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Financial Services Act 2012

Type Public General Act

Publication 2012-12-19

Last updated 2025-01-14

State In force

Department Statute Law Database

Source legislation.gov.uk

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(6) Benchmark” means an index, rate or price that— (a) is determined from time to time by reference to the state of the market, (b) is made available to the public (whether free of charge or on payment), and (c) is used for reference for purposes that include one or more of the following— (i) determining the interest payable, or other sums due, under loan agreements or under other contracts relating to investments; (ii) determining the price at which investments may be bought or sold or the value of investments; (iii) measuring the performance of investments.”, and

(d) for the heading substitute “ Regulated activities ”.

(2) Schedule 2 to FSMA 2000 (regulated activities) is amended as follows.

(3) For paragraph 23 (and the italic heading before it) substitute—

(23) (1) Rights under any contract under which one person provides another with credit. (2) “Credit” includes any cash loan or other financial accommodation. (3) “Cash” includes money in any form. (4) It is immaterial for the purposes of sub-paragraph (1) whether or not the obligation of the borrower is secured on property of any kind.

(4) After paragraph 23A insert—

(23B) (1) Rights under a contract for the bailment or (in Scotland) hiring of goods to a person other than a body corporate. (2) “Goods” has the meaning given in section 61(1) of the Sale of Goods Act 1979. (3) It is immaterial for the purposes of sub-paragraph (1) whether the rights of the person to whom the goods are bailed or hired have been assigned to a body corporate.

(5) After paragraph 24 insert—

(24A) The matters with respect to which provision may be made under section 22(1A)(a) include, in particular, those described in general terms in this Part of this Schedule. (24B) Furnishing persons with information that— (a) is relevant to the financial standing of persons other than bodies corporate, and (b) is collected for that purpose by the person furnishing it. (24C) (1) Taking steps on behalf of a person other than a body corporate in connection with information relevant to that person's financial standing that is or may be held by a regulated person. (2) “Regulated person” means— (a) a person who is carrying on a regulated activity, or (b) a person who is carrying on a business in respect of which a licence under section 21 of the Consumer Credit Act 1974 is required. (24D) Giving advice to a person other than a body corporate in relation to the taking of any steps of the kind mentioned in paragraph 24C(1). (24E) The matters with respect to which provisions may be made under section 22(1A)(b) include, in particular, those described in general terms in this Part of this Schedule. (24F) Providing any information or expression of opinion that— (a) is required by another person in connection with the determination of a benchmark, and (b) is provided to that person for that purpose. (24G) (1) Administering the arrangements for determining a benchmark. (2) Collecting, analysing or processing information or expressions of opinion for the purpose of the determination of a benchmark. (24H) (1) Determining a benchmark. (2) Publishing a benchmark or information connected with a benchmark.

Orders under section 22 of FSMA 2000

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(1) Schedule 2 to FSMA 2000 (regulated activities) is amended as follows.

(2) In paragraph 25(1)—

(a) after “22(1)” insert “ or (1A) ”, and

(b) for “the Authority”, in each place, substitute “ either regulator ”.

(3) For paragraph 26 substitute—

(26) (1) This paragraph applies to any order made under section 22(1) or (1A) which contains a statement by the Treasury that, in their opinion, the effect (or one of the effects) of the proposed order would be that an activity which is not a regulated activity would become a regulated activity. (2) No order to which this paragraph applies may be made unless— (a) a draft of the order has been laid before Parliament and approved by a resolution of each House, or (b) sub-paragraph (4) applies. (3) Sub-paragraph (4) applies if an order to which this paragraph applies also contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without a draft being so laid and approved. (4) Where this sub-paragraph applies the order— (a) must be laid before Parliament after being made, and (b) ceases to have effect at the end of the relevant period unless before the end of that period the order is approved by a resolution of each House of Parliament (but without that affecting anything done under the order or the power to make a new order). (5) The “relevant period” is a period of 28 days beginning with the day on which the order is made. (6) In calculating the relevant period no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.

Designation of activities requiring prudential regulation by PRA

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After section 22 of FSMA 2000 insert—

(22A) (1) The Treasury may by order specify the regulated activities that are “PRA-regulated activities” for the purposes of this Act. (2) An order under subsection (1) may— (a) provide for exceptions; (b) confer powers on the Treasury or either regulator; (c) authorise the making of rules or other instruments by either regulator for purposes of, or connected with, any relevant provision; (d) make provision in respect of any information or document which in the opinion of the Treasury or either regulator is relevant for purposes of, or connected with, any relevant provision; (e) make such consequential, transitional, or supplemental provision as the Treasury consider appropriate for purposes of, or connected with, any relevant provision. (3) Provision made as a result of subsection (2)(e) may amend any primary or subordinate legislation, including any provision of, or made under, this Act. (4) “Relevant provision” means this section or any provision made under this section. (22B) (1) This section applies to the first order made under section 22A(1). (2) This section also applies to any subsequent order made under section 22A(1) which— (a) contains a statement by the Treasury that, in their opinion, the effect (or one of the effects) of the proposed order would be— (i) that an activity would become a PRA-regulated activity, or (ii) that a PRA-regulated activity would become a regulated activity that is not a PRA-regulated activity, or (b) amends primary legislation. (3) No order to which this section applies may be made unless— (a) a draft of the order has been laid before Parliament and approved by a resolution of each House, or (b) subsection (5) applies. (4) Subsection (5) applies if an order to which this section applies contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without a draft being so laid and approved. (5) Where this subsection applies the order— (a) must be laid before Parliament after being made, and (b) ceases to have effect at the end of the relevant period unless before the end of that period the order is approved by a resolution of each House of Parliament (but without that affecting anything done under the order or the power to make a new order). (6) The “relevant period” is a period of 28 days beginning with the day on which the order is made. (7) In calculating the relevant period no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.

Appointed representatives

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(1) Section 39 of FSMA 2000 (appointed representatives) is amended as follows.

(2) After subsection (1B) insert—

(1C) Subsection (1D) applies where an authorised person (“A”)— (a) has permission under Part 4A, or permission resulting from any other provision of this Act, only in relation to one or more qualifying activities, (b) is a party to a contract with another authorised person (A's “principal”) which— (i) permits or requires A to carry on business of a prescribed description (“the relevant business”), and (ii) complies with such requirements as may be prescribed, and (c) is someone for whose activities in carrying on the whole or part of the relevant business A's principal has accepted responsibility in writing. (1D) Sections 20(1) and (1A) and 23(1A) do not apply in relation to the carrying on by A of a relevant additional activity. (1E) In subsections (1C) and (1D)— (a) “qualifying activity” means a regulated activity which is of a prescribed kind and relates— (i) to rights under a contract of the kind mentioned in paragraph 23 of Schedule 2, other than one under which the obligation of the borrower to repay is secured on land, or (ii) to rights under a contract of the kind mentioned in paragraph 23B of that Schedule; (b) “relevant additional activity” means a regulated activity which— (i) is not one to which A's permission relates, and (ii) is comprised in the carrying on of the business for which A's principal has accepted responsibility.

(3) For subsection (2) substitute—

(2) In this Act “appointed representative” means— (a) a person who is exempt as a result of subsection (1), or (b) a person carrying on a regulated activity in circumstances where, as a result of subsection (1D), sections 20(1) and (1A) and 23(1A) do not apply.

Permission to carry on regulated activities

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(1) In section 31 (authorised persons), in subsection (1)(a), for “Part IV permission” substitute “ Part 4A permission ”.

