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AUTH 5 Annex 3 Application of the Handbook to Incoming EEA Firms G

G

1.

The table below summarises the application of the Handbook to an incoming EEA firm. Where the table indicates that a particular module of the Handbook may apply, its application in relation to any particular activity is dependent on the detailed application provisions in that module. The table does not apply to incoming ECA providers. These should refer to ECO 1 for guidance on how the Handbook applies to them.4

2.

In some cases, the application of the Handbook depends on whether responsibility for a matter is reserved under a European Community instrument to the incoming EEA firm's Home State regulator. Guidance on the reservation of responsibility is contained in SYSC App 1 (Matters reserved to a Home State regulator).

3.

For an incoming EEA firm which has permission for cross-border services only, many parts of the Handbook apply only if the firm carries on regulated activities in the United Kingdom. Those parts of the Handbook will therefore not apply if the firm confines its activities to those within the overseas persons exclusions in article 72 of the Regulated Activities Order, or which would not be regarded as carried on in the United Kingdom. Further guidance may be found in AUTH 2.4 (Link between activities and the United Kingdom) and AUTH 2.9.15 G to AUTH 2.9.17 G (Overseas persons).141211975

(G

(1) Module of Handbook

(2) Potential application to an incoming EEA firm with respect to activities carried on from an establishment of the firm (or its appointed representative) in the United Kingdom

(3) Potential application to an incoming EEA firm with respect to activities carried on other than from an establishment of the firm (or its appointed representative) in the United Kingdom

PRIN

The Principles apply only in so far as responsibility for the matter in question is not reserved by a European Community instrument to the firm's Home State regulator (PRIN 3.1.1 R).

For an incoming EEA firm which is a BCD credit institution without a top-up permission, Principle 4 applies only in relation to the liquidity of a branch established in the United Kingdom (PRIN 3.1.1 R (2)).

The Principles do not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom (PRIN 3.1.1 R (2)).

The Principles have limited application for activities which are not carried on from a UK establishment (see PRIN 3.3.1 R).

Otherwise, see column (2).

SYSC

SYSC 1 contains application provisions only. SYSC 2 and SYSC 3 apply as set out in SYSC 1.1.1 R (1):

(1) SYSC 2.1.1 R and SYSC 2.1.2 G do not apply;

(2) SYSC 2.1.3 R to SYSC 2.2.3 G apply, but only in relation to allocation of the function in SYSC 2.1.3 R (2) and only in so far as responsibility for the matter in question is not reserved by a European Community instrument to the firm's Home State regulator; and

(3) SYSC 3 applies, but only in so far as responsibility for the matter in question is not reserved by a European Community instrument to the firm's Home State regulator.

SYSC 1.1.7 R (Where?) further restricts the territorial application of SYSC 1 to SYSC 3 for an incoming EEA firm. Further guidance is contained in SYSC 2.1.6 G, Question 12.

SYSC 4 applies to the extent that the Public Interest Disclosure Act 1998 applies to the firm.

SYSC 1 to SYSC 3 do not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom (SYSC 1.1.1 R (2)).

SYSC 1 to SYSC 3 have limited application for activities which are not carried on from a UK establishment (see SYSC 1.1.7 R).

Otherwise, see column (2).3

COND

COND does not apply if the firm does not have, or apply for, a top-up permission.

Otherwise, only threshold conditions 1, 3, 4 and 5 apply and only in so far as relevant to:

(1) an application for a top-up permission under Part IV of the Act (that is, a permission to carry on regulated activities in addition to those permitted through its authorisation under Schedule 3 to the Act (EEA Passport Rights)); and

(2) the exercise of the FSA's own-initiative power in relation to the top-up permission.

(COND 1.1.1 G.)

As column (2).

APER

APER applies to approved persons (APER 1.1.1 G). See below under SUP 10 as to whether controlled functions are performed, and approval therefore required.8

Not relevant because SUP 10 does not apply.

FIT

FIT applies to a firm wishing to establish a branch in the United Kingdom or to apply for a top-up permission in respect of any application that it makes for the approval of a person to perform a controlled function (FIT 1.1). See under SUP 10 below as to whether such approval is required.

