Financial Services Bill

Session 2012 - 13
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Financial Services Bill

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
48

(b)
may exercise the power so as to add a new activity to those to
which the permission relates or to widen the description of a
regulated activity to which the permission relates, only with the
consent of the FCA.
(6)
Without prejudice to the generality of subsections (1) to (3), a regulator
5
may, in relation to an authorised person who is an investment firm,
exercise its power under this section to cancel the Part 4A permission if
it appears to it that any of the conditions in section 55K is met.
(7)
If, as a result of a variation of a Part 4A permission under this section,
there are no longer any regulated activities for which the authorised
10
person concerned has permission, the regulator responsible for the
variation must, once it is satisfied that it is no longer necessary to keep
the permission in force, cancel it.
(8)
Before cancelling under subsection (7) a Part 4A permission which
relates to a person who (before the variation) was a PRA-authorised
15
person, the regulator must consult the other regulator.
(9)
The power of either regulator to vary a Part 4A permission under this
section extends to including in the permission as varied any provision
that could be included if a fresh permission were being given in
response to an application to that regulator under section 55A.
20
(10)
Consent given by one regulator for the purpose of subsection (4)(b) or
(5)(b) may be conditional on the manner in which the other regulator
exercises its powers under section 55E(4) and (5) or 55F(3) and (4) (as a
result of subsection (9)).
(11)
The power of the FCA or the PRA under this section is referred to in this
25
Part as its own-initiative variation power.
55K
Investment firms: particular conditions that enable cancellation
(1)
The conditions referred to in section 55J(6) are as follows—
(a)
that the firm has failed, during a period of at least 6 months, to
carry on a regulated activity which is an investment service or
30
activity for which it has a Part 4A permission;
(b)
that the firm obtained the Part 4A permission by making a false
statement or by other irregular means;
(c)
that the firm no longer satisfies the requirements for
authorisation pursuant to Chapter I of Title II of the markets in
35
financial instruments directive, or pursuant to or contained in
any EU legislation made under that Chapter, in relation to a
regulated activity which is an investment service or activity for
which it has a Part 4A permission;
(d)
that the firm has seriously and systematically infringed the
40
operating conditions pursuant to Chapter II of Title II of the
markets in financial instruments directive, or pursuant to or
contained in any EU legislation made under that Chapter, in
relation to a regulated activity which is an investment service or
activity for which it has a Part 4A permission.
45
(2)
For the purposes of this section a regulated activity is an investment
service or activity if it falls within the definition of “investment services
and activities” in section 417(1).

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
49

Imposition and variation of requirements
55L
Imposition of requirements by FCA
(1)
Where a person has applied (whether to the FCA or the PRA) for a Part
4A permission or the variation of a Part 4A permission, the FCA may
impose on that person such requirements, taking effect on or after the
5
giving or variation of the permission, as the FCA considers appropriate.
(2)
The FCA may exercise its power under subsection (3) in relation to an
authorised person with a Part 4A permission (whether given by it or by
the PRA) (“A”) if it appears to the FCA that—
(a)
A is failing, or is likely to fail, to satisfy the threshold conditions
10
for which the FCA is responsible,
(b)
A has failed, during a period of at least 12 months, to carry on a
regulated activity to which the Part 4A permission relates, or
(c)
it is desirable to exercise the power in order to advance one or
more of the FCA’s operational objectives.
15
(3)
The FCA’s power under this subsection is a power—
(a)
to impose a new requirement,
(b)
to vary a requirement imposed by the FCA under this section,
or
(c)
to cancel such a requirement.
20
(4)
The FCA’s power under subsection (3) is referred to in this Part as its
own-initiative requirement power.
(5)
The FCA may, on the application of an authorised person with a Part
4A permission—
(a)
impose a new requirement,
25
(b)
vary a requirement imposed by the FCA under this section, or
(c)
cancel such a requirement.
(6)
The FCA must consult the PRA before imposing or varying a
requirement which relates to—
(a)
a person who is, or will on the granting of an application for
30
Part 4A permission be, a PRA-authorised person, or
(b)
a person who is a member of a group which includes a PRA-
authorised person.
55M
Imposition of requirements by PRA
(1)
Where—
35
(a)
a person has applied for a Part 4A permission in relation to
activities which consist of or include a PRA-regulated activity,
(b)
a PRA-authorised person has applied for a Part 4A permission
or the variation of a Part 4A permission, or
(c)
an authorised person other than a PRA-authorised person has
40
applied for a Part 4A permission to be varied by adding to the
regulated activities to which it relates one or more regulated
activities which include a PRA-regulated activity,

the PRA may impose on that person such requirements, taking effect on
or after the giving or variation of the permission, as the PRA considers
45
appropriate.

