Capital One 2011 Annual Report Download - page 32

Non-Bank Activities
Our non-bank subsidiaries are subject to supervision and regulation by various other federal and state authorities.
Our insurance agency subsidiaries, for example, are regulated by state insurance regulatory agencies in the states
in which we operate. Capital One Agency LLC is a licensed insurance agency that provides both personal and
business insurance services to retail and commercial clients and is regulated by the New York State Insurance
Department in its home state and by the state insurance regulatory agencies in the states in which it operates.
Capital One Investment Services LLC, Capital One Southcoast Capital, Inc. and ING DIRECT Investment, Inc.
are registered broker-dealers regulated by the SEC and the Financial Industry Regulatory Authority. Our broker-
dealer subsidiaries are subject to, among other things, net capital rules designed to measure the general financial
condition and liquidity of a broker-dealer. Under these rules, broker-dealers are required to maintain the
minimum net capital deemed necessary to meet their continuing commitments to customers and others, and are
required to keep a substantial portion of their assets in relatively liquid form. These rules also limit the ability of
broker-dealers to transfer capital to parent companies and other affiliates. Broker-dealers are also subject to other
regulations covering their business operations, including sales and trading practices, public offerings, publication
of research reports, use and safekeeping of client funds and securities, capital structure, record-keeping and the
conduct of directors, officers and employees.
Capital One Asset Management LLC, which provides investment advice to institutions, foundations, endowments
and high net worth individuals, is a registered investment adviser regulated under the Investment Advisers Act of
1940. Capital One Financial Advisors LLC is a New York-state registered investment adviser. ShareBuilder
Advisors, LLC is an SEC-registered investment adviser that provides investment advice to retail customers.
Regulation of International Business by Non—U.S. Authorities
COBNA is subject to regulation in foreign jurisdictions where it operates, currently in the United Kingdom and
Canada.
United Kingdom
In the United Kingdom, COBNA operates through Capital One (Europe) plc (“COEP”), which was established in
2000. Effective December 1, 2010, COEP became an authorized payment institution regulated by the Financial
Services Authority (the “FSA”) under the Payment Services Regulations 2009. COEP is a member of the
Lending Code, which sets standards of good lending practice in relation to loans, credit cards and current account
overdrafts. COEP is not a retail deposit-taker. COEP’s indirect parent, Capital One Global Corporation, is
wholly-owned by COBNA and is subject to regulation as an “agreement corporation” under the Federal
Reserve’s Regulation K.
In 2010, the U.K. Government announced plans to change the structure of financial regulation by the end of
2012. As part of this change, the FSA will cease to exist in its current form. The U.K. Government will create a
new Prudential Regulatory Authority (the “PRA”), responsible for the day-to-day prudential supervision of
financial institutions and a new Financial Conduct Authority (the “FCA”), responsible for the conduct of all
financial services firms. The FSA commenced during 2011 the implementation of a “shadow” structure in
preparation for these changes. In addition, a new Financial Policy Committee (the “FPC”) of the Court of
Directors of the Bank of England will be established, which will look across the economy at the macroeconomic
and financial issues that may threaten stability and address the risks it identifies. An Interim FPC was established
in February 2011 and first met in June 2011.
In preparation for these changes, the U.K. Government conducted a range of related consultation work during
2011, in particular focusing on the respective roles and approach of the new regulatory bodies. The consultations
included consideration of whether, in addition to the establishment of the FCA, PRA and FPC, the U.K.
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