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Financial Services Bill (HC Bill 278)

Financial Services BillPage 250

(3) If on an application under subsection (2) the court or (in Scotland) the
sheriff cannot ascertain who is the owner of the seized document the
court or sheriff (as the case may be) may make such order as the court
or sheriff thinks fit.

(4) 5An order under subsection (2) or (3) does not affect the right of any
person to take legal proceedings against any person in possession of
a seized document for the recovery of the document.

(5) Any right to bring proceedings (as described in subsection (4)) may
only be exercised within 6 months of the date of the order made
10under subsection (2) or (3).

Part 2 Part 23 of FSMA 2000: public record, disclosure of information and co-
operation

16 (1) Section 347 (record of authorised persons) is amended as follows.

(2) 15In subsections (1) to (6), for “Authority”, in each place, substitute “FCA”.

(3) Omit subsection (1)(f).

(4) In subsection (2), in paragraph (e)—

(a) omit “or recognised clearing house,”, and

(b) omit “or clearing house”.

(5) 20In subsection (8), for “Authority” substitute “FCA or the PRA”.

17 After section 347 insert—

347A   Duty of PRA to disclose information relevant to the record

(1) The PRA must, for the purpose of assisting the FCA to comply with
its duty under section 347—

(a) 25notify the FCA if the information included in the record as
required under section 347(2)(a) appears to the PRA to be
incomplete or inaccurate,

(b) if it makes a prohibition order relating to an individual,
provide the FCA with information falling within section
30347(2)(f) in relation to that order,

(c) where it is the appropriate regulator in relation to an
approved person, provide the FCA with information falling
within section 347(2)(g) in relation to that approved person,
and

(d) 35where the FCA has notified the PRA that it considers it
appropriate to include in the record information of a certain
description, disclose to the FCA such information of that
description as the PRA has in its possession.

(2) The duty to provide information under this section does not apply to
40information which the PRA reasonably believes is in the possession
of the FCA.

(3) Subsection (1) does not require or authorise the disclosure of
information whose disclosure is prohibited by or under section 348.

(4)

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This section is without prejudice to any other power to disclose
information.

(5)
In this section references to the “record” are to the record maintained
under section 347.

18 (1) 5Section 348 (restrictions on disclosure of information) is amended as follows.

(2) In subsection (2)(b)—

(a) for “Authority” substitute “FCA, the PRA”, and

(b) omit “, the competent authority for the purposes of Part VI”.

(3) In subsection (5)—

(a) 10for paragraph (a) substitute—

(a) the FCA;

(aa) the PRA;,

(b) omit paragraph (b),

(c) in paragraph (d), for “139E” substitute “166A”, and

(d) 15after paragraph (e) insert—

(ea) a person who is or has been engaged to provide
services to a person mentioned in those paragraphs;.

(4) In subsection (6)—

(a) in paragraph (a), for “the competent authority” substitute “the FCA”,

(b) 20in paragraph (b), for “Authority” substitute “FCA, the PRA”, and

(c) omit paragraph (c).

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

19 (1) Section 349 (exceptions from section 348) is amended as follows.

(2) In subsection (2)(c), for “Authority” substitute “FCA or the PRA”.

(3) 25In subsection (3A)(a), for “Authority” substitute “FCA or the PRA”.

(4) In subsection (3B)(c), for “Authority’s functions” substitute “functions of the
FCA or the PRA”.

20 (1) Section 350 (disclosure of information to HMRC) is amended as follows.

(2) For subsection (1) substitute—

(1) 30No obligation as to secrecy imposed by statute or otherwise prevents
the disclosure of Revenue information to—

(a) the FCA or the PRA, if the disclosure is made for the purpose
of assisting or enabling that regulator to discharge its
functions under this or any other Act, or

(b) 35the Secretary of State, if the disclosure is made for the
purpose of assisting in the investigation of a matter under
section 168 or with a view to the appointment of an
investigator under that section.

