Financial Institutions (Prudential Supervision) Regulations 1996

JurisdictionUK Non-devolved
CitationSI 1996/1669

1996 No. 1669

BANKING

The Financial Institutions (Prudential Supervision) Regulations 1996

Made 27th June 1996

Laid before Parliament 27th June 1996

Coming into force 18th July 1996

The Treasury, being designated1for the purposes of, and in exercise of the powers conferred by, section 2(2) of the European Communities Act 19722and of all other powers enabling them in that behalf, hereby make the following Regulations:—

1 GENERAL

PART I

GENERAL

S-1 Citation, commencement and interpretation

Citation, commencement and interpretation

1.—(1) These Regulations may be cited as the Financial Institutions (Prudential Supervision) Regulations 1996.

(2) These Regulations shall come into force on 18th July 1996.

(3) In these Regulations—

“the Banking Act” means the Banking Act 19873;

“the Building Societies Act” means the Building Societies Act 19864;

“the Financial Services Act” means the Financial Services Act 19865;

“the Friendly Societies Act” means the Friendly Societies Act 19926;

“the Insurance Companies Act” means the Insurance Companies Act 19827;

“the Bank” means the Bank of England;

“the Board” means The Securities and Investments Board;

“EEA State” means a State which is a contracting party to the agreement on the European Economic Area signed at Oporto on 2nd May 19928as adjusted by the Protocol signed at Brussels on 17th March 19939;

“the Prudential Supervision Directive” means the European Parliament and Council Directive of 29th June 1995 amending—

(a) Directives 77/780/EECand 89/646/EECin the field of credit institutions,

(b) Directives 72/239/EECand 92/49/EECin the field of non-life insurance,

(c) Directives 79/267/EECand 92/96/EECin the field of life assurance,

(d) Directive 93/22/EECin the field of investment firms, and

(e) Directive 85/611/EECin the field of undertakings for collective investment in transferable securities (UCITS),

with a view to reinforcing prudential supervision (No. 95/26/EC)10;

“undertaking” has the same meaning as in Part VII of the Companies Act 198511.

(4) Any reference in these Regulations—

(a)

(a) to an undertaking being closely linked with any person, or being closely linked with any person by control; or

(b)

(b) to an undertaking’s close links with any person, shall be construed in accordance with regulation 2 below.

S-2 Meaning of “closely linked” etc.

Meaning of “closely linked” etc.

2.—(1) This regulation has effect for the purposes of these Regulations and the following Acts, namely—

(a)

(a) the Banking Act;

(b)

(b) the Building Societies Act;

(c)

(c) the Friendly Societies Act; and

(d)

(d) the Insurance Companies Act;

and subject to the modifications referred to in paragraph (3) below, expressions used in paragraph (2) below which are also used in Part VII of the Companies Act 1985 have the same meanings as in that Part.

(2) An undertaking is closely linked with—

(a)

(a) any person who is or, if he were an undertaking, would be its parent undertaking;

(b)

(b) any undertaking which is its subsidiary undertaking;

(c)

(c) any undertaking which is or, if any person falling within sub-paragraph (a) above were an undertaking, would be a fellow subsidiary undertaking; and

(d)

(d) any person in accordance with whose directions or instructions its directors are accustomed to act;

and any reference to an undertaking’s close links with any person shall be construed accordingly.

(3) For the purpose of determining any question arising under paragraph (2) above, sections 258 to 260 of and Schedule 10A to the Companies Act 1985 shall have effect with the modifications specified in Schedule 1 to these Regulations.

(4) An undertaking which is closely linked with any person is closely linked with that person by control if, and only if, it would still be closely linked with that person if subsection (4) of section 258 of the Companies Act 1985, and paragraph 3 of Schedule 1 to these Regulations, were omitted.

2 BANKING INSTITUTIONS

PART II

BANKING INSTITUTIONS

S-3 Refusal and revocation of authorisation by Bank

Refusal and revocation of authorisation by Bank

3.—(1) After subsection (3) of section 9 of the Banking Act (grant and refusal of authorisation) there shall be inserted the following subsection—

S-3A

“3A The Bank shall refuse an application made by a credit institution if it appears to the Bank that—

(a) the institution is an undertaking which is closely linked with any person; and

(b) the institution’s close links with that person, or any matters relating to any non-EEA laws or administrative provisions to which that person is subject, are such as would prevent the effective exercise by the Bank of its supervisory functions in relation to the institution;

and in this subsection and subsection (1B) of section 11 below `non-EEA laws' means laws of a country or territory which is not a contracting party to the agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993, and “non-EEA administrative provisions” shall be construed accordingly.”