Does not apply.8

GEN

GEN applies (GEN 1.1, GEN 2.1, GEN 3.1, GEN 4.1, GEN 5.1 and GEN 6.1). However, (a) GEN 4 does not apply to the extent that the firm is subject to equivalent rules imposed by its Home State (4.1.1 R (3)) and (b) GEN 6 only applies to business that can be regulated under section 138 of the Act (General rule-making power). It does not therefore apply if, or to the extent that, responsibility has been reserved to an incoming firm's Home State regulator by a European Community instrument.

GEN 4 does not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom.

Otherwise, as column (2).

IPRU(BANK)

Only the following apply, and only if the firm is a credit institution other than an electronic money institution within the meaning of article 1(3)(a) of the E-Money Directive that has the right to benefit from the mutual recognition arrangements under the Banking Consolidation Directive (IPRU(BANK) 3.2.1R):

(1) IPRU(BANK) 3.3.15R, IPRU(BANK) 3.3.16G and IPRU(BANK) 3.5.1R; and

(2) chapter CO (which provides an overview of the underlying policy) and the more detailed guidance in chapters CB, CA, BC, BO, FX, CM, DU, TI, TE, TC, TL, TU, TS and TV.8

Does not apply. But if the firm is a credit institution whose notification to the FSA of its intention to provide services in the United Kingdom covers services provided through a branch, see column (2).

IPRU(BSOC)

Does not apply because an incoming EEA firm cannot be a building society (IPRU(BSOC) X.2.1R).

Does not apply because an incoming EEA firm cannot be a building society (IPRU(BSOC) X.2.1R).

IPRU(FSOC)

Does not apply because an incoming EEA firm cannot be a friendly society (IPRU(FSOC) 1.1).

Does not apply because an incoming EEA firm cannot be a friendly society (IPRU(FSOC) 1.1).

IPRU(INS)

Only IPRU(INS) 3.6 and 3.7 (Linked long-term contracts) apply, and only if the firm is an insurer (IPRU(INS) 1.1(b)).

As column (2).

IPRU(INV)

IPRU(INV) does not apply unless the firm:

(1) has a top-up permission;

(2) is an authorised professional firm, investment management firm, members' adviser, personal investment firm, securities and futures firm, service company or underwriting agent; and

(3) is not a lead regulated firm or a media firm.

(IPRU(INV) 1.1.1R and 1.2R)8

As column (2).

PRU

PRU 9.1 (Responsibility for insurance mediation activity) does not apply unless the firm has a top-up permission.13

PRU 9.2 (Professional indemnity insurance requirements for insurance and mortgage mediation activity and mortgage lending and administration) does not apply unless the firm has a top-up permission.13

As column (2).13

As column (2).13

PRU

PRU 9.3 (Capital resources for insurance and mortgage mediation activity and mortgage lending and administration) does not apply unless the firm has a top-up permission. See PRU 9.3.2 G for more detailed guidance.13

PRU 9.4 (Insurance undertakings and mortgage lenders using insurance or mortgage mediation services) does not apply unless the firm has a top-up permission. 13

Otherwise, PRU does not apply unless the firm is an insurer to which PRU 7.6.33 R applies19

As column (2).13

As column (2).13

COB

COB applies.

Where the activity:

(1) (a) would fall within the overseas persons exclusions in article 72 of the Regulated Activities Order; or15

(b) would not be regarded as carried on in the United Kingdom; or15

(c) is not carried on with or for a client in the United Kingdom;15

then only the following apply:

(d) COB 3 (Financial promotion), but see the territorial scope in COB 3.3 (Where?);15

(e) COB 5.5.7 R (Overseas business);15

(f) certain parts of COB 6 (Product disclosure and the customer's right to cancel or withdraw) but only in relation to long-term insurance business carried on with a customer habitually resident in the United Kingdom or if the State of the risk is the FSA (see COB 1.4.7 R and COB 1.4.8 R); 15and18

(g) (i) COB 4.3.19 R to COB 4.3.25 R save that the firm must also comply with those rules as if they also applied to a firm carrying out the activities in COB 4.3.19R (1) with or on behalf of all private customers;18

(ii) COB 5.2.12 R to COB 5.2.14 R; and18

(iii) COB 5.3.18 R (1) and COB 5.3.18A R to COB 5.3.18C R;18

but only in relation to activities passported under the IMD (see COB 1.4.12R (3));18

(2) concerns a distance contract and is carried on with retail customers in the United Kingdom from an establishment maintained by the firm in an EEA State which:15

(a) has implemented the DMD; or15

(b) has obligations in its domestic law corresponding to those provided for by the DMD15;

COB 4.2, COB 5, and COB 6 do not apply15.