(3) In subsection (4), for “subsection (1)” substitute “subsection (1)(b)”.

(4) 40In subsection (5)(b), at the beginning insert “where the information is
obtained as a result of subsection (1)(b),”.

21 Omit section 351 (competition information).

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22 In section 351A (disclosure under the UCITS directive), in subsection (1), for
“the Authority” substitute “the FCA or the PRA”.

23 (1) In section 353 (removal of other restrictions on disclosure), in subsection
(1)(b)—

(a) 5for “Authority”, in the first place, substitute “FCA or the PRA”, and

(b) for “Authority”, in the second place, substitute “either of them”.

24 After section 353 insert—

Information received from Bank of England

353A Information received from Bank of England

(1) 10A regulator must not disclose to any person specially protected
information.

(2) “Specially protected information” is information in relation to which
the first and second conditions are met.

(3) The first condition is that the regulator received the information
15from—

(a) the Bank of England (“the Bank”), or

(b) the other regulator where that regulator had received the
information from the Bank.

(4) The second condition is that the Bank notified the regulator to which
20it disclosed the information that the Bank held the information for
the purpose of its functions with respect to any of the following—

(a) monetary policy;

(b) financial operations intended to support financial
institutions for the purposes of maintaining stability;

(c) 25the provision of private banking services and related
services.

(5) The notification referred to in subsection (4) must be—

(a) in writing, and

(b) given before, or at the same time as, the Bank discloses the
30information.

(6) The prohibition in subsection (1) does not apply—

(a) to disclosure by one regulator to the other regulator where
the regulator making the disclosure informs the other
regulator that the information is specially protected
35information by virtue of this section;

(b) where the Bank has consented to disclosure of the
information;

(c) to information which has been made available to the public
by virtue of being disclosed in any circumstances in which, or
40for any purposes for which, disclosure is not precluded by
this section;

(d) to information which the regulator is required to disclose in
pursuance of any EU obligation.

(7) In this section references to disclosure by or to a regulator or by the
45Bank include references to disclosure by or to—

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(a) persons who are, or are acting as,—

(i) officers of, members of the staff of, or members of the
governing body of, the regulator, or

(ii) directors, officers, employees or agents of the Bank, or

(b) 5auditors, experts, contractors or investigators appointed by
the regulator or the Bank under powers conferred by this Act
or otherwise.

(8) References to disclosure by a regulator do not include references to
disclosure between persons who fall within any paragraph of
10subsection (7)(a) or (b) in relation to that regulator.

(9) Each regulator must take such steps as are reasonable in the
circumstances to prevent the disclosure of specially protected
information, in cases not excluded by subsection (6), by those who
are or have been—

(a) 15its officers or members of staff (including persons acting as its
officers or members of staff) or members of its governing
body;

(b) auditors, experts, contractors or investigators appointed by
the regulator under powers conferred by this Act or
20otherwise;

(c) persons to whom the regulator has delegated any of its
functions.

25 For section 354 substitute—

354A   FCA’s duty to co-operate with others

(1) 25The FCA must take such steps as it considers appropriate to co-
operate with other persons (whether in the United Kingdom or
elsewhere) who have functions—

(a) similar to those of the FCA, or

(b) in relation to the prevention or detection of financial crime.

(2) 30The persons referred to in subsection (1) do not include the Bank of
England or the PRA (but see sections 3D and 3P).

(3) The FCA must take such steps as it considers appropriate to co-
operate with—

(a) the Panel on Takeovers and Mergers;

(b) 35an authority designated as a supervisory authority for the
purposes of Article 4.1 of the Takeovers Directive;

(c) any other person or body that exercises functions of a public
nature, under legislation in any country or territory outside
the United Kingdom, that appears to the FCA to be similar to
40those of the Panel on Takeovers and Mergers.

(4) Co-operation may include the sharing of information which the FCA
is not prevented from disclosing.

