Financial Services Bill

Session 2012 - 13
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Other Bills before Parliament

Lords Amendments to the Financial Services Bill

10

“3IA
  Power of PRA in relation to with-profits policies

(1)
Where the first, second and third conditions are met, the PRA may give a

direction under this section to the FCA.

(2)
The first condition is that the FCA is proposing to exercise any of its

regulatory powers in relation to with-profits insurers, a class of with-

profits insurers or a particular with-profits insurer.

(3)
In subsection (2) “regulatory powers”, in relation to the FCA, means its

powers in relation to the regulation of authorised persons, including its

powers under Part 24 (insolvency) but not its powers in relation to consent

for the purposes of section 55F or 55I.

(4)
The second condition is that the proposed exercise of the power relates to

the provision of financial benefits under with-profits policies at the

discretion of the insurer, or affects or may affect the amount, timing or

distribution of financial benefits that are so provided or the entitlement to

future benefits that are so provided.

(5)
The third condition is that the PRA is of the opinion that the giving of the

direction is desirable in order to advance the PRA’s general objective or its

insurance objective.

(6)
A direction under this section is a direction requiring the FCA not to

exercise the power or not to exercise it in a specified manner.

(7)
The direction may be expressed to have effect during a specified period or

until revoked.

(8)
The FCA is not required to comply with a direction under this section if or

to the extent that in the opinion of the FCA compliance would be

incompatible with any EU obligation or any other international obligation

of the United Kingdom.

(9)
Subsections (1) to (8) apply only if the effecting or carrying out of with-

profits policies is a PRA-regulated activity.

(10)
In this section “with-profits insurer” and “with-profits policy” have the

same meaning as they have for the purposes of section 3F.”
46
Page 33, line 40, at end insert “or 3IA”
47
Page 33, line 42, at end insert “or 3IA”
48
Page 33, line 43, after “3I” insert “or 3IA”
49
Page 34, line 1, at end insert “or 3IA”
50
Page 34, line 2, after “3I” insert “or 3IA”
51
Page 34, line 4, after “3I” insert “or 3IA”
52
Page 34, line 6, after “3I” insert “or 3IA”
53
Page 34, line 7, at end insert—

“(3A)
The PRA must—

(a)
publish the direction and statement, or the notice, in such manner

as it thinks fit, and

11

(b)
where the direction or notice relates to a particular authorised

person or a particular with-profits insurer, give a copy of the

direction and statement, or the notice, to that person.”
54
Page 34, leave out lines 14 to 19
55
Page 34, leave out lines 20 to 28 and insert—

“(7)
Subsection (3A) does not apply where the PRA, after consulting the

Treasury, decides that compliance with that subsection would be against

the public interest, and at any time when this subsection excludes the

application of subsection (3A) in relation to a direction under section 3I,

subsection (5) also does not apply.

(8)
Where the PRA decides that compliance with subsection (3A) would be

against the public interest, it must from time to time review that decision

and if it subsequently decides that compliance is no longer against the

public interest it must—

(a)
comply with that subsection, and

(b)
in the case of a direction under section 3I, notify the Treasury for the

purposes of subsection (5).”
56
Page 35, line 37, at end insert “or 3IA”
57
Page 37, line 16, leave out from “with” to “that” in line 18 and insert—

“(a)
a local weights and measures authority in England, Wales

or Scotland, or

(b)
the Department of Enterprise, Trade and Investment in

Northern Ireland,


for the provision by the authority or department to the FCA of

services which relate to activities to which this subsection applies.

