Related provisions for PERG 4.4.6

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SUP App 3.9.5GRP

3Table 2: MiFIDinvestment services and activities

Part II RAO Activities13

Part III RAO Investments

A MiFIDinvestment services and activities

1.

Reception and transmission of orders in relation to one or more financial instruments

Article 252

Article 76-81, 82B,12 83-85, 89

2.

Execution of orders on behalf of clients

Article 14, 21

A Article 76-81,82B,12 83-85, 89

3.

Dealing on own account

Article 14

Article 76-81, 82B,12 83-85, 89

4.

Portfolio management

Article 37 (14, 21, 25 - see Note 1) 2

Article 76-81, 82B,12 83-85, 89

5.

Investment advice

Article 53(1)10

Article 76-81, 82B,12 83-85, 89

6.

Underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis

Article 14, 21

Article 76-81, 82B,12 83-85, 89

7.

Placing of financial instruments without a firm commitment basis

Article 21, 25

Article 76-81, 82B,12 83-85, 89

8.

Operation of Multilateral Trading Facilities

Article 25D5 (see Note 2)

5

Article 76-81, 82B,12 83-85, 89

12 9.

Operation of an OTF

Article 25DA (see Note 3)

Article 77, 77A, 78, 79, 80, 81, 82B, 83-85, 89

Ancillary services

Part II RAO Activities

Part III RAO Investments

1.

Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management

Article 40, 45, 64

Article 76-81, 82B,12 83-85, 89

2.

Granting credits or loans to an investor to allow him to carry out a transaction in one or more of the relevant instruments where the firm granting the credit or loan is involved

3.

Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings

Article 14, 21, 25, 53(1)10, 64

Article 76-80, 82B,12 83-85, 89

4.

Foreign exchange services where these are connected with the provision of investment services

Article 14, 21, 25, 53(1)10, 64

Article 83-85, 89

5.

Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments

Article 53(1)10, 64 (see Note 4)13

Article 76-81, 82B,12 83-85, 89

6.

Services related to underwriting

Article 25, 53(1)10, 64

Article 76-81, 82B,12 83-85, 89

7.

Investment services and activities as well as ancillary services of the type included under Section A or B of Annex I related to the underlying of the derivatives included under Section C 5, 6, 7 and 10-where these are connected to the provision of investment or ancillary services.

Article 14, 21, 25, 25D,5 37, 53(1)10, 64

5

Article 83 and 84

Note 1. A firm may also carry on these other activities when it is managing investments.2

Note 2. A firm operating an MTF under article 25D5 does not need to have a permission covering other regulated activities, unless it performs other regulated activities in addition to operating an MTF.

5

Note 3. A firm operating an OTF under article 25DA does not need to have a permission covering other regulated activities, unless it performs other regulated activities in addition to operating an OTF.12

13Note 4: A firm which provides investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments does not need permission under article 53(1) of the Regulated Activities Order if it is appropriately authorised (see article 53(1) to (1D) of the Regulated Activities Order).

