Financial Services Bill

Session 2010 - 12
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Financial Services Bill

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
110

192E
Direction: procedure
(1)
If a regulator proposes to give a direction under section 192C, or gives
such a direction with immediate effect, it must give written notice to—
(a)
the parent undertaking to which the direction is given (or to be
given) (“P”), and
5
(b)
any authorised person or recognised investment exchange who
will, in the opinion of the regulator, be significantly affected by
the direction.
(2)
In the following provisions of this section “notified person” means a
person to whom notice under subsection (1) is given.
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(3)
A direction under section 192C takes effect—
(a)
immediately, if the notice under subsection (1) states that that is
the case,
(b)
on such other date as may be specified in the notice, or
(c)
if no date is specified in the notice, when the matter to which the
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notice relates is no longer open to review.
(4)
A direction may be expressed to take effect immediately (or on a
specified date) only if the regulator reasonably considers that it is
necessary for the direction to take effect immediately (or on that date).
(5)
The notice under subsection (1) must—
20
(a)
give details of the direction,
(b)
state the regulator’s reasons for the direction and for its
determination as to when the direction takes effect,
(c)
inform the notified person that the person may make
representations to the regulator within such period as may be
25
specified in the notice (whether or not the notified person has
referred the matter to the Tribunal), and
(d)
inform the notified person of the person’s right to refer the
matter to the Tribunal.
(6)
The regulator may extend the period allowed under the notice for
30
making representations.
(7)
If, having considered any representations made by any notified person,
the regulator decides—
(a)
to give the direction proposed, or
(b)
if the direction has been given, not to revoke the direction,
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it must give each of the notified persons written notice.
(8)
If, having considered any representations made by any notified person,
the regulator decides—
(a)
not to give the direction proposed,
(b)
to give a different direction, or
40
(c)
to revoke a direction which has effect,

it must give each of the notified persons written notice.
(9)
A notice given under subsection (7) must inform the notified person of
the person’s right to refer the matter to the Tribunal.
(10)
A notice under subsection (8)(b) must comply with subsection (5).
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(11)
If a notice informs the notified person of the person’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 (3)(c), whether a matter is open to
review is to be determined in accordance with section 391(8).
5
192F
Consultation between regulators
(1)
Before the PRA gives a notice under section 192E(1) or (8)(b), it must
consult the FCA.
(2)
Before the FCA gives a notice under section 192E(1) or (8)(b) in relation
to the parent undertaking of a PRA-authorised person, the FCA must
10
consult the PRA.
(3)
Before either regulator gives a notice under section 192E(1) or (8)(b) in
relation to the parent undertaking of a recognised clearing house, the
regulator must consult the Bank of England.
192G
References to Tribunal
15
(1)
A notified person who is aggrieved by the exercise by either regulator
of its powers in relation to directions under section 192C may refer the
matter to the Tribunal.
(2)
“Notified person” is to be read in accordance with subsection (2) of
section 192E, except that it includes a person to whom a notice under
20
subsection (1) of that section ought to have been given.
192H
Statement of policy: directions under section 192C
(1)
Each regulator must prepare and issue a statement of policy with
respect to the giving of directions under section 192C.
(2)
A regulator may at any time alter or replace a statement issued under
25
this section.
(3)
If a statement issued under this section is altered or replaced, the
regulator must issue the altered or replacement statement.
(4)
In exercising or deciding whether to exercise its power under section
192C in any particular case, a regulator must have regard to any
30
statement published under this section and for the time being in force.
(5)
A statement under this section must be published by the regulator
concerned in the way appearing to the regulator to be best calculated to
bring it to the attention of the public.
(6)
A regulator may charge a reasonable fee for providing a person with a
35
copy of a statement published under this section.
(7)
A regulator must, without delay, give the Treasury a copy of any
statement which the regulator publishes under this section.
192I
Statement of policy relating to directions: procedure
(1)
Before issuing a statement of policy under section 192H, a regulator
40
(“the issuing regulator”) must—
(a)
consult the other regulator and the Bank of England, and

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(b)
publish a draft of the proposed statement in the way appearing
to the issuing regulator 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 issuing regulator within a specified time.
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(3)
Before issuing the proposed statement, the issuing regulator must have
regard to any representations made to it in accordance with subsection
(2).
(4)
If the issuing regulator issues the proposed statement it must publish
an account, in general terms, of—
10
(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 (2) in
a way which is, in the opinion of the issuing regulator, significant, the
15
issuing regulator—
(a)
must before issuing it consult the other regulator again, and
(b)
must (in addition to complying with subsection (4)), publish
details of the difference.
(6)
The issuing regulator may charge a reasonable fee for providing a
20
person with a draft published under subsection (1)(b).
(7)
This section also applies to a proposal to alter or replace a statement.
Rules requiring provision of information by parent undertakings
192J
Rules requiring provision of information by parent undertakings
(1)
The appropriate regulator may make rules requiring qualifying parent
25
undertakings—
(a)
to provide to the regulator information of a specified
description;
(b)
to produce to the regulator documents of a specified
description.
30
(2)
The rules may only specify a description of information or documents
that is relevant to the exercise by the regulator of its functions.
(3)
The rules may make provision—
(a)
as to the time within which information must be provided or
documents produced;
35
(b)
about the form in which any information is to provided;
(c)
about the place where any documents are to be produced;
(d)
requiring information provided to be verified in a specified
manner;
(e)
requiring documents produced to be authenticated in a
40
specified manner.
(4)
“The appropriate regulator” means—
(a)
in relation to the parent undertaking of a qualifying authorised
person who is a PRA-authorised person, the FCA or the PRA;

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(b)
in any other case, the FCA.
Failure to comply with direction or breach of rules
192K
Power to impose penalty or issue censure
(1)
This section applies if a regulator is satisfied that a person who is or has
been a qualifying parent undertaking (“P”) has contravened—
5
(a)
a requirement of a direction given to P by that regulator under
section 192C, or
(b)
a provision of rules made by that regulator under section 192J.
(2)
The regulator may impose a penalty of such amount as it considers
appropriate on—
10
(a)
P, or
(b)
any person who was knowingly concerned in the
contravention.
(3)
The regulator may, instead of imposing a penalty on a person, publish
a statement censuring the person.
15
(4)
The regulator may not take action against a person 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 person under section 192L.
(5)
“The limitation period” means the period of 3 years beginning with the
first day on which the regulator knew of the contravention.
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(6)
For this purpose a regulator is to be treated as knowing of a
contravention if it has information from which the contravention can
reasonably be inferred.
192L
Procedure and right to refer to Tribunal
(1)
If a regulator proposes to take action against a person under section
25
192K, it must give the person 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 to publish a statement must set out
the terms of the statement.
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(4)
If the regulator decides to take action against a person under section
192K, it must give the person a decision notice.
(5)
A decision notice about the imposition of a penalty must state the
amount of the penalty.
(6)
A decision notice about the publication of a statement must set out the
35
terms of the statement.
(7)
If the regulator decides to take action against a person under section
192K, the person may refer the matter to the Tribunal.
192M
Duty on publication of statement
After a statement under section 192K(3) is published, the regulator
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must send a copy of the statement to—

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(a)
the person in respect of whom it is made, and
(b)
any person to whom a copy of the decision notice was given
under section 393(4).
192N
Imposition of penalties under section 192K: statement of policy
(1)
Each regulator must prepare and issue a statement of policy with
5
respect to—
(a)
the imposition of penalties under section 192K, and
(b)
the amount of penalties under that section.
(2)
A regulator’s policy in determining what the amount of a penalty
should be must include having regard to—
10
(a)
the seriousness of the contravention,
(b)
the extent to which the contravention was deliberate or reckless,
and
(c)
whether the person on whom the penalty is to be imposed is an
individual.
15
(3)
A regulator 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
regulator must issue the altered or replacement statement.
(5)
In exercising, or deciding whether to exercise, a power under section
20
192K(2) in the case of any particular contravention, a regulator must
have regard to any statement of policy published under this section and
in force at a time when the contravention occurred.
(6)
A statement under this section must be published by the regulator
concerned in the way appearing to the regulator to be best calculated to
25
bring it to the attention of the public.
(7)
A regulator may charge a reasonable fee for providing a person with a
copy of the statement published under this section.
(8)
A regulator must, without delay, give the Treasury a copy of any
statement which it publishes under this section.
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(9)
Section 192I applies in relation to a statement under this section as it
applies in relation to a statement under section 192H.”
Recognised investment exchanges and clearing houses
26
Exemption for recognised investment exchanges and clearing houses
(1)
Section 285 of FSMA 2000 (exemption from general prohibition for recognised
35
investment exchanges and recognised clearing houses) is amended as follows.
(2)
In subsection (2), for paragraph (b) substitute—
“(b)
which is carried on for the purposes of, or in connection with,
the provision by the exchange of services designed to facilitate
the provision of clearing services by another person.”
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(3)
In subsection (3) for the words from “activity which” to the end substitute

