Session 2012 - 13
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Other Bills before Parliament

Lords Amendments to the Financial Services Bill





  Power of PRA in relation to with-profits policies



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


direction under this section to the FCA.



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.



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.



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.



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.



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.



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


until revoked.



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.



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


profits policies is a PRA-regulated activity.



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


same meaning as they have for the purposes of section 3F.”


Page 33, line 40, at end insert “or 3IA


Page 33, line 42, at end insert “or 3IA”


Page 33, line 43, after “3I” insert “or 3IA”


Page 34, line 1, at end insert “or 3IA


Page 34, line 2, after “3I” insert “or 3IA”


Page 34, line 4, after “3I” insert “or 3IA”


Page 34, line 6, after “3I” insert “or 3IA”


Page 34, line 7, at end insert—



The PRA must—



publish the direction and statement, or the notice, in such manner


as it thinks fit, and





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.”


Page 34, leave out lines 14 to 19


Page 34, leave out lines 20 to 28 and insert—



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.



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—



comply with that subsection, and



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


purposes of subsection (5).”


Page 35, line 37, at end insert “or 3IA”


Page 37, line 16, leave out from “with” to “that” in line 18 and insert—



a local weights and measures authority in England, Wales


or Scotland, or



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.



Subsection (5) applies to activities”


Page 37, line 22, leave out “22(1A)” and insert “22(1A)(a)”

Clause 6


Page 38, line 29, at end insert “, or



the setting of a specified benchmark.”,”


Page 38, line 30, after “(1A),” insert—


“( )    

after subsection (5) insert—



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



is determined from time to time by reference to the


state of the market,



is made available to the public (whether free of


charge or on payment), and



is used for reference for purposes that include one or


more of the following—



determining the interest payable, or other


sums due, under loan agreements or under


other contracts relating to investments;



determining the price at which investments


may be bought or sold or the value of







measuring the performance of




Page 39, line 16, leave out “22(1A)” and insert “22(1A)(a)”


Page 39, line 33, at end insert—


“Part 2B


Regulated activities relating to the setting of benchmarks





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



Providing any information or expression of opinion that—



is required by another person in connection with the


determination of a benchmark, and



is provided to that person for that purpose.





Administering the arrangements for determining a benchmark.



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



Determining a benchmark.



Publishing a benchmark or information connected with a



After Clause 8


Insert the following new Clause—



“Appointed representatives



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





After subsection (1B) insert—



Subsection (1D) applies where an authorised person (“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,



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


“principal”) which—



permits or requires A to carry on business of a


prescribed description (“the relevant business”), and





complies with such requirements as may be


prescribed, and



is someone for whose activities in carrying on the whole or


part of the relevant business A’s principal has accepted


responsibility in writing.



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


carrying on by A of a relevant additional activity.



In subsections (1C) and (1D)—



“qualifying activity” means a regulated activity which is of


a prescribed kind and relates—



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



to rights under a contract of the kind mentioned in


paragraph 23B of that Schedule;



“relevant additional activity” means a regulated activity





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



is comprised in the carrying on of the business for


which A’s principal has accepted responsibility.”



For subsection (2) substitute—



In this Act “appointed representative” means—



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



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


Page 42, line 31, after “in” insert “or specified under”


Page 42, line 35, after “in” insert “or specified under”


Page 46, line 1, leave out “considers” and insert “appears to it”


Page 48, line 8, at end insert—



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




Page 49, line 27, at end insert—



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



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Revised 6 December 2012