FEES 13.1.3GRP
Section 333S of the Act (Financial assistance for action against illegal money lending) provides that the Treasury may make grants or loans, or give other forms of financial assistance, to persons for the purpose of taking action against illegal money lending.
Additionally, where a single premium policy was added to a loan:(1) for live policies, where there remains an outstanding loan balance, the firm should, where possible, arrange for the loan to be restructured (without charge to the complainant but using any applicable cancellation value) with the effect of ensuring the number and amounts of any future repayments (including any interest and charges) are the same as would have applied if the commission plus anticipated profit share
CONC 3.10.3GRP
2Firms should note3 that:(1) section 49 of the CCA makes it a criminal offence to canvass borrower-lender agreements, for example cash loans, off trade premises (within the meaning of section 48 of the CCA); and(2) section 154 of the CCA makes it a criminal offence to canvass off trade premises credit broking of a kind specified by article 36A(1)(a) to (c) of the Regulated Activities Order, debt adjusting, debt counselling or providing credit information services (within the meaning
COLL 7.4.3RRP
(1) Upon the happening of any of the events or dates referred to in (2) and not otherwise:1(a) COLL 6.2 (Dealing), COLL 6.3 (Valuation and pricing), COLL 6.6.20R to COLL 6.6.24G (Assessment of value)4 and COLL 5 (Investment and borrowing powers) cease to apply to the AUT or to the units and scheme property in the case of a sub-fund;1(b) the trustee must cease to issue and cancel1units, except in respect of the final cancellation under COLL 7.4.4 R (1) or (2);11(c) the manager
PERG 4.3.9GRP
Some typical examples where the business test is unlikely to be satisfied are:(1) when an individual enters into or administers a one-off mortgage securing a loan to a friend or member of his family whether at market interest rates or not; or(2) when a person provides a service without any expectation of reward or payment of any kind, such as advice given or arrangements made by many Citizens Advice Bureaux and other voluntary sector agencies (but see PERG 4.3.8G (3) where payment
DISP App 3.6.2ERP
In the absence of evidence to the contrary, the firm should presume that the complainant would not have bought the payment protection contract he bought if the sale was substantially flawed, for example where the firm:(1) pressured the complainant into purchasing the payment protection contract; or(2) did not disclose to the complainant, in good time before the sale was concluded, and in a way that was fair, clear and not misleading, that the policy was optional; or(3) made the
MCOB 8.3.1BGRP
3Firms should substitute equivalent home reversion terminology for lifetime mortgage terminology, where appropriate. Examples of terms and expressions that should be replaced in relation to home reversion plans are 'loan' or 'amount borrowed', which should be replaced with 'amount released' or 'amount to be released', as appropriate, and 'mortgage lender' and 'mortgage intermediary' which should be replaced with 'reversion provider' and 'reversion intermediary'.
COLL 6.12.4GRP
(1) The risk management process in COLL 6.12.3 R should take account of the investment objectives and policy of the scheme as stated in the most recent prospectus.(2) The depositary of a UCITS scheme should take reasonable care to review the appropriateness of the risk management process in line with its duties under COLL 6.6.4 R (General duties of the depositary) and COLL 6.6.14 R (Duties of the depositary and authorised fund manager: investment and borrowing powers), as appropriate.
CONC 7.17.5RRP
(1) The duty of the firm to give the borrower notices under CONC 7.17.4 R will cease when either of the conditions mentioned in (2) is satisfied but, if either of those conditions is satisfied before the notice required by CONC 7.17.4R (1) is given, the duty will not cease until that notice is given.(2) The conditions referred to in (1) are:(a) that the borrower ceases to be in arrears;(b) that a judgment is given in relation to the agreement under which a sum is required to be
CREDS 10.1.3GRP

Module

Relevance to Credit Unions

The Principles for Businesses (PRIN)

The Principles for Businesses (PRIN) set out 3high-level requirements 3imposed by the FCA3. They provide a general statement of regulatory requirements. The Principles apply to all12credit unions. In applying the Principles to credit unions, the FCA3 will be mindful of proportionality. In practice, the implications are likely to vary according to the size and complexity 3of the credit union.

1212121212

Senior Management Arrangements, Systems and Controls (SYSC)

SYSC 1,3SYSC 4 to 10 and SYSC 213 apply to all credit unions in respect of the carrying on of their regulated activities and unregulated activities in a prudential context. SYSC 22 (Regulatory references),11SYSC 23 (Senior managers and certification regime: Introduction and classification), SYSC 24 (Senior managers and certification regime: Allocation of prescribed responsibilities), SYSC 25 (Senior managers and certification regime: Management responsibilities maps and handover procedures and material), SYSC 26 (Senior managers and certification regime: Overall and local responsibility), SYSC 27 (Senior managers and certification regime: Certification regime)7 and SYSC 18 (Whistleblowing)11 apply to all credit unions in respect of both their regulated activities and their unregulated activities. SYSC 19F.2 (IDD remuneration incentives) and SYSC 28 (Insurance distribution: specific knowledge, ability and good repute requirements) also apply to credit unions when carrying out insurance distribution activities.11

33

3Code of Conduct (COCON)

This contains rules and guidance that are directly applicable to a credit union’sSMF managers, certification employees and (from 2017) other conduct rules staff. There is also guidance for credit unions on giving their staff training about COCON.