Otherwise, as column (2), (COB 1.4.3 R).81

18

ICOB17

ICOB applies.17

Only the following provisions of ICOB apply:17

(a) ICOB 3 (Financial promotion), but see the territorial scope in ICOB 3.4 (Application: where?)17

(b) ICOB 5.5.20 R, but only in relation to general insurance contracts if the state of the risk is the United Kingdom;17

(c) ICOB 5.5.20 Rand ICOB 5.5.20 R, but only in respect of non-investment insurance contracts which are pure protection contracts where the habitual residence of the customer, other than an EEA ECA recipient, is in the United Kingdom;17

(d) ICOB 6 (Cancellation), but only in respect of non-investment insurance contracts which are pure protection contracts where the habitual residence of the customer, other than an EEA ECA recipient, is in the United Kingdom.17

CASS

CASS does not apply with respect to the firm's passported activities unless the firm is an insurer (CASS 1.2.3 R (2)).

As column (2).

MAR

MAR 1 (Code of market conduct)

Applies if the firm is seeking guidance as to whether or not behaviour amounts to market abuse (MAR 1.1.1 G).

MAR 1 (Code of market conduct) As column (2).

MAR 2 (Price stabilising rules)

Applies if the firm undertakes stabilising action and wishes to show that it has acted in conformity with price stabilising rules, or that its behaviour conforms with rules in accordance with section 118(8)of the Act (Market abuse) (MAR 2.1 Application))

MAR 2 (Price stabilising rules)

Only applies in so far as the firm undertakes stabilising action and wishes to rely on a defence that it has acted in conformity with price stabilising rules, or that its behaviour conforms with rules in accordance with section 118(8)of the Act (Market abuse) (MAR 2.1.6 R (1)

MAR 3 (Inter-professional conduct)

Applies (MAR 3.1.4 R).

MAR 3 (Inter-professional conduct)

Does not apply (MAR 3.1.4 R).

MAR 4 (Endorsement of the Take-over Code)

Applies to firms whose permission includes, or ought to include, any designated investment business, except as set out in MAR 4.4.1 R.

MAR 4 (Endorsement of the Take-over Code)

Does not apply (MAR 4.4.1 R (4)(b)).8

MAR 5 (Alternative Trading Systems)

Does not apply (MAR 5.1.1 R).

MAR 5 (Alternative Trading Systems)

Does not apply (MAR 5.1.1 R).

TC

TC applies, but only in so far as responsibility for any matter it covers is not reserved by a European Community instrument to the firm's Home State regulator.

TC 1 (Commitments):

(1) contains guidance relevant to compliance with Principle 3, satisfaction of threshold condition 5 and the fit and proper test for approved persons; it is therefore relevant only if they apply to the firm (see the guidance on application of PRIN, COND and FIT above);

(2) in particular, does not therefore apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom.

TC 2 (Rules and guidance) does not apply (TC 2.1.2 R (2)).

ML

Applies (ML 1.1.2 R).

Does not apply (ML 1.1.2 R).

AUTH

AUTH applies to the firm if it:

(1) is considering carrying on activities in the United Kingdom which may fall within the scope of the Act and is seeking guidance on whether it needs a top-up permission; or

(2) is, or is considering, applying to the FSA to carry on regulated activities in the United Kingdom under a top-up permission; or

(3) is, or is considering, establishing a branch or providing cross-border services into the United Kingdom using EEA rights.

As column (2).

SUP

SUP 1 (The FSA's approach to supervision)

Applies, but contains only guidance.

SUP 1 (The FSA's approach to supervision)

As column (2).

SUP 2 (Information gathering by the FSA on its own initiative)

The application of this chapter is the same as for Principle 11 (see under PRIN above).

SUP 2 (Information gathering by the FSA on its own initiative)

As column (2).

SUP 3 (Auditors)

Applies to the firm (and its auditor) only if the firm has a top-up permission.8

SUP 3 (Auditors)

As column (2).

