Does a Banking licence apply to all companies in a group? (CAS-03553-X2P7P3 also refers)

The request was successful.

Dear Prudential Regulation Authority,

Redwood Bank Ltd, (RBL) company number number 09872265 has been granted a banking licence by the PRA. This company is a owned by another company Redwood Financial Partners Ltd (RFPL), company number 09760209.

Your previous response CAS-03553-X2P7P3 in respect of Redwood Bank Ltd was somewhat ambivalent and I took it to mean that since you pointed me to the list of regulated banks, amongst which is RBL, and that since RFPL is not listed then RFPL does not have a licence and neither is it covered by RBL's banking licence.

My local council have invested £30m in RFPL. A public objection to the council's accounts was made to the council's auditors Grant Thornton that such an investment in a bank without a licence was unlawful.
Grant Thornton have responded saying that the council did not invest in a bank without a licence. By implication they are saying that RBL's licence covers RFPL.

This matter is extremely important since it involves significant sums of public money.
I need an unequivocal statement from the PRA that either RFPL IS, or IS NOT covered by RBL's banking licence. Would you please let me have such a statement.

Yours faithfully,

Richard Buttrey

Enquiries, Prudential Regulation Authority

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Dear Mr Buttrey

 

Thank you for your email. As you may be aware, the Freedom of Information
Act allows members of the public to request recorded information from
public institutions, subject to certain exemptions. However, it does not
require public institutions to answer general questions or produce records
on request. As such, your question and request have been treated as a
general enquiry, and not under the Freedom of Information Act.

 

The Prudential Regulation Authority (PRA) does not produce statements
clarifying information about the firms we regulate. As I hope you can
understand, this would involve us disclosing potentially confidential
information specific to the business in question. Some information is
considered commercially sensitive, and its disclosing could affect the
business materially (for example, the disclosure of information could
affect its share price). As such, this sort of information would not be
disclosed by the PRA at any point, and is also exempt from disclosure
under the FOI act.

 

However, the financial statements for both Redwood Bank Ltd (RBL) and
Redwood Financial Partners Ltd (RFPL) are both available publically
through Companies House. Having viewed these, it would appear that RFPL is
a holding company for RBL, and is not involved in any other business. As
we are a financial regulator, we regulate RBL as a bank. We therefore list
our regulated institution as Redwood Bank. The Bank of England only
regulates companies who undertake activities defined by the Financial
Services and Markets Act 2000 (FSMA). I would encourage you to view the
introductory pages of RPFL latest filing history:

 

[1]https://beta.companieshouse.gov.uk/compa...

 

Moving on to your question (Does a Banking licence apply to all companies
in a group?), I should firstly highlight that there is no such thing as a
‘Banking License’. What could commonly be known as a banking license would
be a Part 4A Authorisation. This is in relation to Part 4A of FSMA
(updated in the Financial Services Act 2012). Part 4A of FSMA highlights
the legislative powers of the PRA in authorising a firm to provide
financial services. All publically available information is then published
on the FCA register.

 

After reading your question here, along with your previous correspondence
you have had with our Information Access Team, it would appear that your
concerns are focused primarily on how the institution is structured, and
the impact that has on the council’s decision to invest, rather than
concerns surrounding our specific regulatory role. As I am sure you can
understand, the decisions a council make would be one to raise with them
directly. Only Warrington Council can provide you with specific
information relating to their decisions.

 

I hope this helps. 

 

Kind regards

 

Charles

Engagement and Enquiries | Communications

Bank of England|Threadneedle St|London EC2R 8AH|+44 (0)20 3461 4878

[2][PRA request email]

 

[3]Bank of England

 

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Dear Charles (Enquiries,)

Many thanks for your prompt reply it is much appreciated.
I understand my original request has been treated as general enquiry and I'm OK with that.
There's just one aspect to your response that I need to clarify.

You said.
" It would appear that your concerns are focused primarily on how the institution is structured, and
the impact that has on the council’s decision to invest, rather than concerns surrounding our specific regulatory role. As I am sure you can understand, the decisions a council make would be one to raise with them directly. Only Warrington Council can provide you with specific information relating to their decisions."

You are quite correct about only the council being able to provide information about decisions, and I am of course in direct discussion with the council and Grant Thornton, the council's auditors, to whom a public objection to the accounts has been sent and accepted, and I am NOT therefore seeking information from the PRA as to how the institution is structured.

I am however seeking to establish whether the institution (RFPL) the council have invested in is regulated in some way. Either by the PRA or someone else. As you rightly say I don't expect to be given any confidential information. However I trust you can see the importance of this matter which involves significant sums of public money.

In discussions with Grant Thornton the council's auditors, GT say
"The Bank (RBL) and RFPL are subject to regulation by the PRA"
"The change in the investment approach was principally designed to address the capital adequacy issue identified by the PRA. In addition it also provided additional assurance should a banking licence not be granted"

So you can see that Grant Thornton have in mind the concept of a 'banking licence' but they also say RFPL are regulated by the PRA. Is that in fact correct? As a holding company of RBL are RFPL regulated? Note I am not asking for confidential information about the company merely their status in the world of regulation.

However your mention of Part 4A of FSMA which highlights the legislative powers of the PRA in authorising a firm to provide financial services helps, and it is probably what I should have focused on before. So perhaps you will allow me to put my question in another way. I am happy for you to treat this again as a general enquiry rather than a formal FoI if that helps you.

You say that "Part 4A of FSMA highlights the legislative powers of the PRA in authorising a firm to provide
financial services. All publically available information is then published on the FCA register."

So to my refined question.
I have checked the FCA's Financial Services Register and whilst Redwood Bank Limited is listed, Redwood Financial Partners Ltd is not.
Would it be right to conclude therefore that since RFPL is not shown on the FCA's register that RFPL is not authorised to conduct financial services? That seems to be the logical conclusion, and in general parlance would it be correct to say that RFPL is therefore NOT regulated in any way, either by the PRA or the FCA?

I can of course put this question to the FCA if necessary but perhaps you are able to comment directly and save me having to contact them.

Sincerely

Richard Buttrey

Enquiries, Prudential Regulation Authority

1 Attachment

Dear Mr Buttrey

 

Thank you for your further email.

 

I am afraid there is no further information I can provide. The FCA
Register is the publically available register of regulated financial
institutions. We cannot provide any further firm specific information than
is contained on the register.

 

Kind regards

 

Charles

Engagement and Enquiries | Communications

Bank of England|Threadneedle St|London EC2R 8AH|+44 (0)20 3461 4878

[1][PRA request email]

 

[2]Bank of England

 

Privacy notice

 

When you contact us, the Bank of England collects information about you. 
This includes your name, contact details and anything you choose to
disclose in your correspondence.

We use your personal data to manage correspondence and (where applicable)
to respond to you.  Our basis to process this data is that it is necessary
for the performance of a task carried out in the public interest or in the
exercise of official authority of the Bank.

We will keep your personal data for 10 years. You can request that we no
longer use your personal data, by contacting us via the website link
below.

To find out more about the Bank’s approach to privacy, your data
protection rights, to make a complaint, or to contact our Data Protection
Officer, please see our website at [3]www.bankofengland.co.uk/privacy

 

Please note, a copy of all incoming correspondence and enclosures where
practicable will be filed electronically in the Bank of England's record
management system in accordance with its standard record management policy
and statutory obligations. If you become aware of any copyright work that
you consider should not be filed in this way, please let us know and we
will review whether it may be excluded from electronic filing.

show quoted sections