BKM207300 - Bank compensation restriction: definition of banking company: financial sector condition

CTA09/S133E(3)

The financial sector condition captures a company, branch or partnership that has UK regulatory permission to undertake regulated activities in the UK. It also applies to a non-resident company or partnership carrying on activities outside the UK that would need to be authorised if it carried on those activities in the UK. (CTA09/S133E(6)).

1 December 2001 onwards

Where the relevant conduct occurred on or after 1 December 2001 the financial sector condition is met when the company or partnership is an authorised person under FSMA00/S31.

The definition of an authorised person under FSMA00/S31 has changed since its introduction.

From 1 January 2021, it is:

  • a company that has permission to undertake regulated activities in the UK
  • anyone else that is authorised under the Act, including for example under the Temporary Permissions Regime or the Financial Services Contracts Regime.

The Temporary Permissions Regime enables relevant EEA firms and funds that were passporting into the UK when the transition period ended to continue operating temporarily in the UK now that the passporting regime has fallen away.

The Financial Services Contracts Regime enables EEA firms that previously passported into the UK and that did not enter the temporary permissions regime to wind down their UK business in an orderly fashion.

Prior to 1 January 2021, it was:
  • a company that has permission to undertake regulated activities in the UK
  • an EEA firm that is passported into the UK for regulatory purposes
  • a non-EEA treaty firm
  • anyone else that is authorised under the Act

A firm authorised in an EEA state could offer certain products or services in the UK if it had the relevant passport. Firms that passported into the UK were normally regulated by the regulatory authority in their home state.

A non-EEA treaty firm was a firm resident in a non-EEA territory that the Prudential Regulation Authority (PRA) regarded as having a strong regulatory regime.

Before 1 December 2001

Where the relevant conduct occurred before 1 December 2001 the financial sector condition is met if the company or partnership:

  • was a person authorised to carry on an investment business under Chapter 3 of Part 1 of the Financial Services Act 1986,
  • was authorised under the Banking Act 1987, or
  • was entitled to accept deposits in the UK under S.I. 1992/3218.

Deposits in this context means deposits within the meaning of the Banking Act 1987.