SUP 4 (Actuaries)

Does not apply.

SUP 4 (Actuaries)

Does not apply8

SUP 5 (Skilled persons)

Applies only if the firm is required by the FSA to provide a report under section 166 of the Act (Reports by skilled persons).

SUP 5 (Skilled persons)

As column (2).

SUP 6 (Applications to vary and cancel Part IV permission)

Applies only if the firm has a top-up permission.

SUP 6 (Applications to vary and cancel Part IV permission)

As column (2).

SUP 7 (Individual requirements)

Applies only if the firm has a top-up permission. It contains only guidance on the exercise of the FSA's own-initiative power to vary that permission. The FSA has similar, but more limited, powers of intervention under Part XIII of the Act in relation to the permission of the firm under Schedule 3 to the Act (see ENF 4).8

SUP 7 (Individual requirements)

As column (2).2

SUP 8 (Waiver and modification of rules)

Applies only if the firm wishes to apply for, or consent to, or has been given, a waiver of the FSA's rules (SUP 8.1.1 R).

SUP 8 (Waiver and modification of rules)

As column (2).

SUP 9 (Individual guidance)

Applies only if the firm wishes to obtain individual guidance from the FSA or if the FSA gives the firm individual guidance on its own initiative (SUP 9.1.1 G).

SUP 9 (Individual guidance)

As column (2).

SUP 10 (Approved persons)

Applies, but the applicable controlled functions are limited. See SUP 10.1 (Application) for more detailed guidance.

SUP 10 (Approved persons)

Does not apply (SUP 10.1.6 R).

SUP 11 (Controllers and close links)

Does not apply (SUP 11.1.1 R (2)).

SUP 11 (Controllers and close links)

Does not apply (SUP 11.1.1 R (2)).

SUP 12 (Appointed representatives)16

Applies only if the firm has permission to carry on designated investment business, insurance mediation activity or mortgage mediation activity and wishes to appoint, or has appointed, an appointed representative (SUP 12.1.1 R (1)). 16

SUP 12 (Appointed representatives) 16

As column (2).

SUP 13 (Exercise of passport rights by UK firms)

Does not apply.

SUP 13 (Exercise of passport rights by UK firms)

Does not apply.

SUP 14 (Incoming EEA Firms: Changing detail and cancelling qualifications for authorisation)

Applies.

SUP 14 (Incoming EEA Firms: Changing detail and cancelling qualifications for authorisation)

Applies

SUP 15 (Notifications to the FSA)

Applies in full if the firm has a top-up permission. Otherwise, the application is modified as set out in SUP 15 Annex 1.

SUP 15 (Notifications to the FSA)

Does not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom (SUP 15 Annex 1).Otherwise, as column (2).

SUP 16 (Reporting requirements)

Parts of this chapter may apply if the firm has a top-up permission or if the firm is:

(a) a bank; or

(b) a depositary of an ICVC; or

(c) an OPS firm; or

(d) a trustee of an AUT; or

(e) an insurer with permission to effect or carry out life policies; or

(f) a firm with permission to establish, operate or wind up a stakeholder pension scheme; or

(g) a firm with permission to advise on investments, arrange (bring about) deals in investments, make arrangements with a view to transactions in investments, or arrange safeguarding and administration of assets.

(SUP 16.1.)

SUP 16 (Reporting requirements)

Parts of this chapter may apply if the firm has a top-up permission or if the firm is:

(a) a depositary of an ICVC; or

(b) an OPS firm; or

(c) a trustee of an AUT; or

(d) an insurer with permission to effect or carry out life policies; or

(e) a firm with permission to establish, operate or wind up a stakeholder pension scheme; or

(f) a firm with permission to advise on investments, arrange (bring about) deals in investments, make arrangements with a view to transactions in investments, or arrange safeguarding and administration of assets

(SUP 16.1.)

SUP 17 (Transaction reporting)

Does not apply in relation to the firm's passported activities. Otherwise, this chapter applies only if the firm is a securities and futures firm, a personal investment firm or an ISD investment firm (SUP 17.1.1).

SUP 17 (Transaction reporting)

Does not apply (SUP 17.1.1 (2)(a)). 8

SUP 18 (Transfers of business) SUP 18.4

Does not apply. SUP 18.1, SUP 18.2 and SUP 18.3 may be relevant if the firm proposes to transfer the whole or part of its business by an insurance business transfer scheme or to accept such a transfer or proposes to accept certain transfers of insurance business taking place outside the United Kingdom.

