Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, this Part applies to every firm and Chapter 8 applies only to a BRRD undertaking.

1.2

In this Part, the following definitions shall apply:

authorised UK representative

means (in relation to a firm) a person resident in the UK who is authorised to act generally, and to accept service of any document, on behalf of the firm.

BRRD management body

means a BRRD undertaking’s body or bodies, which are appointed in accordance with national law, which are empowered to set the BRRD undertaking’s strategy, objectives and overall direction, and which oversee and monitor management decision-making, and include the persons who effectively direct the business of the BRRD undertaking.

competent authority

has the meaning given in point (16) of Article 2 of the Financial Groups Directive.

dormant account fund operator

means a firm with permission for operating a dormant account fund.

EEA financial conglomerate

means a financial conglomerate that is of a type that falls under Article 5(2) of the Financial Groups Directive.

extraordinary public financial support

means State aid, or any other public financial support at supra-national level, which, if provided for at national level, would constitute State aid, that is provided in order to preserve or restore the viability, liquidity or solvency of a BRRD undertaking or of a group of which a BRRD undertaking forms part.

financial holding company

has the meaning set out at point 20 of Article 4(1) of the CRR.

injunction

means a court order made by the High Court that prohibits a person from doing or continuing to do a certain act or requires a person to carry out a certain act.

insolvency order

means an administration order, compulsory winding up order, bankruptcy order or sequestration order.

MiFID Regulation

means Commission Regulation (EC) 1287/2006 implementing Directive 2004/39/EC of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive.

mixed-activity holding company

has the meaning set out at point 22 of Article 4(1) of the CRR.

mixed financial holding company

has the meaning set out at point 21 of Article 4(1) of the CRR.

notification rule

(in relation to a firm) means a rule requiring a firm to give the PRA notice of, or information regarding, an event, but excluding a rule requiring periodic submission of a report.

occupational pension scheme

has the meaning given in Article 3(1) of the Regulated Activities Order.

operating a dormant account fund

means either of the regulated activities specified in Article 63N(1) of the Regulated Activities Order.

overseas regulator

has the meaning given in section 195(3) of FSMA.

own funds

has the meaning set out at point (118) of Article 4(1) of the CRR.

regulated entity

means one of the following:

1. (1) a credit institution;
2. (2) an insurance undertaking within the meaning of Article 4 of the Consolidated Life Directive, Article 6 of the First Non-Life Directive or Article 1(b) of the Insurance Groups Directive; or
3. (3) an investment firm,

whether or not it is incorporated in, or has its head office in, an EEA State.

repurchase transaction

has the meaning given in point (83) of Article 4(1) of the CRR.

sole trader

means an individual who is a firm.

State aid

means any aid granted by an EEA State or through an EEA State’s resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods and which affects trade between EEA States.

1.3

This Part applies to incoming firms without a top-up permission as follows:

1. (1) 1 applies in full;
2. (2) 2.1-2.3 apply in so far as responsibility for the matter in question is not reserved by an EU instrument to the firm's Home State regulator;
3. (3) 2.4-2.5 apply in full;
4. (4) 2.6-2.9 apply in so far as responsibility for the matter in question is not reserved by an EU instrument to the firm's Home State regulator;
5. (5) 3-4 do not apply;
6. (6) 5.1-5.3 apply in full except that 5.2(2) does not apply to an incoming EEA firm without a top-up permission;
7. (7) 5.4 applies in so far as responsibility for the matter in question is not reserved by an EU instrument to the firm's Home State regulator;
8. (8) 5.5 applies in full; and
9. (9) 6, 7 and 9 apply in full.

1.4

This Part:

1. (1) applies with respect to the carrying on of both regulated activities and unregulated activities; and
2. (2) takes into account any activity of other members of a group of which the firm is a member.

