approval under subsection (2); or
(c) the subsidiary undertakings of the company do not include—
(i) a credit institution, or
(ii) a designated investment firm.
(2) A company is exempt from the requirement for approval if—
(a) it is a parent financial holding company and its principal activity is to acquire holdings in subsidiary undertakings; or
(b) it is a parent mixed financial holding company and its principal activity with respect to institutions and financial institutions is to acquire holdings in subsidiary undertakings,
and all of the conditions in subsection (3) are satisfied.
(3) The conditions in this subsection are satisfied if—
(a) the Bank of England has not identified the company as a resolution entity (within the meaning of section 3 of the Banking Act 2009) in a group resolution plan under Part 5 of the Bank Recovery and Resolution (No. 2) Order 2014;
(b) a credit institution or a designated investment firm which is a subsidiary undertaking in the same group as the company—
(i) has been designated by the PRA as responsible to ensure the group’s compliance with prudential requirements on a consolidated or sub-consolidated basis, and
(ii) has the power required to discharge those obligations effectively, whether under contractual arrangements with other companies in the group or otherwise;
(c) the company does not take any management, operational or financial decisions affecting—
(i) the group as a whole, or
(ii) any of its subsidiary undertakings which are institutions or financial institutions;
(d) the PRA is satisfied that there is no impediment to the effective supervision of the group on a consolidated or sub-consolidated basis.
(4) For the purposes of this section, a company is established in the United Kingdom if the company is incorporated in, or formed under the law of, any part of the United Kingdom.
(1) An application for—
(a) the PRA’s approval for the purposes of section 192P(1)(a); or
(b) confirmation of exemption from the requirement for approval,
must be made by the company concerned.
(2) The application must—
(a) be made in such manner as the PRA may direct; and
(b) contain or be accompanied by the information referred to in subsection (3).
(3) The information referred to in subsection (2) is—
(a) a description of the structural organisation of the group of which the company is part, indicating—
(i) its subsidiary undertakings and parent undertakings, and
(ii) the location and type of activity undertaken by each of the entities within the group;
(b) the identity of at least two individuals who are directors of the company;
(c) a description as to how each director of the company complies with the requirements that they are of sufficiently good repute, and possess sufficient knowledge, skills and experience, to perform their duties as directors;
(d) where one of the subsidiary undertakings of the company is a credit institution or a designated investment firm—
(i) the identity of any persons who hold, whether directly or indirectly, qualifying holdings (within the meaning of Article 4(1)(36) of the capital requirements regulation), in the credit institution or designated investment firm, and the amounts of those holdings, or
(ii) if no person holds a qualifying holding in the credit institution or designated investment firm, the identity of the 20 largest shareholders in the credit institution or designated investment firm and the amount of their shareholdings;
(e) a description of the internal organisation and the distribution of tasks with the group.
(4) The PRA may, by notice in writing, require the company to provide any further information necessary to enable the PRA to assess whether the conditions referred to in section 192P(2) and (3) or section 192R are fulfilled.
(1) When the PRA receives an application from a company under section 192Q, it must decide whether—
(a) to approve the company,
(b) to confirm that the company qualifies for an exemption under section 192P(2) and (3), or
(c) to take one or more of the measures in section 192T.
(2) The PRA may only approve the company under this section where conditions A, B and C are satisfied.
(3) Condition A is that the internal arrangements and distribution of tasks within the group of which the company is part are—
(a) adequate for the purpose of complying with the requirements imposed by Directive 2013/36/EU UK law , CRR rules ... and the capital requirements regulation on a consolidated or sub-consolidated basis, ...
(aa) adequate for the purpose of complying with section 192XA rules, and
(b) effective to—
(i) co-ordinate all the subsidiary undertakings of the company, including, where necessary, through an adequate distribution of tasks among subsidiary institutions;
(ii) prevent or manage intra-group conflicts; and
(iii) enforce the group-wide policies set by the company throughout the group.
(4) Condition B is that the structural organisation of the group of which the company is part does not obstruct or otherwise prevent the effective supervision of the subsidiary institutions and parent institutions as concerns the individual, consolidated and, where appropriate, sub-consolidated obligations to which they are subject.
