Financial Services Bill

Session 2012 - 13
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Financial Services Bill

Financial Services Bill
Schedule 11 — The financial ombudsman service
244

13
For paragraph 2 (and the italic heading before it) substitute—
“Duty of FCA
2
The FCA must take such steps as are necessary to ensure that the
body corporate established by the Financial Services Authority
under this Schedule as originally enacted is, at all times, capable of
5
exercising the functions conferred on the scheme operator by or
under this Act.”
14
In paragraph 3 (constitution)—
(a)
for “Authority”, in each place, substitute “FCA”, and
(b)
in sub-paragraph (4), after “9” insert “, 9A”.
10
15
After paragraph 3 insert—
“Relationship with FCA
3A    (1)
The scheme operator and the FCA must each take such steps as it
considers appropriate to co-operate with the other in the exercise
of their functions under this Part.
15
      (2)
The scheme operator and the FCA must prepare and maintain a
memorandum describing how they intend to comply with sub-
paragraph (1).
      (3)
The scheme operator must ensure that the memorandum as
currently in force is published in the way appearing to the scheme
20
operator to be best calculated to bring it to the attention of the
public.”
16
In paragraph 7 (annual reports)—
(a)
for “Authority” , in each place, substitute “FCA”, and
(b)
at the end insert—
25
    “(5)
The Treasury may—
(a)
require the scheme operator 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 provision of that Act about accounts and
30
their audit is to apply to the scheme operator with such
modifications as are specified in the direction, whether or
not the provision would otherwise apply to the scheme
manager.
      (6)
Compliance with any requirement under sub-paragraph (5)(a) or
35
(b) is enforceable by injunction or, in Scotland, an order for specific
performance under section 45 of the Court of Session Act 1988.
      (7)
Proceedings under sub-paragraph (6) may be brought only by the
Treasury.”

Financial Services Bill
Schedule 11 — The financial ombudsman service
245

17
After paragraph 7 insert—
“Audit of accounts
7A    (1)
The scheme operator must send a copy of its annual accounts to
the Comptroller and Auditor General as soon as is reasonably
practicable.
5
      (2)
The Comptroller and Auditor General must—
(a)
examine, certify and report on accounts received under
this paragraph, and
(b)
send a copy of the certified accounts and the report to the
Treasury.
10
      (3)
The Treasury must lay the copy of the certified accounts and the
report before Parliament.
      (4)
The scheme operator must send a copy of the certified accounts
and the report to the FCA.
      (5)
Except as provided by paragraph 7(5), the scheme operator is
15
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 paragraph “annual accounts” has the meaning given by
section 471 of the Companies Act 2006.”
20
18
For the italic heading before paragraph 8 substitute “Information, advice and
guidance”.
19
In paragraph 8 (guidance), for “guidance consisting of such information and
advice” substitute “such information, guidance or advice”.
20
In paragraph 9 (budget), for “Authority”, in each place, substitute “FCA”.
25
21
After paragraph 9 insert—
“Annual plan
9A    (1)
The scheme operator 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.
30
      (3)
An annual plan in respect of a financial year must make provision
about the use of the resources of the scheme operator.
      (4)
The plan may include material relating to periods longer than the
financial year in question.
      (5)
Before preparing an annual plan, the scheme operator must
35
consult such persons (if any) as the scheme operator considers
appropriate.
      (6)
The scheme operator must publish each annual plan in the way it
considers appropriate.”
22
In paragraph 13 (procedural rules)—
40
(a)
for “Authority”, in each place, substitute “FCA”,

Financial Services Bill
Schedule 12 — Amendments of Parts 11 and 23 of FSMA 2000
Part 1 — Part 11 of FSMA 2000: information gathering and investigations
246

(b)
for “Authority’s”, in each place, (including the italic heading),
substitute “FCA’s”, and
(c)
in sub-paragraph (4)(b), for “Part X” substitute “Part 9A”.
23
In paragraph 14 (scheme operator’s rules)—
(a)
in sub-paragraph (2), after paragraph (f) insert—
5
“(fa)
allow the correction of any clerical mistake in the
written statement of a determination made by an
ombudsman;
(fb)
provide that any irregularity arising from a failure
to comply with any provisions of the scheme rules
10
does not of itself render a determination void;”,
and
(b)
in sub-paragraph (7), for “Authority” substitute “FCA”.
24
In paragraph 16B (procedure for complaints etc), in sub-paragraph (1), after
paragraph (d) insert—
15
“(e)
may provide that an ombudsman may correct any clerical
mistake in a determination made by that ombudsman;
(f)
provide that any irregularity arising from a failure to
comply with any provisions of the consumer credit rules
does not of itself render a determination void.”
20
25
In paragraph 16E (consumer credit rules), for “Authority”, in each place,
substitute “FCA”.
26
In paragraph 18 (terms of reference), for “Authority”, in each place,
substitute “FCA”.
27
In paragraph 19 (delegation), in sub-paragraph (3), for “Authority”
25
substitute “FCA”.
28
In paragraph 20 (voluntary jurisdiction rules: procedure), for “Authority”, in
each place, substitute “FCA”.
Schedule 12
Section 38

