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Financial Services BillPage 230

(a) if the representations are in writing, give a copy to the FCA,
or

(b) if they are not in writing and have not been given directly to
the FCA by the person making them, provide the FCA with a
5record of them.

(7) In subsection (4), for “The Authority” substitute “The regulator concerned”.

21 (1) Section 388 (decision notices) is amended as follows.

(2) In subsection (1)(b), for “the Authority’s reasons” substitute “the reasons of
the regulator giving the notice (“the regulator concerned”)”.

(3) 10After subsection (1) insert—

(1A) Where the PRA is the regulator concerned and the FCA has decided
to refuse consent for the purposes of section 55F, 55I or 59 or to give
conditional consent as mentioned in section 55F(5) or 55I(8), the
decision notice given by the PRA must—

(a) 15state that fact, and

(b) give the reasons for the FCA’s decision.

(4) In subsections (3) and (4), for “The Authority” substitute “The regulator
concerned”.

22 In section 389(1) (notices of discontinuance)—

(a) 20for “the Authority” substitute “a regulator”, and

(b) in paragraphs (a) and (b), after “notice” insert “given by it”.

23 (1) Section 390 (final notices) is amended as follows.

(2) In subsection (1)—

(a) for “the Authority”, in the first place, substitute “a regulator”, and

(b) 25for “the Authority”, in the second place, substitute “the regulator”.

(3) In subsection (2)—

(a) for “the Authority”, in the first place, substitute “a regulator”, and

(b) for “the Authority”, in the second place, substitute “the regulator”.

(4) In subsections (9) and (10), for “the Authority” substitute “the regulator
30giving the notice”.

24 (1) Section 391 (publication) is amended as follows.

(2) For subsection (1) substitute—

(1) In the case of a warning notice falling within subsection (1ZB)—

(a) neither the regulator giving the notice nor a person to whom
35it is given or copied may publish the notice;

(b) a person to whom the notice is given or copied may not
publish any details concerning the notice unless the regulator
giving the notice has published those details; and

(c) after consulting the persons to whom the notice is given or
40copied, the regulator giving the notice may publish such
information about the matter to which the notice relates as it
considers appropriate.

Financial Services BillPage 231

(1ZA) In the case of a warning notice not falling within subsection (1ZB),
neither the regulator giving the notice nor a person to whom it is
given or copied may publish the notice or any details concerning it.

(1ZB) A warning notice falls within this subsection if it is given under—

(a) 5section 63B;

(b) section 67;

(c) section 87M;

(d) section 88B;

(e) section 89K;

(f) 10section 89R;

(g) section 92;

(h) section 126;

(i) section 131H;

(j) section 192L;

(k) 15section 207;

(l) section 312G;

(m) section 345B.

(3) In subsections (1A), (2) and (3), for “Authority” substitute “regulator giving
the notice”.

(4) 20In subsection (4)—

(a) for “The Authority” substitute “The regulator giving a decision or
final notice”, and

(b) for “a decision notice or final notice” substitute “the notice”.

(5) In subsection (5), for “Authority” substitute “regulator giving the notice”.

(6) 25For subsection (6) substitute—

(6) The FCA may not publish information under this section if, in its
opinion, publication of the information would be—

(a) unfair to the person with respect to whom the action was
taken (or was proposed to be taken),

(b) 30prejudicial to the interests of consumers, or

(c) detrimental to the stability of the UK financial system.

(6A) The PRA may not publish information under this section if, in its
opinion, publication of the information would be—

(a) unfair to the person with respect to whom the action was
35taken (or was proposed to be taken),

(b) prejudicial to the safety and soundness of PRA-authorised
persons, or

(c) in a case where section 2C applies, prejudicial to securing the
appropriate degree of protection for policyholders.

(7) 40In subsection (7), for “Authority” substitute “regulator”.

25 (1) Section 392 (application of sections 393 and 394) is amended as follows.

