Regulation 4 “Consumer composite investment”

(1)

Subject to paragraph (2), “consumer composite investment” means—

(a)

an investment,

(b)

a contract of insurance, or

(c)

any right to or interest in anything listed in sub-paragraphs (a) or (b),

where the value or amount payable to the investor is subject to fluctuations because of exposure to reference values or to the performance of one or more assets which are not directly purchased by the investor.

(2)

The following are excluded from the definition of consumer composite investment—

(a)

a contract of long-term insurance where the benefits under the contract are payable only on death or in respect of incapacity due to injury, sickness or infirmity;

(b)

deposits other than structured deposits (as defined in Article 2(1)(23) of the markets in financial instruments regulation^f1);

(c)

non-equity transferable securities issued by—

(i)

the government of any country or territory,

(ii)

a local or regional authority of any country or territory,

(iii)

any public international body of which the United Kingdom or any other State is a member, or

(iv)

the European Central Bank or the central bank of any State;

(d)

non-equity transferable securities issued in at least two separate issues of a similar type or class over a 12-month period by credit institutions provided that these securities—

(i)

are not subordinated, convertible or exchangeable,

(ii)

do not give a right to subscribe for or acquire other types of securities,

(iii)

are not linked to a derivative instrument,

(iv)

materialise reception of repayable deposits, and

(v)

are covered by the compensation scheme (within the meaning of section 213(2) of FSMA 2000^f2) or by a similar scheme in a country or territory outside the United Kingdom;

(e)

non-equity transferable securities issued in at least two separate issues of a similar type or class over a 12-month period by credit institutions where the total consideration for the offers within that period in the United Kingdom is less than £64 million, or an equivalent amount, provided that those securities—

(i)

are not subordinated, convertible or exchangeable,

(ii)

do not give a right to subscribe for or acquire other types of securities, and

(iii)

are not linked to a derivative instrument;

(f)

non-fungible shares of capital whose main purpose is to provide the holder with a right to occupy any immovable property or a part thereof and where the shares cannot be sold without this right being given up;

(g)

occupational pension schemes;

(h)

personal pension schemes;

(i)

shares in the capital of any central bank;

(j)

debt securities specified by the FCA in designated activity rules^f3 made by virtue of regulation 6;

(k)

stakeholder pension schemes;

(l)

transferable securities unconditionally and irrevocably guaranteed by the government or a local or regional authority of any country or territory;

(m)

transferable securities issued by associations with legal status or non-profit-making bodies recognised by any country or territory with a view to their obtaining the funds necessary to achieve their non-profit-making objectives.

(3)

In this regulation—

(a)

“contract of insurance”, “contract of long-term insurance”, “occupational pension scheme”, “personal pension scheme” and “stakeholder pension scheme” have the meanings given in article 3 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001^f4;

(b)

“credit institution” has the meaning given in section 417 of FSMA 2000^f5;

(c)

“debt securities”, “non-equity transferable securities”, “securities” and “transferable securities” have the meanings given in section 102A of FSMA 2000^f6;

(d)

“deposit” has the meaning given in Article 2(1)(23A) of the markets in financial instruments regulation^f7;

(e)

“equivalent amount” means an amount of equal value denominated wholly or partly in another currency or unit of account which is to be calculated by reference to the exchange rates prevailing at the time of issue.

Annotations

Footnotes

f1: The definition of “structured deposit” was substituted by S.I. 2018/1403.
f2: Section 213(2) was amended by paragraph 3(5) of Schedule 10 to the Financial Services Act 2012 (c. 21).
f3: For the meaning of “designated activity rules”, see section 71L(3) of the Financial Services and Markets Act 2000.
f4: S.I. 2001/544. Relevant amendments were made to the definition of “contract of insurance” by S.I. 2015/575, 2019/632 and 2021/90. Relevant amendments were made to the definition of “stakeholder pension scheme” by S.I. 2005/593. The definitions of “occupational pension scheme” and “personal pension scheme” were substituted and inserted respectively by S.I. 2006/1969.
f5: The definition of “credit institution” was inserted by S.I. 2019/632.
f6: The definition of “transferable securities” was amended by S.I. 2017/701 and 2019/707. The definitions of “debt securities” and “non-equity transferable securities” were inserted and substituted respectively by S.I. 2019/707.
f7: The definition of “deposit” was inserted by S.I. 2018/1403.