Amendments of Parts 11 and 23 of FSMA 2000
30
Part 1
Part 11 of FSMA 2000: information gathering and investigations
1     (1)
Section 165 (power to require information) is amended as follows.
      (2)
In subsection (1), for “The Authority” substitute “Either regulator”.
      (3)
In subsection (3), for “Authority” substitute “regulator”.
35
      (4)
In subsection (4), for “the Authority” substitute “either regulator”.
      (5)
In subsections (5) and (6) for “The Authority”, in each place, substitute “The
regulator in question”.
      (6)
In subsection (7), for the words from “exercised” to the end substitute
“exercised—
40

Financial Services Bill
Schedule 12 — Amendments of Parts 11 and 23 of FSMA 2000
Part 1 — Part 11 of FSMA 2000: information gathering and investigations
247

(a)
by either regulator, to impose requirements on a person who is
connected with an authorised person;
(b)
by the FCA, to impose requirements on an operator, trustee or
depositary of a scheme recognised under section 270 or 272 who is
not an authorised person;
5
(c)
by the FCA, to impose requirements on a recognised investment
exchange;
(d)
by the FCA, to impose requirements on a person who is connected
with a recognised investment exchange.”
      (7)
In subsection (9)—
10
(a)
for “the Authority”, in the first place, substitute “the regulator
exercising the power”,
(b)
for “the Authority’s” substitute “that regulator’s”, and
(c)
for “the Authority”, in the second place, substitute “that regulator”.
      (8)
In subsection (11)—
15
(a)
in the opening words, for “an authorised person” substitute “another
person”, and
(b)
in paragraph (d), at the end insert “(reading references in that Part to
the authorised person as references to A)”.
      (9)
In the heading, for “Authority’s” substitute “Regulators’”.
20
2
In section 165A (power to require information relevant to financial
stability)—
(a)
for “Authority”, in each place, substitute “PRA”, and
(b)
in the heading, for “Authority’s” substitute “PRA’s”.
3
In section 165B (safeguards relating to section 165A)—
25
(a)
for “Authority”, in each place, substitute “PRA”, and
(b)
for “Authority’s”, in each place, substitute “PRA’s”.
4
In section 165C (orders under section 165A(2)(d)) for subsection (1)
substitute—
“(1)
The Treasury may make an order under section 165A(2)(d) only if
30
either or both of the following conditions is met in relation to the
provision made by the order.
(1A)
Condition A is that the Treasury consider that—
(a)
the activities carried on by the prescribed person or persons
of the prescribed description, or the way in which those
35
activities (or any part of them) are carried on, or
(b)
any failure to carry on those activities (or any part of them),

pose, or would be likely to pose, a serious threat to the stability of the
UK financial system.
(1B)
Condition B is that the provision implements all or part of a
40
recommendation made by the Financial Policy Committee of the
Bank of England under section 9O of the Bank of England Act 1998.”

Financial Services Bill
Schedule 12 — Amendments of Parts 11 and 23 of FSMA 2000
Part 1 — Part 11 of FSMA 2000: information gathering and investigations
248

5
For section 166 (reports by skilled persons) substitute—
“166
Reports by skilled persons
(1)
This section applies where either regulator has required or could
require a person to whom subsection (2) applies (“the person
concerned”) to provide information or produce documents with
5
respect to any matter (“the matter concerned”).
(2)
This subsection applies to—
(a)
an authorised person (“A”),
(b)
any other member of A’s group,
(c)
a partnership of which A is a member, or
10
(d)
a person who has at any relevant time been a person falling
within paragraph (a), (b) or (c),

who is, or was at the relevant time, carrying on a business.
(3)
The regulator mentioned in subsection (1) may either—
(a)
by notice in writing given to the person concerned, require
15
the person concerned to provide the regulator with a report
on the matter concerned, or
(b)
itself appoint a person to provide the regulator with a report
on the matter concerned.
(4)
When acting under subsection (3)(a), the regulator may require the
20
report to be in such form as may be specified in the notice.
(5)
The regulator must give notice of an appointment under subsection
(3)(b) to the person concerned.
(6)
The person appointed to make a report—
(a)
must be a person appearing to the regulator to have the skills
25
necessary to make a report on the matter concerned, and
(b)
where the appointment is to be made by the person
concerned, must be a person nominated or approved by the
regulator.
(7)
It is the duty of—
30
(a)
the person concerned, and
(b)
any person who is providing (or who has at any time
provided) services to the person concerned in relation to the
matter concerned,

to give the person appointed to prepare a report all such assistance
35
as the appointed person may reasonably require.
(8)
The obligation imposed by subsection (7) is enforceable, on the
application of the regulator in question, by an injunction or, in
Scotland, by an order for specific performance under section 45 of the
Court of Session Act 1988.
40
(9)
A regulator may make rules providing for expenses incurred by it in
relation to an appointment under subsection (3)(b) to be payable as a
fee by the person concerned.
(10)
The powers conferred by this section may also be exercised by the
FCA in relation to a person to whom subsection (11) applies, (and
45
references to the person concerned are to be read accordingly).

