GENPRU 3.2 Third-country groups
Application
GENPRU 3.2 applies to every firm that is a member of a third-country group. But it does not apply to:
3GENPRU 3.2.9R (Supervision by analogy: rules for third-country banking and investment groups) applies in relation to the following:
- (1)
a CAD investment firm; and
- (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 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.
11Equivalence
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 sectoror the investment services sector (in the case of a banking and investment group).
1233Other methods: General
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
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 sectorand (in the case of a financial conglomerate ) insurance sector.
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 3.2.8 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.
1Supervision by analogy: rules for third-country conglomerates
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
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.