PART 4Conduct of persons working in financial services sector

Offence

I137Section 36: interpretation

1

This section has effect for the interpretation of section 36.

2

“Financial institution” means a UK institution which—

a

meets condition A or B, and

b

is not an insurer or a credit union.

3

Condition A is that it has permission under Part 4A of FSMA 2000 to carry on the regulated activity of accepting deposits.

4

Condition B is that—

a

it is for the purposes of FSMA 2000 an investment firm (see section 424A of that Act),

b

it has permission under Part 4A of that Act to carry on the regulated activity of dealing in investments as principal, and

c

when carried on by it, that activity is a PRA-regulated activity.

5

In subsection (2)—

a

“UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom;

b

“insurer” means an institution which is authorised under FSMA 2000 to carry on the regulated activity of effecting or carrying out contracts of insurance as principal;

c

“credit union” means a credit union as defined by section 31 of the Credit Unions Act 1979 or a credit union as defined by Article 2(2) of the Credit Unions (Northern Ireland) Order 1985.

6

Subsections (3), (4) and (5)(b) are to be read in accordance with sections 22 and 22A of FSMA 2000, taken with Schedule 2 to that Act and any order under section 22.

7

A person is a “senior manager” in relation to a financial institution if, under an arrangement entered into by the institution, or by a contractor of the institution, in relation to the carrying on by the institution of a regulated activity, the person performs a senior management function.

F48

“Senior management function” means—

a

a function of a description specified in rules made by the FCA under section 59(3)(a) or (b) of FSMA 2000 which is designated as a senior management function by the FCA under section 59(6A) of that Act;

b

a function of a description specified in rules made by the PRA under section 59(3)(a) of that Act.

9

A financial institution (“F”) is to be regarded as failing where—

a

F enters insolvency,

b

any of the stabilisation options in Part 1 of the Banking Act 2009 is achieved in relation to F, or

c

F is taken for the purposes of the Financial Services Compensation Scheme to be unable, or likely to be unable, to satisfy claims against F.

10

In subsection (9)(a) “insolvency” includes—

a

bankruptcy,

b

liquidation,

c

bank insolvency,

F2ca

building society insolvency,

cb

investment bank insolvency,

d

administration,

e

bank administration,

F3ea

building society special administration,

f

receivership,

g

a composition between F and F's creditors, and

h

a scheme of arrangement of F's affairs.

F111

For the purposes of subsection (10)—

  • “bank administration” has the same meaning as in the Banking Act 2009 (see section 136 of that Act);

  • “bank insolvency” has the same meaning as in that Act (see section 90 of that Act);

  • “building society insolvency” and “building society special administration” have the same meaning as in the Building Societies Act 1986 (see section 119 of that Act);

  • “investment bank insolvency” means any procedure established by regulations under section 233 of the Banking Act 2009.