Related provisions for GENPRU 3.1.6

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GENPRU 3.1.1RRP
1(1) GENPRU 3.1 applies to every firm that is a member of a financial conglomerate other than:(a) an incoming EEA firm;(b) an incoming Treaty firm;(c) a UCITS qualifier; and(d) an ICVC.(2) GENPRU 3.1 does not apply to a firm with respect to a financial conglomerate of which it is a member if the interest of the financial conglomerate in that firm is no more than a participation.(3) GENPRU 3.1.25 R (Capital adequacy requirements: high level requirement), GENPRU 3.1.26 R (Capital
GENPRU 3.1.3GRP
(1) In general the process in (2) to (8) applies for identifying financial conglomerates.(2) Competent authorities that have authorised regulated entities should try to identify any consolidation group that is a financial conglomerate. If a competent authority is of the opinion that a regulated entity authorised by that competent authority is a member of a consolidation group which may be a financial conglomerate it should communicate its view to the other competent authorities
GENPRU 3.1.4GRP
A lead supervisor (called the coordinator) is appointed for each financial conglomerate. Article 10 of the Financial Groups Directive describes the criteria for deciding which competent authority is appointed as coordinator. Article 11 of the Financial Groups Directive sets out the tasks of the coordinator.
GENPRU 3.1.5RRP
A financial conglomerate means a consolidation group that is identified as a financial conglomerate in accordance with the decision tree in GENPRU 3 Annex 4.
GENPRU 3.1.7RRP
For the purpose of the definition of financial conglomerate, there are two financial sectors as follows:(1) the banking sector and the investment services sector, taken together; and(2) the insurance sector.
GENPRU 3.1.8RRP
(1) This rule applies for the purpose of the definition of financial conglomerate and the financial conglomerate definition decision tree.(2) Any mixed financial holding company is considered to be outside the overall financial sector for the purpose of the tests set out in the boxes titled Threshold Test 1, Threshold Test 2 and Threshold Test 3 in the financial conglomerate definition decision tree.(3) Determining whether the tests set out in the boxes titled Threshold Test 2
GENPRU 3.1.9RRP
Once a financial conglomerate has become a financial conglomerate and subject to supervision in accordance with the Financial Groups Directive, the figures in the financial conglomerate definition decision tree are altered as follows:(1) the figure of 40% in the box titled Threshold Test 1 is replaced by 35%;(2) the figure of 10% in the box titled Threshold Test 2 is replaced by 8%; and(3) the figure of six billion Euro in the box titled Threshold Test 3 is replaced by five billion
GENPRU 3.1.10RRP
The alteration in GENPRU 3.1.9 R only applies to a financial conglomerate during the period that:(1) begins when the financial conglomerate would otherwise have stopped being a financial conglomerate because it does not meet one of the unaltered thresholds referred to in GENPRU 3.1.9 R; and(2) covers the three years following that date.
GENPRU 3.1.11RRP
The calculations referred to in the financial conglomerate definition decision tree regarding the balance sheet must be made on the basis of the aggregated balance sheet total of the members of the consolidation group, according to their annual accounts. For the purposes of this calculation, undertakings in which a participation is held must be taken into account as regards the amount of their balance sheet total corresponding to the aggregated proportional share held by the consolidation
GENPRU 3.1.12RRP
The solvency and capital adequacy requirements referred to in the financial conglomerate definition decision tree must be calculated in accordance with the provisions of the relevant sectoral rules.
GENPRU 3.1.13GRP
Articles 3(3) to 3(6), Article 5(4) and Article 6(5) of the Financial Groups Directive allow competent authorities, on a case by case basis, to:(1) change the definition of financial conglomerate and the obligations applying with respect to a financial conglomerate;(2) apply the scheme in the Financial Groups Directive to EEA regulated entities in specified kinds of group structures that do not come within the definition of financial conglomerate; and(3) exclude a particular entity
GENPRU 3.1.14GRP
The capital adequacy provisions of GENPRU 3.1 are designed to be applied to EEA-based financial conglomerates.
GENPRU 3.1.15GRP
GENPRU 3.1.25 R is a high level capital adequacy rule. It applies whether or not the FSA is the coordinator of the financial conglomerate concerned.
GENPRU 3.1.16GRP
GENPRU 3.1.26 R to GENPRU 3.1.31 R and GENPRU 3 Annex 1 implement the detailed capital adequacy requirements of the Financial Groups Directive. They only deal with a financial conglomerate for which the FSA is the coordinator. If another competent authority is coordinator of a financial conglomerate, those rules do not apply with respect to that financial conglomerate and instead that coordinator will be responsible for implementing those detailed requirements.