2.1

A firm must notify the PRA immediately it becomes aware, or has information which reasonably suggests, that any of the following has occurred, may have occurred or may occur in the foreseeable future:

1. (1) the firm failing to satisfy one or more of the threshold conditions; or
2. (2) any matter which could have a significant adverse impact on the firm’s reputation; or
3. (3) any matter which could affect the firm’s ability to continue to provide adequate services to its customers and which could result in serious detriment to a customer of the firm; or
4. (4) any matter in respect of the firm which could result in serious financial consequences to the UK financial system or to other firms.

2.2

In determining whether the PRA should be notified of any of the events in 2.1 that may occur in the foreseeable future, a firm must consider both the probability of the event happening and the severity of the outcome should it happen.

2.3

A firm must give the PRA notice of:

1. (1) any proposed restructuring, reorganisation or business expansion which could have a significant impact on the firm’s risk profile or resources, including, but not limited to:
1. (a) setting up a new undertaking within a firm’s group, or a new branch (whether in the UK or not);
2. (b) commencing the provision of cross border services into a new territory;
3. (c) commencing the provision of a new type of product or service (whether in the UK or not);
4. (d) ceasing to undertake a regulated activity or ancillary activity, or significantly reducing the scope of such activities;
5. (e) entering into, or significantly changing, a material outsourcing arrangement;
6. (f) a substantial change or a series of changes in the governing body of an overseas firm (other than an incoming firm);
7. (g) any proposed change which limits the liability of any of the members or partners of a firm such as a general partner becoming a limited partner or re-registration as a limited liability company of a company incorporated with unlimited liability; or
8. (h) in relation to a dormant account fund operator, notify the PRA when the operator intends to rely on a third party for the performance of operational functions which are critical or important for the performance of relevant services and activities in connection with operating a dormant account fund on a continuous and satisfactory basis;
2. (2) any significant failure in the firm’s systems or controls, including those reported to the firm by the firm’s auditor;
3. (3) any action which a firm proposes to take which would result in a material change in its capital adequacy or solvency, including, but not limited to:
1. (a) any action which would result in a material change in the firm’s financial resources or financial resources requirement;
2. (b) a material change resulting from the payment of a special or unusual dividend or the repayment of share capital or a subordinated loan;
3. (c) for firms which are subject to consolidated financial supervision, any proposal under which another group member may be considering such an action; or
4. (d) significant trading or non-trading losses (whether recognised or unrecognised).

2.4

1. (1) A firm must notify the PRA of:
1. (a) a significant breach of a rule or Statement of Principle;
2. (b) a breach of any requirement imposed by FSMA or by regulations or an order made under FSMA by the Treasury (except if the breach is an offence, in which case (c) applies);
3. (c) the bringing of a prosecution for, or a conviction of, any offence under FSMA;
4. (d) a breach of a directly applicable provision in the MiFID Regulation;
5. (e) a breach of a directly applicable provision in the CRR or any directly applicable regulations made under the CRD or the CRR;
6. (f) a breach of any requirement in regulation 4C(3) (or any successor provision) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007; or
7. (g) it exceeding (or becoming aware that it will exceed) the limit in Article 395 of the CRR,
2. by (or as regards (c), against) the firm or any of its directors, officers, employees, approved persons, or appointed representatives or, where applicable, tied agents.
3. (2) A firm must make the notification in (1) immediately it becomes aware, or has information which reasonably suggests, that any of the matters in (1) has occurred, may have occurred or may occur in the foreseeable future.

2.5

A notification under 2.4 must include:

1. (1) information about any circumstances relevant to the breach or offence;
2. (2) identification of the rule or requirement or offence; and
3. (3) information about any steps which a firm or other person has taken or intends to take to rectify or remedy the breach or prevent any future potential occurrence.

2.6

A firm must notify the PRA immediately if:

1. (1) civil proceedings are brought against the firm and the amount of the claim is significant in relation to the firm’s financial resources or its reputation; or
2. (2) any action is brought against the firm under section 71 (Actions for damages) or section 138D (Actions for damages) of FSMA; or
3. (3) disciplinary measures or sanctions have been imposed on the firm by any statutory or regulatory authority, professional organisation or trade body (other than the PRA) or the firm becomes aware that one of those bodies has started an investigation into its affairs; or
4. (4) the firm is prosecuted for, or convicted of, any offence involving fraud or dishonesty, or any penalties are imposed on it for tax evasion; or
5. (5) it is removed as trustee of an occupational pension scheme by a court order.

