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
55

(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—
5
(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
10
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
15
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
20
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.
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(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.
30
(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.
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55V
Determination of applications
(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.
40
(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
45
regulator without the consent of the other regulator, the other

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Part 2 — Amendments of Financial Services and Markets Act 2000
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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
(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
10
(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.
15
(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
Applications under this Part: communications between regulators
20
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).
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55X
Determination of applications: warning notices and decision notices
(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
30
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),
35
(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,
(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
40
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.
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(3)
This subsection applies if it appears to the regulator that—

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(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
5
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
10
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),
15
(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
20
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
Exercise of own-initiative power: procedure
(1)
This section applies to an exercise of either regulator’s own-initiative
25
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
30
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
35
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
40
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.
45
(5)
The notice must—
(a)
give details of the variation of the permission or the
requirement or its variation,

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(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),
5
(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.
10
(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
15
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—
20
(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,
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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
30
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
Cancellation of Part 4A permission: procedure
(1)
If a regulator proposes to cancel an authorised person’s Part 4A
35
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.
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References to the Tribunal
55Z1
Right to refer matters to the Tribunal
(1)
An applicant who is aggrieved by the determination of an application
made under this Part may refer the matter to the Tribunal.

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(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.
Interpretation
55Z2
Interpretation of Part 4A
5
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(11).”
10
(3)
In Schedule 6 to FSMA 2000 (the threshold conditions), omit paragraph 9.
Passporting
10
Passporting: exercise of EEA rights and Treaty rights
Schedule 4 contains amendments of the following provisions of FSMA 2000—
(a)
Schedule 3 (EEA passport rights),
15
(b)
Schedule 4 (Treaty rights),
(c)
sections 34 and 35 (EEA firms and Treaty firms), and
(d)
Part 13 (incoming firms: powers of intervention).
Performance of regulated activities
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Prohibition orders
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(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
25
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.
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(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-
35
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”.

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(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
(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
10
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
15
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
20
(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,
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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-
30
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
35
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
40
(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.

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(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.
5
(8)
The PRA must consult the FCA before giving a warning notice under
this section.”
12
Approval for particular arrangements
(1)
In section 59 of FSMA 2000 (approval for particular arrangements)—
(a)
in subsections (1) and (2), for “the Authority” substitute “the
10
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
15
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.
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(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
25
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
30
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
35
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.
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(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
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(b)
property of customers of A,