GENPRU 3.1.17GRP
Annex I of the Financial Groups Directive lays down four methods for calculating capital adequacy at the level of a financial conglomerate. Those four methods are implemented as follows:(1) Method 1 calculates capital adequacy using accounting consolidation. It is implemented by GENPRU 3.1.29 R to GENPRU 3.1.31 R and Part 1 of GENPRU 3 Annex 1.(2) Method 2 calculates capital adequacy using a deduction and aggregation approach. It is implemented by GENPRU 3.1.29 R to GENPRU 3.1.31
GENPRU 3.1.19GRP
Paragraph 5.7 of GENPRU 3 Annex 1 (Capital adequacy calculations for financial conglomerates) deals with a case in which there are no capital ties between entities in a financial conglomerate. In particular, the FSA, after consultation with the other relevant competent authorities and in accordance with Annex I of the Financial Groups Directive, will determine which proportional share of a solvency deficit in such an entity will have to be taken into account, bearing in mind
GENPRU 3.1.21GRP
Where GENPRU 3.1.20 G does not apply, the Annex I method to be applied isdecided by the coordinator after consultation with the relevant competent authorities and the financial conglomerate itself.
GENPRU 3.1.25RRP
(1) A firm that is a member of a financial conglomerate must at all times have capital resources of such an amount and type that results in the capital resources of the financial conglomerate taken as a whole being adequate.(2) This rule does not apply with respect to any financial conglomerate until notification has been made that it has been identified as a financial conglomerate as contemplated by Article 4(2) of the Financial Groups Directive.
GENPRU 3.1.29RRP
If with respect to a firm and a financial conglomerate of which it is a member, this rule is applied to the firm with respect to that financial conglomerate as described in GENPRU 3.1.30 R, the firm must at all times have capital resources of an amount and type that ensures that the conglomerate capital resources of that financial conglomerate at all times equal or exceed its conglomerate capital resources requirement.
GENPRU 3.1.30RRP
With respect to a firm and a financial conglomerate of which it is a member:(1) GENPRU 3.1.26 R (Method 4 from Annex I of the Financial Groups Directive) is applied to the firm with respect to that financial conglomerate for the purposes of GENPRU 3.1.27R (2); or(2) GENPRU 3.1.29 R (Methods 1 to 3 from Annex I of the Financial Groups Directive) is applied to the firm with respect to that financial conglomerate;if the firm'sPart IV permission contains a requirement obliging the
GENPRU 3.1.31RRP
If GENPRU 3.1.29 R (Methods 1-3 from Annex I of the Financial Groups Directive) applies to a firm with respect to a financial conglomerate of which it is a member, the definitions of conglomerate capital resources and conglomerate capital resources requirement that apply for the purposes of that rule are the ones from whichever of Part 1, Part 2 or Part 3 of GENPRU 3 Annex 1 is specified in the requirement referred to in GENPRU 3.1.30 R.
GENPRU 3.1.32GRP
GENPRU 3.1.35 R implements Article 7(4) and Article 8(4) of the Financial Groups Directive, which provide that where a financial conglomerate is headed by a mixed financial holding company, the sectoral rules regarding risk concentration and intra-group transactions of the most important financial sector in the financial conglomerate, if any, shall apply to that sector as a whole, including the mixed financial holding company.
GENPRU 3.1.33GRP
Articles 7(3) (Risk concentration) and 8(3) (Intra-group transactions) and Annex II (Technical application of the provisions on intra-group transactions and risk concentration) of the Financial Groups Directive say that Member States may apply at the level of the financial conglomerate the provisions of the sectoral rules on risk concentrations and intra-group transactions. GENPRU 3.1 does not take up that option, although the FSA may impose such obligations on a case by case
GENPRU 3.1.34RRP
GENPRU 3.1.35 R applies to a firm with respect to a financial conglomerate of which it is a member if:(1) the condition in Articles 7(4) and 8(4) of the Financial Groups Directive is satisfied (the financial conglomerate is headed by a mixed financial holding company); and(2) that financial conglomerate is an FSA regulated EEA financial conglomerate.
GENPRU 3.1.35RRP
Afirm must ensure that the sectoral rules regarding risk concentration and intra-group transactions of the most important financial sector in the financial conglomerate referred to in GENPRU 3.1.34 R are complied with with respect to that financial sector as a whole, including the mixed financial holding company. The FSA'ssectoral rules for these purposes are those identified in the table in GENPRU 3.1.36 R.
GENPRU 3.1.36RRP

