Financial Services Bill (HC Bill 2)

Financial Services BillPage 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
5PRA-authorised person.

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) 10After subsection (5) insert—

(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
15person, the FCA or the PRA;

(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) 20In subsection (1)—

(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
25investigating authority”,

(b) in paragraph (c), for “Authority” substitute “investigating
authority”,

(c) after that paragraph insert—

(ca) a recognised investment exchange may have
30contravened the recognition requirements (within the
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
35authority”,

(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
40specified, for the purposes of this subsection by the
Treasury by order.

(4) In subsection (5), for “Authority” substitute “investigating authority”.

(5) For subsection (6) substitute—

(6) Investigating authority” means—

Financial Services BillPage 251

(a) in subsections (1) to (3), the FCA, the PRA or the Secretary of
State;

(b) in subsections (4) and (5), the FCA or the PRA.

9 (1) Section 169 (investigations at the request of an overseas regulator) is
5amended as follows.

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

(3) In subsections (3) and (4), in each place, for “Authority” substitute
“regulator”.

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

(5) 10In subsection (6), for “Authority” substitute “regulator”.

(6) In subsection (7), for “the Authority” substitute “a regulator”.

(7) In subsection (8), for “Authority” substitute “regulator”,

(8) In subsection (9), for “The Authority” substitute “Each regulator”.

(9) In subsection (11), for “Authority” substitute “regulator”.

10 15In section 169A (supporting an overseas regulator regarding financial
stability), in subsection (1), for “Authority” substitute “PRA”.

11 In section 170 (investigations: general), in subsection (10), for paragraphs (a)
and (b) substitute—

(a) the FCA, if the FCA appointed the investigator;

(aa) 20the PRA, if the PRA appointed the investigator;

(b) the Secretary of State, if the Secretary of State appointed the
investigator.

12 In section 174 (admissibility of statements to investigators), in subsection (2),
for “the Authority” substitute “a regulator”.

13 (1) 25Section 175 (information and documents: supplemental) is amended as
follows.

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

(3) After subsection (2) insert—

(2A) A document so produced may be retained for so long as the person
30to whom it is produced considers that it is necessary to retain it
(rather than copies of it) for the purposes for which the document
was requested.

(2B) If the person to whom a document is so produced has reasonable
grounds for believing—

(a) 35that the document may have to be produced for the purposes
of any legal proceedings, and

(b) that it might otherwise be unavailable for those purposes,

it may be retained until the proceedings are concluded.

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

14 (1) 40Section 176 (entry of premises under warrant) is amended as follows.

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

Financial Services BillPage 252

(3) After subsection (5) insert—

(5A) A warrant under this section may be executed by any constable.

(5B) The warrant may authorise persons to accompany any constable
who is executing it.

(5C) 5The powers in subsection (5) may be exercised by a person
authorised by the warrant to accompany a constable; but that person
may exercise those powers only in the company of, and under the
supervision of, a constable.

(4) In subsection (6), for “16” substitute “16(3) to (12)”.

(5) 10In subsection (7), for “18” substitute “18(3) to (12)”.

(6) Omit subsection (8).

(7) In subsection (11), in paragraph (a), for “the Authority” substitute “a
regulator”.

15 After section 176 insert—

176A 15 Retention of documents taken under section 176

(1) Any document of which possession is taken under section 176 (“a
seized document”) may be retained so long as it is necessary to retain
it (rather than copies of it) in the circumstances.

(2) A person claiming to be the owner of a seized document may apply
20to a magistrates’ court or (in Scotland) the sheriff for an order for the
delivery of the document to the person appearing to the court or
sheriff to be the owner.

(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
25court or sheriff (as the case may be) may make such order as the court
or sheriff thinks fit.

(4) An 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) 30Any right to bring proceedings (as described in subsection (4)) may
only be exercised within 6 months of the date of the order made
under subsection (2) or (3).

Part 2 Part 23 of FSMA 2000: public record, disclosure of information and co-
35operation

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

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

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

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

(a) 40omit “or recognised clearing house,”, and

Financial Services BillPage 253

(b) omit “or clearing house”.