(2) For sections 40 to 55 of FSMA 2000 substitute—

(55A) (1) An application for permission to carry on one or more regulated activities may be made to the appropriate regulator by— (a) an individual, (b) a body corporate, (c) a partnership, or (d) an unincorporated association. (2) “The appropriate regulator”, in relation to an application under this section, means— (a) the PRA, in a case where— (i) the regulated activities to which the application relates consist of or include a PRA-regulated activity, or (ii) the applicant is a PRA-authorised person otherwise than by virtue of a Part 4A permission; (b) the FCA, in any other case. (3) An authorised person who has a permission under this Part which is in force may not apply for permission under this section. (4) An EEA firm may not apply for permission under this section to carry on a regulated activity which it is, or would be, entitled to carry on in exercise of an EEA right, whether through a United Kingdom branch or by providing services in the United Kingdom. (5) A permission given by the appropriate regulator under this Part or having effect as if so given is referred to in this Act as “a Part 4A permission”. (55B) (1) “The threshold conditions”, in relation to a regulated activity, means the conditions set out in or specified under Schedule 6, as read with any threshold condition code made by either regulator under section 137O. (2) Any reference in this Part to the threshold conditions for which either regulator is responsible is to be read as a reference to the conditions set out in or specified under Schedule 6 that are expressed to be relevant to the discharge by that regulator of its functions, as read with any threshold condition code made by that regulator under section 137O. (3) In giving or varying permission, imposing or varying a requirement, or giving consent, under any provision of this Part, each regulator must ensure that the person concerned will satisfy, and continue to satisfy, in relation to all of the regulated activities for which the person has or will have permission, the threshold conditions for which that regulator is responsible. (4) But the duty imposed by subsection (3) does not prevent a regulator, having due regard to that duty, from taking such steps as it considers are necessary, in relation to a particular person, in order to advance— (a) in the case of the FCA, any of its operational objectives; (b) in the case of the PRA, any of its objectives. (55C) (1) The Treasury may by order amend Parts 1 and 2 of Schedule 6 by altering, adding or repealing provisions, or by substituting for those Parts as they have effect for the time being provisions specified in the order. (2) Different provision may be made under this section— (a) in relation to the discharge of the functions of each regulator; (b) in relation to different regulated activities; (c) in relation to persons who carry on, or seek to carry on, activities that consist of or include a PRA-regulated activity and in relation to other persons. (55D) (1) This section applies in relation to a person (“the non-EEA firm”)— (a) who is a body incorporated in, or formed under the law of, or is an individual who is a national of, any country or territory outside the EEA, and (b) who is carrying on a regulated activity in any country or territory outside the United Kingdom in accordance with the law of that country or territory (“the overseas state”). (2) In determining whether the non-EEA firm is satisfying or will satisfy, and continue to satisfy, any one or more of the threshold conditions for which a UK regulator is responsible, the UK regulator may have regard to any opinion notified to it by a regulatory authority in the overseas state (“the overseas regulator”) which relates to the non-EEA firm and appears to the UK regulator to be relevant to compliance with those conditions. (3) In considering how much weight (if any) to attach to the opinion, the UK regulator must have regard to the nature and scope of the supervision exercised in relation to the non-EEA firm by the overseas regulator. (4) In this section “UK regulator” means the FCA or the PRA. (55E) (1) This section applies where the FCA is the appropriate regulator in relation to an application for permission under section 55A. (2) The FCA may give permission for the applicant to carry on the regulated activity or activities to which the application relates or such of them as may be specified in the permission. (3) If the applicant is a member of a group which includes a PRA-authorised person, the FCA must consult the PRA before determining the application. (4) If it gives permission, the FCA must specify the permitted regulated activity or activities, described in such manner as the FCA considers appropriate. (5) The FCA may— (a) incorporate in the description of a regulated activity such limitations (for example as to circumstances in which the activity may, or may not, be carried on) as it considers appropriate; (b) specify a narrower or wider description of regulated activity than that to which the application relates; (c) give permission for the carrying on of a regulated activity which is not included among those to which the application relates and is not a PRA-regulated activity. (55F) (1) This section applies where the PRA is the appropriate regulator in relation to an application for permission under section 55A. (2) The PRA may with the consent of the FCA give permission for the applicant to carry on the regulated activity or activities to which the application relates or such of them as may be specified in the permission. (3) If it gives permission, the PRA must specify the permitted regulated activity or activities, described in such manner as the PRA considers appropriate. (4) The PRA may— (a) incorporate in the description of a regulated activity such limitations (for example as to circumstances in which the activity may, or may not, be carried on) as it considers appropriate; (b) specify a narrower or wider description of regulated activity than that to which the application relates; (c) give permission for the carrying on of a regulated activity which is not included among those to which the application relates. (5) Consent given by the FCA for the purposes of this section may be conditional on the manner in which the PRA exercises its powers under subsections (3) and (4). (6) Subsections (3) and (4)(b) and (c) do not enable the PRA to give permission that relates only to activities that are not PRA-regulated activities, except where the applicant is a PRA-authorised person otherwise than by virtue of a Part 4A permission. (55G) (1) “The applicant” means an applicant for permission under section 55A. (2) If the applicant— (a) in relation to a particular regulated activity, is exempt from the general prohibition as a result of section 39(1) or an order made under section 38(1), but (b) has applied for permission in relation to another regulated activity, the application is to be treated as relating to all the regulated activities which, if permission is given, the applicant will carry on. (3) If the applicant— (a) in relation to a particular regulated activity, is exempt from the general prohibition as a result of section 285(2) or (3), but (b) has applied for permission in relation to another regulated activity, the application is to be treated as relating only to that other regulated activity. (4) If the applicant— (a) is a person to whom, in relation to a particular regulated activity, the general prohibition does not apply as a result of Part 19, but (b) has applied for permission in relation to another regulated activity, the application is to be treated as relating only to that other regulated activity. (5) Subsection (6) applies where either regulator (“the responsible regulator”) receives an application for permission under section 55A which is in the regulator's opinion similar to an application which was previously made to the other regulator and was either— (a) treated by the other regulator as not being a valid application to that regulator because of the regulated activities to which it related, or (b) refused by the other regulator after being considered. (6) The responsible regulator must have regard to the desirability of minimising— (a) the additional work for the applicant in dealing with the new application, and (b) the time taken to deal with the new application. (55H) (1) This section applies in relation to an authorised person who has a Part 4A permission but is not a PRA-authorised person. (2) The FCA may, on the application of the authorised person, vary the permission by— (a) adding a regulated activity, other than a PRA-regulated activity, to those to which the permission relates; (b) removing a regulated activity from those to which the permission relates; (c) varying the description of a regulated activity to which the permission relates. (3) The FCA may, on the application of the authorised person, cancel the permission. (4) The FCA may refuse an application under this section if it appears to it that it is desirable to do so in order to advance any of its operational objectives. (5) If the applicant is a member of a group which includes a PRA-authorised person, the FCA must consult the PRA before determining the application. (6) If as a result of a variation of a Part 4A permission under this section there are no longer any regulated activities for which the authorised person concerned has permission, the FCA must, once it is satisfied that it is no longer necessary to keep the permission in force, cancel it. (7) The FCA's power to vary a Part 4A permission under this section extends to including in the permission as varied any provision that could be included if a fresh permission were being given by it in response to an application under section 55A. (55I) (1) On the application of a PRA-authorised person with a Part 4A permission, the PRA may with the consent of the FCA vary the permission by— (a) adding a regulated activity to those to which the permission relates; (b) removing a regulated activity from those to which the permission relates; (c) varying the description of a regulated activity to which the permission relates. (2) On the application of a PRA-authorised person with a Part 4A permission, the PRA may, after consulting the FCA, cancel the permission. (3) On the application of an authorised person other than a PRA-authorised person, the PRA may with the consent of the FCA vary the permission by adding to the regulated activities to which the permission relates one or more regulated activities which include a PRA-regulated activity. (4) The PRA may refuse an application under this section if it appears to it that it is desirable to do so in order to advance any of its objectives. (5) The FCA may withhold its consent to a proposed variation under this section if it appears to it that it is desirable to do so in order to advance one or more of its operational objectives. (6) If as a result of a variation of a Part 4A permission under this section there are no longer any regulated activities for which the authorised person concerned has permission, the PRA must, once it is satisfied after consulting the FCA that it is no longer necessary to keep the permission in force, cancel it. (7) The PRA's power to vary a Part 4A permission under this section extends to including in the permission as varied any provision that could be included if a fresh permission were being given by it in response to an application under section 55A. (8) Consent given by the FCA for the purposes of subsection (1) may be conditional on the manner in which the PRA exercises its powers under section 55F(3) and (4) (as a result of subsection (7)). (55J) (1) Either regulator may exercise its power under this section in relation to an authorised person with a Part 4A permission (“A”) if it appears to the regulator that— (a) A is failing, or is likely to fail, to satisfy the threshold conditions for which the regulator is responsible, (b) A has failed, during a period of at least 12 months, to carry on a regulated activity to which the Part 4A permission relates, or (c) it is desirable to exercise the power in order to advance— (i) in the case of the FCA, one or more of its operational objectives, (ii) in the case of the PRA, any of its objectives. (2) The FCA's power under this section is the power— (a) to vary the Part 4A permission by— (i) adding a regulated activity other than a PRA-regulated activity to those to which the permission relates, (ii) removing a regulated activity from those to which the permission relates, or (iii) varying the description of a regulated activity to which the permission relates in a way which, if it is a PRA-regulated activity, does not, in the opinion of the FCA, widen the description, or (b) to cancel the Part 4A permission. (3) The PRA's power under this section is the power— (a) in the case of a PRA-authorised person, to vary the Part 4A permission in any of the ways mentioned in section 55I(1) or to cancel it; (b) in the case of an authorised person who is not a PRA-authorised person, to vary the Part 4A permission by adding a PRA-regulated activity to those to which the permission relates and, if the PRA does so, to vary the Part 4A permission in any of the other ways mentioned in section 55I(1). (4) The FCA— (a) must consult the PRA before exercising its power under this section in relation to— (i) a PRA-authorised person, or (ii) a member of a group which includes a PRA-authorised person, and (b) in the case of a PRA-authorised person, may exercise the power so as to add a new activity to those to which the permission relates or to widen the description of a regulated activity to which the permission relates, only with the consent of the PRA. (5) The PRA— (a) must consult the FCA before exercising its power under this section, and (b) may exercise the power so as to add a new activity to those to which