PART 1 Introduction

Citation, commencement and extent

1.—(1) These Regulations may be cited as the Credit Institutions and Investment Firms (Miscellaneous Definitions) (Amendment) Regulations 2026.

(2) These Regulations come into force on 1st January 2027.

(3) These Regulations extend to England and Wales, Scotland and Northern Ireland.

PART 2 Amendments to primary legislation

Financial Services and Markets Act 2000

2. The Financial Services and Markets Act 2000(2) is amended as set out in regulations 3 to 18.

3. In section 55PB (requirements relating to general meetings)(3)—

(a)in subsection (1)(a), for “investment firm” substitute “Part 4A investment firm”;

(b)in subsection (6), omit the definition of “investment firm”.

4. For section 71I (sections 71B to 71H: interpretation)(4) substitute—

““71I Sections 71B to 71H: interpretation

(1) For the purposes of sections 71B to 71H and this section—

“appropriate regulator” means—

“consolidated situation” has the meaning given in the glossary of the PRA Rulebook;

“consolidating supervisor” means the competent authority responsible for the exercise of supervision on the basis of the consolidated situation of a parent undertaking;

“director” includes, in relation to an undertaking which has no board of directors, a member of the equivalent management body responsible for the management of the undertaking concerned;

“institution” means a credit institution or an investment firm as defined in article 2(1) of the Bank Recovery and Resolution (No. 2) Order 2014 (S.I. 2014/3348);

“parent undertaking” means an institution, financial holding company or mixed financial holding company which—

“relevant firm” means—

“senior executive”, in relation to a relevant firm or a parent undertaking, means a person who—

(2) For the purposes of the definition of “parent undertaking” in subsection (1)—

(a)an institution, financial holding company or mixed financial holding company is a UK parent if it is not itself the subsidiary of an institution, financial holding company or mixed financial holding company set up in the United Kingdom;

(b)an institution, financial holding company or mixed financial holding company (“A”) holds a participation in an institution (“B”) if—

(i)A owns, directly or indirectly, 20% or more of the voting rights or capital in B, or

(ii)A owns, directly or indirectly, voting rights or capital in B for the purpose of maintaining links with B on a long-term basis which contribute to the activities of A.”.

5. In section 137J (rules about recovery plans: duty to consult)(5), in subsection (6), in paragraph (b) of the definition of “institution”, omit “as defined in Article 4(1)(2AA) of the capital requirements regulation”.

6. In section 143A (FCA investment firms)(6), for subsection (1) substitute—

“(1) In this Part, “FCA investment firm” means a Part 4A investment firm that—

(a)is not for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556), and

(b)has its registered office or, if it has no registered office, its head office in the United Kingdom.”.

7. In section 143B (other terms used in this Part)(7), in subsection (1), omit the definition of “investment firm”.

8. In section 143E (powers to make rules applying to parent undertakings)(8), in subsection (2)—

(a)in paragraph (a), omit “(as defined in section 1161(1) of the Companies Act 2006)”;

(b)in paragraph (b), for “an investment firm” substitute “a Part 4A investment firm”.

9.—(1) Section 144B (terms used in this Part)(9) is amended as follows.

(2) In subsection (1), for the definition of “CRR firm” substitute—

““CRR firm” means a person that satisfies the following conditions—

(3) After subsection (2) insert—

“(3) In the definition of “CRR firm” in subsection (1), “accepting deposits” has the meaning given in article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544).”.

10.—(1) Section 192O (interpretation)(11) is amended as follows.

(2) Subsection (1) is amended as set out in paragraphs (3) to (6).

(3) For the definition of “consolidated situation” substitute—

““consolidated situation” has the meaning given in the glossary of the PRA Rulebook;”.

(4) Omit the definitions of—

(a)“designated investment firm”;

(b)“financial holding company”;

(c)“financial institution”;

(d)“investment firm”;

(e)“mixed financial holding company”.

(5) In the definition of “institution”, for “an investment firm” substitute “a Part 4A investment firm”.