(5) “Financial crime” has the meaning given in section 1H(3).

354B PRA’s duty to co-operate with others

(1) 45The PRA must take such steps as it considers appropriate to co-
operate with—

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(a) other persons (whether in the United Kingdom or elsewhere)
who have functions similar to those of the PRA, and

(b) other bodies that have functions relevant to financial
stability.

(2) 5The persons referred to in subsection (1) do not include the Bank of
England or the FCA (but see sections 3D and 3P).

(3) Co-operation may include the sharing of information which the PRA
is not prevented from disclosing.

354C PRA’s duty to provide information to Bank of England

(1) 10The PRA must disclose to the Bank of England (“the Bank”) any
information in its possession that it thinks will or may assist the Bank
in achieving its financial stability objective.

(2) The duty in subsection (1) applies whether or not the Bank has
requested that the information be disclosed to it.

(3) 15Subsection (1) does not require or authorise the disclosure of
information whose disclosure—

(a) is prohibited by or under section 348 or any other enactment;

(b) is incompatible with any EU obligation;

(c) would constitute or be punishable as a contempt of court.

(4) 20This section is without prejudice to any other power to disclose
information.

(5) The Bank’s financial stability objective is the objective set out in
section 2A(1) of the Bank of England Act 1998.

(6) In this section “enactment” includes—

(a) 25an Act of the Scottish Parliament,

(b) Northern Ireland legislation, and

(c) a Measure or Act of the National Assembly for Wales.

Section 39

SCHEDULE 13 Auditors and actuaries

1 30FSMA 2000 is amended as follows.

2 (1) Section 340 (appointment) is amended as follows.

(2) In subsection (1), for “Rules may require” substitute “The appropriate
regulator may make rules requiring”.

(3) In subsection (2), for “Rules may require” substitute “The appropriate
35regulator may make rules requiring”.

(4) In subsection (3), for “Rules may impose” substitute “The appropriate
regulator may make rules imposing”.

(5) In subsection (4), for “Authority”, in each place, substitute “regulator
making the rules”.

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(6) After subsection (5) insert—

(5A) In subsections (1) and (2) “the appropriate regulator” means—

(a) in the case of a PRA-authorised person, the PRA;

(b) in any other case, the FCA.

(5B) 5In subsection (3) “the appropriate regulator” means—

(a) in the case of an auditor of, or an actuary acting for, a PRA-
authorised person, the PRA or the FCA;

(b) in any other case, the FCA.

(7) After subsection (7) insert—

(8) 10The powers conferred by this section enable only the making of such
rules as appear to the regulator making them to be necessary or
expedient—

(a) in the case of the FCA, for the purpose of advancing one or
more of its operational objectives, or

(b) 15in the case of the PRA, for the purpose of advancing any of its
objectives.

3 (1) Section 342 (information given by auditor or actuary) is amended as follows.

(2) In subsection (1), after “authorised person” insert “or recognised investment
exchange,”.

(3) 20In subsection (3)—

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

(b) after “authorised person” insert “or recognised investment
exchange”, and

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

(4) 25In subsection (4), for “Authority” substitute “regulator”.

(5) In subsection (7), after “authorised person” insert “or recognised investment
exchange”.

(6) For “the Authority”, in each other place (including the heading), substitute
“a regulator”.

4 (1) 30Section 343 (information given by auditor or actuary: persons with close
links) is amended as follows.

(2) In subsection (1)—

(a) in paragraph (a), after “authorised person” insert “or recognised
investment exchange,”, and

(b) 35in paragraph (b), after “authorised person” insert “or recognised
investment exchange”.

(3) In subsection (3)—

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

(b) after “authorised person” insert “or recognised investment
40exchange”.

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

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

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(5) in subsection (7), after “authorised person” insert “or recognised investment
exchange”.

(6) In subsection (8), after “authorised person” insert “or recognised investment
exchange”.