the permission relates or to widen the description of a regulated activity to which the permission relates, only with the consent of the FCA. (6) Without prejudice to the generality of subsections (1) to (3), a regulator may, in relation to an authorised person who is an investment firm, exercise its power under this section to cancel the Part 4A permission if it appears to it that any of the conditions in section 55K is met. (7) Without prejudice to the generality of subsections (1) and (2), the FCA may, in relation to an authorised person who has permission to carry on the regulated activity specified in article 24A of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (which relates to bids in emission allowance auctions), exercise its power under this section to vary the Part 4A permission of the person concerned by removing that activity from those to which the permission relates if it appears to the FCA that the person has seriously and systematically infringed the provisions of paragraph 2 or 3 of Article 59 of the emission allowance auctioning regulation. (8) If, as a result of a variation of a Part 4A permission under this section, there are no longer any regulated activities for which the authorised person concerned has permission, the regulator responsible for the variation must, once it is satisfied that it is no longer necessary to keep the permission in force, cancel it. (9) Before cancelling under subsection (8) a Part 4A permission which relates to a person who (before the variation) was a PRA-authorised person, the regulator must consult the other regulator. (10) The power of either regulator to vary a Part 4A permission under this section extends to including in the permission as varied any provision that could be included if a fresh permission were being given in response to an application to that regulator under section 55A. (11) Consent given by one regulator for the purpose of subsection (4)(b) or (5)(b) may be conditional on the manner in which the other regulator exercises its powers under section 55E(4) and (5) or 55F(3) and (4) (as a result of subsection (10)). (12) The power of the FCA or the PRA under this section is referred to in this Part as its own-initiative variation power. (55K) (1) The conditions referred to in section 55J(6) are as follows— (a) that the firm has failed, during a period of at least 6 months, to carry on a regulated activity which is an investment service or activity for which it has a Part 4A permission; (b) that the firm obtained the Part 4A permission by making a false statement or by other irregular means; (c) that the firm no longer satisfies the requirements for authorisation pursuant to Chapter I of Title II of the markets in financial instruments directive, or pursuant to or contained in any EU legislation made under that Chapter, in relation to a regulated activity which is an investment service or activity for which it has a Part 4A permission; (d) that the firm has seriously and systematically infringed the operating conditions pursuant to Chapter II of Title II of the markets in financial instruments directive, or pursuant to or contained in any EU legislation made under that Chapter, in relation to a regulated activity which is an investment service or activity for which it has a Part 4A permission. (2) For the purposes of this section a regulated activity is an investment service or activity if it falls within the definition of “investment services and activities” in section 417(1). (55L) (1) Where a person has applied (whether to the FCA or the PRA) for a Part 4A permission or the variation of a Part 4A permission, the FCA may impose on that person such requirements, taking effect on or after the giving or variation of the permission, as the FCA considers appropriate. (2) The FCA may exercise its power under subsection (3) in relation to an authorised person with a Part 4A permission (whether given by it or by the PRA) (“A”) if it appears to the FCA that— (a) A is failing, or is likely to fail, to satisfy the threshold conditions for which the FCA is responsible, (b) A has failed, during a period of at least 12 months, to carry on a regulated activity to which the Part 4A permission relates, or (c) it is desirable to exercise the power in order to advance one or more of the FCA's operational objectives. (3) The FCA's power under this subsection is a power— (a) to impose a new requirement, (b) to vary a requirement imposed by the FCA under this section, or (c) to cancel such a requirement. (4) The FCA's power under subsection (3) is referred to in this Part as its own-initiative requirement power. (5) The FCA may, on the application of an authorised person with a Part 4A permission— (a) impose a new requirement, (b) vary a requirement imposed by the FCA under this section, or (c) cancel such a requirement. (6) The FCA may refuse an application under subsection (5) if it appears to it that it is desirable to do so in order to advance any of its operational objectives. (7) The FCA must consult the PRA before imposing or varying a requirement which relates to— (a) a person who is, or will on the granting of an application for Part 4A permission be, a PRA-authorised person, or (b) a person who is a member of a group which includes a PRA-authorised person. (55M) (1) Where— (a) a person has applied for a Part 4A permission in relation to activities which consist of or include a PRA-regulated activity, (b) a PRA-authorised person has applied for a Part 4A permission or the variation of a Part 4A permission, or (c) an authorised person other than a PRA-authorised person has applied for a Part 4A permission to be varied by adding to the regulated activities to which it relates one or more regulated activities which include a PRA-regulated activity, the PRA may impose on that person such requirements, taking effect on or after the giving or variation of the permission, as the PRA considers appropriate. (2) The PRA may exercise its power under subsection (3) in relation to a PRA-authorised person with a Part 4A permission (“P”) if it appears to the PRA that— (a) P is failing, or is likely to fail, to satisfy the threshold conditions for which the PRA is responsible, (b) P has failed, during a period of at least 12 months, to carry on a regulated activity to which the Part 4A permission relates, or (c) it is desirable to exercise the power in order to advance any of the PRA's objectives. (3) The PRA's power under this subsection is a power— (a) to impose a new requirement, (b) to vary a requirement imposed by the PRA under this section, or (c) to cancel such a requirement. (4) The PRA's power under subsection (3) is referred to in this Part as its own-initiative requirement power. (5) The PRA may, on the application of a PRA-authorised person with a Part 4A permission— (a) impose a new requirement, (b) vary a requirement imposed by the PRA under this section, or (c) cancel such a requirement. (6) The PRA may refuse an application under subsection (5) if it appears to it that it is desirable to do so in order to advance any of its objectives. (7) The PRA must consult the FCA before imposing or varying a requirement. (55N) (1) A requirement may, in particular, be imposed— (a) so as to require the person concerned to take specified action, or (b) so as to require the person concerned to refrain from taking specified action. (2) A requirement may extend to activities which are not regulated activities. (3) A requirement may be imposed by reference to the person's relationship with— (a) the person's group, or (b) other members of the person's group. (4) A requirement may be expressed to expire at the end of such period as the regulator imposing it may specify, but the imposition of a requirement that expires at the end of a specified period does not affect the regulator's power to impose a new requirement. (5) A requirement may refer to the past conduct of the person concerned (for example, by requiring the person concerned to review or take remedial action in respect of past conduct). (6) In this section “requirement” means a requirement imposed under section 55L or 55M. (55O) (1) This section applies if it appears to the appropriate regulator that— (a) a person has acquired control over a UK authorised person who has a Part 4A permission, but (b) there are no grounds for exercising its own-initiative requirement power. (2) If it appears to the appropriate regulator that the likely effect of the acquisition of control on the UK authorised person, or on any of its activities, is uncertain, the appropriate regulator may— (a) impose on the UK authorised person a requirement that could be imposed by that regulator under section 55L or 55M (as the case may be) on the giving of permission, or (b) vary a requirement imposed by that regulator under that section on the UK authorised person. (3) “The appropriate regulator” means— (a) in a case where the UK authorised person is a PRA-authorised person, the FCA or the PRA; (b) in any other case, the FCA. (4) This section does not affect any duty of the appropriate regulator to consult or obtain the consent of the other regulator in connection with the imposition of the requirement. (5) Any reference to a person having acquired control is to be read in accordance with Part 12. (55P) (1) This section applies if— (a) on a person being given a Part 4A permission, either regulator imposes an assets requirement on that person, (b) an assets requirement is imposed on an authorised person, or (c) an assets requirement previously imposed on such a person is varied. (2) A person on whom an assets requirement is imposed is referred to in this section as “A”. (3) The “appropriate regulator” is the regulator which imposed the requirement. (4) “Assets requirement” means a requirement under section 55L or 55M— (a) prohibiting the disposal of, or other dealing with, any of A's assets (whether in the United Kingdom or elsewhere) or restricting such disposals or dealings, or (b) that all or any of A's assets, or all or any assets belonging to consumers but held by A or to A's order, must be transferred to and held by a trustee approved by the appropriate regulator. (5) If the appropriate regulator— (a) imposes a requirement of the kind mentioned in subsection (4)(a), and (b) gives notice of the requirement to any institution with whom A keeps an account, the notice has the effects mentioned in subsection (6). (6) Those effects are that— (a) the institution does not act in breach of any contract with A if, having been instructed by A (or on A's behalf) to transfer any sum or otherwise make any payment out of A's account, it refuses to do so in the reasonably held belief that complying with the instruction would be incompatible with the requirement, and (b) if the institution complies with such an instruction, it is liable to pay to the appropriate regulator an amount equal to the amount transferred from, or otherwise paid out of, A's account in contravention of the requirement. (7) If the appropriate regulator imposes a requirement of the kind mentioned in subsection (4)(b), no assets held by a person as trustee in accordance with the requirement may, while the requirement is in force, be released or dealt with except with the consent of the appropriate regulator. (8) If, while a requirement of the kind mentioned in subsection (4)(b) is in force, A creates a charge over any assets of A held in accordance with the requirement, the charge is (to the extent that it confers security over the assets) void against the liquidator and any of A's creditors. (9) Assets held by a person as trustee (“T”) are to be taken to be held by T in accordance with any requirement mentioned in subsection (4)(b) only if— (a) A has given T written notice that those assets are to be held by T in accordance with the requirement, or (b) they are assets into which assets to which paragraph (a) applies have been transposed by T on the instructions of A. (10) A person who contravenes subsection (7) is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale. (11) “Charge” includes a mortgage (or in Scotland a security over property). (12) Subsections (7) and (9) do not affect any equitable interest or remedy in favour of a person who is a beneficiary of a trust as a result of a requirement of the kind mentioned in subsection (4)(b). (55Q) (1) Either UK regulator's own-initiative powers may be exercised in respect of an authorised person at the request of, or for the purpose of assisting, an overseas regulator of a prescribed kind. (2) Subsection (1) applies whether or not the UK regulator has powers which are exercisable in relation to the authorised person by virtue of any provision of Part 13. (3) Subsection (1) does not affect any duty of one UK regulator to consult or obtain the consent of the other UK regulator in relation to the exercise of its own-initiative powers. (4) If a request to a UK regulator for the exercise of its own-initiative powers has been made by an overseas regulator who is— (a) of a prescribed kind, and (b) acting in pursuance of provisions of a prescribed kind, the UK regulator must, in deciding whether or not to exercise those powers in response to the request, consider whether it is necessary to do so in order to comply with an EU obligation. (5) In deciding whether or not to do so, in any case in which the UK regulator does not consider that the exercise of its own-initiative powers is necessary in order to comply with an EU obligation, it may take into account in particular— (a) whether in the country or territory of the overseas regulator concerned, corresponding assistance would be given to a United Kingdom regulatory authority; (b) whether the case concerns the breach of a law, or other requirement, which has no close parallel in the United Kingdom or involves the assertion of a jurisdiction not recognised by the United Kingdom; (c) the seriousness of the case and its importance to