(2) After subsection (1A) of section 11 of that Act (revocation of authorisation) there shall be inserted the following subsection—

S-1B

“1B The Bank may revoke the authorisation of a credit institution if it appears to the Bank that—

(a) the institution is an undertaking which is closely linked with any person; and

(b) the institution’s close links with that person, or any matters relating to any non-EEA laws or administrative provisions to which that person is subject, are such as to prevent the effective exercise by the Bank of its supervisory functions in relation to the institution.”

S-4 Communication by auditor etc. with Bank

Communication by auditor etc. with Bank

4.—(1) In subsection (1) of section 47 of the Banking Act (communication by auditor etc. with Bank), after paragraph (b) there shall be inserted the words

“or

(c)

(c) an auditor of a body with which an authorised institution which is a credit institution is closely linked by control who is also either—

(i) an auditor of the institution; or

(ii) a person appointed to make a report under section 8(5) or 39(1)(b) above in respect of the institution,”

(2) After subsection (3) of that section there shall be inserted the following subsection—

S-3A

“3A In relation to an auditor of a body with which an authorised institution which is a credit institution is closely linked by control, this section applies to any matter of which he becomes aware in his capacity as auditor of the body and which relates to the business or affairs of the institution.”

S-5 Disclosure of information by Bank

Disclosure of information by Bank

5.—(1) In subsection (1) of section 83 of the Banking Act (disclosure for facilitating discharge of functions of Bank)—

(a)

(a) the word “or” immediately following paragraph (b) shall be omitted; and

(b)

(b) after paragraph (c) there shall be inserted the words

“or

(d)

(d) its functions as a supervisor of systems for the transfer of funds between credit institutions and their customers.”

(2) In the Table in subsection (1) of section 84 of that Act (disclosure for facilitating discharge of functions by other supervisory authorities)—

(a)

(a) in entry 11, in the first column, the words “recognised clearing house” shall be omitted and, in the second column, for the words “exchange or clearing house” there shall be substituted the words “or exchange”;

(b)

(b) after entry 11 there shall be inserted the following entries—

11A. A recognised clearing house (within the meaning of the Financial Services Act 1986).

Functions in its capacity as a clearing house under the Financial Services Act 1986 so far as they are exercisable in relation to defaults or potential defaults by market participants.

11B. A person approved under the Uncertificated Securities Regulations 1995 as an operator of a relevant system (within the meaning of those Regulations).

Functions as a person so approved so far as they are exercisable in relation to defaults or potential defaults by market participants.

11C. A recognised supervisory body (within the meaning of Part II of the Companies Act 1989).

Functions in its capacity as such a body under that Part or functions in relation to disciplinary proceedings against auditors.”

(c)

(c) in entry 12, at the end of the second column there shall be inserted the words “or functions in relation to disciplinary proceedings against insolvency practitioners (within the meaning of that Act)”;

(d)

(d) in entry 19, at the end of the second column there shall be inserted the words “or functions in relation to disciplinary proceedings against insolvency practitioners (within the meaning of that Order)”; and

(e)

(e) after that entry there shall be inserted the following entry—

20. A recognised supervisory body (within the meaning of Part III of the Companies (Northern Ireland) Order 1990).

Functions in its capacity as such a body under that Part, or functions in relation to disciplinary proceedings against auditors.”

(3) In subsection (6) of that section, the word “or” immediately following paragraph (b) shall be omitted and after paragraph (c) there shall be inserted the words

“or

(d)

(d) in the case of a supervisory authority in another EEA State, its functions as a supervisor of systems for the transfer of funds between credit institutions and their customers.”

(4) At the beginning of subsection (10) of that section there shall be inserted the words “Subject to subsection (11) below,” and after that subsection there shall be inserted the following subsections—

S-11

“11 Subsection (10) above shall not apply in relation to references to enabling or assisting the discharge or exercise of the following functions, namely—

(a) functions of the Secretary of State under Part XIV of the Companies Act 1985, Part XIII of the Insolvency Act 1986 or Part II of the Companies Act 1989 or, so far as relating to the breach of any law relating to companies...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT