(3) The notice under subsection (2) must include details of the alteration.

(4) If the FCA revokes any of its general guidance, it must give written
notice to the Treasury without delay.

(5) “General guidance” means guidance given by the FCA under section
5139A which is—

(a) given to persons generally, to FCA-regulated persons generally
or to a class of FCA-regulated person,

(b) intended to have continuing effect, and

(c) given in writing or other legible form.

(6) 10“FCA-regulated person” has the same meaning as in section 139A.

CHAPTER 4 Competition scrutiny

140A Interpretation

(1) In this Chapter—

• “market in the United Kingdom” includes—

  (a)

  15so far as it operates in the United Kingdom or a part of
  the United Kingdom, any market which operates there
  and in another country or territory or in a part of another
  country or territory, and

  (b)

  any market which operates only in a part of the United
  20Kingdom;

• “the OFT” means the Office of Fair Trading;

• “practices”, in relation to each regulator, means practices adopted
  by that regulator in the exercise of functions under this Act;

• “regulating provisions” means—

  (a)

  25in relation to the FCA, any—

  (i)

  rules of the FCA;

  (ii)

  general guidance (as defined by section 139B(5));

  (iii)

  statement issued by the FCA under section 64;

  (iv)

  code issued by the FCA under section 64 or 119;

  (b)

  30in relation to the PRA, any—

  (i)

  rules of the PRA;

  (ii)

  statement issued by the PRA under section 64;

  (iii)

  code issued by the PRA under section 64.

(2) In this Chapter each of the Competition Commission and the OFT is “a
35competition authority”.

(3) For the purposes of this Chapter, any reference to a feature of a market
in the United Kingdom for goods or services is to be read as a reference
to—

(a) the structure of the market concerned or any aspect of that
40structure,

(b) any conduct (whether or not in the market concerned) of one or
more than one person who supplies or acquires goods or
services in the market concerned, or

(c) any conduct relating to the market concerned of customers of
any person who supplies or acquires goods or services.

(4) In subsection (3) “conduct” includes any failure to act (whether or not
intentional) and any other unintentional conduct.

140B 5Advice about effect of regulating provision or practice

(1) In this Chapter, any reference to the giving of “section 140B advice” to
a regulator is to be read in accordance with this section.

(2) The OFT gives “section 140B advice” to a regulator if—

(a) it gives advice to the regulator under section 7 of the Enterprise
10Act 2002 (provision of competition advice to Ministers etc.), and

(b) the advice states that in the opinion of the OFT one or more of
the things mentioned in subsection (4) may cause, or contribute
to, the effect mentioned in subsection (5), or might be expected
to do so in the future.

(3) 15The Competition Commission gives “section 140B advice” to a
regulator if a report published by it under section 136 of the Enterprise
Act 2002 (investigations and reports on market investigation reference)
contains—

(a) a decision that one or more of the things mentioned in
20subsection (4) may cause, or contribute to, the effect mentioned
in subsection (5), and

(b) a recommendation that any action should be taken by that
regulator.

(4) Those things are—

(a) 25a regulating provision or practice of the regulator,

(b) two or more regulating provisions or practices (of that regulator
or of both regulators) taken together,

(c) a particular combination of regulating provision or practices (of
that regulator or of both regulators), or

(d) 30a feature, or combination of features, of a market in the United
Kingdom that could be dealt with by regulating provision or
practices (of that regulator or of both regulators).

(5) That effect is the prevention, restriction or distortion of competition in
connection with the supply or acquisition of any goods or services in
35the United Kingdom or a part of the United Kingdom.

140C Consultation with regulator

Before giving section 140B advice, a competition authority must consult
the regulator to which the advice is to be given.

140D Investigation powers of OFT

40Where the OFT is deciding whether to exercise its power under section
7 of the Enterprise Act 2002 to give advice which, if given, would be
section 140B advice, section 174 of that Act has effect as if—

(a) in subsection (1), for the words from “make a reference” to the
end there were substituted “give advice which would for the
45purposes of Chapter 4 of Part 9A of the Financial Services and
Markets Act 2000 be section 140B advice”, and

(b) in subsection (2), for “make such a reference” there were
substituted “give such advice”.