Threshold Conditions (COND)

In order to become authorised under the Act all firms must meet the threshold conditions. The threshold conditions must be met on a continuing basis by credit unions. Failure to meet one of the conditions is sufficient grounds for the exercise by the FCA3 of its powers.

121212

3

3

12312

The Fit and Proper test for Employees and Senior Personnel7 (FIT)

The purpose of FIT is to set out and describe the criteria that a firm should3 consider when assessing the fitness and propriety of a person (1)3 in respect of whom an application is being made for approval to undertake a controlled function under the senior managers7 regime, (2)3 who has already been approved, (3) who is a certification employee or (4) whom a firm is considering appointing to be a certification employee3.

It also sets out and describes criteria that the FCA will consider when assessing the fitness and propriety of a candidate for a controlled function position and that it may consider when assessing the continuing fitness and propriety of approved persons.3

12312

General Provisions (GEN)

GEN contains rules and guidance on general matters, including interpreting the Handbook, statutory status disclosure, the FCA's3 logo and insurance against financial penalties.

12

Fees manual (FEES)

This manual sets out the fees applying to credit unions.

3Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries (MIPRU)

MIPRU applies to any credit union carrying out insurance distribution activity5 or home finance mediation activity, or using these services. In particular, it sets out requirements for allocation of responsibility for the credit union’sinsurance distribution activity5 (MIPRU 2), for the use of home finance intermediaries or persons doing insurance distribution activity11 (MIPRU 5) and for professional indemnity insurance (MIPRU 3).

Conduct of Business sourcebook (COBS)

A credit union which acts as a CTF provider or provides a cash-deposit ISA will need to be aware of the relevant requirements in COBS. COBS 4.6 (Past, simulated past and future performance), COBS 4.7.1 R (Direct offer financial promotions), COBS 4.10 (Approving and confirming compliance of10 financial promotions), COBS 13 (Preparing product information) and COBS 14 (Providing product information to clients) apply with respect to accepting deposits as set out in those provisions, COBS 4.1 and BCOBS. A credit union that communicates with clients, including in a financial promotion, in relation to the promotion of deferred shares and credit union subordinated debt will need to be aware of the requirements of COBS 4.2 (Fair, clear and not misleading communications) and COBS 4.5 (Communicating with retail clients).4

11A credit union carrying on insurance distribution activities in relation to life policies will also need to be aware of the relevant requirements in COBS. A firm may also elect to comply with COBS in relation to pure protection contracts that otherwise fall under ICOBS (see ICOBS 1 Annex 1 3.1R(1)).

11Credit unions are reminded that they are subject to the requirements of the appropriate legislation, including the Credit Unions Act 1979, relating to activities a credit union may carry on.

3Insurance: Conduct of Business sourcebook (ICOBS)

ICOBS applies to any credit union carrying on non-investment insurance distribution5 activities, such as arranging or advising on general insurance contracts to be taken out by members or where those members gain rights under such a contract (for example, in relation to a group policy)11. ICOBS does not apply to a credit union taking out an insurance policy5 for its own purposes11, such as a policy5 against default by members on their loans where the credit union is the beneficiary of the policy5, since in this circumstance the credit union would not be acting as an insurance intermediary, but would itself be the customer. Credit unions are reminded that they are subject to the requirements of the appropriate legislation, including the Credit Unions Act 1979, relating to activities a credit union may carry on.

3Mortgages and Home Finance: Conduct of Business sourcebook (MCOB)

MCOB applies to any credit union that engages in any home finance activity. MCOB rules cover advising and selling standards, responsible lending (including affordability assessment), charges, and the fair treatment of customers in payment difficulties.