Table: application of sectoral rules

This table belongs to GENPRU 3.1.35 R

The most important financial sector

Applicable sectoral rules

Risk concentration

Intra-group transactions

Banking and investment services sector

3BIPRU 8.9A (Consolidated large exposure3 requirements) including BIPRU TP as it applies to a UK consolidation group.

3

BIPRU 10 (Large exposures requirements)3 including BIPRU TP as it applies on a solo basis and relates to BIPRU 10.

3

Insurance sector

None

Rule 9.39 of IPRU(INS)

Note

Any waiver granted to a member of the financial conglomerate, on a solo or consolidated basis, shall not apply in respect of the financial conglomerate for the purposes of GENPRU 3.1.36 R.

GENPRU 3.1.39RRP
(1) In accordance with Article 30 of the Financial Groups Directive (Asset management companies), this rule deals with the inclusion of an asset management company that is a member of a financial conglomerate in the scope of regulation of financial conglomerates. This rule does not apply to the definition of financial conglomerate.(2) An asset management company is in the overall financial sector and is a regulated entity for the purpose of:(a) GENPRU 3.1.26 R to GENPRU 3.1.36
SUP 15.9.1RRP
A firm that is a regulated entity must notify the FSA immediately it becomes aware that any consolidation group of which it is a member:(1) is a financial conglomerate; or(2) has ceased to be a financial conglomerate.
SUP 15.9.2RRP
(1) A firm that is a regulated entity must establish whether or not any consolidation group of which it is a member:(a) is a financial conglomerate; or(b) has ceased to be a financial conglomerate;if:(c) the firm believes; or(d) a reasonable firm that is complying with the requirements of the regulatory system would believe;that it is likely that (a) or (b) is true.(2) A firm does not need to determine whether (1)(a) is the case if the consolidation group is already being regulated
SUP 15.9.4RRP
A firm does not have to give notice to the FSA under SUP 15.9.1 R if it or another member of the consolidation group has already given notice of the relevant fact to:(1) the FSA; or(2) (if another competent authority is co-ordinator of the financial conglomerate ) that competent authority; or(3) (in the case of a financial conglomerate that does not yet have a co-ordinator ) the competent authority who would be co-ordinator under Article 10(2) of the Financial Groups Directive
GENPRU 3.2.8RRP
If the Part IV 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.
GENPRU 3.2.9RRP
If the Part IV 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.
SYSC 12.1.2RRP
Except as set out in SYSC 12.1.4 R, this section applies with respect to different types of group as follows:(1) SYSC 12.1.8 R and SYSC 12.1.10 R apply with respect to all groups, including FSA regulated EEA financial conglomerates, other financial conglomerates and groups dealt with in SYSC 12.1.13 R to SYSC 12.1.16 R;(2) the additional requirements set out in SYSC 12.1.11 R and SYSC 12.1.12 R only apply with respect to FSA regulated EEA financial conglomerates; and(3) the
SYSC 12.1.4RRP
(1) This rule applies in respect of the following rules:(a) SYSC 12.1.8R (2);(b) SYSC 12.1.10R (1), so far as it relates to SYSC 12.1.8R (2);(c) SYSC 12.1.10R (2); and(d) SYSC 12.1.11 R to SYSC 12.1.15 R.(2) The rules referred to in (1):(a) only apply with respect to a financial conglomerate if it is an FSA regulated EEA financial conglomerate;(b) (so far as they apply with respect to a group that is not a financial conglomerate) do not apply with respect to a group for which