140E Publication by OFT of section 140B advice

The OFT must publish in such manner as it thinks fit any section 140B
5advice given by it to either regulator.

140F Duty of Competition Commission to send report to regulator

(1) Where the publication of a report of the Competition Commission
under section 142 of the Enterprise Act 2002 constitutes the giving of
section 140B advice to either regulator, the Commission must give a
10copy of the report to that regulator.

(2) The day on which the copy is given is the day on which the regulator is
to be taken to receive the section 140B advice.

140G Duty of regulator to publish response

(1) A regulator must, within 90 days after the day on which it receives
15section 140B advice, publish a response stating how it proposes to deal
with the advice and in particular—

(a) whether it has decided to take any action, or to take no action,
in response to the advice,

(b) if it has decided to take action, what action it proposes to take,
20and

(c) its reasons for its proposals.

(2) Publication is to be in such manner as the regulator thinks fit.

140H Role of the Treasury

(1) This section applies where—

(a) 25a competition authority has given section 140B advice and the
regulator has published a response under section 140G, and

(b) the competition authority remains of the opinion that one or
more of the things mentioned in section 140B(4) may cause or
contribute to, the effect mentioned in section 140B(5).

(2) 30The competition authority may refer the section 140B advice to the
Treasury by sending the Treasury—

(a) a copy of the section 140B advice and of the response, and

(b) a request to consider the advice and the response.

(3) In referring the section 140B advice, the competition authority may give
35advice to the Treasury as to what action, if any, ought to be taken by the
regulator.

(4) If section 140B advice is referred to them, the Treasury may give a
direction to the regulator to which the advice was given requiring the
regulator to take such action as may be specified in the direction.

(5) 40In considering whether to give a direction and, if so, what action to
specify, the Treasury must have regard to—

(a) any advice the competition authority has given under
subsection (3),

(b) any action which the section 140B advice suggests that the
regulator should take, and

(c) the response of the regulator to the section 140B advice.

(6) The direction may not require the regulator to do anything that it has
5no power to do, but the existence of the direction is relevant to the
exercise of any discretion conferred on the regulator.

(7) Before giving a direction under this section, the Treasury must consult
the regulator to which it is to be given.

(8) If the Treasury give a direction under this section they must—

(a) 10publish in such manner as they think fit a statement giving
details of the direction and of their reasons for giving it, and

(b) lay a copy of the statement before Parliament.

CHAPTER 5 Power to make consequential amendments

141A Power to make consequential amendments of references to rules etc.

(1) 15This section applies if—

(a) a provision of primary or subordinate legislation (whenever
passed or made) contains a reference (however expressed) to
rules of either regulator or to guidance of the FCA,

(b) it appears to the Treasury or the Secretary of State that the
20reference requires amendment in consequence of the exercise
by that regulator of its power under this Part to make, alter or
revoke its rules or the exercise by the FCA or its power to make,
alter or revoke its guidance.

(2) The Treasury or the Secretary of State may by order make such
25amendment of the legislation referred to in subsection (1)(a) as appears
to them to be necessary or expedient in consequence of the exercise by
the regulator of the power mentioned in subsection (1)(b).

(3) The power conferred by subsection (2) includes power—

(a) to replace a reference to the rules of one regulator with a
30reference to the rules of the other regulator or to the rules of
both regulators;

(b) to replace a reference to the rules of both regulators with a
reference to the rules of one regulator.

(4) In subsection (1)(a) “subordinate legislation” does not include rules of
35either regulator.”

(2) In section 391 of FSMA 2000 (publication), after subsection (5) insert—

“(5A) Subsection (5) does not apply in relation to a notice given in accordance
with section 137Q(5) or (8)(a) (but see section 137Q(11)).”

(3) In section 395 of FSMA 2000 (procedures in relation to giving of supervisory
40notices etc), in subsection (13), after paragraph (bb) insert—

“(bba) section 137Q(5) or (8)(a);”.