(2) In paragraph (a)—

(a) for “54(1)” substitute “55Z(1)”, and

(b) after “131H(1),” insert “192L(1),”.

Financial Services BillPage 232

(3) In paragraph (b)—

(a) for “54(2)” substitute “55Z(2)”, and

(b) after “131H(4),” insert “192L(4),”.

26 (1) Section 393 (third party rights) is amended as follows.

(2) 5In subsections (1)(b) and (2), for “Authority” substitute “regulator giving the
notice”.

(3) In subsection (3)—

(a) for “28 days” substitute “14 days”, and

(b) for “the Authority” substitute “the regulator giving the notice”.

(4) 10In subsections (4)(b), (6), (7), (9)(b) and (11)(b), for “the Authority” substitute
“the regulator giving the notice”.

(5) In subsection (12), for “which the Authority must disclose” substitute “to
which access must be given”.

27 (1) Section 394 (access to Authority material) is amended as follows.

(2) 15In subsection (1)—

(a) in the opening words, for “the Authority” substitute “a regulator”,
and

(b) in paragraph (b), for “, in the opinion of the Authority,” substitute
“, in the regulator’s opinion,”.

(3) 20In subsection (2), for “the Authority”, in both places, substitute “the
regulator giving the notice”.

(4) In subsection (3), for “The Authority” substitute “The regulator giving the
notice”.

(5) In subsection (4)—

(a) 25for “the Authority” substitute “the regulator giving the notice”, and

(b) for “the Authority’s” substitute “the regulator’s”.

(6) In subsection (5), for “the Authority” substitute “the regulator giving the
notice”.

(7) In subsection (6)—

(a) 30in paragraph (a), for “the Authority” substitute “the regulator giving
the notice”, and

(b) in paragraph (b), for “the Authority in connection with the matter to
which the notice to which this section applies” substitute “the
regulator giving the notice in connection with the matter to which
35that notice”.

(8) In the heading, for “Authority” substitute “FCA or PRA”.

28 (1) Section 395 (the Authority’s procedures) is amended as follows.

(2) For subsection (1) substitute—

(1) Each regulator must determine the procedure that it proposes to
40follow in relation to the following—

(a) a decision which gives rise to an obligation to give a
supervisory notice,

Financial Services BillPage 233

(b) in the case of the FCA, a decision which—

(i) gives rise to an obligation for it to give a warning
notice or decision notice, or

(ii) gives rise to an obligation for the PRA to include a
5statement under section 387(1A) in a warning notice
or a statement under section 388(1A) in a decision
notice,

(c) in the case of the PRA, a decision which gives rise to an
obligation for it to give a warning notice or decision notice,
10other than a decision which depends entirely on a decision of
the FCA of the kind mentioned in paragraph (b)(ii).

(3) In subsection (2)—

(a) omit the words from “which gives” to “such notice”, and

(b) at the end insert “, or by 2 or more persons who include a person not
15directly involved in establishing that evidence”.

(4) In subsection (3), for the words from “taken” to the end substitute “taken
otherwise as mentioned in subsection (2) if the person taking the decision is
of a level of seniority laid down by the procedure and—

(a) in the case of procedure proposed by the FCA, the FCA
20considers that, in the particular case, it is necessary in order
to advance one or more of its operational objectives, or

(b) in the case of procedure proposed by the PRA, the PRA
considers that, in the particular case, it is necessary in order
to advance any of its objectives.

(5) 25In subsection (5)—

(a) for “The Authority” substitute “Each regulator”, and

(b) for “the procedure” substitute “its procedure”.

(6) In subsection (6)—

(a) for “the Authority” substitute “the regulator issuing it”, and

(b) 30for “it” substitute “the statement”.

(7) In subsection (7), for “The Authority” substitute “The regulator issuing the
statement”.

(8) In subsection (8)—

(a) for “The Authority” substitute “The regulator issuing a statement
35under this section”, and

(b) for “any statement which it issues under this section” substitute “the
statement”.

