BIPRU 1.3 Applications for advanced approaches and waivers2

1. (1)

   A firm may apply for an Article 129 permission or a waiver in respect of:

   1. (a)

      the IRB approach;

   2. (b)

      the advanced measurement approach;

   3. (c)

      the CCR internal model method; and

   4. (d)

      the VaR model approach.

2. (2)

   A firm should apply for a waiver if it wants to:

   1. (a)

      apply the CAD 1 model approach; or2

   2. (b)

      apply the master netting agreement internal models approach; or2

   3. (c)

      disapply consolidated supervision under BIPRU 8 for its UK consolidation group or non-EEA sub-group; or2

   4. (d)

      apply the treatment in BIPRU 2.1 (Solo-consolidation waiver); or

   5. (da)

      2apply the treatment for a core UK group in BIPRU 3.2.25 R (Zero risk-weighting for intra-group exposures) or in BIPRU 10.8A (Intra-group exposures: core UK group); or

   6. (e)

      apply the treatment for a non-core large exposures group in BIPRU 10.9A (Intra-group exposures: non-core large exposures group); or12

      2
   7. (f)

      apply the treatment in BIPRU 10.6.35 R (Sovereign large exposure waiver).2

An EEA parent institution and its subsidiary undertakings or the subsidiary undertakings of its EEA parent financial holding company that wish to use any of the approaches listed in BIPRU 1.3.2 G (1) in respect of its group, including members of its group that are BIPRU firms, may apply for an Article 129 permission.

The Article 129 procedure allows an EEA parent institution and its subsidiary undertakings or the subsidiary undertakings of its EEA parent financial holding company to apply for permission to use the approaches in BIPRU 1.3.2 G (1) without making separate applications to the competent authority of each EEA State where members of a firm's group are authorised.

The Capital Requirements Regulations 2006 set out the Article 129 procedure.

Where a firm or its group has been granted an Article 129 permission, each competent authority, including the lead competent authority, will need to take action to apply that Article 129 permission to the institutions that they authorise. Part 3 of the Capital Requirements Regulations 2006 governs how the FSA will take that action, whether or not the FSA is the lead competent authority.

As explained in SUP 8, under of the Act, the FSA may not grant a waiver to a firm unless it is satisfied that:

1. (1)

   compliance by the firm with the rules, or with the rules as modified, would be unduly burdensome or would not achieve the purpose for which the rules were made; and

2. (2)

   the waiver would not result in undue risk to persons whose interests the rules are intended to protect objects.

The conditions relating to the use of an approach listed in BIPRU 1.3.2 G referred to in the relevant chapter of BIPRU are minimum standards. Satisfaction of those conditions does not automatically mean the FSA will grant a waiver referred to in those paragraphs. The FSA will in addition also apply the tests in section 148 of the Act.

In the FSA's view, if the minimum standards referred to in BIPRU 1.3.11 G are satisfied, the conditions referred to in BIPRU 1.3.10 G (1) will generally be met.

In respect of the application for waivers to apply the approaches set out in BIPRU 1.3.2 G (1), the FSA will aim to give decisions on applications as soon as practicable. However, the FSA expects that it will take a significant period to determine and give a decision due to the complexity of the issues raised by the applications. Details of timelines for applications for waivers to use advanced approaches and under the Article 129 procedure are set out on the FSA website.

Before sending in an application for a waiver or Article 129 permission, a firm may find it helpful to discuss the application with its usual supervisory contact at the FSA. However, the firm should still ensure that all relevant information is included in the application.