(7) 5For “the Authority”, in each other place (including the heading), substitute
“a regulator”.

5 (1) Section 344 (duty of auditor or actuary resigning to give notice) is amended
as follows.

(2) In each place for “Authority” substitute “appropriate regulator”.

(3) 10In subsection (2)(a), after “authorised person” insert “or recognised
investment exchange”.

(4) In subsection (3)(a), for “Authority’s” substitute “regulator’s”.

(5) After subsection (3) insert—

(4) In this section “the appropriate regulator” means—

(a) 15in the case of an auditor of, or an actuary acting for, a PRA-
authorised person, the PRA;

(b) in any other case, the FCA.

6 (1) For section 345 (disqualification of auditor or actuary) and the italic heading
before it substitute—

20Disciplinary measures

345 Disciplinary measures: FCA

(1) Subsection (2) applies if it appears to the FCA that an auditor or
actuary to whom section 342 applies—

(a) has failed to comply with a duty imposed on the auditor or
25actuary by rules made by the FCA, or

(b) has failed to comply with a duty imposed under this Act to
communicate information to the FCA.

(2) The FCA may do one or more of the following—

(a) disqualify the auditor or actuary from being the auditor of, or
30(as the case may be) from acting as an actuary for, any
authorised person or any particular class of authorised
person;

(b) disqualify the auditor from being the auditor of any
recognised investment exchange or any particular class of
35recognised investment exchange;

(c) publish a statement to the effect that it appears to the FCA
that the auditor or (as the case may be) actuary has failed to
comply with the duty;

(d) impose on the auditor or actuary a penalty, payable to the
40FCA, of such amount as the FCA considers appropriate.

(3) If an auditor or actuary has been disqualified by the PRA under
section 345A(4)(a), the FCA may disqualify the auditor or actuary, so
long as the disqualification under that provision remains in force,

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from being the auditor of, or (as the case may be) from acting as an
actuary for—

(a) any FCA-authorised person,

(b) any particular class of FCA-authorised person,

(c) 5any recognised investment exchange, or

(d) any particular class of recognised investment exchange.

(4) In subsection (3) “FCA-authorised person” means an authorised
person who is not a PRA-authorised person.

(5) Where under subsection (2) or (3) the FCA disqualifies a person from
10being the auditor of an authorised person or recognised investment
exchange or class of authorised person or recognised investment
exchange and that authorised person or recognised investment
exchange is also, or any person within that class is also, a recognised
clearing house, the FCA must —

(a) 15notify the Bank of England, and

(b) notify the disqualified person that it has made a notification
under paragraph (a).

(6) The FCA may remove any disqualification imposed under
paragraph (a) or (b) of subsection (2) if satisfied that the disqualified
20person will in future comply with the duty in question.

(7) The FCA may at any time remove any disqualification imposed
under subsection (3).

345A Disciplinary measures: PRA

(1) The following provisions of this section have effect only if the
25Treasury, by order made after consultation with the PRA, so provide.

(2) Subsection (3) applies if it appears to the PRA that an auditor or
actuary to whom section 342 applies—

(a) has failed to comply with a duty imposed on the auditor or
actuary by rules made by the PRA, or

(b) 30has failed to comply with a duty imposed under this Act to
communicate information to the PRA.

(3) The PRA may exercise one or more of the specified powers.

(4) The specified powers are such one or more of the following as may
be specified in the order under subsection (1)

(a) 35to disqualify the auditor or actuary from being the auditor of,
or (as the case may be) from acting as an actuary for, any
PRA-authorised person or any particular class of PRA-
authorised person;

(b) to publish a statement to the effect that it appears to the PRA
40that the auditor or (as the case may be) actuary has failed to
comply with the duty;

(c) to impose on the auditor or actuary a penalty, payable to the
PRA, of such amount as the PRA considers appropriate.

