1
Application and Definitions
1.1
This Part applies to:
- (1) a UK bank;
- (2) a building society; and
- (3) an overseas firm that:
- (a) is not an incoming firm; and
- (b) has a Part 4A permission that includes permission to carry out accepting deposits.
- 01/02/2014
1.2
In this Part the following definitions shall apply:
means in relation to a natural person (“A”):
- (a) A’s spouse or civil partner;
- (b) any other person with whom A lives as partner in an enduring family relationship;
- (c) A’s children or step-children;
- (d) any children or step-children of a person within (b) (and who are not children or step-children of A) who live with A and have not attained the age of 18; and
- (e) A’s parents.
means in relation to a firm:
- (a) any person that it controls;
- (b) its affiliated companies;
- (c) its and its affiliated companies’ controllers;
- (d) its and its affiliated companies’ directors;
- (e) its and its affiliated companies’ senior management;
- (f) its and its affiliated companies’ key employees;
- (g) close family members of any natural person listed in (a) to (f) above;
- (h) direct and related interests of any person listed in (a) to (g) above, which includes a commercial entity in which a member of the management body or any of their close family members:
- (i) has a qualifying holding of 10% or more of capital or of voting rights;
- (ii) exercises significant influence;
- (iii) holds a senior management position; or
- (iv) is a member of management body; and
- (i) any person that would fall into (a) to (h) above after the relevant transaction has occurred.
[Note: Art. 88(1) of the CRD]
means any transaction or arrangement including:
- (a) any arrangement or circumstance that gives rise to or varies an on-balance sheet or off-balance sheet asset or liability (whether contingent or otherwise);
- (b) dealings such as service contracts, as set acquisitions and disposals, construction contracts, lease agreements, derivative transactions, borrowings and write-offs.
- 29/12/2020
2
Related Party Transaction Risk
2.1
A firm must enter into transactions with related parties at market value or on terms no more favourable than would be agreed if the transaction was not with a related party.
- 01/02/2014
2.2
2.1 does not apply to beneficial terms that are part of an overall remuneration package such as favourable interest rates for employee loans.
- 01/02/2014
2.3
A firm must establish, implement and maintain effective policies and procedures to identify, evaluate and manage risks arising out of transactions with its related parties.
- 01/02/2014
2.4
- (1) prevent a related party from taking part in the firm’s decision making process in relation to any transactions with that related party;
- (2) set a materiality threshold above which transactions with related parties receive prior approval from the firm’s management body;
- (3) ensure that the firm records and monitors the details and amounts of any related party transactions using an independent credit review or audit process; and
- (4) only permit exceptions to those policies and procedures if reported to the firm’s senior management or management body as appropriate.
- 01/02/2014