Banking: Conduct of Business sourcebook (BCOBS)

BCOBS sets out rules and guidance for credit unions on how they should conduct their business with their customers. In particular there are rules and guidance relating to communications with banking customers3and financial promotions (BCOBS 2), distance communications (BCOBS 3), information to be communicated to banking customers3(BCOBS 4), post sale requirements (BCOBS 5), and cancellation (BCOBS 6). 3The rules in BCOBS 3.1 that relate to distance contracts may apply 3to a credit union. This is because BCOBS 3 contains requirements which implemented9 the Distance Marketing Directive39where there is "an organised distance sales or service-provision scheme run by the supplier" (Article 2(a)) of the Distance Marketing Directive)9, i.e. if the credit union routinely sells any of its services by post, telephone, fax or the internet3.

11Client Assets (CASS)

CASS 5 (Client money: insurance distribution activity) applies to credit unions carrying on insurance distribution activities where the credit union receives or holds money in the course of or in connection with those activities (i.e. where the application rules set out in CASS 5.1.1R are met). This may vary on a case-by-case basis depending on the firm’s business model.

11Product Intervention and Product Governance sourcebook (PROD)

PROD 1.4 (Product Intervention and Product Governance Sourcebook (PROD)) and PROD 4 (Product governance: IDD and pathway investments) apply to credit unions involved in the manufacture or distribution of insurance products.

Supervision manual (SUP)

The following provisions of SUP are relevant to credit unions: 13SUP 1A13 (The FCA’s 3 approach to supervision), SUP 2 (Information gathering by the FCA or PRA 3 on its own initiative), SUP 3.1 to SUP 3.8 (Auditors), SUP 5 (Reports by skilled11 persons), SUP 6 (Applications to vary and11 cancel Part 4A12permission and to impose, vary or cancel requirements11), SUP 7 (Individual requirements), SUP 8 (Waiver and modification of rules), SUP 9 (Individual guidance), 13SUP 10C (FCA senior managers7 regime for approved persons in SMCR firms7), SUP 11 (Controllers and Close links), SUP 15 (Notifications to the FCA11) and SUP 16 (Reporting Requirements). Where credit unions carry on insurance distribution activities and fall within the category provided at SUP 3.1.2R(10), SUP 3.10 and SUP 3.11 (Auditors) will also be relevant.11

Credit unions are reminded that they are subject to the requirements of the Act and SUP 11 on close links, and are bound to notify the FCA3 of changes. It may be unlikely, in practice, that credit unions will develop such relationships. It is possible, however, that a person may acquire close links with a 3credit union3 within the meaning of the Act by reason of holding the prescribed proportion of deferred shares in the credit union.

In relation to SUP 16, credit unions are exempted from the requirement to submit annual reports of 3close links.

1212121212133123121212

11

Decision, Procedure and Penalties manual (DEPP)

DEPP is relevant to credit unions because it sets out:

(1) the FCA's12 decision-making procedure for giving statutory notices. These are warning notices, decision notices and supervisory notices (DEPP 1.2 to DEPP 5); and

(2) the FCA's12 policy with respect to the imposition and amount of penalties under the Act (see DEPP 6).

1212

Dispute Resolution: Complaints (DISP)

DISP sets out rules and guidance in relation to treating complainants fairly and the Financial Ombudsman Service.

Compensation (COMP)

COMP sets out rules relating to the scheme for compensating consumers when authorised firms are unable, or likely to be unable, to satisfy claims against them.12

11Consumer Credit sourcebook (CONC)

CONC contains rules that apply to firms carrying on credit-related regulated activities. PERG 2.7.19IG provides guidance on relevant exemptions. Where an exemption applies, the credit union lending will be outside the scope of CONC. However, subject to the constraints in the Credit Unions Act 1979 or the Credit Unions (Northern Ireland) Order 1985 (as relevant), credit unions may undertake credit-related regulated activities to which CONC does apply if the activity is carried out by way of business. This could include lending under a borrower-lender-supplier agreement, including entering into conditional sale agreements and/or hire-purchase agreements, or debt adjusting or debt counselling where the credit union is not the lender. A credit union carrying on such activities should consider whether it requires permission to do so. Further information can be found on the FCA’s website.