Financial Services Bill
Schedule 12 — Amendments of Parts 11 and 23 of FSMA 2000
Part 1 — Part 11 of FSMA 2000: information gathering and investigations
249

(11)
This subsection applies to—
(a)
a recognised investment exchange (“A”),
(b)
any other member of A’s group,
(c)
a partnership of which A is a member, or
(d)
a person who has at any time been a person falling within
5
paragraph (a), (b) or (c),

who is, or was at the relevant time, carrying on a business.”
6
After section 166 insert—
“166A
  Appointment of skilled person to collect and update information
(1)
This section applies if either regulator considers that an authorised
10
person has contravened a requirement in rules made by that
regulator to collect, and keep up to date, information of a description
specified in the rules.
(2)
The regulator may either—
(a)
require the authorised person to appoint a skilled person to
15
collect or update the information, or
(b)
itself appoint a skilled person to do so.
(3)
References in this section to a skilled person are to a person—
(a)
appearing to the regulator to have the skills necessary to
collect or update the information in question, and
20
(b)
where the appointment is to be made by the authorised
person, nominated or approved by the regulator.
(4)
The regulator must give notice of an appointment under subsection
(2)(b) to the authorised person.
(5)
The skilled person may require any person to provide all such
25
assistance as the skilled person may reasonably require to collect or
update the information in question.
(6)
A requirement imposed under subsection (5) is enforceable, on the
application of the regulator in question, by an injunction or, in
Scotland, by an order for specific performance under section 45 of the
30
Court of Session Act 1988.
(7)
A contractual or other requirement imposed on a person (“P”) to
keep any information in confidence does not apply if—
(a)
the information is or may be relevant to anything required to
be done as a result of this section,
35
(b)
an authorised person or a skilled person requests or requires
P to provide the information for the purpose of securing that
those things are done, and
(c)
the regulator in question has approved the making of the
request or the imposition of the requirement before it is made
40
or imposed.
(8)
An authorised person may provide information (whether received
under subsection (7) or otherwise) that would otherwise be subject to
a contractual or other requirement to keep it in confidence if it is
provided for the purposes of anything required to be done as a result
45
of this section.

Financial Services Bill
Schedule 12 — Amendments of Parts 11 and 23 of FSMA 2000
Part 1 — Part 11 of FSMA 2000: information gathering and investigations
250

(9)
A regulator may make rules providing for expenses incurred by it in
relation to an appointment under subsection (2)(b) to be payable as a
fee by the authorised person.
(10)
In this section “authorised person”, in relation to the PRA, means
PRA-authorised person.”
5
7     (1)
Section 167 (appointment of investigator in general cases) is amended as
follows.
      (2)
In subsection (1), for “the Authority or the Secretary of State (“the
investigating authority”)” substitute “an investigating authority”.
      (3)
After subsection (5) insert—
10
“(5A)
“Investigating authority” means—
(a)
in relation to a recognised investment exchange, the
Secretary of State or the FCA;
(b)
in relation to an authorised person or former authorised
person, the FCA or the PRA;
15
(c)
in relation to an appointed representative or former
appointed representative, the FCA or the PRA.”
8     (1)
Section 168 (appointment of investigator in specific cases) is amended as
follows.
      (2)
In subsection (1)—
20
(a)
omit paragraph (a), and
(b)
in paragraph (b), for “191” substitute “191F”.
      (3)
In subsection (4)—
(a)
in the opening words, for “the Authority” substitute “an
investigating authority”,
25
(b)
in paragraph (c), for “Authority” substitute “investigating
authority”,
(c)
after that paragraph insert—
“(ca)
a recognised investment exchange may have
contravened the recognition requirements (within the
30
meaning of Part 18);”,
(d)
in paragraph (f), for “an authorised or exempt person” substitute “a
person”,
(e)
in paragraph (h), for “Authority” substitute “investigating
authority”,
35
(f)
in paragraph (j), omit the words from “or by any” to the end, and
(g)
after that paragraph insert—
“(k)
a person may have contravened a qualifying EU
provision that is specified, or of a description
specified, for the purposes of this subsection by the
40
Treasury by order.”
      (4)
In subsection (5), for “Authority” substitute “investigating authority”.
      (5)
For subsection (6) substitute—
“(6)
“Investigating authority” means—