SUP 18 (Transfers of business)

As column (2).8

SUP 19 (Commodity Futures Trading Commission Part 30 Exemption)

This chapter may be relevant if the firm intends to trade on behalf of US customers on non-US futures and options exchanges.

SUP 19 (Commodity Futures Trading Commission Part 30 Exemption)

Does not apply (SUP 19.1.1 G (2)).8

SUP 20 (Fees)

Applies (SUP 20.1.1 R) but modified (SUP 20.4.7 G - SUP 20.4.10 R).

SUP 20 (Fees)

As column (2).8

SUP App 1 (Prudential categories)

Applies and provides guidance on the prudential categories used in the Handbook.

SUP App 1 (Prudential categories)

As column (2).8

SUP App 2 (Insurers: Scheme of operations)

Does not apply (SUP App 2.1.1 R).

SUP App 2 (Insurers: Scheme of operations)

Does not apply (SUP App 2.1.1 R).8

ENF

ENF applies and contains guidance on the use of the FSA's enforcement powers (ENF 1).

ENF applies and contains guidance on the use of the FSA's enforcement powers (ENF 1).

DEC

DEC applies and contains guidance on the FSA's decision making procedures (DEC 1).

DEC applies and contains guidance on the FSA's decision making procedures (DEC 1).

DISP

Applies (DISP 1.1.1 R).

Does not apply (DISP 1.1.1 R).8

COMP

Applies, except in relation to the passported activities of an ISD investment firm or a BCD credit institution (see the definition of "participant firm") other than an electronic money institution within the meaning of article 1(3)(a) of the E-Money Directive that has the right to benefit from the mutual recognition arrangements under the Banking Consolidation Directive. However, an ISD investment firm or BCD credit institution may be able to apply for top-up cover in relation to its passported activities (see COMP 14 (Participation by EEA Firms)).

Does not apply in relation to the passported activities of an ISD investment firm or a BCD credit institution (see the definition of "participant firm"). Otherwise, COMP may apply, but the coverage of the compensation scheme is limited for non-UK activities (see COMP 5).81

COAF

Applies if the firm wishes to bring a complaint under the complaints scheme, provided the complaint meets the requirements of the complaints scheme (COAF 1.2).

As column (2).

COLL and CIS

COLL and CIS apply if the firm:

(a) is the operator or depositary of an AUT or ICVC; or

(b) wishes to apply for an authorisation order to establish an AUT or ICVC; or

(c) is the operator of a recognised scheme; or

(d) wishes to apply for recognition of a recognised scheme.

As column (2).

CRED

Does not apply.

Does not apply.6

ECO

ECO 2 applies if the firm is an outgoing ECA provider. ECO 3 applies if the firm is a domestic ECA provider. ECO 1 does not apply.

ECO 1 applies if the firm is an incoming ECA provider except for ECO 1.2.1 R which does not apply if:. 15

(a) the electronic commerce activity is not insurance business which:15

(i) satisfies the conditions in ECO 1.2.3 R; and15

(ii) is carried on by an insurer; and15

(b) the EEA State from which the activity is provided has implemented the DMD with the result that the obligations provided for by the DMD are applied when the incoming ECA provider is carrying on the activity from an establishment in that State with a UK ECA recipient in the United Kingdom.15

ECO 2 and ECO 3 do not apply.8

ELM

Only ELM 6 and (in so far as it applies to the rules in ELM 6) ELM 5.6.1R apply.

Does not apply.8

LLD

Does not apply.

Does not apply.8

MCOB10

Applies where the activity is carried on with or for a customer resident in the United Kingdom or another EEA State at the time that the activity is carried on, but see the territorial scope in MCOB 3.3 (Application: where?). 10

Applies where the activity is carried on with or for a customer resident in the United Kingdom at the time, that the activity is carried on but see MCOB 1.3.4 R (Distance contracts entered into from an establishment in another EEA State) and MCOB 3.3 (Application: where?).10

PROF

PROF applies only if the firm is an authorised professional firm.

As column (2).

REC

Does not apply.

Does not apply.