The following Financial Services guidance note Produced in partnership with Orrick, Herrington & Sutcliffe (Europe) LLP provides comprehensive and up to date legal information covering:
In the UK, certain relationships and close ties that firms may have are considered to have the potential to affect the way in which a firm is run and could affect consumer outcomes and interfere with effective regulatory supervision. As a result, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have certain powers in relation to close links, aimed at ensuring that adequate supervision of financial services firms can take place. A major driver behind the regime is the prevention of financial crime and market abuse.
This Practice Note provides an overview of the UK close links regime, including the threshold conditions that authorised firms with close links must satisfy to ensure that they can be effectively supervised by the FCA and PRA, and the requirements for firms to keep the FCA and/or PRA informed about their close links on an ongoing basis.
The concept of ‘close links’ is based on Directive 95/26/EC (the Post-BCCI Directive), which was designed to reduce the risks posed by a lack of transparency in a corporate group caused by an affiliate. In the case of the collapsed BCCI banking group, close links were considered to have prevented an effective level of supervision.
The Post-BCCI Directive amended a number of EU Directives in order to strengthen prudential supervision of
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