(5) Where the PRA disqualifies a person under subsection (4)(a) it
45must—

(a) notify the FCA, and

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(b) notify the person concerned that it has made a notification
under paragraph (a).

(6) Where the PRA disqualifies a person from being the auditor of a
PRA-authorised person or class of PRA-authorised person, and that
5PRA-authorised person is also, or any person within that class is also,
a recognised clearing house, the PRA must, in addition to complying
with subsection (5)

(a) notify the Bank of England, and

(b) notify the disqualified person that it has made a notification
10under paragraph (a).

(7) The PRA may remove any disqualification imposed under
subsection (4)(a) if satisfied that the disqualified person will in future
comply with the duty in question.

345B Procedure and right to refer to Tribunal

(1) 15If the FCA proposes to act under section 345(2) or the PRA proposes
to act under section 345A(3), it must give the auditor or actuary to
whom the action would relate a warning notice.

(2) A warning notice about a proposal to impose a penalty must state the
amount of the penalty.

(3) 20A warning notice about a proposal to publish a statement must set
out the terms of the statement.

(4) If the FCA decides to act under section 345(2) or the PRA decides to
act under section 345A(3), it must give the auditor or actuary to
whom the action would relate a decision notice.

(5) 25A decision notice about the imposition of a penalty must state the
amount of the penalty.

(6) A decision notice about the publication of a statement must set out
the terms of the statement. If the FCA decides to act under section 345(2) or the PRA decides to
30act under section 345A(3), the auditor or actuary concerned may
refer the matter to the Tribunal.

345C Duty on publication of statement

After a statement under section 345(2)(c) or 345A(4)(b) is published,
the regulator that published it must send a copy of the statement to—

(a) 35the auditor or actuary, and

(b) any person to whom a copy of the decision notice was given
under section 393(4).

345D Imposition of penalties on auditors or actuaries: statement of policy

(1) The FCA must prepare and issue a statement of its policy with
40respect to—

(a) the imposition of penalties under section 345(2)(d), and

(b) the amount of penalties under that provision.

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(2) If by virtue of an order under section 345A(1), the PRA has power to
impose penalties under section 345A(4)(c), the PRA must prepare
and issue a statement of its policy with respect to—

(a) the imposition of penalties under section 345A(4)(c), and

(b) 5the amount of penalties under that provision.

(3) A regulator’s policy in determining what the amount of a penalty
should be must include having regard to—

(a) the seriousness of the contravention, and

(b) the extent to which the contravention was deliberate or
10reckless.

(4) A regulator may at any time alter or replace a statement issued under
this section.

(5) If a statement issued under this section is altered or replaced, the
regulator must issue the altered or replacement statement.

(6) 15A regulator must, without delay, give the Treasury a copy of any
statement which it publishes under this section.

(7) A statement issued under this section must be published by the
regulator in the way appearing to the regulator to be best calculated
to bring it to the attention of the public.

(8) 20In deciding whether to exercise a power under section 345(2)(d) in
the case of any particular contravention, the FCA must have regard
to any statement of policy published by it under this section and in
force at a time when the contravention occurred.

(9) In deciding whether to exercise a power under section 345A(4)(d) in
25the case of any particular contravention, the PRA must have regard
to any statement of policy published by it under this section and in
force at a time when the contravention occurred.

(10) A regulator may charge a reasonable fee for providing a person with
a copy of the statement.

345E 30Statements of policy: procedure

(1) Before a regulator issues a statement under section 345D, the
regulator must publish a draft of the proposed statement in the way
appearing to the regulator to be best calculated to bring it to the
attention of the public.

(2) 35The draft must be accompanied by notice that representations about
the proposal may be made to the regulator within a specified time.

(3) Before issuing the proposed statement, the regulator must have
regard to any representations made to it in accordance with
subsection (2).

(4) 40If the regulator issues the proposed statement it must publish an
account, in general terms, of—

(a) the representations made to it in accordance with subsection
(2), and

(b) its response to them.