PRIN applies to every firm, except that it does not apply to a firm in relation to its carrying on of auction regulation bidding.20

17 PRIN also applies:

1. (1)

   to an electronic money institution, an authorised payment institution, a small payment institution or a registered account information service provider; and

2. (2)

   [deleted]18

A firm will not be subject to a Principle to the extent that it would be contrary to the requirements of an EU measure passed or made before IP completion day19, to the extent that those requirements continue to have effect after IP completion day19 under the EUWA15.

16 PRIN applies to a TP firm, except that Principle 4 only applies to the extent that a TP firm is subject to rules relating to capital adequacy.

16Only Principles 1, 2, 3, 7, 9 and 11 apply to a TP UCITS qualifier and a TP AIFM qualifier, and only with respect to the activities in PRIN 3.2.2R (Communication and approval of financial promotions).

4 PRIN 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, 11credit-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,8Principles 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.

9 PRIN 3.3.1R applies to electronic money institutions, payment institutions and registered account information service providers10 as if the references to a firm were references to a person within that description, and references to an appointed representative were to an agent of such a person within the meaning of the Payment Services Regulations.

8Notwithstanding PRIN 3.3.1R, PRIN applies to:

1. (1)

   a TP firm with respect to activities carried on from an establishment maintained by the firm (or its appointed representative) in the United Kingdom;

2. (2)

   a TP firm with respect to services provided into the United Kingdom by the firm (or its appointed representative) from an establishment in an EEA State; and

3. (3)

   a TP AIFM qualifier or a TP UCITS qualifier with respect to the firm’s activities in relation to the AIF or scheme in question, in the United Kingdom.

11 PRIN 3.4.1R , PRIN 3.4.2R and PRIN 1 Annex 1 do not apply with respect to:

1. (1)

   credit-related regulated activities; or

2. (2)

   regulated claims management activities; or

3. (3)

   regulated funeral plan activities; or

4. (4)

   payment services; or

5. (5)

   the issuing of electronic money (where not a regulated activity).

For business other than MiFID or equivalent third country business,7 the only requirement of Principle 7 relating to eligible counterparties3 is that a firm must communicate information to eligible counterparties3 in a way that is not misleading.

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

1. (1)

   6Paragraph (2) applies in relation to an individual who:

   1. (a)

      has provided, or is to provide, a guarantee or an indemnity (or both) in relation to a regulated credit agreement, a regulated consumer hire agreement or a P2P agreement; and

   2. (b)

      is not the borrower or the hirer.

2. (2)

   If the individual is not a customer, they are to be treated as if they were a customer for the purposes of Principles 6 and 7.

3. (3)

   For the purposes of this rule, a guarantee does not include a legal or equitable mortgage or a pledge.

A contravention of the rules in PRIN does not give rise to a right of action by a private person under section 138D of the Act (and each of those rules is specified under section 138D(3) of the Act as a provision giving rise to no such right of action).

Where Principle 11 refers to regulators, this means, in addition to the FCA7, other regulators with recognised jurisdiction in relation to regulated activities, payment services and electronic money10 whether in the United Kingdom or abroad.