SYSC 12.1.11RRP
Where this section applies with respect to a financial conglomerate, the risk management processes referred to in SYSC 12.1.8R (2) must include:(1) sound governance and management processes, which must include the approval and periodic review by the appropriate managing bodies within the financial conglomerate of the strategies and policies of the financial conglomerate in respect of all the risks assumed by the financial conglomerate, such review and approval being carried out
SYSC 12.1.12RRP
Where this section applies with respect to a financial conglomerate, the internal control mechanisms referred to in SYSC 12.1.8R (2) must include:(1) mechanisms that are adequate to identify and measure all material risks incurred by members of the financial conglomerate and appropriately relate capital in the financial conglomerate to risks; and(2) sound reporting and accounting procedures for the purpose of identifying, measuring, monitoring and controlling intra-group transactions
SUP 16.12.1GRP
1The effect of SUP 16.1.1 R is that this section applies to every firm carrying on business set out in column (1) of SUP 16.12.4 R except:(1) an incoming EEA firm2 with permission for cross border services only;(2) an oil market participant that is not subject to the requirements of IPRU(INV) Chapter 32;(3) an authorised professional firm (other than one that must comply with IPRU(INV) 3, 5 or 13 in accordance with IPRU(INV) 2.1.4R, where SUP 16.12.4 R will apply in respect
SUP 16.12.3RRP
(1) Any firm permitted to 5carry5 on any of the activities within each of the RAGs set out in column (1) of the table in SUP 16.12.4 R must:(a) (i) unless (ii) or (iii) 11applies, submit to the FSA the duly completed data items or other items applicable to the firm as set out in the provision referred to in column (2) of that table;(ii) unless (iii) applies, where 11 a firm is required to submit completed data items for 11more than one RAG, that11firm must only submit the data
SUP 16.12.32RRP
(1) A firm that is a member of a financial conglomerate must submit financial reports to the FSA in accordance with the table in SUP 16.12.33 R if:(a) it is at the head of an FSA regulated EEA financial conglomerate; or(b) its Part IV permission contains a relevant requirement.(2) In (1)(b), a relevant requirement is one which:(a) applies SUP 16.12.33 R to the firm; or(b) applies SUP 16.12.33 R to the firm unless the mixed financial holding company of the financial conglomerate
SUP 16.12.33RRP

Financial reports from a member of a financial conglomerate (see SUP 16.12.32 R)

Content of Report

Form (Note 1)

Frequency

Due Date

Calculation of supplementary capital adequacy requirements in accordance with one of the four technical calculation methods

Note 2

Note 5

Note 5

Identification of significant risk concentration levels

Note 3

Yearly

4 months after year end

Identification of significant intra-group transactions

Note 4

Yearly

4 months after year end

Report on compliance with GENPRU 3.1.35 R where it applies

11

Note 6

Note 5

Note 5

Note 1

When giving the report required, a firm must use the form indicated, if any.

Note 2

If Part 1 of GENPRU 3 Annex 1(method 1), Part 2 of GENPRU 3 Annex 1 (method 2), or Part 3 of GENPRU 3 Annex 1 (method 3) applies, there is no specific form. Adequate information must be provided, and each financial conglomerate for which the FSA is the co-ordinator must discuss with the FSA how to do this.