persons in the United Kingdom; (d) whether it is otherwise appropriate in the public interest to give the assistance sought. (6) The UK regulator may decide not to exercise its own-initiative powers, in response to a request, unless the overseas regulator concerned undertakes to make such contribution towards the cost of their exercise as the UK regulator considers appropriate. (7) Subsection (6) does not apply if the UK regulator decides that it is necessary for it to exercise its own-initiative powers in order to comply with an EU obligation. (8) In subsection (6) “request” means a request of a kind mentioned in subsection (1). (9) In this section— (a) “UK regulator” means the FCA or the PRA; (b) “overseas regulator” means a regulator outside the United Kingdom; (c) “own-initiative powers”, in relation to the FCA or the PRA, means its own-initiative variation power and its own-initiative requirement power. (55R) (1) In considering— (a) an application for a Part 4A permission, (b) whether to vary or cancel a Part 4A permission, (c) whether to impose or vary a requirement under this Part, or (d) whether to give any consent required by any provision of this Part, the regulator concerned may have regard to any person appearing to it to be, or likely to be, in a relationship with the applicant or a person given permission which is relevant. (2) Before— (a) giving permission in response to an application under section 55A made by a person who is connected with an EEA firm (other than an EEA firm falling within paragraph 5(e) of Schedule 3 (insurance and reinsurance intermediaries)), or (b) cancelling or varying a Part 4A permission given to such a person, the regulator concerned must in prescribed circumstances consult the firm's home state regulator. (3) A person (“A”) is connected with an EEA firm if— (a) A is a subsidiary undertaking of the firm, or (b) A is a subsidiary undertaking of a parent undertaking of the firm. (55S) (1) “Additional Part 4A permission” — (a) in relation to either regulator, means a Part 4A permission which is in force in relation to an EEA firm or a Treaty firm, and (b) in relation to the FCA, also includes a Part 4A permission which is in force in relation to a person authorised as a result of paragraph 1(1) of Schedule 5. (2) If either regulator is considering whether, and if so how, to exercise its own-initiative variation power or its own-initiative requirement power in relation to an additional Part 4A permission, it must take into account— (a) the home state authorisation of the authorised person concerned, (b) any relevant directive, and (c) relevant provisions of the Treaty. (55T) For the purpose of any provision of this Part which refers to the FCA's operational objectives, or the PRA's objectives in relation to the exercise of a power in relation to a particular person, it does not matter whether there is a relationship between that person and the persons whose interests will be protected by the exercise of the power. (55U) (1) An application for a Part 4A permission must— (a) contain a statement of the regulated activity or regulated activities which the applicant proposes to carry on and for which the applicant wishes to have permission, and (b) give the address of a place in the United Kingdom for service on the applicant of any notice or other document which is required or authorised to be served on the applicant under this Act. (2) An application for the variation of a Part 4A permission must contain a statement— (a) of the desired variation, and (b) of the regulated activity or regulated activities which the applicant proposes to carry on if the permission is varied. (3) An application for the variation of a requirement imposed under section 55L or 55M or for the imposition of a new requirement must contain a statement of the desired variation or requirement. (4) An application under this Part must— (a) be made in such manner as the regulator to which it is to be made may direct, and (b) contain, or be accompanied by, such other information as that regulator may reasonably require. (5) At any time after the application is received and before it is determined, the appropriate regulator may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application or, as the case requires, to decide whether to give consent. (6) In subsection (5), the “appropriate regulator” means— (a) in a case where the application is made to the FCA, the FCA; (b) in a case where the application is made to the PRA, the FCA or the PRA. (7) Different directions may be given, and different requirements imposed, in relation to different applications or categories of application. (8) Each regulator may require an applicant to provide information which the applicant is required to provide to it under this section in such form, or to verify it in such a way, as the regulator may direct. (9) The PRA must consult the FCA before— (a) giving a direction under this section in relation to a class of applications, or (b) imposing a requirement under this section in relation to a class of applications. (55V) (1) An application under this Part must be determined by the regulator to which it is required to be made (“the appropriate regulator”) before the end of the period of 6 months beginning with the date on which it received the completed application. (2) The appropriate regulator may determine an incomplete application if it considers it appropriate to do so; and it must in any event determine such an application within 12 months beginning with the date on which it received the application. (3) Where the application cannot be determined by the appropriate regulator without the consent of the other regulator, the other regulator's decision must also be made within the period required by subsection (1) or (2). (4) The applicant may withdraw the application, by giving the appropriate regulator written notice, at any time before the appropriate regulator determines it. (5) If the appropriate regulator grants an application— (a) for Part 4A permission, (b) for the variation or cancellation of a Part 4A permission, (c) for the variation or cancellation of a requirement imposed under section 55L or 55M, or (d) for the imposition of a new requirement under either of those sections, it must give the applicant written notice. (6) The notice must state the date from which the permission, variation, cancellation or requirement has effect. (7) A notice under this section which is given by the PRA and relates to the grant of an application for Part 4A permission or for the variation of a Part 4A permission must state that the FCA has given its consent to the grant of the application. (55W) The PRA must as soon as practicable notify the FCA of the receipt or withdrawal of— (a) an application for permission under section 55A, (b) an application under section 55I, or (c) an application under section 55M(5). (55X) (1) If a regulator proposes— (a) to give a Part 4A permission but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b), (b) to give a Part 4A permission but to exercise its power under section 55L(1) or 55M(1) in connection with the application for permission, (c) to vary a Part 4A permission on the application of an authorised person but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b), (d) to vary a Part 4A permission but to exercise its power under section 55L(1) or 55M(1) in connection with the application for variation, or (e) in the case of the FCA, to exercise its power under section 55L(1) in connection with an application to the PRA for a Part 4A permission or the variation of a Part 4A permission, it must give the applicant a warning notice. (2) If a regulator proposes to refuse an application made under this Part, it must (unless subsection (3) applies) give the applicant a warning notice. (3) This subsection applies if it appears to the regulator that— (a) the applicant is an EEA firm, and (b) the application is made with a view to carrying on a regulated activity in a manner in which the applicant is, or would be, entitled to carry on that activity in the exercise of an EEA right whether through a United Kingdom branch or by providing services in the United Kingdom. (4) If a regulator decides— (a) to give a Part 4A permission but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b), (b) to give a Part 4A permission but to exercise its power under section 55L(1) or 55M(1) in connection with the giving of the permission, (c) to vary a Part 4A permission on the application of an authorised person but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b), (d) to vary a Part 4A permission on the application of an authorised person but to exercise its power under section 55L(1) or 55M(1) in connection with the variation, (e) in the case of the FCA, to exercise its power under section 55L(1) in connection with an application to the PRA for a Part 4A permission or the variation of a Part 4A permission, or (f) to refuse an application under this Part, it must give the applicant a decision notice. (55Y) (1) This section applies to an exercise of either regulator's own-initiative variation power or own-initiative requirement power in relation to an authorised person (“A”). (2) A variation of a permission or the imposition or variation of a requirement takes effect— (a) immediately, if the notice given under subsection (4) states that that is the case, (b) on such date as may be specified in the notice, or (c) if no date is specified in the notice, when the matter to which the notice relates is no longer open to review. (3) A variation of a permission, or the imposition or variation of a requirement, may be expressed to take effect immediately (or on a specified date) only if the regulator concerned, having regard to the ground on which it is exercising its own-initiative variation power or own-initiative requirement power, reasonably considers that it is necessary for the variation, or the imposition or variation of the requirement, to take effect immediately (or on that date). (4) If either regulator proposes to vary a Part 4A permission or to impose or vary a requirement, or varies a Part 4A permission or imposes or varies a requirement, with immediate effect, it must give A written notice. (5) The notice must— (a) give details of the variation of the permission or the requirement or its variation, (b) state the regulator's reasons for the variation of the permission or the imposition or variation of the requirement, (c) inform A that A may make representations to the regulator within such period as may be specified in the notice (whether or not A has referred the matter to the Tribunal), (d) inform A of when the variation of the permission or the imposition or variation of the requirement takes effect, and (e) inform A of A's right to refer the matter to the Tribunal. (6) The regulator may extend the period allowed under the notice for making representations. (7) If, having considered any representations made by A, the regulator decides— (a) to vary the permission, or impose or vary the requirement, in the way proposed, or (b) if the permission has been varied or the requirement imposed or varied, not to rescind the variation of the permission or the imposition or variation of the requirement, it must give A written notice. (8) If, having considered any representations made by A, the regulator decides— (a) not to vary the permission, or impose or vary the requirement, in the way proposed, (b) to vary the permission or requirement in a different way, or impose a different requirement, or (c) to rescind a variation or requirement which has effect, it must give A written notice. (9) A notice under subsection (7) must inform A of A's right to refer the matter to the Tribunal. (10) A notice under subsection (8)(b) must comply with subsection (5). (11) If a notice informs A of A's right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference. (12) For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 391(8). (55Z) (1) If a regulator proposes to cancel an authorised person's Part 4A permission otherwise than at the person's request, it must give the person a warning notice. (2) If a regulator decides to cancel an authorised person's Part 4A permission otherwise than at the person's request, it must give the person a decision notice. (55Z1) A regulator must notify ESMA of— (a) the giving by it of a Part 4A permission to an investment firm, where the regulated activities to which the permission relates are investment services and activities, (b) the giving by it of a Part 4A permission to a management company (as defined in section 237(2)), where the regulated activities to which the permission relates fall within paragraph 8 of Schedule 2, (c) the cancellation by it of a Part 4A permission of a description falling within paragraph (b), or (d) the cancellation by it of a Part 4A permission under section 55J(6), in reliance on any one or more of the conditions in section 55K(1)(b) to (d). (55Z2) (1) A regulator must notify EBA of— (a) the giving by it of a Part 4A permission to a credit institution, where the regulated activity to which the permission relates falls within paragraph 4 of Schedule 2, or (b) the cancellation by it of a Part 4A permission of a description falling within paragraph (a). (2) “Credit institution” has the meaning given in section 1H(8). (55Z3) (1) An applicant who is aggrieved by the determination of an application made under this Part may refer the matter to the Tribunal. (2) An authorised person who is aggrieved by the exercise by either regulator of its own-initiative variation power or its own-initiative requirement power may refer the matter to the Tribunal. (55Z4) In this Part— - “own-initiative requirement power”, in relation to the FCA or the PRA, is to be read in accordance with section 55L(4) or 55M(4); - “own-initiative variation power”, in relation to the FCA or the PRA, is to be read in accordance with section 55J(12).