(4) Omit Schedule 14 to FSMA 2000 (role of the Competition Commission).

23 Short selling rules

(1) In every provision of Part 8A of FSMA 2000 (short selling) for “Authority”, in
each place, substitute “FCA”.

(2) In section 131D of FSMA 2000 (procedure in urgent cases)—

(a) 5in subsection (1)—

(i) for “section 155 (consultation in relation to proposed rules)”
substitute “subsections (1)(b) and (2) to (5) of section 138I
(public consultation in relation to proposed rules)”, and

(ii) for paragraphs (a) and (b) substitute “advance one or more of its
10operational objectives.”, and

(b) in subsection (4), for paragraphs (a) and (b) substitute “advance one or
more of its operational objectives.”.

Control over authorised persons

24 Control over authorised persons

(1) 15FSMA 2000 is amended as follows.

(2) In every provision of Part 12 (control over authorised persons), for “Authority”
or “Authority’s”, in each place (where not expressly amended by the following
provisions), substitute “appropriate regulator” or “appropriate regulator’s”.

(3) In section 178 (obligation to notify an acquisition of control), after subsection
20(2) insert—

“(2A) In this Part, “the appropriate regulator” means—

(a) where the UK authorised person is a PRA-authorised person,
the PRA;

(b) in any other case, the FCA.”

(4) 25In section 179 (requirements for section 178 notices) in subsection (2), for “The
Authority” substitute “Each regulator”.

(5) In section 187 (approval with conditions), for subsection (2) substitute—

“(2) The appropriate regulator may only impose conditions where—

(a) if it did not impose those conditions, it would propose to object
30to the acquisition, or

(b) it is required to do so by a direction under section 187A(3)(b) or
section 187B(3).”

(6) After section 187 insert—

“187A Assessment: consultation by PRA with FCA

(1) 35The PRA must consult the FCA before acting under section 185.

(2) The FCA may make representations to the PRA in relation to any of the
matters set out in sections 185(2) and 186.

(3) If the FCA considers that on the basis of the matters set out in section
186(f) there are reasonable grounds to object to the acquisition, the FCA
40may—

(a) direct the PRA to object to the acquisition, or

(b) direct the PRA not to approve the acquisition unless it does so
subject to conditions specified in the direction (with or without
other conditions).

(4) Before giving a direction under subsection (3), the FCA must notify the
5PRA of its proposal to do so.

(5) In order to comply with the obligation under subsection (1), the PRA
must provide the FCA with—

(a) copies of—

(i) the section 178 notice, and

(ii) 10any document included with that notice,

(b)
any further information provided pursuant to section 190, and

(c) any other information in the possession of the PRA which—

(i) in the opinion of the PRA, is relevant to the application,
or

(ii) 15is reasonably requested by the FCA.

(c)(c)any other information in the possession of the PRA which—

(i) in the opinion of the PRA, is relevant to the application,
or

(ii) is reasonably requested by the FCA.

(6) 20If the PRA acts under section 185(1)(b), it must indicate to the section
178 notice-giver any representations or directions received from the
FCA.

(7) Directions given by the FCA under this section are subject to any
directions given to the FCA under section 3I.

187B 25Assessment: consultation by FCA with PRA

(1) The FCA must consult the PRA before acting under section 185 if—

(a) the UK authorised person to which the section 178 notice relates
has as a member of its immediate group a PRA-authorised
person, or

(b) 30the section 178 notice-giver is a PRA-authorised person.

(2) The PRA may make representations to the FCA in relation to any of the
matters set out in sections 185(2) and 186.

(3) If the PRA considers that on the basis of relevant matters that there are
reasonable grounds to object to the acquisition, the PRA may direct the
35FCA not to approve the acquisition unless it does so subject to
conditions specified in the direction (with or without other conditions).

(4) In subsection (3) “relevant matters” means—

(a) the matters in paragraphs (d) and (e)(i) of section 186, and

(b) in a case falling within subsection (1)(b) of this section, also
40includes the matter in paragraph (c) of section 186.

