Legalize / United Kingdom / Statutory-Instrument

The Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) Order 2014

Type Statutory-Instrument

Publication 2014-07-23

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

Reform history JSON API PDF

Made: 23rd July 2014

Coming into force: 1st January 2015

The Treasury, in exercise of the powers conferred by sections 142A(2)(b), 142B(2), 142F and 428(3) of the Financial Services and Markets Act 2000 , make the following Order.

In accordance with section 142Z of the Financial Services and Markets Act 2000, a draft of this Order has been laid before Parliament and approved by a resolution of each House of Parliament.

PART 1 — General

Citation, commencement and interpretation

1

(1) This Order may be cited as the Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) Order 2014.

(2) This Order comes into force on 1st January 2015.

(3) In this Order—

“account holder” means any person who has an account with an institution which carries on the activity of accepting deposits;

“the 2000 Act” means the Financial Services and Markets Act 2000;

“the 2006 Act” means the Companies Act 2006 ;

“charity” has the meaning given in section 1 of the Charities Act 2011 , section 106 of the Charities and Trustee Investment (Scotland) Act 2005 or section 1 of the Charities (Northern Ireland) Act 2008 ;

“CIO” means a body constituted and registered as a charitable incorporated organisation under Part 11 of the Charities Act 2011 or Part 11 of the Charities (Northern Ireland) Act 2008, or as a Scottish charitable incorporated organisation under Part 1 of the Charities and Trustee Investment (Scotland) Act 2005;

“company” has the meaning in section 1 of the 2006 Act;

“core deposit” has the meaning given in article 2(2);

“declaration of eligibility” has the meaning given in article 9(1);

“deposit” has the meaning given in article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ;

“eligible individual” has the meaning given in article 9(1);

“excluded activities and prohibitions order” means the Financial Services and Markets Act 2000 (Excluded Activities and Prohibitions) Order 2014 ;

“financial year”—in relation to a company, has the meaning given in section 390 of the 2006 Act,in relation to a limited liability partnership has the meaning given in section 390 of the 2006 Act as modified by regulation 7 of the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 ,in relation to an organisation which is—a charity or a CIO, andis not a company,has the meaning given in regulation 3 of the Charities (Accounts and Reports) Regulations 2008 ,in relation to a registered society—if that society was registered on or after 8th January 2012, means a year of account for that society as defined in section 77 of the Co-operative and Community Benefit Societies Act 2014 ,if that society was registered on or before 7th January 2012 , means a year of account for that society as defined in section 78 of the Co-operative and Community Benefit Societies Act 2014,in relation to a Northern Ireland industrial and provident society, means a year of account as defined in section 101(1) of the Industrial and Provident Societies Act (Northern Ireland) 1969 ,in relation to a Northern Ireland credit union, means a year of account as defined in Article 2(2) of the Credit Unions (Northern Ireland) Order 1985 ,in relation to a society registered under the Friendly Societies Act 1974 , means a year of account as defined in section 111 of that Act,in relation to a society incorporated in accordance with section 6(1) of the Friendly Societies Act 1992 , has the meaning given in section 118 of that Act,in relation to any other organisation—if that organisation is required to prepare a profit and loss account by its constitution or by the law under which it is established, means any period in respect of which it is required to prepare such a profit and loss account,if that organisation is not required to prepare a profit and loss account, means any year commencing on the 1st January;

“limited liability partnership” means a body incorporated under the Limited Liability Partnerships Act 2000 ;

“Northern Ireland credit union” means a credit union as defined in Article 2(2) of the Credit Unions (Northern Ireland) Order 1985;

“Northern Ireland industrial and provident society” means a society registered or deemed to be registered under the Industrial and Provident Societies Act (Northern Ireland) 1969;

“the prudential requirements regulation” means Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms;

“public body” means any person certain of whose functions are functions of a public nature;

“qualifying organisation” has the meaning given in article 3(1);

“qualifying group member” has the meaning given in article 8(1);

“quarter” means a period of three months;

“recognised accountant” means an accountant who is a member of—the Institute of Chartered Accountants in England and Wales,the Institute of Chartered Accountants of Scotland,the Institute of Chartered Accountants in Ireland,the Association of Chartered Certified Accountants,the Chartered Institute of Management Accountants,the Chartered Institute of Public Finance and Accountancy, ora professional body for accountants established in a jurisdiction outside the United Kingdom;