(9) In subsection (9)—

(a) for “giving” substitute “a regulator gives”,

(b) 40after “decision notice,” insert “other than a warning notice or
decision notice relating to a decision of the PRA that is required by a
a decision of the FCA of the kind mentioned in subsection (1)(b)(ii)”,
and

(c) for “the Authority” substitute “the regulator”.

Financial Services BillPage 234

(10) After subsection (9) insert—

(9A) When the FCA takes a decision falling within subsection (1)(b)(ii), it
must follow its stated procedure.

(11) In subsection (10)—

(a) 5for “the Authority” substitute “a regulator”, and

(b) for “the procedure” substitute “its procedure”.

(12) In subsection (11), for “The Authority’s” substitute “A regulator’s”.

(13) In subsection (13), for paragraph (a) substitute—

(a) 55Y(4), (7) or (8)(b);.

(14) 10In the heading, for “Authority’s” substitute “FCA’s and PRA’s”.

(15) In the italic heading before that section, for “Authority’s” substitute “FCA’s
and PRA’s”.

29 (1) Section 396 (statements under s.395: consultation) is amended as follows.

(2) In subsection (1)—

(a) 15after “a statement of” insert “its”,

(b) for “the Authority”, in the first place, substitute “the regulator”,

(c) for “the Authority”, in the second place, substitute “it”, and

(d) for “it” substitute “the draft”.

(3) In subsection (2), for “Authority” substitute “regulator publishing the draft”.

(4) 20In subsection (3), for “Before issuing the proposed statement of procedure,
the Authority” substitute “Before a regulator issues the proposed statement
of its procedure, it”.

(5) In subsection (4), for “Authority issues the proposed statement of
procedure” substitute “regulator issues the proposed statement of its
25procedure,”.

(6) In subsection (5)—

(a) for “statement of procedure differs from the draft published”
substitute “statement of the regulator’s procedure differs from the
draft published by it”,

(b) 30for “, in the opinion of the Authority,” substitute “, in its opinion,”,
and

(c) for “the Authority must” substitute “it must”.

(7) In subsection (6)—

(a) for “The Authority” substitute “The regulator publishing a draft
35under subsection (1)”, and

(b) for “a draft published under subsection (1)” substitute “the draft”.

Part 7 Offences

30 (1) Section 398 (misleading the Authority: residual cases) is amended as
40follows.

(2) In subsection (1), for “the Authority” substitute “a regulator”.

Financial Services BillPage 235

(3) In the heading, for “the Authority” substitute “FCA or PRA”.

31 (1) Section 401 (proceedings for offences) is amended as follows.

(2) In subsections (2)(a) and (3)(a), for “Authority” substitute “appropriate
regulator”.

(3) 5After subsection (3) insert—

(3A) For the purposes of subsections (2)(a) and (3)(a), the PRA is the
“appropriate regulator” in respect of each of the following offences—

(a) an offence under section 55P(10) where the contravention is
of a requirement imposed by the PRA;

(b) 10an offence under section 56(4) where the prohibition order is
made by the PRA;

(c) an offence under section 177(3) where the investigation is
being, or is likely to be, conducted on behalf of the PRA;

(d) an offence under section 177(4) where the requirement is
15imposed by the PRA;

(e) an offence under section 177(6) where the warrant is issued as
a result of information on oath given by the PRA or a person
appointed by the PRA to conduct an investigation on its
behalf;

(f) 20an offence under section 191F(1) where the notice should
have been given to the PRA;

(g) an offence under any of section 191F(2) to (7) where the
notice, approval or information was given to or by the PRA;

(h) an offence under section 366(3), unless the activity of
25effecting or carrying out long-term contracts of insurance is
not to any extent a PRA-regulated activity;

(i) an offence under section 398(1) where the information was
given to the PRA.