(6) At the appropriate places insert—

““UK parent financial holding company” means a financial holding company which—

““UK parent mixed financial holding company” means a mixed financial holding company which—

(7) After subsection (1) insert—

“(1A) For the purposes of the definitions of “UK parent financial holding company” and “UK parent mixed financial holding company” in this section, “UK authorised person” means an authorised person which is incorporated in, or formed under the law of, any part of the United Kingdom.”.

(8) In subsection (2)(a), omit “, within the meaning given in Article 4(1)(30) and 4(1)(32) respectively of the capital requirements regulation”.

11. In section 192Q (application for approval or exemption)(12)—

(a)in subsection (3)(d)(i), omit “(within the meaning of Article 4(1)(36) of the capital requirements regulation),”;

(b)after subsection (4) insert—

“(5) In this section, “qualifying holding” means a direct or indirect holding in an undertaking which—

(a)represents 10% or more of the capital or the voting rights in that undertaking, or

(b)enables a person to exercise a significant influence over the management of that undertaking.”.

12. In section 237 (other definitions)(13), in subsection (2), in the definition of “management company”, omit “, as defined in section 1161 of the Companies Act 2006,”.

13. In section 342 (information given by auditor or actuary to a regulator)(14)—

(a)in subsection (6A), for “an investment firm” substitute “a Part 4A investment firm”;

(b)omit subsection (8).

14. In section 343 (information given by auditor or actuary to a regulator: persons with close links)(15)—

(a)in subsection (6A), for “an investment firm” substitute “a Part 4A investment firm”;

(b)omit subsection (10).

15.—(1) Section 417 (definitions)(16) is amended as follows.

(2) In subsection (1), at the appropriate places insert—

““designated investment firm” means a Part 4A investment firm which is for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556);”;

““financial holding company” means a financial institution that satisfies the following conditions—

““financial institution” means an undertaking that satisfies the following conditions—

““mixed financial holding company” has the meaning given in regulation 1(2) of the Financial Conglomerates and Other Financial Groups Regulations 2004 (S.I. 2004/1862);”;

““Part 4A investment firm” means a person who—

““PRA Rulebook” means the rulebook published by the PRA containing rules made by that Authority under this Act as the rulebook has effect from time to time;”;

““subsidiary” means a subsidiary undertaking within the meaning of section 1162 of, and Schedule 7 to, the Companies Act 2006(17);”;

““undertaking” has the meaning given in the Companies Act 2006 (see section 1161(1) of that Act);”.

(3) Before subsection (2) insert—

“(1B) For the purpose of the definition of “financial holding company” in this section, subject to subsections (1C) and (1D), a financial institution’s subsidiaries are mainly credit institutions, designated investment firms or financial institutions where one or more of the following applies—

(a)the financial institution has invested, directly or indirectly, an amount corresponding to more than 50% of its equity capital in holdings of the equity capital of those of its subsidiaries which are credit institutions, designated investment firms or financial institutions;

(b)the financial institution derives more than 50% of its consolidated assets from those of its subsidiaries which are credit institutions, designated investment firms or financial institutions;

(c)the financial institution derives more than 50% of its consolidated revenues from those of its subsidiaries which are credit institutions, designated investment firms or financial institutions;

(d)the PRA has otherwise made a determination that the financial institution’s subsidiaries are mainly credit institutions, designated investment firms or financial institutions.

(1C) If it considers that it is desirable to advance one or more of its objectives, the PRA may make a determination that a financial institution’s subsidiaries are not mainly credit institutions, designated investment firms or financial institutions regardless of whether any of subsection (1B)(a) to (c) applies.

(1D) The PRA may amend or revoke a determination made under subsection (1B)(d) or (1C).

(1E) For the purpose of the definition of “financial institution” in this section, “asset management company” means—

(a)a person who has a Part 4A permission to carry on the regulated activity of managing a UK UCITS (as specified in article 51ZA of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544)),

(b)a person who has a Part 4A permission to carry on the regulated activity of managing an AIF (as specified in article 51ZC of that Order),

(c)a small AIFM within the meaning of regulation 9 of the Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773) which is registered under Part 3 of those Regulations,

(d)a person who would require a permission or registration described in paragraphs (a), (b) or (c) if its registered office were in the United Kingdom, or

(e)an AIFM (as defined in regulation 4(1) of the Alternative Investment Fund Managers Regulations 2013) (S.I. 2013/1773) which—

(i)has its registered office in a country or territory outside the United Kingdom, and

(ii)is regulated and supervised by the authorities of that country or territory.”.