(5) In assessing whether Condition B is satisfied, the PRA must take into account—
(a) the position of the company within the group;
(b) the shareholding structure of the company, and the group of which it is part; and
(c) the role of the company within the group.
(6) Condition C is that—
(a) the PRA has received the information as to the identity of the shareholders of any credit institution in the group, and the amount of their shareholdings, which is required under Directive 2013/36/EU UK law; and
(b) the directors of the company are of sufficiently good repute, and possess sufficient knowledge, skills and experience to perform their duties as directors.
(7) Where the PRA proposes to refuse approval, or to reject an application for confirmation of exemption, it must give the company a warning notice within four months beginning with—
(a) the date on which it received the application under section 192Q; or
(b) if later (subject to subsection (8) and section 387), the date on which it received any further information requested under section 192Q(4).
(8) When the PRA decides to refuse approval, or to reject an application for an exemption, it must give the company a decision notice within six months of the date on which it received which the application under section 192Q.
(1) The PRA must monitor whether—
(a) a company approved under section 192R continues to satisfy the conditions in section 192R(3) to (6); and
(b) a company which it has confirmed is exempt from the requirement for approval under section 192P continues to satisfy the conditions for exemption set out in section 192P(2) and (3).
(2) A company which is subject to the requirement for approval under section 192P(1), or exempt from that requirement under section 192P(2), must give the PRA notice in writing of—
(a) any change in the structural organisation of the group; and
(b) any other information required by rules made under section 192J.
(1) Where the PRA determines that the conditions in section 192R are not met, or have ceased to be met, by a company which is subject to the requirement for approval under section 192P(1), the PRA must take appropriate measures in relation to the company—
(a) to ensure the continuity and integrity of the consolidated or sub-consolidated supervision of the group of which the company is part (the “relevant group”); ...
(b) to ensure that the relevant group complies with the requirements in Directive 2013/36/EU UK law , CRR rules ... and the capital requirements regulation on a consolidated or sub-consolidated basis , and
(c) to ensure that the relevant group complies with section 192XA rules.
(2) Measures taken under subsection (1) may include a direction—
(a) suspending the exercise by the company of voting rights attached to the shares of specified subsidiary institutions held by the company;
(b) requiring the company to transfer its holdings in its subsidiary institutions to its shareholders;
(c) designating another financial holding company, mixed financial holding company or institution within the group as being responsible for a period specified in the direction for ensuring that the group complies with the requirements laid down in Directive 2013/36/EU UK law , CRR rules ... and in the capital requirements regulation on a consolidated or sub-consolidated basis and with section 192XA rules;
(d) restricting or prohibiting distributions or interest payments to shareholders;
(e) requiring the company to divest from, or reduce its holdings in, institutions or financial institutions;
(f) requiring the company to submit a plan setting out how it proposes to correct any deficiencies in its compliance with the conditions in section 192R.
(3) Where the PRA determines that a company which it has confirmed is exempt from the requirement for approval under section 192P no longer satisfies the conditions for exemption under section 192P(3), it must direct that company to apply for approval for the purposes of section 192P(1)(a).
(1) If the PRA proposes to give a direction under section 192T, or gives such a direction with immediate effect, it must give written notice to—
(a) the financial holding company or mixed financial holding company to which the direction is given (or to be given); and
(b) any authorised person or recognised investment exchange who will, in the opinion of the PRA, be significantly affected by the direction.
(2) In the following provisions of this section “notified person” means a person to whom notice under subsection (1) is given.
(3) A direction under section 192T takes effect—
(a) immediately, if the notice under subsection (1) states that that is the case;
(b) on such other date as may be specified in the notice; or
(c) if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.
(4) A direction may be expressed to take effect immediately (or on a specified date) only if the PRA reasonably considers that it is necessary for the direction to take effect immediately (or on that date).
(5) The notice under subsection (1) must—
(a) give details of the direction;
(b) state the PRA’s reasons for the direction and for its determination as to when the direction takes effect;
(c) inform the notified person that the person may make representations to the PRA within such period as may be specified in the notice (whether or not the notified person has referred the matter to the Tribunal); and
(d) inform the notified person of the person’s right to refer the matter to the Tribunal.