(3) In Schedule 6 to FSMA 2000 (the threshold conditions), omit paragraph 9.

Passporting

Passporting: exercise of EEA rights and Treaty rights

12

Schedule 4 contains amendments of the following provisions of FSMA 2000—

(a) Schedule 3 (EEA passport rights),

(b) Schedule 4 (Treaty rights),

(d) Part 13 (incoming firms: powers of intervention).

Performance of regulated activities

Prohibition orders

13

(1) Section 56 of FSMA 2000 (performance of regulated activities: prohibition orders) is amended as follows.

(2) For subsection (1) substitute—

(1) The FCA may make a prohibition order if it appears to it that an individual is not a fit and proper person to perform functions in relation to a regulated activity carried on by— (a) an authorised person, (b) a person who is an exempt person in relation to that activity, or (c) a person to whom, as a result of Part 20, the general prohibition does not apply in relation to that activity. (1A) The PRA may make a prohibition order if it appears to it that an individual is not a fit and proper person to perform functions in relation to a regulated activity carried on by— (a) a PRA-authorised person, or (b) a person who is an exempt person in relation to a PRA-regulated activity carried on by the person.

(3) In subsection (2), for “The Authority may make an order (“a prohibition order”)” substitute “ A “prohibition order” is an order ”.

(4) In subsection (3), for paragraph (b) substitute—

(b) all persons falling within subsection (3A) or a particular paragraph of that subsection or all persons within a specified class of person falling within a particular paragraph of that subsection.

(5) After subsection (3) insert—

(3A) A person falls within this subsection if the person is— (a) an authorised person, (b) an exempt person, or (c) a person to whom, as a result of Part 20, the general prohibition does not apply in relation to a regulated activity.

(6) In subsection (6), for “An authorised person” substitute “ A person falling within subsection (3A) ”.

(7) In subsection (7)—

(a) for “The Authority” substitute “ The regulator that has made a prohibition order ”, and

(b) for “a prohibition order” substitute “ the order ”.

(8) After subsection (7) insert—

(7A) If— (a) the FCA proposes to vary or revoke a prohibition order, and (b) as a result of the proposed variation or revocation, an individual— (i) will no longer be prohibited from performing a function of interest to the PRA, or (ii) will be prohibited from performing such a function, the FCA must consult the PRA before varying or revoking the order. (7B) A function is of interest to the PRA if it is performed in relation to a regulated activity carried on by— (a) a PRA-authorised person, or (b) a person who is an exempt person in relation to a PRA-regulated activity carried on by the person. (7C) The PRA must consult the FCA before varying or revoking a prohibition order.

(9) Omit subsection (8).

(10) Section 57 of FSMA 2000 (prohibition orders: procedure and right to refer to Tribunal) is amended as follows.

(11) In subsections (1) and (3), for “the Authority” substitute “ a regulator ”.

(12) At the end insert—

(6) If— (a) the FCA proposes to make a prohibition order, and (b) as a result of the proposed order, an individual will be prohibited from performing a function of interest to the PRA, the FCA must consult the PRA before giving a warning notice under this section. (7) A function is of interest to the PRA if it is performed in relation to a regulated activity carried on by— (a) a PRA-authorised person, or (b) a person who is an exempt person in relation to a PRA-regulated activity carried on by the person. (8) The PRA must consult the FCA before giving a warning notice under this section.

