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Financial Services Bill


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

34

 

3K      

Further provisions about directions under section 3I

(1)   

Before giving a direction under section 3I, the PRA must consult the

FCA.

(2)   

A direction under section 3I must be given or confirmed in writing, and

must be accompanied by a statement of the reasons for giving it.

5

(3)   

A notice revoking a direction under section 3I must be given or

confirmed in writing.

(4)   

The PRA must give the Treasury a copy of—

(a)   

a direction under section 3I;

(b)   

a statement relating to such a direction;

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(c)   

a notice revoking such a direction.

(5)   

The Treasury must lay before Parliament any document received by

them under subsection (4).

(6)   

The PRA must also—

(a)   

publish the direction and statement, or the notice, in such

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manner as it thinks fit, and

(b)   

where the direction or notice relates to a particular authorised

person, give a copy of the direction and statement, or the notice,

to that person.

(7)   

But subsections (5) and (6) do not apply in a case where the PRA

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considers that compliance with those subsections would be against the

public interest.

(8)   

Where the PRA decides that compliance with subsections (5) and (6)

would be against the public interest, it must from time to time review

that decision and if it subsequently decides that compliance is no longer

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against the public interest it must—

(a)   

notify the Treasury for the purposes of subsection (5), and

(b)   

comply with subsection (6).

Directions relating to consolidated supervision

3L      

Directions relating to consolidated supervision of groups

30

(1)   

This section applies where one of the regulators (“the supervising

regulator”), but not the other, is the competent authority for the

purpose of consolidated supervision that is required in relation to some

or all of the members of a group (“the relevant group”) in pursuance of

any of the relevant directives.

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(2)   

“Consolidated supervision” includes supplementary supervision.

(3)   

The “relevant directives” are—

(a)   

the banking consolidation directive;

(b)   

Directive 2002/87/EC of the European Parliament and of the

Council on the supplementary supervision of credit

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institutions, insurance undertakings and investment firms in a

financial conglomerate;

(c)   

Directive 2006/49/EC on the capital adequacy of investment

firms and credit institutions;

 
 

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

35

 

(d)   

Directive 2009/138/EC of the European Parliament and the

Council of 25 November 2009 on the taking-up and pursuit of

the business of Insurance and Reinsurance (Solvency II).

(4)   

The supervising regulator may, if it considers it necessary to do so for

the effective consolidated supervision of the relevant group, give the

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other regulator a direction under this section.

(5)   

A direction under this section is a direction requiring the other

regulator to exercise, or not to exercise, a relevant function in a

specified manner in relation to authorised persons who are members of

the relevant group.

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(6)   

The direction may relate to members of the relevant group other than

the members in respect of which consolidated supervision is required.

(7)   

A “relevant function”, in relation to either regulator, is a function

conferred by or under this Act which relates to the regulation of

authorised persons, but does not include—

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(a)   

the regulator’s function of making rules under this Act;

(b)   

its function of preparing and issuing codes under this Act;

(c)   

its function of determining the general policy and principles by

reference to which it performs particular functions;

(d)   

the FCA’s functions in relation to the giving of general

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guidance;

(e)   

the PRA’s functions in relation to the giving of guidance under

section 2H;

(f)   

the FCA’s functions in relation to consent for the purposes of

section 55F or 55I.

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(8)   

The direction may not require the regulator to which it is given (“the

directed regulator”) to do anything that it has no power to do, but the

direction is relevant to the exercise of any discretion conferred on the

directed regulator.

(9)   

The directed regulator must comply with the direction as soon as

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practicable, but this is subject to subsections (10) and (11).

(10)   

The directed regulator is not required to comply with a direction under

this section if or to the extent that in its opinion compliance would be

incompatible with any EU obligation or any other international

obligation of the United Kingdom.

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(11)   

Directions given by the FCA under this section are subject to any

directions given to the FCA under section 3I.

3M      

Revocation of directions under section 3L

(1)   

The supervising regulator may at any time by notice to the other

regulator revoke a direction under section 3L.

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(2)   

The revocation of the direction does not affect the validity of anything

previously done in accordance with it.

(3)   

Expressions defined for the purposes of section 3L have the same

meaning in this section.

 
 

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

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3N      

Further provisions about directions under section 3L

(1)   

Before giving a direction under section 3L, the supervising regulator

must consult the other regulator.

(2)   

A direction under section 3L must be given or confirmed in writing,

and must be accompanied by a statement of the reasons for giving it.

5

(3)   

A notice revoking a direction under section 3L must be given or

confirmed in writing.

(4)   

The regulator to which a direction under section 3L is given must give

a copy of the direction and statement to each of the authorised persons

to whom the direction relates.

10

(5)   

The supervising regulator must publish the direction and statement, or

the notice, in such manner as it thinks fit.

(6)   

But subsection (4) or (5) does not apply in a case where the regulator on

which the duty is imposed considers that compliance with that

subsection would be against the public interest.

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(7)   

In a case where a regulator decides that compliance with subsection (4)

or (5) would be against the public interest, the regulator must from time

to time review that decision and if it subsequently decides that

compliance is no longer against the public interest it must comply with

the subsection.

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(8)   

Expressions defined for the purposes of section 3L have the same

meaning in this section.

3O      

Consultation by regulator complying with direction

(1)   

If the directed regulator is required by this Act to consult any person

other than the supervising regulator before exercising the relevant

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function to which the direction relates, the directed regulator must give

the supervising regulator copies of any written representations

received from the persons consulted.