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Part 2 — Amendments of Financial Services and Markets Act 2000
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“activity—
(a)
which is carried on for the purposes of, or in connection with,
the provision of clearing services by the clearing house, or
(b)
which is carried on for the purposes of, or in connection with,
the provision by the clearing house of services designed to
5
facilitate the provision of clearing services by another person.”
(4)
After that subsection insert—
“(4)
The Treasury may by order amend paragraph (b) of subsection (2) or
(3).”
27
Powers in relation to recognised investment exchanges and clearing houses
10
(1)
After section 285 of FSMA 2000 insert—
“285A
Powers exercisable in relation to recognised investment exchanges
and clearing houses
(1)
For the purposes of this Part, the FCA is “the appropriate regulator” in
relation to recognised investment exchanges.
15
(2)
For the purposes of this Part, the Bank of England is “the appropriate
regulator” in relation to recognised clearing houses.
(3)
In Schedule 17A—
(a)
Part 1 makes provision for a memorandum of understanding
between the appropriate regulators and the PRA with respect to
20
the exercise of their functions in relation to recognised
investment exchanges and clearing houses;
(b)
Part 2 applies certain provisions of this Act in relation to the
Bank of England in consequence of the conferring of functions
on the Bank under this Part of this Act; and
25
(c)
Part 3 makes provision about fees.”
(2)
After Schedule 17 of FSMA 2000 insert the Schedule 17A set out in Schedule 7
to this Act.
28
Recognition requirements: power of FCA and Bank to make rules
In section 286 of FSMA 2000 (qualification for recognition), after subsection
30
(4E) insert—
“(4F)
Regulations under subsection (1) may confer power on the appropriate
regulator to make rules for the purposes of the regulations or of any
specified provision made by the regulations.”
29
Recognised bodies: procedure for giving directions under s.296 etc
35
(1)
Section 298 of FSMA 2000 (directions under section 296 and revocation orders
under section 297(2) or (2A): procedure) is amended as follows.
(2)
In subsection (1), omit paragraphs (b) and (c) (requirements to bring notice to
attention of members of the body and other persons).
(3)
In subsection (3), omit paragraphs (b) and (c) (members of the body and other
40
persons may make representations).

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(4)
For subsection (4) substitute—
“(4)
The period for making representations is such period as is specified in
the notice (which may, in any particular case, be extended by the
appropriate regulator).”
(5)
In subsection (6), omit paragraph (b) (notice of decision to members of the body
5
and others) and the “and” before it.
(6)
In subsection (7), for “considers it essential” substitute “reasonably considers it
necessary”.
30
Power to take disciplinary measures against recognised bodies
After section 312D of FSMA 2000 insert—
10
“Chapter 3B
Disciplinary measures
312E
Public censure
(1)
If the appropriate regulator considers that a recognised body has
contravened a relevant requirement imposed on the body, it may
15
publish a statement to that effect.
(2)
Where the FCA is the appropriate regulator, a requirement is a
“relevant requirement” for the purposes of this Chapter if it is—
(a)
a requirement that is imposed by or under any provision of this
Part that relates to a recognised investment exchange,
20
(b)
a requirement that is imposed under any other provision of this
Act by the FCA that relates to a recognised investment
exchange,
(c)
a requirement that is imposed by a qualifying EU provision
specified, or of a description specified, for the purposes of this
25
subsection by the Treasury by order, or
(d)
a requirement that is imposed by this Act and whose
contravention constitutes an offence that the FCA has power to
prosecute under this Act (see section 401).
(3)
Where the Bank of England is the appropriate regulator, a requirement
30
is a “relevant requirement” for the purposes of this Chapter if it is—
(a)
a requirement that is imposed by or under any provision of this
Part that relates to a recognised clearing house,
(b)
a requirement that is imposed under any other provision of this
Act by the Bank,
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(c)
a requirement that is imposed by a qualifying EU provision
specified, or of a description specified, for the purposes of this
subsection by the Treasury by order, or
(d)
a requirement that is imposed by this Act and whose
contravention constitutes an offence that the Bank has power to
40
prosecute under this Act (see section 401, as applied by
paragraph 24 of Schedule 17A).