GENPRU 3.2 Third-country groups

GENPRU 3.2 implemented requirements that corresponded in part to article 18 of the Financial Groups Directive, article 127 of the CRD and (in relation to BIPRU firms) article 143 of the BCD.

The first question that must be asked about a third-country group is whether the UK regulated entities in that third-country group are subject to supervision by a third-country competent authority, which is equivalent to that provided for in GENPRU 3 (in the case of a financial conglomerate) or the UK prudential sectoral legislation for the banking sector, the CRR investment services sector or the MIFIDPRU investment services sector (in the case of a banking and investment group).

If the supervision of a third-country group by a third-country competent authority does not meet the equivalence test referred to in GENPRU 3.2.3 G, the methods set out in MIFIDPRU or the UK provisions which implemented the CRD and UK CRR will apply. Alternatively, the FCA may apply other methods that ensure appropriate supervision of the UK regulated entities in that third-country group in accordance with the aims of supplementary supervision in GENPRU 3 or consolidated supervision under the applicable UK prudential sectoral legislation.

If the supervision of a third-country group by a third-country competent authority does not meet the equivalence test referred to in GENPRU 3.2.3 G, the FCA may, rather than take the measures described in GENPRU 3.2.4 G, apply, by analogy, the provisions concerning supplementary supervision in GENPRU 3 or, as applicable, consolidated supervision under the applicable UK prudential sectoral legislation, to the UK regulated entities in the banking sector, CRR investment services sector, MIFIDPRU investment services sector and (in the case of a financial conglomerate ) insurance sector.

The FCA believes that it will only be right to adopt the option in GENPRU 3.2.5 G in response to very unusual group structures.

GENPRU 3.2.8 R and GENPRU 3.2.9 R and GENPRU 3 Annex 2 set out rules to deal with the situation covered in GENPRU 3.2.5 G. Those rules do not apply automatically. Instead, they can only be applied with respect to a particular third-country group through the Part 4A permission of a firm in that third-country group.