11

If Part 4 of GENPRU 3 Annex 1 applies (method 4):11

(1) a banking and investment services conglomerate11must use FSA003; and

11

(2) an insurance conglomerate must use:

(a) (where SUP 16.12.32R (1)(a) applies), Forms 1, 2 and 3 in Appendix 9.1 of IPRU(INS) prepared in accordance with IPRU (INS) 9.35(1); or

(b) (in any other case),the Insurance Group Capital Adequacy Reporting Form (Form 95) in Appendix 9.9 of IPRU(INS)

For the purposes of (b), rules 9.40(1), 9.40(1A), 9.40(3) and 9.40(4) of IPRU(INS) apply as they would if the insurance conglomerate were an insurance group.

Note 3

Rather than specifying a standard format for each financial conglomerate to use, each financial conglomerate for which the FSA is the co-ordinator must discuss with the FSA the form of the information to be reported. This should mean that usual information management systems of the financial conglomerate can be used to the extent possible to generate and analyse the information required.

When reviewing the risk concentration levels, the FSA will in particular monitor the possible risk of contagion in the financial conglomerate, the risk of a conflict of interests, the risk of circumvention of sectoral rules, and the level or volume of risks.

Note 4

For the purposes of this reporting requirement, an intra-group transaction will be presumed to be significant if its amount exceeds 5% of the total amount of capital adequacy requirements at the level of the financial conglomerate.

Rather than specifying a standard format for each financial conglomerate to use, each financial conglomerate for which the FSA is the co-ordinator must11 discuss with the FSA the form of the information to be reported. This should mean that usual information management systems of the financial conglomerate can be used to the extent possible to generate and analyse the information required.

When reviewing the intra-group transactions, the FSA will in particular monitor the possible risk of contagion in the financial conglomerate, the risk of a conflict of interest11, the risk of circumvention of sectoral rules, and the level or volume of risks.

11

Note 5

The frequency and due date will be as follows:

(1)banking and investment services conglomerate:11 frequency is half-yearly with due date 45 business days after period end

(2) insurance conglomerate: frequency is yearly with due date four months after period end for the capital adequacy return and three months after period end for the report on compliance with GENPRU 3.1.35 R where it applies.

11

Note 6

Adequate information must be added as a separate item to the relevant form for sectoral reporting.
SUP 8.9.2GRP
1If the FSA, in the course of carrying on supplementary supervision of a financial conglomerate, is considering exercising its powers under section 148 of the Act (Modification or waiver of rules), regulation 4 of the Financial Groups Directive Regulations contains special provisions. The FSA must, in broad terms, do two things. Where required by those regulations, it must obtain the consent of the relevant competent authorities of the group. And, where required by those Regulations,
SUP 11.5.4AGRP
Firms are also reminded that a change in control may give rise to a notification as a financial conglomerate or a change in the supplementary supervision of a financial conglomerate (see GENPRU 3.14(Cross sector groups) and GENPRU 3.24(Third country groups)). 144
SUP 16.3.25GRP
If this chapter requires the submission of a report or data item13 covering a group, a single report or data item13 may be submitted, and so satisfy the requirements of all firms in the group. Such a report or data item13 should contain the information required from all of them, meet all relevant due dates and indicate all the firms on whose behalf it is submitted; if necessary a separate covering sheet should list the firms on whose behalf a report or data item13 is submitted.
SUP 6.3.31GRP
In considering whether to grant a firm's application to vary its Part IV permission, the FSA will also have regard, under section 49(1) of the Act (Persons connected with an applicant), to any person6 appearing to be, or likely to be, in a relationship with the firm which is relevant. The Financial Groups Directive Regulations make special consultation provisions where the FSA is exercising its functions under Part IV of the Act (Permission to carry on regulated activities) for