16. In section 421A (meaning of “participating interest”)(18), omit subsection (5).

17. In Schedule 3 (EEA Passport Rights), in paragraph 5(c) (EEA firm)(19), for “Article 4(1)(26) of the capital requirements regulation” substitute “section 417(1)”.

18. After Schedule 19C (insurers in financial difficulties: enforcement of contracts), insert Schedule 19D (activities of financial institutions) set out in the Schedule to these Regulations.

Banking Act 2009

19.—(1) Section 3 (interpretation: other expressions)(20) of the Banking Act 2009(21) is amended as follows.

(2) In subsection (1)—

(a)for the definition of “own funds” substitute—

““own funds” means the sum of Tier 1 capital and Tier 2 capital;”;

(b)at the appropriate places insert—

““Tier 1 capital” has the meaning given in article 25 of Chapter 3 of the Own Funds (CRR) Part of the PRA rulebook;”;

““Tier 2 capital” has the meaning given in article 71 of Chapter 3 of the Own Funds (CRR) Part of the PRA rulebook;”.

(3) In subsection (4), after “Part” insert “, except in the definitions of “Tier 1 capital” and “Tier 2 capital” in subsection (1),”.

(4) After subsection (4) insert—

“(5) In the definitions of “Tier 1 capital” and “Tier 2 capital” in subsection (1), a reference to the PRA rulebook is to the rulebook published by the PRA containing rules made by the PRA under the Financial Services and Markets Act 2000 as the rulebook has effect from time to time.”.

PART 3 Amendments to secondary legislation

The Financial Conglomerates and Other Financial Groups Regulations 2004

20.—(1) Regulation 1 (citation, commencement and interpretation) of the Financial Conglomerates and Other Financial Groups Regulations 2004(22) is amended as follows.

(2) In paragraph (2)—

(a)after the definition of “the Act” insert—

““ancillary services undertaking” means an undertaking the principal activity of which consists of an activity which is ancillary to the principal activity of a credit institution or a designated investment firm (as defined in section 417 of the Act);

“common management relationship” means a relationship between an undertaking (“U1”) and one or more undertakings (“U2”) which satisfies the following conditions—

(b)after the definition of “financial conglomerate” insert—

““financial institution” has the meaning given in section 417 of the Act;”;

(c)in the definition of “financial sector”—

(i)in sub-paragraph (a), omit “, as defined in Articles 4(1)(1), 4(1)(18) and 4(1)(26) of the capital requirements regulation”;

(ii)in sub-paragraph (c), for “Article 4(1)(2) of the capital requirements regulation” substitute “section 424A of the Act, that is not a credit institution”;

(d)in the definition of “group”—

(i)in sub-paragraph (b), omit “as defined in article 4(1)(35) of the capital requirements regulation”;

(ii)in sub-paragraph (c), for “relationship within the meaning of a common management relationship as defined in article 4(1)(38A) of the capital requirements regulation” substitute “common management relationship”;

(e)after the definition of “supplementary supervision” insert—

““undertaking” has the meaning given in section 1161 of the Companies Act 2006.”.

(3) After paragraph (2) insert—

“(2A) For the purposes of the definition of “group” in this regulation, a parent undertaking or a subsidiary of the parent undertaking (“A”) holds a participation in an entity (“B”) if—

(a)A owns, directly or indirectly, 20% or more of the voting rights or capital of B, or

(b)A owns, directly or indirectly, voting rights or capital in B for the purpose of maintaining links with B on a long-term basis which contribute to the activities of A.”.

The Financial Services and Markets Act 2000 (Excluded Activities and Prohibitions) Order 2014

21. In article 1(4) (citation, commencement and interpretation) of the Financial Services and Markets Act 2000 (Excluded Activities and Prohibitions) Order 2014(23)—

(a)omit the definition of “Annex 1 activities”;

(b)in the definition of “financial holding company”, for “points 2 to 12 and 15 of the Annex I activities”, substitute “Schedule 19D of the Act”.