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
50

(2)
The PRA may exercise its power under subsection (3) in relation to a
PRA-authorised person with a Part 4A permission (“P”) if it appears to
the PRA that—
(a)
P is failing, or is likely to fail, to satisfy the threshold conditions
for which the PRA is responsible,
5
(b)
P has failed, during a period of at least 12 months, to carry on a
regulated activity to which the Part 4A permission relates, or
(c)
it is desirable to exercise the power in order to advance any of
the PRA’s objectives.
(3)
The PRA’s power under this subsection is a power—
10
(a)
to impose a new requirement,
(b)
to vary a requirement imposed by the PRA under this section,
or
(c)
to cancel such a requirement.
(4)
The PRA’s power under subsection (3) is referred to in this Part as its
15
own-initiative requirement power.
(5)
The PRA may, on the application of a PRA-authorised person with a
Part 4A permission—
(a)
impose a new requirement,
(b)
vary a requirement imposed by the PRA under this section, or
20
(c)
cancel such a requirement.
(6)
The PRA must consult the FCA before imposing or varying a
requirement.
55N
Requirements under section 55L or 55M: further provisions
(1)
A requirement may, in particular, be imposed—
25
(a)
so as to require the person concerned to take specified action, or
(b)
so as to require the person concerned to refrain from taking
specified action.
(2)
A requirement may extend to activities which are not regulated
activities.
30
(3)
A requirement may be imposed by reference to the person’s
relationship with—
(a)
the person’s group, or
(b)
other members of the person’s group.
(4)
A requirement expires at the end of such period as the regulator
35
imposing it may specify, but this does not affect the regulator’s power
to impose a new requirement.
(5)
A requirement may refer to the past conduct of the person concerned
(for example, by requiring the person concerned to review or take
remedial action in respect of past conduct).
40
(6)
In this section “requirement” means a requirement imposed under
section 55L or 55M.
55O
Imposition of requirements on acquisition of control
(1)
This section applies if it appears to the appropriate regulator that—

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
51

(a)
a person has acquired control over a UK authorised person who
has a Part 4A permission, but
(b)
there are no grounds for exercising its own-initiative
requirement power.
(2)
If it appears to the appropriate regulator that the likely effect of the
5
acquisition of control on the UK authorised person, or on any of its
activities, is uncertain, the appropriate regulator may—
(a)
impose on the UK authorised person a requirement that could
be imposed by that regulator under section 55L or 55M (as the
case may be) on the giving of permission, or
10
(b)
vary a requirement imposed by that regulator under that
section on the UK authorised person.
(3)
“The appropriate regulator” means—
(a)
in a case where the UK authorised person is a PRA-authorised
person, the FCA or the PRA;
15
(b)
in any other case, the FCA.
(4)
This section does not affect any duty of the appropriate regulator to
consult or obtain the consent of the other regulator in connection with
the imposition of the requirement.
(5)
Any reference to a person having acquired control is to be read in
20
accordance with Part 12.
55P
Prohibitions and restrictions
(1)
This section applies if—
(a)
on a person being given a Part 4A permission, either regulator
imposes an assets requirement on that person,
25
(b)
an assets requirement is imposed on an authorised person, or
(c)
an assets requirement previously imposed on such a person is
varied.
(2)
A person on whom an assets requirement is imposed is referred to in
this section as “A”.
30
(3)
The “appropriate regulator” is the regulator which imposed the
requirement.
(4)
“Assets requirement” means a requirement under section 55L or 55M—
(a)
prohibiting the disposal of, or other dealing with, any of A’s
assets (whether in the United Kingdom or elsewhere) or
35
restricting such disposals or dealings, or
(b)
that all or any of A’s assets, or all or any assets belonging to
consumers but held by A or to A’s order, must be transferred to
and held by a trustee approved by the appropriate regulator.
(5)
If the appropriate regulator—
40
(a)
imposes a requirement of the kind mentioned in subsection
(4)(a), and
(b)
gives notice of the requirement to any institution with whom A
keeps an account,

the notice has the effects mentioned in subsection (6).
45
(6)
Those effects are that—

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
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(a)
the institution does not act in breach of any contract with A if,
having been instructed by A (or on A’s behalf) to transfer any
sum or otherwise make any payment out of A’s account, it
refuses to do so in the reasonably held belief that complying
with the instruction would be incompatible with the
5
requirement, and
(b)
if the institution complies with such an instruction, it is liable to
pay to the appropriate regulator an amount equal to the amount
transferred from, or otherwise paid out of, A’s account in
contravention of the requirement.
10
(7)
If the appropriate regulator imposes a requirement of the kind
mentioned in subsection (4)(b), no assets held by a person as trustee in
accordance with the requirement may, while the requirement is in
force, be released or dealt with except with the consent of the
appropriate regulator.
15
(8)
If, while a requirement of the kind mentioned in subsection (4)(b) is in
force, A creates a charge over any assets of A held in accordance with
the requirement, the charge is (to the extent that it confers security over
the assets) void against the liquidator and any of A’s creditors.
(9)
Assets held by a person as trustee (“T”) are to be taken to be held by T
20
in accordance with any requirement mentioned in subsection (4)(b)
only if—
(a)
A has given T written notice that those assets are to be held by
T in accordance with the requirement, or
(b)
they are assets into which assets to which paragraph (a) applies
25
have been transposed by T on the instructions of A.
(10)
A person who contravenes subsection (7) is guilty of an offence and
liable on summary conviction to a fine not exceeding level 5 on the
standard scale.
(11)
“Charge” includes a mortgage (or in Scotland a security over property).
30
(12)
Subsections (7) and (9) do not affect any equitable interest or remedy in
favour of a person who is a beneficiary of a trust as a result of a
requirement of the kind mentioned in subsection (4)(b).
Exercise of power in support of overseas regulator
55Q
Exercise of power in support of overseas regulator
35
(1)
Either UK regulator’s own-initiative powers may be exercised in
respect of an authorised person at the request of, or for the purpose of
assisting, an overseas regulator of a prescribed kind.
(2)
Subsection (1) applies whether or not the UK regulator has powers
which are exercisable in relation to the authorised person by virtue of
40
any provision of Part 13.
(3)
Subsection (1) does not affect any duty of one UK regulator to consult
or obtain the consent of the other UK regulator in relation to the
exercise of its own-initiative powers.
(4)
If a request to a UK regulator for the exercise of its own-initiative
45
powers has been made by an overseas regulator who is—