(3B) For the purposes of subsections (2)(a) and (3)(a), the FCA is the
30“appropriate regulator” in respect of all other offences under this Act
or subordinate legislation made under this Act.

(4) In subsection (5), for “Authority” substitute “appropriate regulator”.

32 (1) Section 402 (power of the Authority to institute proceedings for certain other
offences) is amended as follows.

(2) 35In subsections (1) and (2), for “Authority” substitute “FCA”.

(3) In the heading, for “the Authority” substitute “FCA”.

Financial Services BillPage 236

Part 8 Co-operation

33 After section 415A insert—

Consultation

415B 5Consultation in relation to taking certain enforcement action

(1) The FCA must consult the PRA before taking a qualifying step in
relation to a person who—

(a) is a PRA-authorised person, or

(b) has a qualifying relationship with a PRA-authorised person.

(2) 10The PRA must consult the FCA before taking a qualifying step.

(3) In this section any reference to the taking of a qualifying step is a
reference to—

(a) the giving of a warning notice or decision notice under
section 63B (performance of controlled functions without
15approval),

(b) the giving of a warning notice or decision notice under
section 67 (disciplinary powers in relation to approved
person),

(c) the giving of a warning notice under section 126 or a decision
20notice under section 127 (market abuse),

(d) the giving of a warning notice or decision notice under
section 131H (short selling),

(e) the giving of a warning notice under section 207 or a decision
notice under section 208 (breaches of requirements imposed
25by or under Act etc.),

(f) the giving of a warning notice under section 312G or a
decision notice under section 312H (recognised bodies),

(g) the making of an application to the court under section
380, 381, 382 or 383 (injunctions or restitution), or

(h) 30the giving of a warning notice under section 385 or a decision
notice under section 386 (power of FCA or PRA to require
restitution).

(4) A person has a qualifying relationship with a PRA-authorised
person (“A”) for the purposes of this section if—

(a) 35the person is a member of A’s immediate group, or

(b) in the case of a qualifying step within subsection (3)(a) or (b),
the person performs a significant-influence function under
an arrangement entered into by A, or by a contractor of A, in
relation to the carrying on by A of a regulated activity.

40“Significant-influence function” and “arrangement” have the same
meanings as in section 59.

Financial Services BillPage 237

Section 35

SCHEDULE 10 The Financial Services Compensation Scheme

1 Part 15 of FSMA 2000 (the Financial Services Compensation Scheme) is
amended as follows.

2 (1) 5Section 212 (the scheme manager) is amended as follows.

(2) For subsections (1) and (2) substitute—

(1) The scheme manager” means the body corporate established by the
Financial Services Authority under this section as originally enacted.

(2) The regulators must take such steps as are necessary to ensure that
10the scheme manager is, at all times, capable of exercising the
functions conferred on it by or under this Part or Part 15A.

(3) In subsections (4) and (5) for “Authority” substitute “regulators”.

3 (1) Section 213 (the compensation scheme) is amended as follows.

(2) In each place, for “Authority” substitute “regulators”.

(3) 15In subsection (1)—

(a) after “rules” insert “made in accordance with an order under
subsection (1A)”, and

(b) for the words from “cases where” to the end substitute “cases
where—

(a) 20relevant persons are unable, or likely to be unable, to
satisfy claims against them, or

(b) persons who have assumed responsibility for
liabilities arising from acts or omissions of relevant
persons (“successors”) are unable, or likely to be
25unable, to satisfy claims against the successors that
are based on those acts or omissions.

(4) After subsection (1) insert—

(1A) The Treasury must by order specify—

(a) the cases in which the FCA are, or are not, to make rules
30under subsection (1), and

(b) the cases in which the PRA are, or are not, to make rules
under that subsection.

(5) In subsection (2), after “rules” insert “(taken together)”.

(6) In subsection (9)(a), after “against him” insert “, or against a successor falling
35within subsection (1)(b),”.

