COND 1.1A Application1

1. (1)

   Section 55C of the Financial Services Act 2012 (Power to amend Schedule 6) gave HM Treasury the power to amend Schedule 6 of the Act. HM Treasury exercised this power by making The Financial Services and Markets Act 2000 (Threshold Conditions) Order 2013 which entered into force on 1 April 2013 (the "TC Order"). The TC Order's main result is the creation of four sets of threshold conditions, namely:

   1. (i)

      conditions for firms authorised and regulated by the FCA only (paragraphs 2B to 2F of Schedule 6 to the Act)

   2. (ii)

      FCA specific conditions for firms authorised by the PRA and subject to dual regulation (paragraphs 3B to 3E of Schedule 6 to the Act);

   3. (iii)

      PRA-specific conditions for insurers (paragraphs 4A to 4F of Schedule 6 to the Act); and

   4. (iv)

      PRA-specific conditions for other PRA-authorised persons (paragraphs 5A to 5F of Schedule 6 to the Act).

2. (2)

   The guidance in COND is only applicable to the threshold conditions listed in COND 1.1A.1G(1)(i) and (ii), above. These are the threshold conditions stated in paragraphs 2A and 3A of Schedule 6 to the Act as being relevant to the discharge by the FCA of its functions under the Act.

3. (3)

   In respect of a person which does not carry on, or seek to carry on, any PRA-regulated activities, the threshold conditions that are relevant to the discharge by the FCA of its functions under the Act are those set out in paragraphs 2B to 2F of Schedule 6 to the Act, subject to COND 1.1A.4G (1), below.

4. (4)

   In respect of a firm which does carry on, or seeks to carry on, a PRA-regulated activity, the threshold conditions that are relevant to the discharge by the FCA of its functions under the Act are those set out in paragraphs 3B to 3E of Schedule 6 to the Act, subject to COND 1.1A.4G (2), below.

5. (5)

   A reference to "FCA threshold conditions" in COND means a reference to the threshold conditions referred to in (3) and (4) that apply to a particular firm.

1. (1)

   COND applies to all firms, except where stated otherwise in this guidance.

2. (2)

   In COND, 'firm' includes an applicant for Part 4A permission unless the context otherwise requires.

1. (1)

   As a result of the new legal framework for threshold conditions described in COND 1.1A.1G (1), PRA-authorised persons and firms seeking to become PRA-authorised persons are subject to two sets of threshold conditions:

   1. (i)

      the FCA-specific conditions referred to in COND 1.1A.1G (1)(ii)and

   2. (ii)

      one of the two PRA-specific conditions referred to in COND 1.1A.1G (1)(iii) or (iv), depending on the PRA-regulated activities which the PRA-authorised person or firm carries on, or is seeking to carry on.

   The FCA threshold conditions set out in paragraphs 3B to 3E of the Act seek to reflect this. In particular, these threshold conditions do not contain a condition relating to adequate financial resources. This is a matter that falls to be considered by the PRA under its threshold conditions.

2. (2)

   The majority of the guidance in COND is intended to assist all firms to understand how the FCA will approach its assessment of the applicable FCA threshold conditions, regardless of whether or not a firm is, or is seeking to become, a PRA-authorised person. This is because the FCA threshold conditions which apply to PRA-authorised persons and those which apply to firms authorised by the FCA only are, for the most part, the same.

3. (3)

   However, where guidance in COND refers to an assessment of a firm's financial position or its compliance with prudential regulatory requirements, it is not intended to assist firms which are, or are seeking to become, PRA-authorised persons. This is because these are matters that are not covered by the FCA's threshold conditions, but rather fall to be considered by the PRA under its threshold conditions.

4. (4)

   Although some of the PRA threshold conditions and FCA threshold conditions that apply to firms which are, or are seeking to become, PRA-authorised persons may appear to address similar subject matter, the FCA will approach the assessment of its threshold conditions with its unique statutory objectives in mind and in the light of the functions which the FCA is required to discharge in relation to them.

5. (5)

   For the avoidance of doubt, the guidance in COND is not intended to apply to the PRA's assessment of its own threshold conditions in respect of a PRA-authorised person. This is a matter for the PRA alone.

COND applies to incoming EEA firms and incoming Treaty firms as set out below:

1. (1)

   for an incoming EEA firm or an incoming Treaty firm which does not carry on any PRA-regulated activities, FCA threshold conditions 2C to 2F apply; and

2. (2)

   for an incoming EEA firm or an incoming Treaty firm which carries on a PRA-regulated activity, FCA threshold conditions 3B to 3E apply.

FCA threshold conditions apply to incoming EEA firms and incoming Treaty firms only in as far as relevant to the discharge by the FCA of its relevant functions in relation to an application for, or the exercise of its own-initiative powers in relation to, a top-up permission or the functions relating to the FCA's consent or consultation rights relating to the exercise by the PRA of its powers in relation to an application for, or use of its own-initiative powers relating to, a top-up permission.

FCA threshold conditions 3B, 3C and 3E apply to Swiss General Insurance Companies.

Subject to the limitations referred to above, COND applies in relation to all of the regulated activities for which a firm has, or will have, permission.

COND applies in relation to all of the regulated activities wherever they are carried on, except as stated in COND 1.1A.4 G.