GENPRU 3.2 Third-country groups

GENPRU 3.2 implemented 6 requirements that corresponded 6in 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.

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 sector, the CRR investment services sector or the MIFIDPRU investment services sector 6 (in the case of a banking and investment group).

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 MIFIDPRU or 6the UK provisions which implemented the5 CRD and UK CRR45 will apply. Alternatively, 6the 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.

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, CRR investment services sector, MIFIDPRU investment services sector6 and (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 firm 6in that third-country group.