(5) In order to comply with the obligation under subsection (1), the FCA
must provide the PRA with—

(a) copies of—

(i) the section 178 notice, and

(ii) 45any document included with that notice,

(b)
any further information provided pursuant to section 190, and

(c) any other information in the possession of the FCA which—

(i) in the opinion of the FCA, is relevant to the application,
or

(ii) is reasonably requested by the PRA.

(6) If the FCA acts under section 185(1)(b), it must indicate to the section
178 notice-giver any representations or directions received from the
PRA.

187C 5Variation etc of conditions

(1) Where the PRA has imposed conditions required by a direction given
by the FCA under section 187A(3)—

(a) the FCA may direct the PRA to exercise its power under section
187(4) to vary or cancel any of those conditions;

(b) 10the PRA must consult the FCA before it exercises that power in
relation to those conditions otherwise than in accordance with
a direction under paragraph (a).

(2) Where the FCA has imposed conditions required by a direction given
by the PRA under section 187B(3)—

(a) 15the PRA may direct the FCA to exercise its power under section
187(4) to vary or cancel any of those conditions;

(b) the FCA must consult the PRA before it exercises that power in
relation to those conditions otherwise than in accordance with
a direction under paragraph (a).”

(7) 20In section 191A (objection to control), after subsection (4) insert—

“(4A) Where the appropriate regulator is the PRA, it must consult the FCA
before giving a warning notice under this section.

(4B) Where the appropriate regulator is the FCA, it must consult the PRA
before giving a warning notice under this section if—

(a) 25the UK authorised person has as a member of its immediate
group a PRA-authorised person, or

(b) the person to whom the warning notice is to be given is a PRA-
authorised person.”

(8) In section 191B (restriction notices), after subsection (2) insert—

“(2A) 30Where the appropriate regulator is the PRA, it must consult the FCA
before giving a restriction notice under this section.

(2B) Where the appropriate regulator is the FCA, it must consult the PRA
before giving a restriction notice under this section if—

(a) the UK authorised person has as a member of its immediate
35group a PRA-authorised person, or

(b) the person to whom the restriction notice is to be given is a PRA-
authorised person.”

(9) In section 191C (orders for the sale of shares), after subsection (2) insert—

“(2A) Where the appropriate regulator is the PRA, it must consult the FCA
40before making an application to the court under this section.

(2B) Where the appropriate regulator is the FCA, it must consult the PRA
before making an application to the court under this section if—

(a) the UK authorised person has as a member of its immediate
group a PRA-authorised person, or

(b) the person holding the shares or voting power is a PRA-
authorised person.”

(10) In section 191D (obligation to notify of disposition of control), after subsection
(1) insert—

“(1A) 5The PRA must give the FCA a copy of any notice it receives under this
section.

(1B) The FCA must give the PRA a copy of any notice it receives under this
section which—

(a) relates to a UK authorised person who has as a member of its
10immediate group a PRA-authorised person, or

(b) is given by a PRA-authorised person.”

(11) In section 191E (requirements for notices under section 191D), in subsection (2),
for “The Authority” substitute “Each regulator”.

(12) In section 191G (interpretation), in subsection (1), after the definition of
15“acquisition” insert—

• ““the appropriate regulator” is to be read in accordance with
  section 178(2A);”.

25 Powers of regulators in relation to parent undertakings

(1) After section 192 of FSMA 2000 insert—

20“ Part 12A Powers exercisable in relation to parent undertakings

Introductory

192A Meaning of “qualifying authorised person”

(1) In this Part “qualifying authorised person” means an authorised person
25satisfying the following conditions.

(2) Condition A is that the authorised person is a body corporate
incorporated in any part of the United Kingdom.

(3) Condition B is that the authorised person is—

(a) a PRA-authorised person, or

(b) 30an investment firm.

