UK: The Financial Conglomerates and Other Financial Groups (Amendment etc.) (EU Exit) Regulations 2019

The Financial Conglomerates and Other Financial Groups (Amendment etc.) (EU Exit) Regulations 2019 were made yesterday (February 14): see here or here (pdf). The Regulations come into force on exit day (see reg. 1). They are accompanied by an explanatory memorandum and an impact assessment: see, respectively, here (pdf) and here (pdf). To quote directly from the explanatory memorandum:

2.2 The EU Financial Conglomerates Directive (FICOD – No. 2002/87/EC) was originally adopted in 2002 and subsequently amended in 2011. It was developed to address the lack of specific prudential treatment for financial conglomerates – groups with activities in more than one of the insurance, banking, or investment services sectors. The directive therefore contributes to greater financial stability and consumer protection.

2.3 FICOD applies specifically to a group with at least one entity in the insurance sector, and at least one entity in the banking or investment services sector. One of these entities, according to the EU definition, must be located in the European Economic Area (EEA), while the other(s) may be located anywhere in the world (including the EEA). 

2.4 FICOD sets out specific requirements on solvency to prevent the same capital being used more than once as a buffer against risk in different entities in the same conglomerate. It also sets out requirements related to conglomerates’ management, risk management, and requirements for information sharing with relevant regulators. 

2.5 The UK subsequently implemented FICOD through the Financial Conglomerates and Other Financial Groups Regulations 2004 (FICOR - 2004 No. 1862). This instrument therefore identifies and amends deficiencies in the EU text to ensure that FICOR will remain operative in a UK-only context post-exit".