# The Financial Services and Markets Act 2000 (Prescribed Financial Institutions) Order 2013

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U.K.

Statutory Instruments

# 2013 No. 165

Financial Services And Markets

# The Financial Services and Markets Act 2000 (Prescribed Financial Institutions) Order 2013

Made

29th January 2013

Laid before Parliament

30th January 2013

Coming into force

1st April 2013

The Treasury, in exercise of the powers conferred by sections 192B(4) and 428(3) of, and paragraph 17 of Schedule 17A to,                           the Financial Services and Markets Act 2000 F1, make the following Order:                        

F12000 c.8. Section 192B was inserted by section 27 of the Financial Services Act 2012 (c.21). Schedule 17A was inserted by Schedule 7 to that Act.

## Citation, commencement and interpretationU.K.

1.—(1) This Order may be cited as the Financial Services and Markets Act 2000 (Prescribed Financial Institutions) Order 2013 and                     comes into force on 1st April 2013.                  

(2) In this Order—

“the Act” means the Financial Services and Markets Act 2000;                  

“credit institution” has the meaning given by [F2Article 4(1)(1) of the capital requirements regulation];                  

[F3“financial holding company” has the meaning given by Article 4(1)(20) of the capital requirements regulation;]                  

[F4“financial institution” has the meaning given by Article 4(1)(26) of the capital requirements regulation;]                  

“insurance holding company” means an undertaking which is not a mixed financial holding company the main business of which is to acquire and hold participating                     interests in subsidiary undertakings which are exclusively or mainly insurance undertakings, reinsurance undertakings, third-country                     insurance undertakings or third-country reinsurance undertakings, and which has at least one subsidiary undertaking which                     is an insurance undertaking or a reinsurance undertaking;                  

“insurance undertaking” means an undertaking which has received authorisation as an insurance undertaking in accordance with the first non-life                     insurance directive or the life assurance consolidation directive;                  

[F5“investment firm” has the meaning given by Article 4(1)(2) of the capital requirements regulation;                  

“mixed activity holding company” means a parent undertaking which—                  

is not a credit institution, an investment firm, a financial holding company or a mixed financial holding company; and                           

has at least one subsidiary which is a credit institution or an investment firm;]                           

“mixed financial holding company” means an undertaking which is not a credit institution, an insurance undertaking or an investment firm, which has at least                     one subsidiary undertaking which is a credit institution, an insurance undertaking or an investment firm and which, together                     with its subsidiary undertakings, constitutes a financial conglomerate (within the meaning given by Article 2.14 of Directive                     2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions,                     insurance undertakings and investment firms in a financial conglomerate F6) (disregarding any decision taken under Article 3(3) of that Directive);                  

“reinsurance undertaking” means an undertaking which has received authorisation in accordance with the reinsurance directive;                  

[F7“relevant MAHC” means a mixed activity holding company which has at least one subsidiary which—                  

is an institution; and                           

is not a subsidiary of a financial holding company which is also a subsidiary of the mixed activity holding company;]                           

“third-country insurance undertaking” means an undertaking which would require authorisation in accordance with the first non-life insurance directive or the                     life assurance consolidation directive if it had its head office in the EEA;                  

“third-country reinsurance undertaking” means an undertaking which would require authorisation in accordance with the reinsurance directive if it had its head office                     in the EEA.                  

F2Words in art. 1(2) substituted (1.1.2014) by The Capital Requirements Regulations 2013 (S.I. 2013/3115), reg. 1(2), **Sch. 2 para. 77(a)**

F3Words in art. 1(2) substituted (10.1.2015) by The Bank Recovery and Resolution (No. 2) Order 2014 (S.I. 2014/3348), art. 1(2), **Sch. 3 para. 11(2)(a)**

F4Words in art. 1(2) substituted (10.1.2015) by The Bank Recovery and Resolution (No. 2) Order 2014 (S.I. 2014/3348), art. 1(2), **Sch. 3 para. 11(2)(b)**

F5Words in art. 1(2) inserted (10.1.2015) by The Bank Recovery and Resolution (No. 2) Order 2014 (S.I. 2014/3348), art. 1(2), **Sch. 3 para. 11(2)(c)**

F6OJ L 035, 11.2.2003, p.1.

