Financial Services Bill

Session 2012 - 13
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Financial Services Bill

Financial Services Bill
Schedule 13 — Auditors and actuaries
258

      (3)
In 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”.
5
      (4)
In 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”.
10
4     (1)
Section 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
15
(b)
in 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
20
exchange”, and
(c)
for “the Authority”, in the second place, substitute “that regulator”.
      (4)
In subsection (4), for “Authority” substitute “regulator”.
      (5)
in subsection (7), after “authorised person” insert “or recognised investment
exchange”.
25
      (6)
In subsection (8), after “authorised person” insert “or recognised investment
exchange”.
      (7)
For “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
30
as follows.
      (2)
In each place for “Authority” substitute “appropriate regulator”.
      (3)
In subsection (2)(a), after “authorised person” insert “or recognised
investment exchange”.
      (4)
In subsection (3)(a), for “Authority’s” substitute “regulator’s”.
35
      (5)
After subsection (3) insert—
“(4)
In this section “the appropriate regulator” means—
(a)
in the case of an auditor of, or an actuary acting for, a PRA-
authorised person, the PRA;
(b)
in any other case, the FCA.”
40
6     (1)
For section 345 (disqualification of auditor or actuary) and the italic heading

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Schedule 13 — Auditors and actuaries
259

before it substitute—
“Disciplinary 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—
5
(a)
has failed to comply with a duty imposed on the auditor or
actuary 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—
10
(a)
disqualify the auditor or actuary from being the auditor of, or
(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
15
recognised investment exchange or any particular class of
recognised 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;
20
(d)
impose on the auditor or actuary a penalty, payable to the
FCA, 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,
25
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)
any recognised investment exchange, or
30
(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
being the auditor of an authorised person or recognised investment
35
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)
notify the Bank of England, and
40
(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
person will in future comply with the duty in question.
45
(7)
The FCA may at any time remove any disqualification imposed
under subsection (3).

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Schedule 13 — Auditors and actuaries
260

345A
Disciplinary measures: PRA
(1)
The following provisions of this section have effect only if the
Treasury, 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—
5
(a)
has failed to comply with a duty imposed on the auditor or
actuary by rules made by the PRA, or
(b)
has 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.
10
(4)
The specified powers are such one or more of the following as may
be specified in the order under subsection (1)—
(a)
to 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-
15
authorised person;
(b)
to publish a statement to the effect that it appears to the PRA
that 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
20
PRA, of such amount as the PRA considers appropriate.
(5)
Where the PRA disqualifies a person under subsection (4)(a) it
must—
(a)
notify the FCA, and
(b)
notify the person concerned that it has made a notification
25
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
PRA-authorised person is also, or any person within that class is also,
a recognised clearing house, the PRA must, in addition to complying
30
with subsection (5)—
(a)
notify the Bank of England, and
(b)
notify the disqualified person that it has made a notification
under paragraph (a).
(7)
The PRA may remove any disqualification imposed under
35
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)
If 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
40
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)
A warning notice about a proposal to publish a statement must set
out the terms of the statement.
45

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(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)
A decision notice about the imposition of a penalty must state the
amount of the penalty.
5
(6)
A decision notice about the publication of a statement must set out
the terms of the statement.
(7)
If the FCA decides to act under section 345(2) or the PRA decides to
act under section 345A(3), the auditor or actuary concerned may
refer the matter to the Tribunal.
10
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)
the auditor or actuary, and
(b)
any person to whom a copy of the decision notice was given
15
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
respect to—
(a)
the imposition of penalties under section 345(2)(d), and
20
(b)
the amount of penalties under that provision.
(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
25
(b)
the 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
30
reckless.
(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.
35
(6)
A 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.
40
(8)
In 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.

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(9)
In deciding whether to exercise a power under section 345A(4)(c) in
the 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
5
a copy of the statement.
345E
Statements 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
10
attention of the public.
(2)
The 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
15
subsection (2).
(4)
If 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
20
(b)
its response to them.
(5)
If the statement differs from the draft published under subsection (1)
in a way which is, in the opinion of the regulator, significant, the
regulator must (in addition to complying with subsection (4))
publish details of the difference.
25
(6)
A regulator may charge a reasonable fee for providing a person with
a copy of a draft under subsection (1).
(7)
This section also applies to a proposal to alter or replace a statement.”
7     (1)
Section 392 (application of sections 393 and 394) is amended as follows.
      (2)
In paragraph (a), for “345(2) (whether as a result of subsection (1) of that
30
section” substitute “345B(1) (whether as a result of section 345(2), 345A(3)”.
      (3)
In paragraph (b), for “345(3) (whether as a result of subsection (1) of that
section” substitute “345B(4) (whether as a result of section 345(2), 345A(3)”.
Schedule 14
Section 41