“registered society” has the meaning given in section 1 of the Co-operative and Community Benefit Societies Act 2014;

“relevant financial year” in relation to an organisation means—the last completed financial year for which accounting records are available, orwhere the organisation has existed for less than one financial year, its first financial year;

“securities” has the meaning given in section 14 of the Banking Act 2009 ;

“SME” has the meaning given in article 1(4) of the excluded activities and prohibitions order;

“UK account” has the meaning given in article 2(3)(ba);

“UK account holder” means the holder of a UK account;

“UK deposit-taker” means a body corporate incorporated in the United Kingdom which carries on the regulated activity of accepting deposits in relation to which it has a permission under Part 4A of the 2000 Act ;

“undertaking” includes a company, body corporate, partnership or unincorporated association.

PART 2 — Circumstances in which accepting a deposit is not a core activity

Circumstances in which accepting a deposit is not a core activity

2

(1) In relation to a UK deposit-taker, accepting a deposit is not a core activity unless the deposit is a core deposit.

(2) A deposit is a core deposit if it is held with the UK deposit-taker in a UK account ... except where one or more of the account holders is—

(a) a relevant financial institution;

(aa) an SME which is—

(i) an investment firm,

(ii) a UCITS or an alternative investment fund,

(iii) a management company or an alternative investment fund manager, or

(iv) a financial holding company or a mixed financial holding company,

and for these purposes, “UCITS”, “alternative investment fund”, “management company”, “alternative investment fund manager”, “financial holding company” and “mixed financial holding company” have the meanings given in article 1(4) of the excluded activities and prohibitions order;

(b) a qualifying organisation;

(d) an eligible individual; ...

(e) a person who is, or at any time within the previous six months has been, subject to financial sanctions;

(f) the central bank of a state or territory other than the United Kingdom;

(g) the European Central Bank;

(h) the European Union;

(i) the European Atomic Energy Community;

(j) the Bank for International Settlements;

(k) the Bank of England Asset Purchase Facility Fund Limited;

(l) the Covid Corporate Financing Facility Limited; or

(m) the UK Infrastructure Bank Limited.

(3) In this article—

(a) a reference to an account held with a UK deposit-taker is to an account provided by the institution as part of its activity of accepting deposits;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ba) an account is a UK account if it was opened at a branch of the UK deposit-taker located in the United Kingdom;

(c) “branch” means a place of business that forms a legally dependent part of the UK deposit-taker and conducts directly all or some of the operations inherent in its business;

(d) “relevant financial institution” has the meaning given in the excluded activities and prohibitions order;

(e) “financial sanctions” means any prohibition or obligation imposed under financial sanctions legislation as defined in section 143(4) of the Policing and Crime Act 2017.

(4) A UK deposit-taker may continue to treat an account holder of that UK deposit-taker as a relevant financial institution for the purposes of this article—

(a) for a period of twelve months beginning with the day after the day on which the account holder ceases to satisfy the definition of a relevant financial institution (“the twelve-month period”), or

(b) until the date on which the account holder ceases to be an account holder of that UK deposit-taker, where this happens before the end of the twelve-month period.

Meaning of qualifying organisation

3

(1) An organisation is a qualifying organisation in relation to a UK deposit-taker if that deposit-taker, having made reasonable inquiries, determines that the organisation meets the relevant qualifying condition for the relevant financial year.

(2) The relevant qualifying condition is set out—

(a) in the case of a body corporate or a partnership, in article 4;

(b) in the case of an organisation which is not a body corporate or a partnership, in article 5.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying condition for a body corporate or a partnership

4

(1) The qualifying condition for a body corporate or a partnership is that during the relevant financial year that body or partnership met one or more of the criteria in table 1—


Turnover	Not less than £6.5 million
Balance sheet total	Not less than £3.26 million
Number of employees	Not less than 50

(2) If the organisation has existed for less than one financial year, the maximum figure for turnover must be proportionately adjusted.

(3) The balance sheet total means—

(a) the aggregate of the amounts shown as assets in the organisation's balance sheet for the relevant financial year; or

(b) where the UK deposit-taker—

(i) makes a determination as to whether the organisation meets the qualifying condition during the organisation’s first financial year; and

(ii) at the time the determination is made, the organisation has not yet prepared a balance sheet;

the aggregate of the amounts which would be shown as assets in a balance sheet prepared not more than six weeks before the date upon which that determination is made.

