Financial Services Bill

Session 2010 - 12
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Other Bills before Parliament

Financial Services Bill

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
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1G
Meaning of “consumer”
(1)
In sections 1B to 1E “consumers” means persons who—
(a)
use, have used or may use—
(i)
regulated financial services, or
(ii)
services that are provided by persons other than
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authorised persons but are provided in carrying on
regulated activities,
(b)
have relevant rights or interests in relation to any of those
services,
(c)
have invested, or may invest, in financial instruments, or
10
(d)
have relevant rights or interests in relation to financial
instruments.
(2)
A person (“P”) has a “relevant right or interest” in relation to any
services within subsection (1)(a) if P has a right or interest—
(a)
which is derived from, or is otherwise attributable to, the use of
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the services by others, or
(b)
which may be adversely affected by the use of the services by
persons acting on P’s behalf or in a fiduciary capacity in relation
to P.
(3)
If a person is providing a service within subsection (1)(a) as trustee, the
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persons who are, have been or may be beneficiaries of the trust are to
be treated as persons who use, have used or may use the service.
(4)
A person who deals with another person (“B”) in the course of B
providing a service within subsection (1)(a) is to be treated as using the
service.
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(5)
A person (“P”) has a “relevant right or interest” in relation to any
financial instrument if P has—
(a)
a right or interest which is derived from, or is otherwise
attributable to, investment in the instrument by others, or
(b)
a right or interest which may be adversely affected by the
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investment in the instrument by persons acting on P’s behalf or
in a fiduciary capacity in relation to P.
1H
Further interpretative provisions for sections 1B to 1G
(1)
The following provisions have effect for the interpretation of sections
1B to 1G.
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(2)
“Regulated financial services” means services provided—
(a)
by authorised persons in carrying on regulated activities;
(b)
by authorised persons in carrying on a consumer credit
business in connection with the accepting of deposits;
(c)
by authorised persons in communicating, or approving the
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communication by others of, invitations to engage in
investment activity;
(d)
by authorised persons who are investment firms, or credit
institutions, in providing relevant ancillary services;
(e)
by persons acting as appointed representatives;
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(f)
by payment service providers in providing payment services;
(g)
by electronic money issuers in issuing electronic money;

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
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(h)
by sponsors to issuers of securities;
(i)
by primary information providers to persons who issue
financial instruments.
(3)
“Financial crime” includes any offence involving—
(a)
fraud or dishonesty,
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(b)
misconduct in, or misuse of information relating to, a financial
market, or
(c)
handling the proceeds of crime.
(4)
“Offence” includes an act or omission which would be an offence if it
had taken place in the United Kingdom.
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(5)
“Issuer”, except in the expression “electronic money issuer”, has the
meaning given in section 102A(6).
(6)
“Financial instrument” has the meaning given in section 102A(4).
(7)
“Securities” has the meaning given in section 102A(2).
(8)
In this section—
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“accepting”, in relation to deposits, includes agreeing to accept;
“consumer credit business” has the same meaning as in the
Consumer Credit Act 1974;
“credit institution” means—
(a)
a credit institution authorised under the banking
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consolidation directive, or
(b)
an institution which would satisfy the requirements for
authorisation as a credit institution under that directive
if it had its registered office (or if it does not have a
registered office, its head office) in an EEA State;
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“electronic money” has the same meaning as in the Electronic
Money Regulations 2011;
“electronic money issuer” means a person who is an electronic
money issuer as defined in regulation 2(1) of the Electronic
Money Regulations 2011 other than a person falling within
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paragraph (f), (g) or (j) of the definition;
“engage in investment activity” has the meaning given in section
21;
“financial instrument” has the meaning given in section 102A(4);
“payment services” has the same meaning as in the Payment
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Services Regulations 2009;
“payment service provider” means a person who is a payment
service provider as defined in regulation 2(1) the Payment
Services Regulations 2009 other than a person falling within
paragraph (g) or (h) of the definition;
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“primary information provider” has the meaning given in section
89P(2);
“relevant ancillary service” means any service of a kind mentioned
in Section B of Annex I to the markets in financial instruments
directive the provision of which does not involve the carrying
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on of a regulated activity;
“sponsor” has the meaning given in section 88(2).