2.7

A notification under 2.6 must include details of the matter and an estimate of the likely financial consequences, if any.

2.8

1. (1) A firm must notify the PRA immediately if one of the following events arises and the event is significant:
1. (a) it becomes aware that an employee may have committed a fraud against one of its customers;
2. (b) it becomes aware that a person, whether or not employed by it, may have committed a fraud against it;
3. (c) it considers that any person, whether or not employed by it, is acting with intent to commit a fraud against it;
4. (d) it identifies irregularities in its accounting or other records, whether or not there is evidence of fraud; or
5. (e) it suspects that one of its employees may be guilty of serious misconduct concerning their honesty or integrity and which is connected with the firm’s regulated activities or ancillary activities.
2. (2) A notification under (1) must provide all relevant and significant details of the incident or suspected incident of which the firm is aware.

2.9

A firm must notify the PRA immediately of any of the following events:

1. (1) the calling of a meeting to consider a resolution for winding up the firm;
2. (2) an application to dissolve the firm or to strike it off the Register of Companies;
3. (3) the presentation of a petition for the winding up of the firm;
4. (4) the making of, or any proposals for the making of, a composition or arrangement with any one or more of its creditors;
5. (5) an application for the appointment of an administrator or trustee in bankruptcy to the firm;
6. (6) the appointment of a receiver to the firm (whether an administrative receiver or a receiver appointed over particular property);
7. (7) an application for an interim order against the firm under section 252 of the Insolvency Act 1986 (or, in Northern Ireland, section 227 of the Insolvency (Northern Ireland) Order 1989);
8. (8) if the firm is a sole trader:
1. (a) an application for a sequestration order on the firm; or
2. (b) the presentation of a petition for bankruptcy; or
9. (9) anything equivalent to (1) to (8) above occurring in respect of the firm in a jurisdiction outside the UK.

3.1

The PRA directs that:

1. (1) the Society must immediately inform the PRA in writing if it becomes aware that any matter likely to be of material concern to the PRA may have arisen in relation to:
1. (a) the regulated activities for which the Society has permission; or
2. (b) managing agents; or
3. (c) approved persons or individuals acting for or on behalf of managing agents.
2. (2) the Society must inform the PRA if it commences investigations or disciplinary proceedings relating to apparent breaches:
1. (a) of FSMA or requirements made or imposed under FSMA, including the threshold conditions or any rules, by a managing agent; or
2. (b) of the Statements of Principle by an individual or other person who carries out controlled functions for or on behalf of a managing agent.
3. (3) that the Society must inform the PRA if it commences investigations or disciplinary proceedings which do not fall within the scope of (2) but which:
1. (a) involve a managing agent, or an approved person who carries out controlled functions for it or on its behalf; or
2. (b) may indicate that an individual acting for or on behalf of a managing agent may not be a fit and proper person to perform functions in relation to regulated activities,

and in each case the direction is given in relation to the exercise of the powers of the Society and of the Council generally, with a view to achieving the objective of enabling the PRA to (1) comply with its general duty under section 314 of FSMA; (2) determine whether managing agents or approved persons acting for them or on their behalf, are complying with the requirements imposed on them by or under FSMA and (3) enforce the provisions of FSMA, or requirements made under FSMA, by enabling the PRA to consider, where appropriate, whether it should use its powers, for example to:

1. (i) vary or cancel the permission of a managing agent, under section 55J of FSMA (Variation or cancellation on initiative of regulator);
2. (ii) withdraw approval from an approved person acting for or on behalf of a managing agent, under section 63 of FSMA (Withdrawal of approval);
3. (iii) prohibit an individual, acting for or on behalf of a managing agent, from involvement in regulated activities, under section 56 of FSMA (Prohibition orders);
4. (iv) require a managing agent to make restitution, under section 384 of FSMA (Power of [FCA or PRA] to require restitution);
5. (v) discipline a managing agent, or an approved person acting for it or on its behalf, for a breach of a requirement made under FSMA, including the Fundamental Rules, Statements of Principle and rules;
6. (vi) apply to court for an injunction, restitution order or insolvency order; and
7. (vii) prosecute any criminal offence that the PRA has power to prosecute under FSMA.

