This explanatory memorandum is laid before Parliament by Command of Her Majesty.

HM Treasury is the Department responsible for the laying of this Instrument.

Description

These Regulations implement, in part, Directive 2002/87/EC of the European Parliament and of the Council on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/96/EEC, 93/6/EEC, and Directives 98/78/EC and 2000/12/EC of the European Parliament and of the Council (‘The Financial Conglomerates Directive’). The Financial Conglomerates Directive will require the introduction (from financial years beginning in 2005) of additional prudential supervision of those groups that straddle the insurance and banking/investment business sectors significantly. The groups affected are called financial conglomerates. A group will be a financial conglomerate if at least 40% of its business is financial and at least 10% or Euro 6 billion of its financial business is in each of the combined banking/investment sectors.

The Financial Conglomerates Directive was incorporated into the EEA Agreement on the 9th July 2004 (by Joint Committee Decision 104/2004 of 9th July 2004).

The Financial Conglomerates Directive includes certain procedural requirements that competent authorities of EEA States must carry out. In the UK the Financial Services Authority (FSA) will act as the competent authority for these purposes. Thus these Regulations impose obligations on the FSA for the purpose of implementing the procedural requirements contained in the Financial Conglomerates Directive.

Legislative Background