6General guidance on Benchmark Administration, Contribution and Use (BENCH)

BENCH provides guidance about which parts of the Handbook are relevant to a firm when carrying out benchmark activities and when using a benchmark. It also provides guidance about the benchmarks regulation.

The Enforcement Guide (EG)

The Enforcement Guide (EG) describes the FCA's12 approach to exercising the main enforcement powers given to it by the Act and by other legislation.2

12

Financial Crime Guide: A firm’s guide to countering financial crime risks (FCG) and Financial Crime Thematic Reviews (FCTR)8

FCG and FCTR provide8guidance on steps that a firm can take to reduce the risk that it might be used to further financial crime.

BIPRU 13.7.4RRP
For the purposes of cross product netting, the following are considered different product categories:(1) repurchase transactions, reverse repurchase transactions, securities or commodities lending or borrowing transactions;(2) margin lending transactions; and(3) financial derivative instruments.[Note: BCD Annex III Part 7 point (a) (part)]
CREDS 3A.5.4RRP
(1) The firm must:(a) give the relevant credit union client a statement in the form in (2) on paper or another durable medium; and(b) obtain confirmation in writing from the relevant credit union client that the relevant credit union client has signed it,in good time before the relevant credit union client has committed to buy the deferred share.(2) “I make this statement in connection with my proposed investment in deferred shares issued by a credit union. I have been made aware
PERG 4.16.1GRP
It is common practice in the mortgage industry for the original lender which makes the loan to pass on ownership of the loan to a third party through securitisation. Securitisation transactions take different forms, but the essence is that the original lender sells the beneficial interest (with or without the legal interest) in a mortgage portfolio to a special purpose vehicle ('SPV'), which raises finance to pay for the portfolio by selling its own securities. The original lender
IPRU-INV 5.8.2RRP

1 Deductions and Ratios (Items 10, 11 and 15)

(a)

[deleted]2

(b)

A firm2which is subject to a liquid capital requirement under IPRU-INV 5.4.1R may take into account qualifying subordinated loans in the calculation of liquid capital up to a maximum of 400% of its Tier 1 capital.

2 Non corporate entities

(a)

In the case of partnerships or sole traders, the following terms should be substituted, as appropriate, for items 1 to 4 in Tier 1 capital:

(i)

partners' capital accounts (excluding loan capital);

(ii)

partners' current accounts (excluding unaudited profits and loan capital);

(iii)

proprietors' account (or other term used to signify the sole trader's capital but excluding unaudited profits).

(b)

Loans other than qualifying subordinated loans shown within partners' or proprietors' accounts must be classified as Tier 2 capital under item 12.

(c)

For the calculation of own funds, partners' current accounts figures are subject to the following adjustments in respect of a defined benefit occupational pension scheme:

(i)

a firm must derecognise any defined benefit asset;

(ii)

a firm may substitute for a defined benefit liability the firm'sdeficit reduction amount. The election must be applied consistently in respect of any one financial year.

Note 1

A firm should keep a record of and be ready to explain to its supervisory contacts in the FCA the reasons for any difference between the deficit reduction amount and any commitment the firm has made in any public document to provide funding in respect of a defined benefit occupational pension scheme.

2A Reserves

For the calculation of own funds the following adjustments apply to the audited reserves figure:

(a)

a firm must deduct any unrealised gains or, where applicable, add back in any unrealised losses on cash flow hedges of financial instruments measured at cost or amortised cost;

(b)

in respect of a defined benefit occupational pension scheme, a firm must derecognise any defined benefit asset;

(c)

a firm may substitute for a defined benefit liability the firm's deficit reduction amount. The election must be applied consistently in respect of any one financial year.

Note 2

A firm should keep a record of and be ready to explain to its supervisory contacts in the FCA the reasons for any difference between the deficit reduction amount and any commitment the firm has made in any public document to provide funding in respect of a defined benefit occupational pension scheme.

(d)

a firm must not include any unrealised gains from investment property.