Approval for particular arrangements

14

(1) In section 59 of FSMA 2000 (approval for particular arrangements)—

(a) in subsections (1) and (2), for “the Authority” substitute “ the appropriate regulator ”, and

(b) for subsections (3) to (7) substitute—

(3) Controlled function”— (a) in relation to the carrying on of a regulated activity by a PRA-authorised person, means a function of a description specified in rules made by the FCA or the PRA, and (b) in relation to the carrying on of a regulated activity by any other authorised person, means a function of a description specified in rules made by the FCA. (4) “The appropriate regulator”— (a) in relation to a controlled function which is of a description specified in rules made by the FCA, means the FCA, and (b) in relation to a controlled function which is of a description specified in rules made by the PRA, means the PRA with the consent of the FCA. (5) The FCA may specify a description of function under subsection (3)(a) or (b) only if, in relation to the carrying on of a regulated activity by an authorised person, it is satisfied that the function is— (a) a customer-dealing function, or (b) a significant-influence function. (6) The PRA may specify a description of function under subsection (3)(a) only if, in relation to the carrying on of a regulated activity by a PRA-authorised person, it is satisfied that the function is a significant-influence function. (7) In determining whether a function is a significant-influence function, the FCA or the PRA may take into account the likely consequences of a failure to discharge the function properly. (7A) “Customer-dealing function”, in relation to the carrying on of a regulated activity by an authorised person (“A”), means a function that will involve the person performing it in dealing with— (a) customers of A, or (b) property of customers of A, in a manner substantially connected with the carrying on of the activity. (7B) “Significant-influence function”, in relation to the carrying on of a regulated activity by an authorised person, means a function that is likely to enable the person responsible for its performance to exercise a significant influence on the conduct of the authorised person's affairs, so far as relating to the activity.

(2) After section 59 of FSMA 2000 insert—

(59A) (1) The FCA must— (a) keep under review the exercise of its power under section 59(3)(a) to specify any significant-influence function as a controlled function, and (b) exercise that power in a way that it considers will minimise the likelihood that approvals fall to be given by both the FCA and the PRA in respect of the performance by a person of significant-influence functions in relation to the carrying on of a regulated activity by the same PRA-authorised person. (2) The FCA and the PRA must each consult the other before exercising any power under section 59(3)(a). (3) Any reference in this section to the exercise of a power includes its exercise by way of amendment or revocation of provision previously made in the exercise of the power. (4) “Approval” means an approval under section 59. (5) Any expression which is used both in this section and section 59 has the same meaning in this section as in that section. (59B) (1) The FCA may arrange with the PRA that in such cases as may be described in the arrangements the PRA may give approval under section 59 without obtaining the consent of the FCA. (2) Arrangements under this section must be in writing, and must specify the date on which they come into force. (3) The regulators must publish any arrangements under this section in such manner as they think fit. (4) Section 59(4)(b) has effect subject to any arrangements in force under this section.

(3) In section 63 of FSMA 2000 (withdrawal of approval), for subsection (1) substitute—

(1) The FCA may withdraw an approval under section 59 given by the FCA or the PRA in relation to the performance by a person of a function if the FCA considers that the person is not a fit and proper person to perform the function. (1A) The PRA may withdraw an approval under section 59 in relation to the performance by a person (“A”) of a function if— (a) the PRA gave the approval, or the FCA gave the approval and the function is a significant-influence function performed in relation to the carrying on by a PRA-authorised person of a regulated activity, and (b) the PRA considers that A is not a fit and proper person to perform the function. (1B) “Significant-influence function” has the same meaning as in section 59. (1C) Before one regulator withdraws an approval given by the other regulator, it must consult the other regulator.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Further amendments relating to performance of regulated activities

15

Schedule 5 contains further amendments of Part 5 of FSMA 2000 (performance of regulated activities).

Official listing

FCA to exercise functions under Part 6 of FSMA 2000

16

(1) FSMA 2000 is amended as follows.

(2) In each of the provisions of Part 6 (official listing etc) mentioned in subsection (3)—

(a) for “competent authority” or “competent authority's”, in each place, substitute “ FCA ” or “FCA's”, and

(b) for “the authority” or “the Authority”, in each place, substitute “ the FCA ”.

(3) Those provisions are—

(a) sections 73A to 84;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) section 87G;

(e) sections 87J to 87O (including the italic heading before section 87J);

(f) sections 87Q to 88;

(g) sections 89A to 97 (including the italic heading before section 89H and the heading to that section);

(h) section 101(2);

(i) section 103(1).

(4) Before section 73A insert an italic heading “Rules”.

(5) In section 77(3) (discontinuance and suspension of listing), for “sections 96 and 99” substitute “ section 96 and paragraph 23(6) of Schedule 1ZA ”.

(6) In section 87A (criteria for approval of prospectus)—

(a) in subsection (1), for “competent authority” substitute “ “FCA”,

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11) In section 87P (exercise of powers at request of competent authority of another EEA State)—

(a) in subsection (1)(c), for “competent authority”, in the second place, substitute “ FCA ”, and

(b) in subsection (2), for “competent authority” substitute “ FCA ”.

(12) In section 100A (exercise of powers where UK is host member State)—

(a) in subsections (1) and (2), for “competent authority” substitute “ FCA ”,

(b) in subsection (3), for “the authority”, in both places, substitute “ the FCA ”,

(d) in subsections (5) and (6), for “the authority” substitute “ the FCA ”.

(13) In Schedule 10 (compensation: exemptions), for “competent authority”, in each place, substitute “ FCA ”.

(14) Omit the following provisions—

(a) section 72 (Financial Services Authority to exercise functions of the competent authority under Part 6) and the italic heading before it;

(b) section 73 (general duty of the competent authority);

(d) section 100 (penalties);

(e) in section 101 (general provisions), subsections (1) and (3) to (8);

(f) section 102 (exemption from liability in damages);

(g) in section 103 (interpretation), subsections (2) and (3);

(h) in section 195 (exercise of power in support of overseas regulator), subsection (4)(b);

(i) in section 410 (international obligations), subsection (4)(b);

(j) in section 415 (jurisdiction in civil proceedings), subsection (1)(b);

(k) Schedule 7 (modification of Act in its application to the Financial Services Authority when acting as competent authority for purposes of Part 6);

(l) Schedule 8 (power to transfer functions under Part 6 to other persons).

Discontinuance or suspension at the request of the issuer: procedure

17

(1) FSMA 2000 is amended as follows.

(2) In section 78A (discontinuance or suspension at the request of the issuer: procedure)—

(a) in subsection (1), for paragraphs (a) and (b) substitute—

(a) immediately, if the notification under subsection (2) so provides; (b) in any other case, on such date as may be provided for in that notification.

(b) in subsection (2), for “give him written notice” substitute “ notify the issuer (whether in writing or otherwise) ”, and

(3) The notification must— (a) notify the issuer of the date on which the discontinuance or suspension took effect or will take effect, and (b) notify the issuer of such other matters (if any) as are specified in listing rules.

(3) In section 395(13) (definition of “supervisory notice”), after “a notice” insert “ or notification ”.

Listing rules: disciplinary powers in relation to sponsors

18

(1) FSMA 2000 is amended as follows.

(2) In section 88 (provision that may be made by listing rules in relation to sponsors)—

(a) in subsection (3), at the end insert—

(e) provide for limitations or other restrictions to be imposed on the services to which an approval relates (whether or not the approval has already been granted); (f) provide for the approval of a sponsor to be suspended on the application of the sponsor.

(b) in subsection (4), in paragraph (a), for “for approval as a sponsor” substitute “ under sponsor rules ”,

(aa) to impose limitations or other restrictions on the services to which a person's approval relates,

(d) in subsection (5), in paragraph (a), for “for approval” substitute “ under sponsor rules ”,

(e) after that paragraph (but before the “or” at the end) insert—

(aa) not to impose limitations or other restrictions on the services to which a person's approval relates,

(f) in subsection (6), in paragraph (a), for “for approval” substitute “ under sponsor rules ”,

(g) after that paragraph (a) (but before the “or” at the end) insert—

(aa) to impose limitations or other restrictions on the services to which a person's approval relates,

, and

(h) after subsection (7) insert—

(8) In this section any reference to an application under sponsor rules means— (a) an application for approval as a sponsor, (b) an application for the suspension of an approval as a sponsor, (c) an application for the withdrawal of the suspension of an approval as a sponsor, or (d) an application for the withdrawal or variation of a limitation or other restriction on the services to which a sponsor's approval relates.

(3) The power to make provision under section 88(3)(e) of FSMA 2000 (as inserted by subsection (2)(a) above) includes power to make provision in relation to persons who were approved as sponsors before the coming into force of subsection (2)(a) above.