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(a)
of a prescribed kind, and
(b)
acting in pursuance of provisions of a prescribed kind,

the UK regulator must, in deciding whether or not to exercise those
powers in response to the request, consider whether it is necessary to
do so in order to comply with an EU obligation.
5
(5)
In deciding whether or not to do so, in any case in which the UK
regulator does not consider that the exercise of its own-initiative
powers is necessary in order to comply with an EU obligation, it may
take into account in particular—
(a)
whether in the country or territory of the overseas regulator
10
concerned, corresponding assistance would be given to a
United Kingdom regulatory authority;
(b)
whether the case concerns the breach of a law, or other
requirement, which has no close parallel in the United Kingdom
or involves the assertion of a jurisdiction not recognised by the
15
United Kingdom;
(c)
the seriousness of the case and its importance to persons in the
United Kingdom;
(d)
whether it is otherwise appropriate in the public interest to give
the assistance sought.
20
(6)
The UK regulator may decide not to exercise its own-initiative powers,
in response to a request, unless the overseas regulator concerned
undertakes to make such contribution towards the cost of their exercise
as the UK regulator considers appropriate.
(7)
Subsection (6) does not apply if the UK regulator decides that it is
25
necessary for it to exercise its own-initiative powers in order to comply
with an EU obligation.
(8)
In subsection (6) “request” means a request of a kind mentioned in
subsection (1).
(9)
In this section—
30
(a)
“UK regulator” means the FCA or the PRA;
(b)
“overseas regulator” means a regulator outside the United
Kingdom;
(c)
“own-initiative powers”, in relation to the FCA or the PRA,
means its own-initiative variation power and its own-initiative
35
requirement power.
Connected persons
55R
Persons connected with an applicant
(1)
In considering—
(a)
an application for a Part 4A permission,
40
(b)
whether to vary or cancel a Part 4A permission,
(c)
whether to impose or vary a requirement under this Part, or
(d)
whether to give any consent required by any provision of this
Part,

the regulator concerned may have regard to any person appearing to it
45
to be, or likely to be, in a relationship with the applicant or a person
given permission which is relevant.

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(2)
Before—
(a)
giving permission in response to an application under section
55A made by a person who is connected with an EEA firm
(other than an EEA firm falling within paragraph 5(e) of
Schedule 3 (insurance and reinsurance intermediaries)), or
5
(b)
cancelling or varying a Part 4A permission given to such a
person,

the regulator concerned must in prescribed circumstances consult the
firm’s home state regulator.
(3)
A person (“A”) is connected with an EEA firm if—
10
(a)
A is a subsidiary undertaking of the firm, or
(b)
A is a subsidiary undertaking of a parent undertaking of the
firm.
Additional permissions
55S
Duty of FCA or PRA to consider other permissions
15
(1)
“Additional Part 4A permission” —
(a)
in relation to either regulator, means a Part 4A permission
which is in force in relation to an EEA firm or a Treaty firm, and
(b)
in relation to the FCA, also includes Part 4A permission which
is in force in relation to a person authorised as a result of
20
paragraph 1(1) of Schedule 5.
(2)
If either regulator is considering whether, and if so how, to exercise its
own-initiative variation power or its own-initiative requirement power
in relation to an additional Part 4A permission, it must take into
account—
25
(a)
the home state authorisation of the authorised person
concerned,
(b)
any relevant directive, and
(c)
relevant provisions of the Treaty.
Persons whose interests are protected
30
55T
Persons whose interests are protected
For the purpose of any provision of this Part which refers to the FCA’s
operational objectives or the PRA’s objectives in relation to the exercise
of a power in relation to a particular person, it does not matter whether
there is a relationship between that person and the persons whose
35
interests will be protected by the exercise of the power.
Procedure
55U
Applications under this Part
(1)
An application for a Part 4A permission must—
(a)
contain a statement of the regulated activity or regulated
40
activities which the applicant proposes to carry on and for
which the applicant wishes to have permission, and