(5) In 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) 5The PRA must, for the purpose of assisting the FCA to comply with
its duty under section 347—

(a) notify 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) 10if it makes a prohibition order relating to an individual,
provide the FCA with information falling within section
347(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
15within section 347(2)(g) in relation to that approved person,
and

(d) where 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
20description as the PRA has in its possession.

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

(3) Subsection (1) does not require or authorise the disclosure of
25information whose disclosure is prohibited by or under section 348.

(4)
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) 30Section 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) 35for paragraph (a) substitute—

(a) the FCA;

(aa) the PRA;,

(b) omit paragraph (b),

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

(d) 40after 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) 45in paragraph (b), for “Authority” substitute “FCA, the PRA”, and

Financial Services BillPage 254

(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) 5In 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 by HMRC) is amended as follows.

(2) For subsection (1) substitute—

(1) 10No 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) 15the 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) 20In 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).

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

23 (1) 25In section 353 (removal of other restrictions on disclosure), in subsection
(1)(b)—

(a) for “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—

30Information received from Bank of England

353A Information received from Bank of England

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

(2) “Specially protected information” is information in relation to which
35the first and second conditions are met.

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

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

(b) the other regulator where that regulator had received the
40information from the Bank.

Financial Services BillPage 255

(4) The second condition is that the Bank notified the regulator to which
it 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) 5financial operations intended to support financial
institutions for the purposes of maintaining stability;

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

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

(a) 10in writing, and

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

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

(a) to disclosure by one regulator to the other regulator where
15the regulator making the disclosure informs the other
regulator that the information is specially protected
information by virtue of this section;

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

(c) 20to information which has been made available to the public
by virtue of being disclosed in any circumstances in which, or
for any purposes for which, disclosure is not precluded by
this section;

(d) to information which the regulator is required to disclose in
25pursuance of any EU obligation.

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

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

(i) officers of, members of the staff of, or members of the
30governing body of, the regulator, or

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

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

(8) 35References to disclosure by a regulator do not include references to
disclosure between persons who fall within any paragraph of
subsection (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
40information, in cases not excluded by subsection (6), by those who
are or have been—

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

(b) 45auditors, experts, contractors or investigators appointed by
the regulator under powers conferred by this Act or
otherwise;

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

Financial Services BillPage 256

25 For section 354 substitute—

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

(1) The FCA must take such steps as it considers appropriate to co-
operate with other persons (whether in the United Kingdom or
5elsewhere) who have functions—

(a) similar to those of the FCA, or

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

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

(3) 10The FCA must take such steps as it considers appropriate to co-
operate with—

(a) the Panel on Takeovers and Mergers;

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

(c) 15any other person or body that exercises functions of a public
nature, under legislation in any country or territory outside
the United Kingdom, that appear to the FCA to be similar to
those of the Panel on Takeovers and Mergers.

(4) Co-operation may include the sharing of information which the FCA
20is 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) The PRA must take such steps as it considers appropriate to co-
operate with—

(a) 25other 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) The persons referred to in subsection (1) do not include the Bank of
30England 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) The PRA must disclose to the Bank of England (“the Bank”) any
35information 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) Subsection (1) does not require or authorise the disclosure of
40information 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.

Financial Services BillPage 257

(4) This 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) 5In this section “enactment” includes—

(a) an 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 10Auditors and actuaries

1 FSMA 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) 15In subsection (2), for “Rules may require” substitute “The appropriate
regulator 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
20making the rules”.

(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) 25In 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) 30The 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) 35in 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,”.

Financial Services BillPage 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) 5for “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”.

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

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
15investment exchange,”, and

(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) 20after “authorised person” insert “or recognised investment
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
25exchange”.

(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) 30Section 344 (duty of auditor or actuary resigning to give notice) is amended
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) 35In subsection (3)(a), for “Authority’s” substitute “regulator’s”.

(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) 40in any other case, the FCA.

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

Financial Services BillPage 259

before it substitute—

Disciplinary measures

345 Disciplinary measures: FCA

(1) Subsection (2) applies if it appears to the FCA that an auditor or
5actuary to whom section 342 applies—

(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) 10The FCA may do one or more of the following—

(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) 15disqualify the auditor from being the auditor of any
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
20comply with the duty;

(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
25long as the disqualification under that provision remains in force,
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) 30any 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
35being 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) 40notify 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
45person will in future comply with the duty in question.

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