(4) The Treasury may by order—

(a) amend subsection (3) so as to add to or restrict the descriptions
of authorised person who can be qualifying authorised persons,
or

(b) 35provide that while the order is in force subsection (3) is not to
have effect.

(5) Except as provided by subsection (6), an order under subsection (4) is
not to be made unless a draft of the order has been laid before
Parliament and approved by a resolution of each House.

(6) An order under subsection (4) may be made without a draft having
been laid and approved as mentioned in subsection (5) if the order
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
5laid and approved.

(7) An order under subsection (4) made in accordance with subsection
(6)—

(a) must be laid before Parliament after being made, and

(b) ceases to have effect at the end of the relevant period unless
10before the end of that period the order is approved by a
resolution of each House of Parliament (but without affecting
anything done under the order or the power to make a new
order).

(8) The “relevant period” is a period of 28 days beginning with the day on
15which the order is made.

(9) In calculating the relevant period no account is to be taken of any time
during which Parliament is dissolved or prorogued or during which
both Houses are adjourned for more than 4 days.

192B Meaning of “qualifying parent undertaking”

(1) 20The parent undertaking of a qualifying authorised person or
recognised UK investment exchange is for the purposes of this Part a
“qualifying parent undertaking” if the following conditions are
satisfied in relation to it.

(2) Condition A is that the parent undertaking is a body corporate
25incorporated in any part of the United Kingdom.

(3) Condition B is that the parent undertaking is not itself an authorised
person, a recognised investment exchange or a recognised clearing
house.

(4) Condition C is that the parent undertaking is a financial institution of a
30kind prescribed by the Treasury by order.

(5) “Recognised UK investment exchange” means a recognised investment
exchange that is not an overseas investment exchange as defined in
section 313(1).

(6) The Treasury may by order—

(a) 35amend subsection (4) by omitting the words “a financial
institution”, and

(b) make any amendment of subsection (2) that they consider
desirable in connection with an amendment made under
paragraph (a).

40Power of direction

192C Power to direct qualifying parent undertaking

(1) The appropriate regulator may give a direction under this section to a
qualifying parent undertaking if either the general condition or the
consolidated supervision condition is satisfied.

(2) The general condition is that the appropriate regulator considers that
the acts or omissions of the qualifying parent undertaking are having
or may have a material adverse effect on the regulation by the regulator
of one or more qualifying authorised persons or recognised investment
5exchanges in pursuance of any of the regulator’s objectives.

(3) The consolidated supervision condition is that—

(a) the appropriate regulator is the competent authority for the
purpose of consolidated supervision that is required, in relation
to some or all of the members of the group of a qualifying
10authorised person, in pursuance of any of the directives
mentioned in section 3L(3), and

(b) the appropriate regulator considers that the acts or omissions of
the qualifying parent undertaking are having or may have a
material adverse effect on the effectiveness of that consolidated
15supervision.

(4) In subsection (3)(a) “consolidated supervision” includes supplemental
supervision.

(5) In deciding whether to give a direction under this section, a regulator
must have regard—

(a) 20to the desirability where practicable of exercising its powers in
relation to authorised persons or recognised investment
exchanges rather than its powers under this section, and

(b) to the principle that a burden or restriction which is imposed on
a person should be proportionate to the benefits, considered in
25general terms, which are expected to result from its imposition.

(6) “The appropriate regulator” means—

(a) where a direction relates to a qualifying authorised person or
recognised investment exchange who is a PRA-authorised
person, the FCA or the PRA;

(b) 30in any other case, the FCA.

(7) “Objectives”, in relation to the FCA, means operational objectives.

192D Requirements that may be imposed

(1) A direction under section 192C may require the parent undertaking—

(a) to take specified action, or

(b) 35to refrain from taking specified action.

(2) A requirement may be imposed by reference to the parent
undertaking’s relationship with—

(a) its group, or

(b) other members of its group.

(3) 40A requirement may refer to the past conduct of the parent undertaking
(for example, by requiring the parent undertaking to review or take
remedial action in respect of past conduct).

(4) The direction must specify the period during which each requirement
remains in force.