3.2

Each direction in SUP 15.3.22D to SUP 15.3.25D of the PRA Handbook continues to have effect from the date the relevant direction was given to the date on which the direction in 3.1 has effect.

4.1

1. (1) An overseas firm, which is not an incoming firm, must notify the PRA within 30 business days of any person taking up or ceasing to hold the following positions:
1. (a) the firm's worldwide chief executive (that is, the person who, alone or jointly with one or more others, is responsible under the immediate authority of the directors for the whole of its business) if the person is based outside the UK;
2. (b) the person within the overseas firm with a purely strategic responsibility for UK operations;
3. (c) for a bank: the two or more persons who effectively direct its business; or
4. (d) for an insurer: the authorised UK representative.
2. (2) The notification in (1) must be submitted in the form referred to in 10.1 (Form F). However, if the person is an approved person, notification giving details of their name, the approved person's individual reference number and the position to which the notification relates, is sufficient.

[Note: 4.1 is not made under the powers conferred on the PRA by Part V of FSMA (Performance of Regulated Activities). A person notified to the PRA under 4.1 is not subject to the Statements of Principle or Code of Practice for Approved Persons, unless they are also an approved person.]

4.2

1. (1) A firm other than a credit union must submit the form referred to in 10.1 online using the ONA system.
2. (2) Where a firm is obliged to submit an application online under (1), if the ONA system fails and online submission is unavailable for 24 hours or more, until such time as facilities for online submission are restored:
1. (a) a firm must submit the form in the way set out in 7.4 to 7.6; and
2. (b) the rules in relation to non-compliance with rules by a firm in the case of an emergency do not apply.

5.1

A firm must give the PRA reasonable advance notice of a change in any of the following names, and give details of the new name and the date of the change:

1. (1) the firm’s name (which is the registered name if the firm is a body corporate); and
2. (2) any business name under which the firm carries on a regulated activity or ancillary activity either from an establishment in the UK or with or for clients in the UK,

in each case by submitting the form referred to in 10.2 (Standing Data Form).

5.2

A firm must give the PRA reasonable advance notice of a change in any of the following addresses, and give details of the new address and the date of the change:

1. (1) the firm’s principal place of business in the UK; and
2. (2) in the case of an overseas firm, its registered office (or head office) address,

in each case by submitting the form referred to in 10.2 (Standing Data Form).

5.3

A firm must give the PRA reasonable advance notice of a change in any of the following telephone numbers, and give details of the new telephone number and the date of the change:

1. (1) the number of the firm’s principal place of business in the UK; and
2. (2) in the case of an overseas firm, the number of its head office,

in each case by submitting the form referred to in 10.2 (Standing Data Form).

5.3A

A firm must, within 30 business days of its accounting reference date, check the accuracy of its standing data through the ONA system. If any standing data is incorrect, the firm must correct the standing data by submitting the form referred to in 10.2 (Standing Data Form).

5.4

A firm must notify the PRA immediately if it becomes subject to or ceases to be subject to the supervision of any overseas regulator (including a Home State regulator).