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
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1I
Meaning of “the UK financial system”
In this Act “the UK financial system” means the financial system
operating in the United Kingdom and includes—
(a)
financial markets and exchanges,
(b)
regulated activities, and
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(c)
other activities connected with financial markets and
exchanges.
Power to amend objectives
1J
Power to amend objectives
The Treasury may by order amend any of the following provisions—
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(a)
in section 1E(1), paragraphs (a) and (b),
(b)
section 1G, and
(c)
section 1H(2) and (5) to (8).
Guidance about objectives
1K
Guidance about objectives
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(1)
The general guidance given by the FCA under section 139A must
include guidance about how it intends to advance its operational
objectives in discharging its general functions in relation to different
categories of authorised person or regulated activity.
(2)
Before giving or altering any guidance complying with subsection (1),
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the FCA must consult the PRA.
Supervision, monitoring and enforcement
1L
Supervision, monitoring and enforcement
(1)
The FCA must maintain arrangements for supervising authorised
persons.
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(2)
The FCA must maintain arrangements designed to enable it to
determine whether persons other than authorised persons are
complying—
(a)
with requirements imposed on them by or under this Act, in
cases where the FCA is the appropriate regulator for the
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purposes of Part 14 (disciplinary measures), or
(b)
with requirements imposed on them by any qualifying EU
provision that is specified, or of a description specified, for the
purposes of this subsection by the Treasury by order.
(3)
The FCA must also maintain arrangements for enforcing compliance by
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persons other than authorised persons with relevant requirements,
within the meaning of Part 14, in cases where the FCA is the
appropriate regulator for the purposes of any provision of that Part.

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
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Arrangements for consulting practitioners and consumers
1M
The FCA’s general duty to consult
The FCA must make and maintain effective arrangements for
consulting practitioners and consumers on the extent to which its
general policies and practices are consistent with its general duties
5
under section 1B.
1N
The Practitioner Panel
(1)
Arrangements under section 1M must include the establishment and
maintenance of a panel of persons (to be known as “the Practitioner
Panel”) to represent the interests of practitioners.
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(2)
The FCA must appoint one of the members of the Practitioner Panel to
be its chair.
(3)
The Treasury’s approval is required for the appointment or dismissal
of the chair.
(4)
The FCA must appoint to the Practitioner Panel such—
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(a)
persons representing authorised persons, and
(b)
persons representing recognised investment exchanges,

as it considers appropriate.
(5)
The FCA may appoint to the Practitioner Panel such other persons as it
considers appropriate.
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1O
The Smaller Business Practitioner Panel
(1)
Arrangements under section 1M must include the establishment and
maintenance of a panel of persons (to be known as “the Smaller
Business Practitioner Panel”) to represent the interests of eligible
practitioners.
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(2)
“Eligible practitioners” means authorised persons of a description
specified in a statement maintained by the FCA.
(3)
The FCA must appoint one of the members of the Smaller Business
Practitioner Panel to be its chair.
(4)
The Treasury’s approval is required for the appointment or dismissal
30
of the chair.
(5)
The FCA must appoint to the Smaller Business Practitioner Panel
such—
(a)
individuals who are eligible practitioners, and
(b)
persons representing eligible practitioners,
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as it considers appropriate.
(6)
The FCA may appoint to the Smaller Business Practitioner Panel such
other persons as it considers appropriate.
(7)
In making the appointments, the FCA must have regard to the
desirability of ensuring the representation of eligible practitioners
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carrying on a range of regulated activities.
(8)
The FCA may revise the statement maintained under subsection (2).

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
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(9)
The FCA must—
(a)
give the Treasury a copy of the statement or revised statement
without delay, and
(b)
publish the statement as for the time being in force in such
manner as it thinks fit.
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1P
The Markets Practitioner Panel
(1)
Arrangements under section 1M must include the establishment and
maintenance of a panel of persons (to be known as “the Markets
Practitioner Panel”) to represent the interests of practitioners who are
likely to be affected by the exercise by the FCA of its functions relating
10
to markets, including its functions under Parts 6, 8A and 18.
(2)
The FCA must appoint one of the members of the Markets Practitioner
Panel to be its chair.
(3)
The Treasury’s approval is required for the appointment or dismissal
of the chair.
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(4)
The FCA must appoint to the Markets Practitioner Panel such persons
to represent the interests of persons within subsection (5) as it considers
appropriate.
(5)
The persons within this subsection are—
(a)
authorised persons,
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(b)
persons who issue financial instruments,
(c)
sponsors, as defined in section 88(2),
(d)
recognised investment exchanges, and
(e)
primary information providers, as defined in section 89P(2).
(6)
The FCA may appoint to the Markets Practitioner Panel such other
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persons as it considers appropriate.
1Q
The Consumer Panel
(1)
Arrangements under section 1M must include the establishment and
maintenance of a panel of persons (to be known as “the Consumer
Panel”) to represent the interests of consumers.
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(2)
The FCA must appoint one of the members of the Consumer Panel to
be its chair.
(3)
The Treasury’s approval is required for the appointment or dismissal
of the chair.
(4)
The FCA may appoint to the Consumer Panel such consumers, or
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persons representing the interests of consumers, as it considers
appropriate.
(5)
The FCA must secure that membership of the Consumer Panel is such
as to give a fair degree of representation to those who are using, or are
or may be contemplating using, services otherwise than in connection
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with businesses carried on by them.
(6)
Sections 425A and 425B (meaning of “consumers”) apply for the
purposes of this section, but the references to consumers in this section
do not include consumers who are authorised persons.