(6) The PRA may extend the period allowed under the notice for making representations.
(7) If, having considered any representations made by any notified person, the PRA decides—
(a) to give the direction proposed; or
(b) if the direction has been given, not to revoke the direction,
it must give each of the notified persons written notice.
(8) If, having considered any representations made by any notified person, the PRA decides—
(a) not to give the direction proposed,
(b) to give a different direction, or
(c) to revoke a direction which has effect,
it must give each of the notified persons written notice.
(9) A notice given under subsection (7) must inform the notified person of the person’s right to refer the matter to the Tribunal.
(10) A notice under subsection (8)(b) must comply with subsection (5).
(11) If a notice informs the notified person of the person’s right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(12) For the purposes of subsection (3)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
The PRA must consult the FCA before—
(a) approving an application under section 192Q; or
(b) giving a notice under section 192U(1) or (8)(b) to the financial holding company or mixed financial company of a group which includes an institution which is not a PRA-authorised person.
(1) A reference may be made to the Tribunal by—
(a) a company which is aggrieved by the decision of the PRA under section 192R to refuse approval, or to reject an application for an exemption; or
(b) a notified person who is aggrieved by the exercise by the PRA of its powers in relation to directions under section 192T.
(2) “Notified person” means a person to whom notice under section 192U(1) has been given, or ought to have been given.
(1) The PRA may make rules described in subsection (2) applying to financial holding companies and mixed financial holding companies that are—
(a) approved under section 192R, or
(b) designated under section 192T(2)(c),
where it appears to the PRA to be necessary or expedient to make the rules for the purpose of advancing any of its objectives.
(2) Those rules are—
(a) rules imposing requirements to be complied with by holding companies on a consolidated or sub-consolidated basis;
(b) rules imposing requirements which, in the PRA's opinion, are likely to mitigate group risk;
(c) rules imposing reporting requirements related to requirements described in paragraph (a) or (b);
(d) rules imposing public disclosure requirements related to requirements described in paragraph (a) or (b);
(e) rules imposing requirements in respect of governance arrangements;
(f) rules imposing requirements in respect of remuneration policies and practices.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) Rules made under this section may make provision by reference to the capital requirements regulation, to instruments made under that regulation or to Directive 2013/36/EU UK law, as amended from time to time.
(6) Section 137H (rules about remuneration) applies where the PRA makes rules under this section prohibiting persons, or persons of a specified description, from being remunerated in a specified way as it applies where the PRA makes general rules imposing such a prohibition.
(7) Section 137I (Treasury direction to consider compliance with remuneration policies) applies where the PRA makes rules under this section requiring financial holding companies or mixed financial holding companies, or a specified description of such companies, to act in accordance with a remuneration policy as it applies where the PRA makes general rules imposing such requirements on authorised persons, but as if—
(a) the references in that section to authorised persons were references to financial holding companies or mixed financial holding companies, and
(b) subsection (7) of that section were omitted.
(8) Section 141A (power to make consequential amendments of references to rules etc) applies to the exercise by the PRA of its power to make, alter or revoke rules under this section as it applies in relation to the exercise by the PRA of its power to make, alter or revoke rules under Part 9A.
(9) In this section—
“governance arrangements” includes organisational structure, lines of responsibility and internal control mechanisms;
“group risk” means the risk that the financial position of a financial holding company or mixed financial holding company or of a member of its group may be adversely affected—
by its relationships, whether financial or non-financial, with other members of the group, or
by matters which affect the financial position of the group, or of a group which forms part of that group, taken as a whole (including, for example, reputational contagion).
(1) For provision about the making of section 192XA rules that are CRR rules, see Part 9D.
(2) The following provisions of Part 9D apply in relation to section 192XA rules that are not CRR rules as if they were CRR rules—
(a) section 144C (matters to consider when making rules);
(b) section 144D (explanation to accompany consultation on rules);
(c) section 144E(1) and (4) to (7) (exceptions from sections 144C and 144D).