Note 3

Unrealised gains from investment property should be reported as part of revaluation reserves.

(e)

where applicable, a firm must deduct any asset in respect of deferred acquisition costs and add back in any liability in respect of deferred income (but exclude from the deduction or addition any asset or liability which will give rise to future cash flows), together with any associated deferred tax.

Note 4

Reserves must be audited unless the firm is exempt from the provisions of Part VII of the Companies Act 1985 (section 249A (Exemptions from audit)), or where applicable, Part 16 of the Companies Act 2006 (section 477 (Small companies: Conditions for exemption from audit)) relating to the audit of accounts.

3 Intangible assets (Item 6)

Intangible assets comprise:

(a)

formation expenses to the extent that these are treated as an asset in the firm's accounts;

(b)

goodwill, to the extent that it is treated as an asset in the firm's accounts; and

(c)

other assets treated as intangibles in the firm's accounts.

Intangible assets do not include a deferred acquisition cost asset.

4 Material current year losses (Item 7)

Losses in current year operating figures must be deducted when calculating Tier 1 capital if such losses are material. For this purpose profits and losses must be calculated quarterly or monthly, as appropriate. If this calculation reveals a net loss it shall only be deemed to be material for the purposes of this Table if it exceeds 10 per cent of the firm's Tier 1 capital.

5 Material holdings in credit and financial institutions (Item 8)

Material holdings comprise:

(a)

where the firm holds more than 10 per cent of the equity share capital of the institution, the value of that holding and the amount of any subordinated loans to the institution and the value of holdings in qualifying capital items or qualifying capital instruments issued by the institution;

(b)

in the case of holdings other than those mentioned in (a) above, the value of holdings of equity share capital in, and the amount of subordinated loans made to, such institutions and the value of holdings in qualifying capital items or qualifying capital instruments issued by such institutions to the extent that the total of such holdings and subordinated loans exceeds 10 per cent of the firm'sown funds calculated before the deduction of item 8.

2

6 Long term qualifying subordinated loans (Item 11)

Loans having the characteristics prescribed by IPRU-INV 5.6.1R may be included in item 11, subject to the limits set out in paragraph (1) above.

2

7 Qualifying arrangements (Item 13)

2

2

2

A firm2 may only include qualifying undertakings in its calculation of liquid capital if:

(i)

it maintains liquid capital equivalent to 6/52 of its annual expenditure in a form other than qualifying undertakings; and

(ii)

the total amount of all qualifying undertakings plus qualifying subordinated loans does not exceed the limits set out in paragraph (1)(b) above.

8 Net trading book profits (Item 14)

Unaudited2 profits can be included at item 14.

This Item must not be included in the liquid capital calculation of a firm whose permitted business includes establishing, operating or winding up a personal pension scheme.

Note 5

Non-trading book interim profits may only be included in Tier 1 of the calculation if they have been independently verified by the firm’s external auditors, unless the firm is exempt from the provisions of Part VII of the Companies Act 1985 (section 249A (Exemptions from audit)), or where applicable, Part 16 of the Companies Act 2006 (section 477 (Small companies: Conditions for exemption from audit)) relating to the audit of accounts.

For this purpose, the external auditor should normally undertake at least the following:

(a)

satisfy himself that the figures forming the basis of the interim profits have been properly extracted from the underlying accounting records;

(b)

review the accounting policies used in calculating the interim profits so as to obtain comfort that they are consistent with those normally adopted by the firm in drawing up its annual financial statements;

(c)

perform analytical review procedures on the results to date, including comparisons of actual performance to date with budget and with the results of prior periods;

(d)

discuss with management the overall performance and financial position of the firm;

(e)

obtain adequate comfort that the implications of current and prospective litigation, all known claims and commitments, changes in business activities and provisions for bad and doubtful debts have been properly taken into account in arriving at the interim profits; and

(f)

follow up problem areas of which the auditors are already aware in the course of auditing the firm’s financial statements.