4 In section 214 (general provisions of the scheme), in subsection (1), after
paragraph (a) insert—

(aa) as to the circumstances in which a successor falling within
section 213(1)(b) is to be taken (for the purposes of the
40scheme) to be unable, or likely to be unable, to satisfy claims
against the successor that are based on the acts or omissions
of a relevant person;.

Financial Services BillPage 238

5 In section 215 (rights of the scheme in insolvency), for “Authority”, in each
place, substitute “regulators”.

6 In section 217 (insurers in financial difficulties), in subsection (5), for
“Authority” substitute “either regulator or both regulators”.

7 5After section 217 insert—

Relationship with the regulators

217A Co-operation

(1) Each regulator and the scheme manager must take such steps as they
consider appropriate to co-operate with each other in the exercise of
10their functions under this Part and Part 15A.

(2) Each regulator and the scheme manager must prepare and maintain
a memorandum describing how that regulator and the scheme
manager intend to comply with subsection (1).

(3) The scheme manager must ensure that the memoranda as currently
15in force are published in the way appearing to it to be best calculated
to bring them to the attention of the public.

8 For the italic heading before section 218 substitute “Annual plan and report”.

9 Before section 218 insert—

217B Annual plan

(1) 20The scheme manager must in respect of each of its financial years
prepare an annual plan.

(2) The plan must be prepared before the start of the financial year.

(3) An annual plan in respect of a financial year must make provision
about the use of the resources of the scheme manager.

(4) 25The plan may include material relating to periods longer than the
financial year in question.

(5) Before preparing an annual plan, the scheme manager must consult
such persons (if any) as the scheme manager considers appropriate.

(6) The scheme manager must publish each annual plan in the way it
30considers appropriate.

10 (1) Section 218 (annual report) is amended as follows.

(2) In subsections (1) and (2)(b), for “Authority” substitute “regulators”.

(3) At the end insert—

(4) The Treasury may—

(a) 35require the scheme manager to comply with any provisions
of the Companies Act 2006 about accounts and their audit
which would not otherwise apply to it, or

(b) direct that any such provision of that Act is to apply to the
scheme manager with such modifications as are specified in
40the direction.

Financial Services BillPage 239

(5) Compliance with any requirement under subsection (4)(a) or (b) is
enforceable by injunction or, in Scotland, an order for specific
performance under section 45 of the Court of Session Act 1988.

(6) Proceedings under subsection (5) may be brought only by the
5Treasury.

11 After section 218 insert—

218ZA Audit of accounts

(1) The scheme manager must send a copy of its annual accounts to the
Comptroller and Auditor General and the Treasury as soon as is
10reasonably practicable.

(2) The Comptroller and Auditor General must—

(a) examine, certify and report on accounts received under this
section, and

(b) send a copy of the certified accounts and the report to the
15Treasury.

(3) The Treasury must lay the copy of the certified accounts and the
report before Parliament.

(4) The scheme manager must send a copy of the certified accounts and
the report to the regulators.

(5) 20Except as provided by section 218(4), the scheme manager is exempt
from the requirements of Part 16 of the Companies Act 2006 (audit),
and its balance sheet must contain a statement to that effect.

(6) In this section “annual accounts” has the meaning given by section
471 of the Companies Act 2006.

12 (1) 25Section 218A (power to require information) is amended as follows.

(2) In subsection (1)—

(a) for “The Authority”, in the first place, substitute “Each regulator”,
and

(b) for “the Authority”, in the second and third place, substitute “that
30regulator”.

(3) In subsections (2) and (4), for “Authority” substitute “regulator”.

(4) In subsection (5), for “Authority’s” substitute “regulator’s”.

(5) In the heading, for “Authority’s” substitute “Regulators’”.

13 In section 224 (scheme manager’s power to inspect documents), in
35subsection (1), after “relevant person,” insert “or a successor falling within
section 213(1)(b),”.

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