The Bank Recovery and Resolution (No. 2) Order 2014

22.—(1) Article 2 (interpretation) of the Bank Recovery and Resolution (No. 2) Order 2014(24) is amended as follows.

(2) In paragraph (1)—

(a)for the definition of “subsidiary” substitute—

““subsidiary” has the meaning given to “subsidiary undertaking” in section 1162 of the Companies Act 2006;”;

(b)for the definition of “UK parent institution” substitute—

““UK parent institution” means a relevant UK authorised person which—

(3) After paragraph (1) insert—

“(1A) For the purpose of the definition of “UK parent institution” in paragraph (1)—

(a)“ancillary services undertaking” has the meaning given in regulation 1(2) of the Financial Conglomerates and Other Financial Groups Regulations 2004;

(b)“designated investment firm”, “financial holding company” and “financial institution” have the meanings given in section 417 of FSMA;

(c)“relevant UK authorised person” means a UK authorised person which is a credit institution or a designated investment firm;

(d)a financial holding company or a mixed financial holding company is established in the United Kingdom if it is incorporated in, or formed under the law of, any part of the United Kingdom;

(e)a relevant UK authorised person holds a participation in a credit institution, a designated investment firm, a financial institution or an ancillary services undertaking (“a relevant firm”) if the relevant UK authorised person—

(i)owns, directly or indirectly, 20% or more of the voting rights in the relevant firm, or

(ii)owns, directly or indirectly, voting rights or capital in the relevant firm for the purpose of maintaining links with the relevant firm on a long-term basis which contribute to the activities of the relevant UK authorised person.”.

The Securitisation Regulations 2024

23. In regulation 3(1) (interpretation) of the Securitisation Regulations 2024(25)—

(a)at the appropriate place insert—

““excluded arrangement” means a transaction or scheme which—

(b)in the definition of “securitisation”—

(i)after “transaction or scheme” the first time it occurs, insert “other than an excluded arrangement”;

(ii)for paragraph (c) substitute—

“(c)the transaction or scheme does not create exposures which possess all of the following characteristics (regardless of whether the characteristics relate to the legal form or economic substance of the transaction or scheme)—

(i)the exposure is to an entity which was created specifically to finance or operate physical assets (or both),

(ii)the borrowing entity has few or no other material assets or activities, and therefore little or no independent capacity to repay the obligation (apart from the income that the entity receives from the assets being financed),

(iii)the terms of the obligation give the lender a substantial degree of control over the assets and the income that they generate, and

(iv)as a result of paragraphs (i) to (iii), the primary source of repayment of the obligation is the income generated by the assets rather than the independent capacity of a broader commercial enterprise;”.

Regulation 18

SCHEDULE Insertion of Schedule 19D to the Financial Services and Markets Act 2000

Section 417

“SCHEDULE 19D Activities of financial institutions

1. Lending, including—

(a)providing consumer credit,

(b)entering into credit agreements relating to immovable property,

(c)factoring (with or without recourse), and

(d)financing commercial transactions (including forfeiting).

2. Financial leasing.

3. Payment services (as defined in regulation 2 of the Payment Services Regulations 2017 (S.I. 2017/752)).

4. Issuing and administering means of payment (including travellers’ cheques and bankers’ drafts) where such activities are not covered by paragraph 3.

5. Providing guarantees or entering into commitments.

6. Trading for own account or for the account of customers in any of the following—

(a)money market instruments (including cheques, bills and certificates of deposits);

(b)foreign exchange;

(c)financial futures and options;

(d)exchange and interest rate instruments;

(e)transferable securities.

7. Participation in securities issues and the provision of services relating to those issues.

8. Providing—

(a)advice to undertakings in relation to capital structure, industrial strategy and related matters;

(b)advice and services in relation to the mergers and acquisition of undertakings.

9. Money broking.

10. Providing portfolio management and advice.

11. Safekeeping and administration of securities.

12. Issuing electronic money.

13. Providing a service or carrying on an activity specified in Part 3 or 3A of Schedule 2 (financial instruments and investment services and activities) to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) relating to any of the financial instruments specified in Part 1 of that Schedule.”