5.5

1. (1) A firm other than a credit union must submit the forms required in 5.1 to 5.3A online using the ONA system.
2. (2) Where a firm is obliged to submit a notice online under (1), if the ONA system fails and online submission is unavailable for 24 hours or more, until such time as facilities for online submission are restored:
1. (a) a firm must submit any notice required by 5.1 to 5.3 in the way set out in 7.4 to 7.6;
2. (aa) a firm must submit any notice required by 5.3A to static.data@fca.org.uk or via post or hand delivery to the FCA marked for the attention of the “Static Data team”; and
3. (b) the rules in relation to non-compliance with rules by a firm in the case of an emergency do not apply.
3. (3) A credit union must submit corrected standing data to static.data@fca.org.uk or via post or hand delivery to the FCA marked for the attention of the “Static Data Team”.

6.1

A firm must take reasonable steps to ensure that all information it gives to the PRA in accordance with a rule is:

1. (1) factually accurate or, in the case of estimates and judgments, fairly and properly based after appropriate enquiries have been made by the firm; and
2. (2) complete, in that it should include anything of which the PRA would reasonably expect notice.

6.2

If a firm is unable to obtain the information required in 6.1, then it must inform the PRA that the scope of the information provided is, or may be, limited.

6.3

If a firm becomes aware, or has information that reasonably suggests that it has or may have provided the PRA with information which was or may have been false, misleading, incomplete or inaccurate, or has or may have changed in a material particular, it must notify the PRA immediately. Subject to 6.4, the notification must include:

1. (1) details of the information which is or may be false, misleading, incomplete or inaccurate, or has or may have changed;
2. (2) an explanation why such information was or may have been provided; and
3. (3) the correct information.

6.4

If the information in 6.3(3) cannot be submitted with the notification (because it is not immediately available), it must instead be submitted as soon as possible afterwards.

7.1

A notification required from a firm under any notification rule must be given in writing, and in English, and must be submitted on the form specified for that notification rule, or if no form is specified, on the form referred to in 10.3 (Notification form), and must give the firm’s Firm Reference Number unless:

1. (1) the notification rule states otherwise; or
2. (2) the notification is provided solely in compliance with 2.3 or Fundamental Rule 7.

7.2

A firm must provide a written notification following an oral notification if:

1. (1) the PRA requests written confirmation of a firm’s oral notification; or
2. (2) a matter either is complex or may be such as to make it necessary for the PRA to take action.

7.3

In giving notice to the PRA:

1. (1) a firm must ensure that matters are promptly, properly and clearly communicated to the PRA; and
2. (2) a firm must discuss relevant matters with the PRA at an early stage, before making any internal or external commitments.

7.4

Unless stated in the notification rule, or on the relevant form (if specified), a written notification required from a firm under any notification rule must be:

1. (1) given to or addressed for the attention of the firm's usual supervisory contact at the PRA; and
2. (2) delivered to the PRA by one of the following methods:
1. (a) post to the PRA's address;
2. (b) leaving the notification at the PRA's address and obtaining a time-stamped receipt;
3. (c) electronic mail to an address for the firm's usual supervisory contact at the PRA and obtaining an electronic confirmation of receipt;
4. (d) hand delivery to the firm's usual supervisory contact at the PRA;
5. (e) fax to a fax number for the firm's usual supervisory contact at the PRA and receiving a successful transmission report for all pages of the notification;
6. (f) online submission via the PRA's website at www.bankofengland.co.uk/pra/ Opens in a new window.

[Note: The current published address of the PRA for postal submission or hand delivery of notifications is 20 Moorgate, London EC2R 6DA.]

7.5

If the firm or its group is subject to lead supervision arrangements by the PRA, the firm or group may give or address a notice under 7.4(1) to the supervisory contact at the regulator designated as lead supervisor, if the firm has chosen to make use of the lead supervisor as a central point of contact.

7.6

If a firm is a member of a group which includes more than one firm, any one undertaking in the group may notify the PRA on behalf of all firms in the group to which the notification applies. In this way, that undertaking may satisfy the obligation of all relevant firms in the group to notify the PRA. Nevertheless, the obligation to make the notification remains the responsibility of the individual firm itself.