Amendments of Part 24 of FSMA 2000: insolvency
35
1
Part 24 of FSMA 2000 is amended as follows.
2
In section 355 (interpretation of Part 24) at the end of subsection (1) insert—
“ “PRA-regulated person” means a person who—
(a)
is or has been a PRA-authorised person,

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(b)
is or has been an appointed representative whose
principal (or one of whose principals) is, or was, a
PRA-authorised person, or
(c)
is carrying on or has carried on a PRA-regulated
activity in contravention of the general prohibition.”
5
3     (1)
Section 356 (powers to participate in proceedings: company voluntary
arrangements) is amended as follows.
      (2)
In subsections (1) and (2), for “the Authority” substitute “the appropriate
regulator”.
      (3)
In subsection (3)—
10
(a)
for “the Authority”, in the first place, substitute “a regulator”, and
(b)
for “the Authority”, in the second place, substitute “the appropriate
regulator”.
      (4)
After subsection (3) insert—
“(4)
“The appropriate regulator” means—
15
(a)
in the case of a PRA-authorised person—
(i)
for the purposes of subsections (1) and (2), the FCA or
the PRA, and
(ii)
for the purposes of subsection (3), each of the FCA
and the PRA;
20
(b)
in any other case, the FCA.
(5)
If either regulator makes an application to the court under any of
those provisions in relation to a PRA-authorised person, the other
regulator is entitled to be heard at any hearing relating to the
application.”
25
      (5)
In the heading, for “Authority’s powers” substitute “Powers of FCA and
PRA”.
4     (1)
Section 357 (powers to participate in proceedings: individual voluntary
arrangements) is amended as follows.
      (2)
In subsections (1) to (5), for “Authority” substitute “appropriate regulator”.
30
      (3)
In subsection (6)—
(a)
for “the Authority”, in the first place, substitute “a regulator”, and
(b)
for “the Authority”, in the second place, substitute “the appropriate
regulator”.
      (4)
After subsection (6) insert—
35
“(7)
“The appropriate regulator” means—
(a)
in the case of a PRA-authorised person—
(i)
for the purposes of subsections (1) and (4) to (6), each
of the FCA and the PRA, and
(ii)
for the purposes of subsection (3), the FCA or the
40
PRA;
(b)
in any other case, the FCA.
(8)
If either regulator makes an application to the court under any of the
provisions mentioned in subsection (5) in relation to a PRA-

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authorised person, the other regulator is entitled to be heard at any
hearing relating to the application.”
      (5)
In the heading, for “Authority’s powers” substitute “Powers of FCA and
PRA”.
5     (1)
Section 358 (powers to participate in proceedings: trust deeds for creditors
5
in Scotland) is amended as follows.
      (2)
In subsections (2) to (4), for “Authority” substitute “appropriate regulator”.
      (3)
In subsection (5)—
(a)
for “the Authority”, in the first place, substitute “the appropriate
regulator”, and
10
(b)
for “the Authority”, in the second place, substitute “that regulator”.
      (4)
In subsection (6), for “the Authority” substitute “a regulator”.
      (5)
After subsection (6) insert—
“(6A)
“The appropriate regulator” means—
(a)
in the case of a PRA-authorised person—
15
(i)
for the purposes of subsections (2), (3) and (4), each of
the FCA and the PRA, and
(ii)
for the purposes of subsection (5), the FCA or the
PRA;
(b)
in any other case, the FCA.”
20
      (6)
In the heading, for “Authority’s powers” substitute “Powers of FCA and
PRA”.
6     (1)
Section 359 (administration order) is amended as follows.
      (2)
In subsection (1), for “Authority” substitute “FCA”.
      (3)
After subsection (1) insert—
25
“(1A)
The PRA may make an administration application under Schedule
B1 to the 1986 Act or Schedule B1 to the 1989 Order in relation to a
company or insolvent partnership which is a PRA-regulated
person.”
      (4)
In subsection (2), for “the Authority” substitute “a regulator”, and
30
      (5)
In subsection (4), in the definition of “authorised deposit taker”, for “Part
IV”, in both places, substitute “Part 4A”.
7     (1)
Section 361 (administrator’s duty to report) is amended as follows.
      (2)
In subsection (2), for “Authority” substitute “appropriate regulator”.
      (3)
After subsection (2) insert—
35
“(2A)
“The appropriate regulator” means—
(a)
where the regulated activity is a PRA-regulated activity, the
FCA and the PRA;
(b)
in any other case, the FCA.”