A firm wishing to include interim profits in Tier 1 capital in a financial return should submit to the FCA with the financial return a verification report signed by its external auditor which states whether the interim results are fairly stated, unless the firm is exempt from the provisions of Part VII of the Companies Act 198 (section 249A (Exemptions from audit)), or where applicable, Part 16 of the Companies Act 2006 (section 477 (Small companies: Conditions for exemption from audit)) relating to the audit of accounts.

Profits on the sale of capital items or arising from other activities which are not directly related to the investment business of the firm may also be included within the calculation of liquid capital, but (unless the firm is exempt as above) only if they can be separately verified by the firm’s auditors. In such a case, such profits can form part of the firm’s Tier 1 capital as profits.

9 Short term qualifying subordinated loans (Item 15)

Loans having the characteristics prescribed by IPRU-INV 5.6.3R may be included in item 15 subject to the limits set out in paragraph (1) above. Tier 2 capital which exceeds the ratios prescribed by paragraph (1)(a) and (b) may be included in item 15 subject to paragraph (1) above.

10 Illiquid assets (Item 16)

Illiquid assets comprise:

(a)

tangible fixed assets.

Note 6

In respect of tangible fixed assets purchased under finance leases the amount to be deducted as an illiquid asset shall be limited to the excess of the asset over the amount of the related liability shown on the balance sheet.

(b)

holdings in, including subordinated loans to, credit or financial institutions which may be included in the own funds of such institutions unless they have been deducted under item 8;

(c)

any investment in undertakings other than credit institutions and other financial institutions where such investments are not readily realisable;

(d)

any deficiency in net assets of a subsidiary;

(e)

deposits not available for repayment within 90 days or less (except for payments in connection with margined futures or options contracts);

Note 7

Where cash is placed on deposit with a maturity of more than 90 days but is repayable on demand subject to the payment of a penalty, then this is not required to be deducted as an illiquid asset but a deduction is required for the amount of the penalty.

(f)

loans, trade and3 other debtors and accruals not falling due to be repaid within 90 days or which are more than one month overdue by reference to the contractual payment date;

(g)

physical stocks (except where subject to the position risk requirement as set out in IPRU-INV 5.11; and

(h)

prepayments to the extent that the period of prepayment exceeds six weeks in the case of a firm subject to the 6/52 expenditure based requirement or thirteen weeks in the case of a firm subject to the 13/52 expenditure based requirement.

(i)

if not otherwise covered, any holding in eligible capital instruments of an insurance undertaking, insurance holding company, or reinsurance undertaking that is a subsidiary or participation. Eligible capital instruments include ordinary share capital, cumulative preference shares, perpetual securities and long-term subordinated loans that are eligible for insurance undertakings under INSPRU 1.

Illiquid assets do not include a defined benefit asset or a deferred acquisition cost asset.

11 Qualifying property (Item 17)

This item comprises the qualifying amount calculated in accordance with IPRU-INV 5.7.1R.

MCOB 5A.5.7GRP
Firms are reminded that they must comply with MCOB 7.6.5R in respect of the release of loan instalments after the start of the MCD regulated mortgage contract.
MCOB 6.9.8RRP
As soon as a SRB agreement provider has provided the written pre-offer document at Stage One to a SRB agreement seller who is in arrears under his regulated mortgage contract or home purchase plan on the property to which the proposed regulated sale and rent back agreement relates, it must, in a durable medium, immediately notify the mortgage lender, home purchase provider or the providers of other loans that may be secured on the property:(1) explaining that the firm is proposing
MCOB 6.5.2RRP
If the regulated mortgage contract has any linked borrowing or linked deposits, details of the charges on these linked facilities, for example charges payable on a linked current account, must be included in the firm'stariff of charges.
CONC 11.1.3GRP
Section 66A of the CCA (right to withdraw) does not apply to an agreement for credit exceeding £60,260 (unless the agreement is a residential renovation agreement)2, an agreement secured on land, a restricted-use credit agreement to finance the purchase of land or an agreement for a bridging loan in connection with the purchase of land. Section 67 of the CCA (cancellable agreements) applies to regulated credit agreements (apart from agreements secured on land, restricted-use credit