The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021
2021 No. 1376
Financial Services
The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021
Made 7th December 2021
Coming into force in accordance with regulation 1(2) and (3)
The Treasury, in exercise of the powers conferred by sections 9I(2) and 9L(1) and (4)(a) of the Bank of England Act 19981, sections 22A, 144F(1) and 428(3) of the Financial Services and Markets Act 20002, section 258A(2)(b) of the Banking Act 20093, section 8(1) of, and paragraph 21 of Schedule 7 to, the European Union (Withdrawal) Act 20184, and sections 3(1), (5) and (6) and 45(1) and (3) of the Financial Services Act 20215make the following Regulations.
In accordance with section 3(4) of the Financial Services Act 2021, the Treasury consider that the provisions of the Capital Requirements Regulation6revoked by these Regulations have been adequately replaced by general rules made by the Prudential Regulation Authority.
In accordance with section 9L(2)(a) of the Bank of England Act 1998, the Treasury have consulted the Financial Policy Committee.
In the opinion of the Treasury, one of the effects of these Regulations is that an activity will become a PRA-regulated activity within the meaning of the Financial Services and Markets Act 20007.
A draft of these Regulations has been laid before and approved by a resolution of each House of Parliament, in accordance with section 9N(1) of the Bank of England Act 19988, sections 22B (3)(a) and 429(2) of the Financial Services and Markets Act 20009, section 258A(3)(b) of the Banking Act 2009 and sections 3(7), 45(4) and 46(3) of the Financial Services Act 2021.
PART 1
Introduction
Citation, commencement and extent
1.—(1) These Regulations may be cited as the Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021.
(2) This Part and Part 6 come into force on the day after the day on which these Regulations are made.
(3) The remaining Parts come into force on 1st January 2022.
(4) These Regulations extend to England and Wales, Scotland and Northern Ireland.
PART 2
Amendment of Primary Legislation and Northern Ireland Legislation
2.—(1) Section 387A (financial institutions and their non-preferential debts) of the Insolvency Act 198610is amended as follows.
(2) In subsection (1)—
(a)
(a) after paragraph (d) insert—
“
(da)
(da) an investment holding company,
”;
(b)
(b) for paragraph (e) substitute—
“
(e)
(e) a financial institution which is—
(i) a subsidiary of an entity referred to in paragraphs (a) to (da), and
(ii) covered by the supervision of that entity on a consolidated basis by the Financial Conduct Authority in accordance with Part 9C rules or by the Prudential Regulation Authority in accordance with Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms11or CRR rules, or,
(3) At the end of subsection (2) insert .
(4) After subsection (2) insert—
“
2A For the purposes of subsection (1)—
“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 Part 9C rules, Regulation (EU) 575/2013 or CRR rules (as appropriate), as if that entity and one or more other entities formed a single entity;
“CRR rules” has the meaning given in section 144A of the Financial Services and Markets Act 200012;
“Part 9C rules” has the meaning given in section 143F of the Financial Services and Markets Act 200013.
Insolvency (Northern Ireland) Order 1989
3.—(1) Article 347A (financial institutions and their non-preferential debts) of the Insolvency (Northern Ireland) Order 198914is amended as follows.
(2) In paragraph (1)—
(a)
(a) after sub-paragraph (d) insert—
“
(da)
(da) an investment holding company,
”;
(b)
(b) for sub-paragraph (e) substitute—
“
(e)
(e) a financial institution which is—
(i) a subsidiary of an entity referred to in sub-paragraphs (a) to (da), and
(ii) covered by the supervision of that entity on a consolidated basis by the Financial Conduct Authority in accordance with Part 9C rules or by the Prudential Regulation Authority in accordance with Regulation (EU) No 575/2013of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms or CRR rules, or,
(3) At the end of paragraph (2) insert .