(4) The number of employees means the average number of persons employed (whether full-time or part-time) by the organisation in the relevant financial year, determined as follows—

(a) find for each month in the relevant financial year the number of persons employed under contracts of service by the organisation (whether throughout the month or not);

(b) add together the monthly totals; and

(5) In this article “turnover”, in relation to a body corporate or a partnership, means the amounts derived from the provision of goods and services falling within the ordinary activities of the body corporate or partnership (“the gross receipts”), after deduction of—

(a) trade discounts;

(b) value added tax; and

Qualifying condition for an organisation which is not a body corporate or a partnership

5

(1) The qualifying condition for an organisation which is not a body corporate or a partnership is that the organisation's gross income for the relevant financial year was more than £6.5 million.

(2) In this article “gross income” means an organisation's gross income from all sources.

(3) For the purpose of paragraph (2)—

(a) the gross income of a charity or a CIO which—

(i) is not entered in the register of charities kept under section 3 of the Charities and Trustee Investment (Scotland) Act 2005 (“the Scottish Charity Register”), and

(ii) is a member of a group as defined in section 141 of the Charities Act 2011 or paragraph 1(5) of Schedule 6 to the Charities (Northern Ireland) Act 2008

includes the gross income of any charity or CIO which is a member of the same group, and

(b) the gross income of a charity or a CIO which—

(i) is entered in the Scottish Charity Register, and

(ii) has one or more subsidiary undertakings (as defined by regulation 1(2) of the Charities Accounts (Scotland) Regulations 2006) ,

includes the gross income of any of those subsidiary undertakings which are charities or CIOs.

Qualifying organisation declaration accompanied by a confirming statement: requirements for confirming statement

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requirements concerning currency when qualifying organisation declaration accompanied by annual accounts

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of qualifying group member

8

(1) An organisation is a qualifying group member in relation to a UK deposit-taker if that deposit-taker determines that the organisation is a member of the same group as a qualifying organisation.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of eligible individual

9

(1) An individual is an eligible individual in relation to a UK deposit-taker if—

(a) that individual has provided to that UK deposit-taker a statement complying with paragraph (2) (a “declaration of eligibility”); and

(b) that declaration of eligibility is—

(i) accompanied by a statement signed and dated by a recognised accountant in accordance with paragraph (5) (a “confirming statement”), or

(ii) accepted by the UK deposit-taker to which that declaration is given without a confirming statement, in accordance with paragraph (6).

(2) A declaration of eligibility must—

(a) confirm that the individual giving the declaration meets the condition in paragraph (3);

(b) specify the period in respect of which the individual giving the declaration has calculated that they meet the condition in paragraph (3) (the “eligibility calculation period”); and

(3) The condition mentioned in paragraph (2)(a) is that on average during the eligibility calculation period the individual giving the declaration of eligibility held assets to the value of not less than £250,000, as calculated in accordance with article 10.

(4) An eligibility calculation period specified in a declaration of eligibility in accordance with paragraph (2)(b) must be a period of twelve months ending on a day which falls not more than three months before the date of the declaration of eligibility in which it is specified.

(5) A confirming statement given in accordance with paragraph (1)(b)(i) must state that the recognised accountant signing the statement has reviewed—

(a) the declaration of eligibility; and

(b) any information relating to the assets on which the declaration of eligibility is based—

(i) of which the recognised accountant was aware at the time at which the recognised accountant was asked to make the confirming statement, or

(ii) which the recognised accountant has subsequently requested from the individual giving the declaration of eligibility,

and that nothing has come to the recognised accountant's attention which suggests that the declaration of eligibility is false.

(6) A UK deposit-taker may accept a declaration of eligibility without a confirming statement if it is satisfied that the declaration of eligibility is true.

(7) The date of a declaration of eligibility is the date given by the individual making the declaration when that individual dates the declaration.

Declaration of eligibility: determining assets held by an individual

10

(1) For the purpose of preparing a declaration of eligibility the assets of an individual (“A”) must be calculated as follows—

(a) at the end of each quarter in the eligibility calculation period calculate the value of such assets held by A as are necessary to demonstrate that A meets the condition specified in article 9(3) to give quarterly totals; and

(b) add the quarterly totals together and divide by four.

(2) For the purpose of calculating quarterly totals—

(a) any money on deposit in a joint bank account for which A is one of the account holders shall be treated as held by A alone;

(b) if A holds any other asset jointly with one or more other persons, A shall be treated as holding —

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.