(4) For section 89 substitute—

(88A) (1) The FCA may take action against a sponsor under this section if it considers that the sponsor has contravened a requirement or restriction imposed on the sponsor by rules made as a result of section 88(3)(c) or (e). (2) If the FCA is entitled to take action under this section against a sponsor, it may do one or more of the following— (a) impose a penalty on the sponsor of such amount as it considers appropriate; (b) suspend, for such period as it considers appropriate, the sponsor's approval; (c) impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the performance of services to which the sponsor's approval relates as it considers appropriate; (d) publish a statement to the effect that the sponsor has contravened a requirement or restriction imposed on the sponsor by rules made as a result of section 88(3)(c) or (e). (3) The period for which a suspension or restriction is to have effect may not exceed 12 months. (4) A suspension may relate only to the performance in specified circumstances of a service to which the approval relates. (5) A restriction may, in particular, be imposed so as to require the sponsor to take, or refrain from taking, specified action. (6) The FCA may— (a) withdraw a suspension or restriction; or (b) vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect. (7) The FCA may not take action against a sponsor under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the sponsor under section 88B(1). (8) “The limitation period” means the period of 3 years beginning with the first day on which the FCA knew that the sponsor had contravened the requirement or restriction. (9) For this purpose the FCA is to be treated as knowing that a sponsor has contravened a requirement or restriction if it has information from which that can reasonably be inferred. (88B) (1) If the FCA proposes to take action against a sponsor under section 88A, it must give the sponsor a warning notice. (2) A warning notice about a proposal to impose a penalty must state the amount of the penalty. (3) A warning notice about a proposal— (a) to suspend an approval, or (b) to impose a restriction in relation to the performance of a service, must state the period for which the suspension or restriction is to have effect. (4) A warning notice about a proposal to publish a statement must set out the terms of the statement. (5) If the FCA decides to take action against a sponsor under section 88A, it must give the sponsor a decision notice. (6) A decision notice about the imposition of a penalty must state the amount of the penalty. (7) A decision notice about— (a) the suspension of an approval, or (b) the imposition of a restriction in relation to the performance of a service, must state the period for which the suspension or restriction is to have effect. (8) A decision notice about the publication of a statement must set out the terms of the statement. (9) If the FCA decides to take action against a sponsor under section 88A, the sponsor may refer the matter to the Tribunal. (88C) (1) The FCA must prepare and issue a statement of its policy with respect to— (a) the imposition of penalties, suspensions or restrictions under section 88A, (b) the amount of penalties under that section, and (c) the period for which suspensions or restrictions under that section are to have effect. (2) The FCA's policy in determining what the amount of a penalty should be, or what the period for which a suspension or restriction is to have effect should be, must include having regard to— (a) the seriousness of the contravention in question in relation to the nature of the requirement concerned, (b) the extent to which that contravention was deliberate or reckless, and (c) whether the sponsor concerned is an individual. (3) The FCA may at any time alter or replace a statement issued under this section. (4) If a statement issued under this section is altered or replaced, the FCA must issue the altered or replacement statement. (5) In exercising, or deciding whether to exercise, its power under section 88A in the case of any particular contravention, the FCA must have regard to any statement of policy published under this section and in force at a time when the contravention in question occurred. (6) A statement issued under this section must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of the public. (7) The FCA may charge a reasonable fee for providing a person with a copy of the statement. (8) The FCA must, without delay, give the Treasury a copy of any statement which it publishes under this section. (88D) (1) Before issuing a statement under section 88C, the FCA must publish a draft of the proposed statement in the way appearing to the FCA to be best calculated to bring it to the attention of the public. (2) The draft must be accompanied by notice that representations about the proposal may be made to the FCA within a specified time. (3) Before issuing the proposed statement, the FCA must have regard to any representations made to it in accordance with subsection (2). (4) If the FCA issues the proposed statement it must publish an account, in general terms, of— (a) the representations made to it in accordance with subsection (2), and (b) its response to them. (5) If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the FCA, significant, the FCA must (in addition to complying with subsection (4)) publish details of the difference. (6) The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1). (7) This section also applies to a proposal to alter or replace a statement. (88E) (1) The FCA may take action against a sponsor under this section if it considers that it is desirable to do so in order to advance one or more of its operational objectives. (2) If the FCA is entitled to take action under this section against a sponsor, it may— (a) suspend, for such period as it considers appropriate, the sponsor's approval, or (b) impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the performance of services to which the sponsor's approval relates as it considers appropriate. (3) A suspension may relate only to the performance in specified circumstances of a service to which the approval relates. (4) A restriction may, in particular, be imposed so as to require the sponsor to take, or refrain from taking, specified action. (5) The FCA may— (a) withdraw a suspension or restriction, or (b) vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect. (6) A person against whom the FCA takes action under this section may refer the matter to the Tribunal. (88F) (1) Action against a sponsor under section 88E takes effect— (a) immediately, if the notice given under subsection (3) so provides, or (b) on such later date as may be specified in the notice. (2) If the FCA— (a) proposes to take action against a sponsor under that section, or (b) takes action against a sponsor under that section with immediate effect, it must give the sponsor written notice. (3) The notice must— (a) give details of the action, (b) state the FCA's reasons for taking the action and for its determination as to when the action takes effect, (c) inform the sponsor that the sponsor may make representations to the FCA within such period as may be specified in the notice (whether or not the matter has been referred to the Tribunal), (d) inform the sponsor of when the action takes effect, (e) inform the sponsor of the right to refer the matter to the Tribunal, and (f) give an indication of the procedure on such a reference. (4) The FCA may extend the period allowed under the notice for making representations. (5) If the FCA decides— (a) to take the action in the way proposed, or (b) if the action has taken effect, not to rescind it, the FCA must give the sponsor written notice. (6) If the FCA decides— (a) not to take the action in the way proposed, (b) to take action under section 88E that differs from the action originally proposed, or (c) to rescind action which has taken effect, the FCA must give the sponsor written notice. (7) A notice under subsection (5) must— (a) inform the sponsor of the right to refer the matter to the Tribunal, and (b) give an indication of the procedure on such a reference. (8) A notice under subsection (6)(b) must comply with subsection (3).

(5) In section 392 (warning and decisions notices: application of provisions relating to third party rights and access to evidence)—

(a) for “section 89(2),” substitute “ section 88B(1), ”, and

(b) for “section 89(3),” substitute “ section 88B(5), ”.

(6) In section 395(13) (meaning of “supervisory notice”), after paragraph (bza) insert—

(bzb) section 88F(2), (5) or (6)(b);

