The Credit Institutions and Investment Firms (Miscellaneous Definitions) (Amendment) Regulations 2026

Published: Thu 30th Apr 26

These Regulations amend the Financial Services and Markets Act 2000, the Banking Act 2009, and various pieces of secondary legislation to restate and update definitions relevant to credit institutions and investment firms.

The instrument establishes new legal definitions for terms including 'Part 4A investment firm', 'financial holding company', and 'own funds' to replace those previously derived from EU law.

It applies to financial regulators (the FCA and PRA), UK banks, building societies, investment firms, and their parent undertakings, effectively moving technical definitions from the revoked Capital Requirements Regulation into the UK domestic statute book.

Arguments For

The explanatory note states that these amendments are necessary to restate key definitions from the Capital Requirements Regulation (EU No. 575/2013), which is being revoked by the Financial Services and Markets Act 2023.
The document indicates that restating these definitions within UK primary and secondary legislation ensures that existing financial regulations continue to function effectively after the EU-derived versions are repealed.
The Treasury asserts that these changes provide legal certainty by incorporating technical terms, such as "own funds" and "financial institution," directly into the Financial Services and Markets Act 2000 and the Banking Act 2009.

Arguments Against

Legal practitioners might find the simultaneous use of different definitions across the PRA Rulebook and primary legislation increases complexity during the transition period.
Financial institutions may incur administrative costs to ensure their internal compliance frameworks align with the specific wording of the new "Part 4A investment firm" and "CRR firm" definitions.
The new "securitisation" criteria and the "excluded arrangement" provision for transactions established before 2027 may create a two-tier regulatory structure for older versus newer financial products.

PART 1 Introduction

Citation, commencement and extent

-(1) These Regulations may be cited as the Credit Institutions and Investment Firms (Miscellaneous Definitions) (Amendment) Regulations 2026.

(2) These Regulations come into force on 1st January 2027.
(3) These Regulations extend to England and Wales, Scotland and Northern Ireland.

This section establishes the official title of the regulations and sets the date they become legally active as 1 January 2027.

It also confirms that the rules apply across all jurisdictions within the United Kingdom.

PART 2 Amendments to primary legislation

Financial Services and Markets Act 2000

The Financial Services and Markets Act 2000 is amended as set out in regulations 3 to 18.
In section 55PB (requirements relating to general meetings)-

(a) in subsection (1)(a), for 'investment firm' substitute 'Part 4A investment firm';
(b) in subsection (6), omit the definition of 'investment firm'.

This part initiates changes to the Financial Services and Markets Act 2000.

Specifically, it updates terminology regarding general meetings by replacing the broad term 'investment firm' with the more specific 'Part 4A investment firm'.

For section 71I (sections 71B to 71H: interpretation) substitute-

' 71I Sections 71B to 71H: interpretation

(1) For the purposes of sections 71B to 71H and this section-

'appropriate regulator' means-

(a) in relation to a PRA-authorised person, the PRA;
(b) in relation to any other authorised person, the FCA;
(c) in relation to a parent undertaking that is not an authorised person-
(i) the PRA, where the PRA is the consolidating supervisor in relation to that undertaking;
(ii) the FCA, where the FCA is the consolidating supervisor in relation to that undertaking;
(d) in relation to a financial holding company or mixed financial holding company which is not a parent undertaking-
(i) the PRA, where the holding company is approved by the PRA under Part 12B;
(ii) the FCA in all other cases;

'consolidated situation' has the meaning given in the glossary of the PRA Rulebook;

'consolidating supervisor' means the competent authority responsible for the exercise of supervision on the basis of the consolidated situation of a parent undertaking;

'director' includes, in relation to an undertaking which has no board of directors, a member of the equivalent management body responsible for the management of the undertaking concerned;

'institution' means a credit institution or an investment firm as defined in article 2(1) of the Bank Recovery and Resolution (No. 2) Order 2014 (S.I. 2014/3348);

'parent undertaking' means an institution, financial holding company or mixed financial holding company which-

(a) is incorporated in, or formed under the law of, any part of the United Kingdom,
(b) is a UK parent, and
(c) either-
(i) has a subsidiary which is an institution, or
(ii) holds a participation in an institution;

'relevant firm' means-

(a) a bank as defined in section 2 of the Banking Act 2009,
(b) a building society as defined in section 119 of the Building Societies Act 1986, or
(c) a Part 4A investment firm;

'senior executive', in relation to a relevant firm or a parent undertaking, means a person who-

(a) exercises executive functions within that firm or that undertaking, and
(b) is responsible, and directly accountable to the directors, for the day to day management of that firm or that undertaking.

(2) For the purposes of the definition of 'parent undertaking' in subsection (1)-

(a) an institution, financial holding company or mixed financial holding company is a UK parent if it is not itself the subsidiary of an institution, financial holding company or mixed financial holding company set up in the United Kingdom;
(b) an institution, financial holding company or mixed financial holding company ('A') holds a participation in an institution ('B') if-
(i) A owns, directly or indirectly, 20% or more of the voting rights or capital in B, or
(ii) A owns, directly or indirectly, voting rights or capital in B for the purpose of maintaining links with B on a long-term basis which contribute to the activities of A.'.

