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HMRC internal manual

Banking Manual

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.

An authorised person under FSMA00/S31 is:

  • 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 can offer certain products or services in the UK if it has the relevant passport. Firms that passport into the UK are normally regulated by the regulatory authority in their home state.

A non-EEA treaty firm is a firm resident in a non-EEA territory that the Prudential Regulation Authority (PRA) regards 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.