F7Words in art. 1(2) inserted (10.1.2015) by The Bank Recovery and Resolution (No. 2) Order 2014 (S.I. 2014/3348), art. 1(2), **Sch. 3 para. 11(2)(d)**

## Prescribed financial institutionsU.K.

2.—(1) All financial institutions are prescribed for the purposes of section 192B(4) of the Act, in so far as it applies—                  

(a)to parent undertakings of a recognised UK investment exchange (within the meaning of section 192B(5) of the Act), and                  

(b)for the purposes of Part 12A of the Act as that Part is applied in relation to the Bank of England by paragraph 17 of Schedule                        17A to the Act (further provision in relation to exercise of Part 18 functions by Bank of England).                  

(2) Financial institutions of the following kinds are prescribed for the purposes of section 192B(4) of the Act in so far as it                     applies to parent undertakings of a qualifying authorised person—                  

(a)an insurance holding company;                  

(b)a financial holding company;                  

(c)a mixed financial holding company.                  

[F8(d)a mixed activity holding company for the purposes set out in paragraph (3) and (4);                  

(e)a relevant MAHC for the purpose set out in paragraph (5).]                  

[F9(3)The first purpose is enabling the FCA or PRA to make rules under section 192JB of FSMA in relation to the provision of financial                        support to other members of the group of a mixed activity holding company which encounter or are likely to encounter financial                        difficulties.                  

(4)The second purpose is enabling the FCA or PRA to make rules which require a mixed activity holding company to notify it that                        the company is failing or likely to fail (within the meaning given in Article 32.4 of the recovery and resolution directive).                  

(5)The third purpose is enabling the FCA or PRA to make rules which require a relevant MAHC, in any agreement which creates a                        liability, to include a contractual term by which a party to the agreement to whom the liability is owed—                  

(a)recognises that the liability may be subject to the exercise by the Bank of England of power to make—                  

(i)a mandatory reduction instrument (within the meaning given in section 6B of the Banking Act 2009); or                  

(ii)a resolution instrument under section 12A, 48U, 48V or 48W of that Act; and                  

(b)agrees to be bound by any reduction of the principal or outstanding amount due or by any conversion or cancellation effected                           by the exercise of that power.                  

(6)Rules made for the purpose set out in paragraph (5) may not be brought into force before 1st January 2016.]                  

F8Art. 2(2)(d)(e) inserted (10.1.2015) by The Bank Recovery and Resolution (No. 2) Order 2014 (S.I. 2014/3348), art. 1(2), **Sch. 3 para. 11(3)(a)**

F9Art. 2(3)-(6) inserted (10.1.2015) by The Bank Recovery and Resolution (No. 2) Order 2014 (S.I. 2014/3348), art. 1(2), **Sch. 3 para. 11(3)(b)**

Mark Lancaster

Desmond Swayne

 Two of the Lords Commissioners of Her Majesty's Treasury

## Explanatory Note

(This note is not part of the Order)

This Order prescribes kinds of financial institution for the purposes of Part 12A of the Financial Services and Markets Act                        2000 (c.8) (powers exercisable in relation to parent undertakings) (“Part 12A”). The powers conferred by that Part may only                        be exercised in relation to parent undertakings of certain authorised persons, recognised investment exchanges or recognised                        clearing houses if the parent undertaking is a financial institution of a prescribed kind.                     

In relation to the parent undertakings of authorised persons, the Order prescribes those financial institutions which are                        within the scope of consolidated (or supplementary) supervision by virtue of EU law and which are primarily financial in nature:                        insurance holding companies; financial holding companies; and mixed financial holding companies. These terms, and related                        definitions, are defined in article 1. The definition of “financial institution” in article 1 applies only for the purposes                        of the definition of “financial holding company”; it does not apply for the purposes of Part 12A.                     

This Order also prescribes all financial institutions for the purposes of Part 12A in so far as that Part applies to the parent                        undertakings of recognised investment exchanges or to the Bank of England in the exercise of its functions in relation to                        recognised clearing houses.                     

A full impact assessment of the effect that this Order will have on the costs of business and the voluntary sector is available                        from, Her Majesty's Treasury, 1 Horse Guards Road, London SW1A 2HQ or on www.hm-treasury.gov.uk and is published alongside                        the Order on www.legislation.gov.uk.