Primary information providers

19

(1) In Part 6 of FSMA 2000 (official listing), after section 89O insert—

(89P) (1) Part 6 rules may require issuers of financial instruments to use primary information providers for the purpose of giving information of a specified description to a market of a specified description. (2) “Primary information provider” means a person approved by the FCA for the purposes of this section. (3) “Specified” means specified in the Part 6 rules. (4) Part 6 rules made by virtue of subsection (1) may— (a) provide for the FCA to maintain a list of providers; (b) impose requirements on a provider in relation to the giving of information or of information of a specified description; (c) specify the circumstances in which a person is qualified for being approved as a provider; (d) provide for limitations or other restrictions to be imposed on the giving of information to which an approval relates (whether or not the approval has already been granted); (e) provide for the approval of a provider to be suspended on the application of the provider. (5) If the FCA proposes— (a) to refuse a person's application under information provider rules, (b) to impose limitations or other restrictions on the giving of information to which a person's approval relates, or (c) to cancel a person's approval as a provider otherwise than at the person's request, it must give the person a warning notice. (6) If the FCA decides— (a) to grant the application under information provider rules, (b) not to impose limitations or other restrictions on the giving of information to which a person's approval relates, or (c) not to cancel the approval, it must give the person concerned written notice of its decision. (7) If the FCA decides— (a) to refuse to grant the application under information provider rules, (b) to impose limitations or other restrictions on the giving of information to which a person's approval relates, or (c) to cancel the approval, it must give the person concerned a decision notice. (8) A person to whom a decision notice is given under this section may refer the matter to the Tribunal. (9) In this section any reference to an application under information provider rules means— (a) an application for approval as a provider, (b) an application for the suspension of an approval as a provider, (c) an application for the withdrawal of the suspension of an approval as a provider, or (d) an application for the withdrawal or variation of a limitation or other restriction on the giving of information to which a provider's approval relates. (89Q) (1) The FCA may take action against a provider under this section if it considers that the provider has contravened a requirement or restriction imposed on the provider by rules made as a result of section 89P(4)(b) or (d). (2) If the FCA is entitled to take action under this section against a provider, it may do one or more of the following— (a) impose a penalty on the provider of such amount as it considers appropriate; (b) suspend, for such period as it considers appropriate, the provider's approval; (c) impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the giving by the provider of information as it considers appropriate; (d) publish a statement to the effect that the provider has contravened a requirement or restriction imposed on the provider by rules made as a result of section 89P(4)(b) or (d). (3) The period for which a suspension or restriction is to have effect may not exceed 12 months. (4) A suspension may relate only to the giving of information in specified circumstances. (5) A restriction may, in particular, be imposed so as to require the provider to take, or refrain from taking, specified action. (6) The FCA may— (a) withdraw a suspension or restriction, or (b) vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect. (7) The FCA may not take action against a provider under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the provider under section 89R(1). (8) “The limitation period” means the period of 3 years beginning with the first day on which the FCA knew that the provider had contravened the requirement or restriction. (9) For this purpose the FCA is to be treated as knowing that a provider has contravened a requirement or restriction if it has information from which that can reasonably be inferred. (89R) (1) If the FCA proposes to take action against a provider under section 89Q, it must give the provider a warning notice. (2) A warning notice about a proposal to impose a penalty must state the amount of the penalty. (3) A warning notice about a proposal— (a) to suspend an approval, or (b) to impose a restriction in relation to the giving of information, must state the period for which the suspension or restriction is to have effect. (4) A warning notice about a proposal to publish a statement must set out the terms of the statement. (5) If the FCA decides to take action against a provider under section 89Q, it must give the provider a decision notice. (6) A decision notice about the imposition of a penalty must state the amount of the penalty. (7) A decision notice about— (a) the suspension of an approval, or (b) the imposition of a restriction in relation to the giving of information, must state the period for which the suspension or restriction is to have effect. (8) A decision notice about the publication of a statement must set out the terms of the statement. (9) If the FCA decides to take action against a provider under section 89Q, the provider may refer the matter to the Tribunal. (89S) (1) The FCA must prepare and issue a statement of its policy with respect to— (a) the imposition of penalties, suspensions or restrictions under section 89Q, (b) the amount of penalties under that section, (c) the period for which suspensions or restrictions under that section are to have effect, and (d) the matters in relation to which suspensions or restrictions under that section are to have effect. (2) The FCA's policy in determining what the amount of a penalty should be, or what the period for which a suspension or restriction is to have effect should be, must include having regard to— (a) the seriousness of the contravention in question in relation to the nature of the requirement concerned, (b) the extent to which that contravention was deliberate or reckless, and (c) whether the provider concerned is an individual. (3) The FCA may at any time alter or replace a statement issued under this section. (4) If a statement issued under this section is altered or replaced, the FCA must issue the altered or replacement statement. (5) In exercising, or deciding whether to exercise, its power under section 89Q in the case of any particular contravention, the FCA must have regard to any statement of policy published under this section and in force at a time when the contravention in question occurred. (6) A statement issued under this section must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of the public. (7) The FCA may charge a reasonable fee for providing a person with a copy of the statement. (8) The FCA must, without delay, give the Treasury a copy of any statement which it publishes under this section. (89T) (1) Before issuing a statement under section 89S, the FCA must publish a draft of the proposed statement in the way appearing to the FCA to be best calculated to bring it to the attention of the public. (2) The draft must be accompanied by notice that representations about the proposal may be made to the FCA within a specified time. (3) Before issuing the proposed statement, the FCA must have regard to any representations made to it in accordance with subsection (2). (4) If the FCA issues the proposed statement it must publish an account, in general terms, of— (a) the representations made to it in accordance with subsection (2); and (b) its response to them. (5) If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the FCA, significant, the FCA must (in addition to complying with subsection (4)) publish details of the difference. (6) The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1). (7) This section also applies to a proposal to alter or replace a statement. (89U) (1) The FCA may take action against a provider under this section if it considers that it is desirable to do so in order to advance one or more of its operational objectives. (2) If the FCA is entitled to take action under this section against a provider, it may— (a) suspend, for such period as it considers appropriate, the provider's approval, or (b) impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the giving by the provider of information as it considers appropriate. (3) A suspension may relate only to the giving of information in specified circumstances. (4) A restriction may, in particular, be imposed so as to require the provider to take, or refrain from taking, specified action. (5) The FCA may— (a) withdraw a suspension or restriction, or (b) vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect. (6) A person against whom the FCA takes action under this section may refer the matter to the Tribunal. (89V) (1) Action against a provider under section 89U takes effect— (a) immediately, if the notice given under subsection (2) so provides, or (b) on such later date as may be specified in the notice. (2) If the FCA— (a) proposes to take action against a provider under that section, or (b) takes action against a provider under that section with immediate effect, it must give the provider written notice. (3) The notice must— (a) give details of the action, (b) state the FCA's reasons for taking the action and for its determination as to when the action takes effect, (c) inform the provider that the provider may make representations to the FCA within such period as may be specified in the notice (whether or not the matter has been referred to the Tribunal), (d) inform the provider of when the action takes effect, (e) inform the provider of the right to refer the matter to the Tribunal, and (f) give an indication of the procedure on such a reference. (4) The FCA may extend the period allowed under the notice for making representations. (5) If the FCA decides— (a) to take the action in the way proposed, or (b) if the action has taken effect, not to rescind it, the FCA must give the provider written notice. (6) If the FCA decides— (a) not to take the action in the way proposed, (b) to take action under section 89U that differs from the action originally proposed, or (c) to rescind action which has taken effect, the FCA must give the provider written notice. (7) A notice under subsection (5) must— (a) inform the provider of the right to refer the matter to the Tribunal, and (b) give an indication of the procedure on such a reference. (8) A notice under subsection (6)(b) must comply with subsection (3).

(2) In section 395(13) (meaning of “supervisory notice”), after paragraph (bzb) (as inserted by section 18(6)) insert—

(bzc) section 89V(2), (5) or (6)(b);

Penalties for breach of Part 6 rules

20

In section 91(6) of FSMA 2000 (penalties for breach of Part 6 rules: limitation period), for “two years” substitute “ 3 years ”.

Repeal of competition scrutiny power

21

Section 95 of FSMA 2000 (competition scrutiny) is repealed.

Control of business transfers

22

(1) In section 104 of FSMA 2000 (control of business transfers) omit “or banking business transfer scheme”.

(2) Schedule 6 contains further amendments of Part 7 of FSMA 2000 (control of business transfers).

Hearings and appeals

Proceedings before Tribunal

23

(1) Part 9 of FSMA 2000 (hearings and appeals) is amended as follows.

(2) In section 133 (proceedings before Tribunal: general provision)—

(a) in subsection (1)(a), for “the Authority” substitute “ the FCA or the PRA ”,

(b) for subsections (5) and (6) substitute—

(5) In the case of a disciplinary reference or a reference under section 393(11), the Tribunal— (a) must determine what (if any) is the appropriate action for the decision-maker to take in relation to the matter; and (b) on determining the reference, must remit the matter to the decision-maker with such directions (if any) as the Tribunal considers appropriate for giving effect to its determination. (6) In any other case, the Tribunal must determine the reference or appeal by either— (a) dismissing it; or (b) remitting the matter to the decision-maker with a direction to reconsider and reach a decision in accordance with the findings of the Tribunal. (6A) The findings mentioned in subsection (6)(b) are limited to findings as to— (a) issues of fact or law; (b) the matters to be, or not to be, taken into account in making the decision; and (c) the procedural or other steps to be taken in connection with the making of the decision.

, and

(7A) A reference is a “disciplinary reference” for the purposes of this section if it is in respect of any of the following decisions— (a) a decision to impose a penalty under section 63A; (b) a decision to take action under section 66; (c) a decision to take action under section 87M; (d) a decision to take action under section 88A; (e) a decision to take action under section 89K; (f) a decision to take action under section 89Q; (g) a decision to take action under section 91; (h) a decision to take action under section 123; (i) a decision to take action under section 131G; (j) a decision to take action under section 192K; (k) a decision to publish a statement under section 205, impose a penalty under section 206 or suspend a permission or impose a restriction under section 206A; (l) a decision to take action under section 249; (m) a decision to publish a statement under section 312E or impose a penalty under section 312F; (n) a decision to take action under section 345 or 345A.

(3) In section 133A (proceedings before Tribunal: decision and supervisory notices, etc)—

(a) in subsection (1)—

(i) after “determining” insert “ in accordance with section 133(5) ”, and

(ii) for the words from “given by the Authority” to “the Authority would” substitute “ given by a body, the Tribunal may not direct the body to take action which it would ”,

(b) omit subsections (2) and (3),

(c) in subsection (4), for the words from the beginning to “a decision notice—” substitute “ The action specified in a decision notice must not be taken— ”, and

(d) in subsection (5)—

(i) for “the Authority” substitute “ the FCA or the PRA ”, and

(ii) for “the Authority's” substitute “ its ”.

(4) In section 133B (offences), in subsection (1)(a), for “the Authority” substitute “ the FCA or the PRA ”.

(5) In section 136 (funding of the legal assistance scheme), in subsections (1), (2), (6)(a), (7) (in both places) and (8), for “Authority” substitute “ FCA ”.

Rules and guidance

24

(1) For sections 138 to 164 of FSMA 2000 substitute—

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