(5A)
Subsection (5) applies to activities”
58
Page 37, line 22, leave out “22(1A)” and insert “22(1A)(a)”
Clause 6
59
Page 38, line 29, at end insert “, or

(b)
the setting of a specified benchmark.”,”
60
Page 38, line 30, after “(1A),” insert—

“( )
after subsection (5) insert—

“(6)
“Benchmark” means an index, rate or price that—

(a)
is determined from time to time by reference to the

state of the market,

(b)
is made available to the public (whether free of

charge or on payment), and

(c)
is used for reference for purposes that include one or

more of the following—

(i)
determining the interest payable, or other

sums due, under loan agreements or under

other contracts relating to investments;

(ii)
determining the price at which investments

may be bought or sold or the value of

investments;

12

(iii)
measuring the performance of

investments.””
61
Page 39, line 16, leave out “22(1A)” and insert “22(1A)(a)”
62
Page 39, line 33, at end insert—

“Part 2B

Regulated activities relating to the setting of benchmarks

General

24E
The matters with respect to which provisions may be made

under section 22(1A)(b) include, in particular, those described in

general terms in this Part of this Schedule.

Providing information

24F
Providing any information or expression of opinion that—

(a)
is required by another person in connection with the

determination of a benchmark, and

(b)
is provided to that person for that purpose.

Administration

24G(1)
Administering the arrangements for determining a benchmark.

      (2)
Collecting, analysing or processing information or expressions of

opinion for the purpose of the determination of a benchmark.

Determining or publishing benchmark or publishing connected information

24H(1)
Determining a benchmark.

      (2)
Publishing a benchmark or information connected with a

benchmark.””
After Clause 8
63
Insert the following new Clause—


“Appointed representatives

(1)
Section 39 of FSMA 2000 (appointed representatives) is amended as

follows.

(2)
After subsection (1B) insert—

“(1C)
Subsection (1D) applies where an authorised person (“A”)—

(a)
has permission under Part 4A, or permission resulting from

any other provision of this Act, only in relation to one or

more qualifying activities,

(b)
is a party to a contract with another authorised person (A’s

“principal”) which—

(i)
permits or requires A to carry on business of a

prescribed description (“the relevant business”), and

13

(ii)
complies with such requirements as may be

prescribed, and

(c)
is someone for whose activities in carrying on the whole or

part of the relevant business A’s principal has accepted

responsibility in writing.

(1D)
Sections 20(1) and (1A) and 23(1A) do not apply in relation to the

carrying on by A of a relevant additional activity.

(1E)
In subsections (1C) and (1D)—

(a)
“qualifying activity” means a regulated activity which is of

a prescribed kind and relates—

(i)
to rights under a contract of the kind mentioned in

paragraph 23 of Schedule 2, other than one under

which the obligation of the borrower to repay is

secured on land, or

(ii)
to rights under a contract of the kind mentioned in

paragraph 23B of that Schedule;

(b)
“relevant additional activity” means a regulated activity

which—

(i)
is not one to which A’s permission relates, and

(ii)
is comprised in the carrying on of the business for

which A’s principal has accepted responsibility.”

(3)
For subsection (2) substitute—

“(2)
In this Act “appointed representative” means—

(a)
a person who is exempt as a result of subsection (1), or

(b)
a person carrying on a regulated activity in circumstances

where, as a result of subsection (1D), sections 20(1) and (1A)

and 23(1A) do not apply.””
Clause 9
64
Page 42, line 31, after “in” insert “or specified under”
65
Page 42, line 35, after “in” insert “or specified under”
66
Page 46, line 1, leave out “considers” and insert “appears to it”
67
Page 48, line 8, at end insert—

“(6A)
Without prejudice to the generality of subsections (1) and (2), the FCA may,

in relation to an authorised person who has permission to carry on the

regulated activity specified in article 24A of the Financial Services and

Markets Act 2000 (Regulated Activities) Order 2001 (which relates to bids

in emission allowance auctions), exercise its power under this section to

vary the Part 4A permission of the person concerned by removing that

activity from those to which the permission relates if it appears to the FCA

that the person has seriously and systematically infringed the provisions of

paragraph 2 or 3 of Article 59 of the emission allowance auctioning

regulation.”
68
Page 49, line 27, at end insert—

“(5A)
The FCA may refuse an application under subsection (5) if it appears to it

that it is desirable to do so in order to advance any of its operational

objectives.”