7.7

If a notification rule requires notification within a specified period:

1. (1) the firm must give the notification so as to be received by the PRA no later than the end of that period; and
2. (2) if the end of that period falls on a day which is not a business day, the notification must be given so as to be received by the PRA no later than the first business day after the end of that period.

8.0

This Chapter applies to a BRRD undertaking.

8.1

A CRR firm must report to the PRA immediately any case in which its counterparty in a repurchase transaction or securities or commodities lending or borrowing transaction defaults on its obligations.

8.2

A BRRD undertaking, which is a CRR firm, a financial holding company, a mixed financial holding company or a mixed activity holding company must notify the PRA immediately if its BRRD management body considers that:

1. (1) the assets of the BRRD undertaking are or there are objective elements to support a determination that the assets of the BRRD undertaking will, in the near future, be less than its liabilities;
2. (2) the BRRD undertaking is or there are objective elements to support a determination that the BRRD undertaking will, in the near future, be unable to pay its debts or other liabilities as they fall due; or
3. (3) extraordinary public financial support is required for the BRRD undertaking or the group of which the BRRD undertaking forms part.

8.3

A BRRD undertaking, which is a CRR firm, must notify the PRA immediately if its management body considers that the firm is failing or there are objective elements to support a determination that the firm will, in the near future, fail to satisfy one or more of the threshold conditions, including as a result of the firm having incurred or being likely to incur losses that will deplete all or a significant amount of its own funds.

[Note: Art.81(1) of the BRRD]

8.4

A notification required from a BRRD undertaking under 8.2 or 8.3 must be delivered to the PRA by the method of electronic mail to an address for the usual supervisory contact at the PRA for the BRRD undertaking or its group.

9.1

A firm that is a regulated entity must notify the PRA immediately it becomes aware that any consolidation group of which it is a member:

1. is a financial conglomerate; or
   
   
2. has ceased to be a financial conglomerate.

9.2

1. (1) A firm that is a regulated entity must establish whether or not any consolidation group of which it is a member:
1. (a) is a financial conglomerate; or
2. (b) has ceased to be a financial conglomerate,
3. if:
4. (c) the firm believes; or
5. (d) a reasonable firm that is complying with the requirements of the regulatory system would believe,
6. that it is likely that (a) or (b) is true.
2. (2) A firm does not need to determine whether (1)(a) is the case if the consolidation group is already being regulated as a financial conglomerate.
3. (3) A firm does not need to determine whether (1)(b) is the case if notification has already been given as contemplated by 9.4.

9.3

A firm must consider the requirements in 9.2 on a continuing basis, and in particular, when the group prepares its financial statements and on the occurrence of an event affecting the consolidation group. Such events include, but are not limited to, an acquisition, merger or sale.

9.4

A firm does not have to give notice to the PRA under 9.1 if it or another member of the consolidation group has already given notice of the relevant fact to:

1. (1) the PRA; or
2. (2) (if another competent authority is coordinator of the financial conglomerate) that competent authority; or
3. (3) (in the case of a financial conglomerate that does not yet have a coordinator) the competent authority who would be coordinator under Article 10(2) of the Financial Groups Directive (Competent authority responsible for exercising supplementary supervision (the coordinator)).

9.5

1. (1) A firm must, at the level of the EEA financial conglomerate, regularly provide the PRA with details on the financial conglomerate's legal structure and governance and organisational structure, including all regulated entities, non-regulated subsidiaries and significant branches.
2. (2) A firm must disclose publicly, at the level of the EEA financial conglomerate, on an annual basis, either in full or by way of references to equivalent information, a description of the financial conglomerate's legal structure and governance and organisational structure.
3. (3) For the purposes of (1) and (2), where a firm is a member of an EEA financial conglomerate which is part of a wider UK regulated EEA financial conglomerate, reporting applies only at the level of the EEA parent mixed financial holding company or ultimate EEA mixed financial holding company.

10.1

Form F can be found here Opens in a new window.

10.2

The Standing Data Form can be found here Opens in a new window.

10.3

The Notification Form can be found here Opens in a new window.