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SYSC 23 Annex 1 Definition of SMCR firm and different types of SMCR firms

SYSC 23 Annex 1.1R

1Part One: Flow diagram and other basic provisions

1.1

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The flow diagram in SYSC 23 Annex 1 1.2R defines:

(1)

an SMCR firm; and

(2)

the different categories of SMCR firm.

1.2

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Flow diagram: Types of SMCR firm

SYSC_23_ann_01_20181210.png

Note to the decision tree

The categorisation in this decision tree is subject to SYSC 23 Annex 1 2.1R.

Part Two: Changing category

2.1

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If a firm is subject to a requirement that it must comply with the rules in the FCA Handbook applicable to one of the categories of SMCR firm set out in this Annex, it is to be treated as falling into that category of SMCR firm for all purposes.

Part Three: Definition of exempt firm

3.1

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This part defines an exempt firm for the purposes of the flow diagram in Part One of this Annex.

3.2

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An overseas firm is an exempt firm if it:

(1)

does not have; and

(2)

does not have an appointed representative that has;

an establishment in the United Kingdom.

3.3

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An incoming EEA firm that is an EEA pure reinsurer is an exempt firm.

23.4

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An incoming ECA provider acting as such is an exempt firm.

Part Four: Definition of banking sector

4.1

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A firm is in the banking sector for the purposes of the flow diagram in Part One of this Annex if the firm meets the conditions in SYSC 23 Annex 1 4.2R, SYSC 23 Annex 1 4.4R or SYSC 23 Annex 1 4.6R.

4.2

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A firm is in the banking sector for the purposes of the flow diagram in Part One of this Annex if it is an institution that meets the following conditions:

(1)

it is incorporated in, or formed under the law of any part of, the United Kingdom;

(2)

it is not an institution authorised under the Act to carry on the regulated activity of effecting contracts of insurance or carrying out contracts of insurance; and

(3)

it meets one of the following conditions:

(a)

its Part 4A permission includes accepting deposits; or :

(b)

it meets all the following conditions:

(i)

the institution is an investment firm;

(ii)

its Part 4A permission covers dealing in investments as principal; and

(iii)

when carried on by it, that activity is a PRA-regulated activity.

4.3

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An SMCR banking firm in SYSC 23 Annex 1 4.2R is a UK SMCR banking firm.

4.4

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A firm is also in the banking sector for the purposes of the flow diagram in Part One of this Annex if it is a non-UK institution other than an incoming firm that meets the following conditions:

(1)

it has a branch in the United Kingdom;

(2)

it is not an institution authorised under the Act to carry on the regulated activity of effecting contracts of insurance or carrying out contracts of insurance; and

(3)

it meets one of the following conditions:

(a)

it is a credit institution which has a Part 4A permission that includes accepting deposits; or

(b)

it meets all the following conditions:

(i)

the institution is an investment firm;

(ii)

its Part 4A permission covers dealing in investments as principal; and

(iii)

when carried on by it, that activity is a PRA-regulated activity.

4.5

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An SMCR banking firm in SYSC 23 Annex 1 4.4R is a third-country SMCR banking firm.

4.6

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A firm is also in the banking sector for the purposes of the flow diagram in Part One of this Annex if it is an incoming EEA firm or incoming Treaty firm that meets the following conditions:

(1)

it has a branch in the United Kingdom;

(2)

it is not an institution authorised under the Act to carry on the regulated activity of effecting contracts of insurance or carrying out contracts of insurance; and

(3)

it meets one of the following conditions:

(a)

it is a credit institution which has a permission under Part 4A, Schedule 3 or Schedule 4 of the Act that includes accepting deposits; or

(b)

it meets all the following conditions:

(i)

the institution is an investment firm;

(ii)

it has a permission under Part 4A, Schedule 3 or Schedule 4 of the Act that covers dealing in investments as principal; and

(iii)

when carried on by it, that activity is a PRA-regulated activity.

4.7

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An SMCR banking firm in SYSC 23 Annex 1 4.6R is an EEA SMCR banking firm.

Part Five: Definition of insurance sector

5.1

R

A firm is in the insurance sector for the purposes of the flow diagram in Part One of this Annex if the firm is:

(1)

a Solvency II firm (including a large non-directive insurer); or

(2)

a small non-directive insurer.

5.2

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(1)

A firm from which the Solvency II rules (as defined by the part of the PRA Rulebook described in this paragraph (1)) are disapplied by chapter 2 of the Solvency II Firms: Transitional Measures part of the PRA Rulebook is in the insurance sector for the purposes of the flow diagram in Part One of this Annex.

(2)

A firm defined as a small run-off firm in the Glossary part of the PRA Rulebook is in the insurance sector for the purposes of the flow diagram in Part One of this Annex.