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
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
15
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
20
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
25
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
5
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—
15
(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
20
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
30
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.
40
(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
36

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.
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(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.
15
(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
25
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.
30
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
37

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
10
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
20
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).
25
(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.
30
(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
5
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
15
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.

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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
20
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).”
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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

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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.
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      (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.”
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Designation of activities requiring prudential regulation by PRA
After section 22 of FSMA 2000 insert—
“22A
Designation of activities requiring prudential regulation by PRA
25
(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
35
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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