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G Guidance

Legal Instruments

Deleted

PRIN 3.1 Who?

PRIN 3.1.1 R 01/12/2009

PRIN applies to every firm, except that:

(1)
for an incoming EEA firm or an incoming Treaty firm, the Principles apply only in so far as responsibility for the matter in question is not reserved by an EU 4 instrument to the firm's Home State regulator;
4
(2)
for an incoming EEA firm which is a BCD credit institution without a top-up permission, Principle 4 applies only in relation to the liquidity of a branch established in the United Kingdom;
(3)
for an incoming EEA firm which has permission only for cross border services and which does not carry on regulated activities in the United Kingdom, the Principles do not apply;
(4)
for a UCITS qualifier, only Principles 11, 2, 3, 7 and 9 apply, and only with respect to the activities in PRIN 3.2.2 R (Communication and approval of financial promotions);1
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(5)
PRIN does not apply to an incoming ECA provider acting as such.1

PRIN 3.1.2 G 01/07/2012

COBS 1 Annex 1 and the territorial guidance in PERG 13.6 all contain 1 guidance that is relevant to1 the reservation of responsibility to a Home State regulator referred to in PRIN 3.1.1 R (1).

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PRIN 3.1.3 G 01/11/2007

PRIN 3.1.1 R (2) reflects article 411of the Banking Consolidation Directive which provides that the Host State regulator retains responsibility in cooperation with the Home State regulator for the supervision of the liquidity of a branch of a BCD credit institution.

PRIN 3.1.4 G 01/12/2001

PRIN 3.1.1 R (3) puts incoming EEA firms on an equal footing with unauthorised overseas persons who utilise the overseas persons exclusions in article 72 of the Regulated Activities Order.

PRIN 3.1.5 G 01/12/2001

PRIN 3.1.1 R (4) reflects section 266 of the Act (Disapplication of rules).

PRIN 3.1.6 R 01/12/2009

A firm will not be subject to a Principle to the extent that it would be contrary to the UK's obligations under an EU 4 instrument.

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PRIN 3.1.7 G 01/11/2007

2 PRIN 4 provides specific guidance on the application of the Principles for MiFID business.

PRIN 3.1.8 G 30/04/2011

3The Principles will not apply to the extent that they purport to impose an obligation which is inconsistent with the Payment Services Directive or the Electronic Money Directive.5 For example, there may be circumstances in which Principle 6 may be limited by the harmonised conduct of business obligations applied by the Payment Services Directive and Electronic Money Directive 5 to credit institutions (see Parts 5 and 6 of the Payment Services Regulations and Part 5 of the Electronic Money Regulations).5

PRIN 3.2 What?

PRIN 3.2.1 R 01/11/2009

PRIN applies with respect to the carrying on of:

(1)
regulated activities;
(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); and
(3)
ancillary activities in relation to designated investment business, home finance activity 2, 3 insurance mediation activity and accepting deposits.3 1
2

PRIN 3.2.2 R 01/12/2001

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

(1)
if communicated by an unauthorised person without approval would contravene section 21(1) of the Act (Restrictions on financial promotion); and
(2)
may be communicated by a firm without contravening section 238(1) of the Act (Restrictions on promotion of collective investment schemes).

PRIN 3.2.3 R 01/12/2001

Principles 3, 4 and (in so far as it relates to disclosing to the FSA) 11 (and this chapter) also:

(1)
apply with respect to the carrying on of unregulated activities (for Principle 3 this is only in a prudential context); and
(2)
take into account any activity of other members of a group of which the firm is a member.

PRIN 3.3 Where?

PRIN 3.3.1 R 06/08/2010

Territorial application of the Principles

Principle	Territorial application
Principles 1, 2 and 3	in a prudential context, apply with respect to activities wherever they are carried on; otherwise, apply with respect to activities carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom unless another applicable rule which is relevant to the activity has a wider territorial scope, in which case the Principle applies with that wider scope in relation to the activity described in that rule.
Principle 4	applies with respect to activities wherever they are carried on.
Principle 5	if the activities have, or might reasonably be regarded as likely to have, a negative effect on confidence in the UK financial system 4, applies with respect to activities wherever they are carried on; otherwise, applies with respect to activities carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom. 4
Principles 6, 7, 8, 9 and 10	Principle 8, in a prudential context, applies with respect to activities wherever they are carried on; otherwise apply with respect to activities carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom unless another applicable rule which is relevant to the activity has a wider territorial scope, in which case the Principle applies with that wider scope in relation to the activity described in that rule.
Principle 11	applies with respect to activities wherever they are carried on.2

PRIN 3.3.2 G 01/11/2007

[deleted]3

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PRIN 3.4 General

Clients and the Principles

PRIN 3.4.1 R 01/11/2007

Although Principle 7 refers to clients, the only requirement of Principle 7 relating to eligible counterparties 3 is that a firm must communicate information to eligible counterparties 3 in a way that is not misleading.

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PRIN 3.4.2 R 01/11/2007

For the purposes of PRIN, a firm intending to carry on, or carrying on, activities that do not involve designated investment business, may treat a client as an eligible counterparty in accordance with PRIN 1 Annex 1 R.2

PRIN 3.4.3 G 01/11/2007

(1)
COBS 3 (Client categorisation)2 applies to a firm intending to conduct, or conducting, designated investment business 2(other than giving basic advice)2 and ancillary activities relating to designated investment business. Any client categorisation2established in relation to such business will be applicable for the purposes of Principles 6, 7, 8 and 9.1
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(2)
The person to whom a firm gives basic advice 2 will be a retail client 3 for all purposes including the purposes of Principles 6, 7, 8 and 9.1
2 3

Actions for damages

PRIN 3.4.4 R 01/12/2001

A contravention of the rules in PRIN does not give rise to a right of action by a private person under section 150 of the Act (and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action).

Reference to "regulators" in Principle 11

PRIN 3.4.5 R 01/12/2001

Where Principle 11 refers to regulators, this means, in addition to the FSA, other regulators with recognised jurisdiction in relation to regulated activities, whether in the United Kingdom or abroad.