Context
The FCA and the PRA are jointly consulting on proposals to replace the EU guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector (3L3 Guidelines) with a new PRA Supervisory Statement and FCA Guidance. The Consultation is perhaps most relevant to larger firms seeking authorisation by the PRA. The European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority jointly reviewed and updated the 3L3 Guidelines in 2017. These guidelines established an EU-wide common understanding of the five assessment criteria to be applied by the competent authorities in the assessment process and what should be taken into account under each criteria.
Key points to note
The policy proposals included in this CP are:
- a new Supervisory Statement – Prudential assessment of acquisitions and increases in control (Appendix 1);
- a new FCA guidance (Appendix 2);
- the deletion of SS33/15 – Aggregation of holdings for the purpose of prudential assessment of controllers, and the removal of the equivalent section from the FCA Handbook (Appendix 3); and
- the removal of 3L3 Guidelines references in SoP – Interpretation of EU Guidelines and Recommendations: Bank of England and PRA approach after the UK’s withdrawal from the EU (Appendix 4), and equivalent from the FCA Handbook and website.
The PRA’s proposed Supervisory Statement and FCA’s Guidance would set guidance and expectations on:
- identifying qualified holdings, including the concepts of significant influence, aggregated holdings (replacing SS33/15) and indirect controllers;
- submitting the change in control notification, the additional information the PRA and the FCA may require, and the approach to completeness;
- the assessment criteria (in accordance with section 186 of FSMA) used to assess notifications to acquire or increase control in PRA and FCA authorised firms operating in the UK; and
- how the PRA and the FCA would use their statutory powers to impose conditions on an approval when it advances their objectives.
Next actions
The consultation closes on Friday 23 February 2024. The FCA and the PRA invite feedback on the proposals set out in the consultation. Please address any comments or enquiries to CP25/23@bankofengland.co.uk, or to John Cunningham (MG02), Prudential Regulation Authority, 20 Moorgate, London, EC2R 6DA