Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.


Status: This chapter was amended on 31 December 2020 as a result of Brexit. However, it is subject to the FCA Prudential Transitional Direction, which means that firms should not comply with these provisions yet. Instead, firms must follow this link and continue to comply with pre-IP completion day requirements https://www.handbook.fca.org.uk/handbook?date=31-12-2020&timeline=True (unless specified otherwise in the Direction). To see a full list of Handbook modules affected, please see Section B of the Annex to the Direction.

GENPRU 3.2 Third-country groups

Application

GENPRU 3.2.1RRP

GENPRU 3.2 applies to every firm that is a member of a third-country group. But it does not apply to:

  1. (1)

    [deleted]5

  2. (2)

    [deleted]5

  3. (3)

    [deleted]5

  4. (4)

    an ICVC; or3

  5. (5)

    a bank; or3

  6. (6)

    a designated investment firm; or3

  7. (7)

    an insurer.3

GENPRU 3.2.1ARRP

3GENPRU 3.2.9R (Supervision by analogy: rules for third-country banking and investment groups) applies in relation to the following:

  1. (1)

    a CAD investment firm; and

  2. (2)

    an investment firm that falls within the definition of “investment firm” in article 4(1)(2) of the UK CRR4.

Purpose

GENPRU 3.2.2GRP

GENPRU 3.2 implements requirements that correspond in part to5 article 183 of the Financial Groups Directive, article 1273 of the CRD and (in relation to BIPRU firms) article 143 of the BCD3.

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Equivalence

GENPRU 3.2.3GRP

The first question that must be asked about a third-country group is whether the UK regulated entities5 in that third-country group are subject to supervision by a third-country competent authority, which is equivalent to that provided for in GENPRU 35 (in the case of a financial conglomerate) or the UK prudential sectoral legislation5 for the banking sector or the investment services sector (in the case of a banking and investment group).

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Other methods: General

GENPRU 3.2.4GRP

If the supervision of a third-country group by a third-country competent authority does not meet the equivalence test referred to in GENPRU 3.2.3 G,1 the methods set out in the UK provisions which implemented the5 CRD and UK CRR45 will apply or the FCA5 may apply other methods that ensure appropriate supervision of the UK regulated entities5 in that third-country group in accordance with the aims of supplementary supervision in GENPRU 35 or consolidated supervision under the applicable UK prudential sectoral legislation5.

Supervision by analogy: introduction

GENPRU 3.2.5GRP

If the supervision of a third-country group by a third-country competent authority does not meet the equivalence test referred to in GENPRU 3.2.3 G, the FCA5 may, rather than take the measures described in GENPRU 3.2.4 G, apply, by analogy, the provisions concerning supplementary supervision in GENPRU 35 or, as applicable, consolidated supervision under the applicable UK prudential sectoral legislation, to the UK regulated entities5 in the banking sector, investment services sector and (in the case of a financial conglomerate ) insurance sector.

GENPRU 3.2.6GRP

The FCA3 believes that it will only be right to adopt the option in GENPRU 3.2.5 G in response to very unusual group structures.

GENPRU 3.2.7G

GENPRU 3.2.8 R and GENPRU 3.2.9 R and GENPRU 3 Annex 2 set out rules to deal with the situation covered in GENPRU 3.2.5 G. Those rules do not apply automatically. Instead, they can only be applied with respect to a particular third-country group through the Part 4A permission of a in that third-country group.

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Supervision by analogy: rules for third-country conglomerates

GENPRU 3.2.8RRP

If the Part 4A permission of a firm contains a requirement obliging it to comply with this rule with respect to a third-country financial conglomerate of which it is a member, it must comply, with respect to that third-country financial conglomerate, with the rules in Part 1 of GENPRU 3 Annex 2, as adjusted by Part 3 of that annex.

Supervision by analogy: rules for third-country banking and investment groups

GENPRU 3.2.9RRP

If the Part 4A permission of a firm contains a requirement obliging it to comply with this rule with respect to a third-country banking and investment group of which it is a member, it must comply, with respect to that third-country banking and investment group, with the rules in Part 2 of GENPRU 3 Annex 2, as adjusted by Part 3 of that annex.