(2)   

Expressions defined for the purposes of section 3L have the same

meaning in this section.

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Co-operation with Bank of England

3P      

Co-operation by FCA and PRA with Bank of England

(1)   

Each regulator must take such steps as it considers appropriate to co-

operate with the Bank of England in connection with—

(a)   

the pursuit by the Bank of its Financial Stability Objective, and

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(b)   

the Bank’s compliance with its duties under sections 54 and 55

of the Financial Services Act 2012 (duty to notify Treasury of

possible need for public funds and of subsequent changes).

(2)   

Co-operation under subsection (1) may include the sharing of

information that the regulator is not prevented from disclosing.

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

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Arrangements for provision of services

3Q      

Arrangements for provision of services

(1)   

The regulators may enter into arrangements with each other for the

provision of services by one of them to the other.

(2)   

Either regulator may enter into arrangements with the Bank of England

5

for the provision of services—

(a)   

by the Bank to the regulator, or

(b)   

by the regulator to the Bank.

(3)   

Either regulator may enter into arrangements with any of the bodies

specified in subsection (4) for the provision of services by the regulator

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to that body.

(4)   

Those bodies are—

(a)   

the consumer financial education body (see section 3R(2)),

(b)   

the scheme manager (see section 212(1)), and

(c)   

the scheme operator (see section 225(2)).

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(5)   

Arrangements under this section are to be on such terms as may be

agreed by the parties.

Enhancing public understanding of financial matters etc.

3R      

The consumer financial education body

(1)   

The consumer financial education body continues to have the

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consumer financial education function.

(2)   

The “consumer financial education body” means the body corporate

originally established by the Financial Services Authority under section

6A of this Act (as it had effect before the passing of the Financial

Services Act 2012).

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(3)   

The consumer financial education function is to enhance—

(a)   

the understanding and knowledge of members of the public of

financial matters (including the UK financial system), and

(b)   

the ability of members of the public to manage their own

financial affairs.

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(4)   

The consumer financial education function includes, in particular—

(a)   

promoting awareness of the benefits of financial planning;

(b)   

promoting awareness of the financial advantages and

disadvantages in relation to the supply of particular kinds of

goods or services;

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(c)   

promoting awareness of the benefits and risks associated with

different kinds of financial dealing (which includes informing

the FCA and other bodies of those benefits and risks);

(d)   

the publication of educational materials or the carrying out of

other educational activities;

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(e)   

the provision of information and advice to members of the

public;

(f)   

assisting members of the public with the management of debt;

 
 

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

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(g)   

working with other organisations which provide debt services,

with a view to improving—

(i)   

the availability to the public of those services;

(ii)   

the quality of the services provided;

(iii)   

consistency in the services available, in the way in which

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they are provided and in the advice given.

(5)   

In subsection (4) “debt services” means debt advice or assistance with

the management of debt.

(6)   

Schedule 1A makes further provision about the consumer financial

education body.”

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(2)   

For Schedule 1 to FSMA 2000 substitute the Schedules 1ZA and 1ZB set out in

Part 1 of Schedule 3 to this Act.

(3)   

Part 2 of that Schedule contains other amendments related to the provisions of

this section.

Regulated activities

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6       

Extension of scope of regulation

(1)   

In section 22 of FSMA 2000 (the classes of activity and categories of

investment)—

(a)   

after subsection (1) insert—

“(1A)   

An activity is also a regulated activity for the purposes of this

20

Act if it is an activity of a specified kind which is carried on by

way of business and relates to information about a person’s

financial standing.”

(b)   

in subsection (3), after “(1)” insert “or (1A)”, and

(c)   

for the heading substitute “Regulated activities”.

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(2)   

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

(3)   

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

“Loans and other forms of credit

23    (1)  

Rights under any contract under which one person provides another

with credit.

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      (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—

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“Contracts for hire of goods

23B   (1)  

Rights under a contract for the bailment or (in Scotland) hiring of

goods to a person other than a body corporate.

 
 

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

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      (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

(5)   

After paragraph 24 insert—

“Part 2A

Regulated activities relating to information about persons’ financial

standing

General

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24A        

The matters with respect to which provision may be made under

section 22(1A) include, in particular, those described in general

terms in this Part of this Schedule.

Providing credit reference services

24B        

Furnishing persons with information that—

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(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.

Providing credit information services

24C   (1)  

Taking steps on behalf of a person other than a body corporate in

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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

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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).”

7       

Orders under section 22 of FSMA 2000

30

(1)   

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

(2)   

In paragraph 25(1), for “the Authority”, in each place, substitute “either

regulator”.

(3)   

For paragraph 26 substitute—

“Parliamentary control

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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

 
 

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

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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

5

(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.

10

      (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

15

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

20

time during which Parliament is dissolved or prorogued or during

which both Houses are adjourned for more than 4 days.”

8       

Designation of activities requiring prudential regulation by PRA

After section 22 of FSMA 2000 insert—

“22A    

Designation of activities requiring prudential regulation by PRA

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(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;

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(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

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relevant for purposes of, or connected with, any relevant

provision;

(e)   

make such consequential, transitional, or supplemental

provision as the Treasury considers appropriate for purposes

of, or connected with, any relevant provision.

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(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.

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Revised 27 January 2012