This section replaces the interpretation rules for regulatory requirements imposed on parent undertakings.

It defines who the 'appropriate regulator' (either the FCA or PRA) is for different types of financial groups and clarifies the meaning of technical concepts like 'consolidated situation' and 'participation' (owning 20% or more of a firm).

-(1) Section 144B (terms used in this Part) is amended as follows. (2) In subsection (1), for the definition of 'CRR firm' substitute- ''CRR firm' means a person that satisfies the following conditions-

(a) it is an authorised person falling within section 31(1)(a) that is-
(i) a credit institution which has permission under Part 4A to carry on the regulated activity of accepting deposits, or
(ii) a designated investment firm;
(b) its registered office, or if it has no registered office, its head office, is in the United Kingdom;
(c) it is not-
(i) a credit union (as defined in section 31(1) of the Credit Unions Act 1979 or article 2(2) of the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205) (N.I. 12)), or
(ii) a friendly society;'. (3) After subsection (2) insert- '(3) In the definition of 'CRR firm' in subsection (1), 'accepting deposits' has the meaning given in article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544).'.

This section updates the definition of a 'CRR firm', which refers to institutions subject to the Capital Requirements Regulation rules.

It specifies that these firms must be UK-based credit institutions or designated investment firms, while explicitly excluding credit unions and friendly societies from this designation.

-(1) Section 417 (definitions) is amended as follows. (2) In subsection (1), at the appropriate places insert- ''designated investment firm' means a Part 4A investment firm which is for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRAregulated Activities) Order 2013 (S.I. 2013/556);'; ''financial holding company' means a financial institution that satisfies the following conditions-

(a) the financial institution is not a mixed financial holding company,
(b) the subsidiaries of the financial institution are mainly or exclusively credit institutions, designated investment firms or financial institutions, and
(c) at least one of the subsidiaries is a credit institution or a designated investment firm;'; ''financial institution' means an undertaking that satisfies the following conditions-
(a) it is-
(i) an undertaking, the principal activity of which is to-
(aa) acquire holdings in another undertaking, or
(bb) carry on one or more of the activities specified in Schedule 19D, or
(ii) an asset management company, and
(b) it is not-
(i) a credit institution, (ii) a designated investment firm, (iii) a pure industrial holding company, (iv) an insurance holding company, or (v) a mixed-activity insurance holding company;'; ... [Subsections 1B to 1E defining 'mainly' and 'asset management company']

This section inserts several fundamental definitions into the main interpretation section of the Financial Services and Markets Act 2000.

It provides specific criteria for what constitutes a 'financial institution' and a 'financial holding company', including financial thresholds based on equity capital, consolidated assets, or revenue.

It also gives the PRA the power to determine if a firm's subsidiaries are 'mainly' financial in nature regardless of the standard metrics.

-(1) Section 3 (interpretation: other expressions) of the Banking Act 2009 is amended as follows. (2) In subsection (1)-

(a) for the definition of 'own funds' substitute- ''own funds' means the sum of Tier 1 capital and Tier 2 capital;'; (b) at the appropriate places insert- ''Tier 1 capital' has the meaning given in article 25 of Chapter 3 of the Own Funds (CRR) Part of the PRA rulebook;'; ''Tier 2 capital' has the meaning given in article 71 of Chapter 3 of the Own Funds (CRR) Part of the PRA rulebook;'.

This section amends the Banking Act 2009 to modernize the definition of 'own funds'.

It links the definition of capital (Tier 1 and Tier 2) directly to the specific requirements found in the PRA Rulebook rather than legacy EU standards.

In regulation 3(1) (interpretation) of the Securitisation Regulations 2024- (a) at the appropriate place insert- ''excluded arrangement' means a transaction or scheme which- (i) was entered into before 1st January 2027, (ii) was not a securitisation within the meaning of this regulation (as it applied immediately before 1st January 2027), and (iii) would not, on and after 1st January 2027, be a securitisation but for the substitution of paragraph (c) by [these] Regulations 2026;'; (b) [amends the definition of 'securitisation' to clarify exclusions for physical asset financing]

This section modifies how securitisations—financial structures that pool assets—are defined.

It introduces a 'grandfathering' clause for arrangements made before 2027 to ensure that existing contracts are not unexpectedly reclassified under the new definitions.

SCHEDULE

Regulation 18

Insertion of Schedule 19D to the Financial Services and Markets Act 2000

'SCHEDULE 19D

Activities of financial institutions

Lending... 2. Financial leasing. 3. Payment services... 4. Issuing and administering means of payment... 5. Providing guarantees... 6. Trading for own account... 7. Participation in securities issues... 8. Advice to undertakings... 9. Money broking. 10. Portfolio management... 11. Safekeeping of securities. 12. Issuing electronic money. 13. [Specified investment services]

This new Schedule lists the specific activities that characterize a 'financial institution' under UK law.

The list includes standard banking functions like lending and leasing, as well as modern services such as issuing payment instruments, electronic money, and portfolio management.

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