(4) After paragraph (2) insert—
“
2A For the purposes of paragraph (1)—
“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 Part 9C rules, Regulation (EU) 575/2013 or CRR rules (as appropriate), as if that entity and one or more other entities formed a single entity;
“CRR rules” has the meaning given in section 144A of the Financial Services and Markets Act 2000;
“Part 9C rules” has the meaning given in section 143F of the Financial Services and Markets Act 2000.
Financial Services and Markets Act 2000
4.—(1) The Financial Services and Markets Act 200015is amended as follows.
(2) In section 3M(1) (directions relating to consolidated supervision of groups)16—
(a)
(a) at the end of paragraph (a), omit “or”;
(b)
(b) after paragraph (b) insert—
“
(c)
(c) Part 9C rules;
(d)
(d) CRR rules; or
(e)
(e) rules made under section 192XA.
(3) In section 55J(6A)(c) (variation or cancellation on initiative of regulator)17, for the words from “the capital requirements regulation” to the end substitute .
(4) In section 55PB(6) (requirements relating to general meetings)18, in the definition of “investment firm”, for “section 258A of the Banking Act 2009” substitute19.
(5) In section 71I(1)(c) (sections 71B to 71H: interpretation)20, for “section 258A of the Banking Act 2009” substitute .
(6) In section 137J(6) (rules about recovery plans: duty to consult)21, in the definition of “institution”, for paragraph (b) substitute—
“
(b)
(b) a designated investment firm as defined in Article 4(1)(2AA) of the capital requirements regulation22;
(7) In section 192JB23(rules requiring parent undertakings to facilitate resolution)—
(a)
(a) in subsection (3)(c), for “consolidating supervisor of the qualifying parent undertaking” substitute ;
(b)
(b) omit subsection (4)(a).
(8) In section 192O24(interpretation of Part 12B – approval of certain holding companies)—
(a)
(a) in subsection (1)—
(i) omit the definition of “consolidated basis”;
(ii) before the definition of “designated investment firm” insert—
“
“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;
”;
(iii) for the definition of “sub-consolidated basis” substitute—
“
“on a sub-consolidated basis” means—
(a) 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
(b) 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;
”;
(b)
(b) in subsection (2)(b), after “capital requirements regulation” insert .
(9) In section 192R(3)(a) (grant of approval), after “ Directive 2013/36/EUUK law” insert .
(10) In section 192T (measures)—
(a)
(a) in subsection (1)(b), after “Directive 2013/36/ EU UK law” insert ;
(b)
(b) in subsection (2)(c), after “Directive 2013/36/ EU UK law” insert .
5. In paragraph 3(1) of Schedule 3A to the Terrorism Act 200025(interpretation of Part 1 – regulated sector), for the definition of “the Capital Requirements Regulation” substitute—
“
“the Capital Requirements Regulation” means Regulation (EU) No. 575/2013of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms;
6. In paragraph 3(1) of Schedule 9 to the Proceeds of Crime Act 200226(interpretation of Part 1 – regulated sector), for the definition of “the Capital Requirements Regulation” substitute—
“
“the Capital Requirements Regulation” means Regulation (EU) No. 575/2013of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms;
Banking (Special Provisions) Act 2008
7.—(1) Section 15 (interpretation) of the Banking (Special Provisions) Act 200827is amended as follows.
(2) In subsection (1), after the definition of “pension scheme” insert—
“
“PRA Rulebook” means the rulebook published by the Prudential Regulation Authority containing rules made by that Authority under FSMA 2000 as that rulebook has effect on 1 January 2022;
(3) In subsection (2), for “Title 1 of Part Two of Regulation (EU) No. 575/2013of the European Parliament and of the Council” substitute Regulation (EU) No. 575/2013.
Counter-Terrorism Act 2008
8. In paragraph 7 of Schedule 7 to the Counter-Terrorism Act 200828(interpretation of Part 2 – persons to whom a direction may be given), for the definition of “the capital requirements regulation” substitute—
“
“the...
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