PRIN 3.2 What?

4PRIN (other than Principle 12 and PRIN 2A)12 applies with respect to the carrying on of:

1. (1)

   regulated activities;

2. (2)

   activities that constitute dealing in investments as principal, disregarding the exclusion in article 15 of the Regulated Activities Order (Absence of holding out etc); 6

3. (3)

   ancillary activities in relation to designated investment business, home finance activity, regulated funeral plan activity, 11 credit-related regulated activity, insurance distribution activity7 and accepting deposits; and6

4. (4)

   activities directly arising from insurance risk transformation.6

10Other than with respect to a firm that is a credit union, PRIN also applies with respect to:

1. (1)

   the provision of payment services;

2. (2)

   issuing of electronic money (where not the activity of issuing electronic money specified in article 9B of the Regulated Activities Order); and

3. (3)

   activities connected to the provision of payment services and to the issuing of electronic money (whether or not the activity of issuing electronic money specified in article 9B of the Regulated Activities Order).

PRIN also applies with respect to the communication and approval of financial promotions which:

1. (1)

   if communicated by an unauthorised person without approval would contravene section 21(1) of the Act (Restrictions on financial promotion); and

2. (2)

   may be communicated by a firm without contravening section 238(1) of the Act (Restrictions on promotion of collective investment schemes).

Subject to PRIN 3.2.4R,8 Principles 3, 4 and (in so far as it relates to disclosing to the FCA5) 11 (and this chapter) also:

1. (1)

   apply to firms10 with respect to the carrying on of unregulated activities (for Principle 3 this is only in a prudential context); and

2. (2)

   for firms and other persons that are subject to the Principles,10 take into account any activity of other members of a group of which the firm is a member.

8In relation to an Annex II benchmark administrator which:

1. (1)

   administers only benchmarks which are subject to Annex II to the benchmarks regulation; and

2. (2)

   does not have permission to carry on any other regulated activities in relation to which Principle 11 applies,

Principle 11 (in so far as it relates to disclosing to the FCA) applies only to the regulated activity of administering a benchmark.

1. (1)

   13Principle 12 and PRIN 2A apply to a firm’s retail market business, including in respect of existing products and closed products.

2. (2)
   1. (a)

      Subject to (b), Principle 12 and PRIN 2A apply to a firm with respect to the communication or approval of a financial promotion (see PRIN 3.2.2R), but only if the financial promotion is addressed to, or disseminated in such a way that it is likely to be received by, a retail customer.

   2. (b)

      Principle 12 and PRIN 2A do not apply to the communication or approval of a financial promotion to the extent that the financial promotion relates to an activity that is excluded from the definition of retail market business by virtue of limbs (1) to (6) of that definition.

3. (3)

   If the firm is a credit union, and except insofar as Principle 12 and PRIN 2A apply by virtue of (2), then Principle 12 and PRIN 2A do not apply to the following activities:

   1. (a)

      payment services and activities connected to the provision of payment services, except where the activity is an ancillary activity in relation to a regulated activity other than issuing electronic money; and

   2. (b)

      activities connected to or ancillary activities in relation to issuing electronic money, but only insofar as the activity is not an ancillary activity in relation to another regulated activity.

12Where Principle 12 and PRIN 2A apply to the activities of13 a firm13 operating in a distribution chain, Principle 12 and PRIN 2A apply only to the extent that the person is responsible in the course of carrying out those activities13 for determining or materially influencing retail customer outcomes.

12Subject to PRIN 3.2.7R, Principle 12 and PRIN 2A do not apply to activities to the extent that those activities are not included in a rule which sets out the scope of protections offered to retail customers by COBS, ICOBS, MCOB, BCOBS, CMCOB, FPCOB, PROD or CONC.

12Principles 6 and 7 do not apply to a firm’s activities to the extent that Principle 12 and PRIN 2A apply.