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
62


in a manner substantially connected with the carrying on of the
activity.
(7B)
“Significant-influence function”, in relation to the carrying on of
a regulated activity by an authorised person, means a function
that is likely to enable the person responsible for its
5
performance to exercise a significant influence on the conduct
of the authorised person’s affairs, so far as relating to the
activity.”
(2)
After section 59 of FSMA 2000 insert—
“59A
Specifying functions as controlled functions: supplementary
10
(1)
The FCA must—
(a)
keep under review the exercise of its power under section
59(3)(a) to specify any significant-influence function as a
controlled function, and
(b)
exercise that power in a way that it considers will minimise the
15
likelihood that approvals fall to be given by both the FCA and
the PRA in respect of the performance by a person of
significant-influence functions in relation to the carrying on of a
regulated activity by the same PRA-authorised person.
(2)
The FCA and the PRA must each consult the other before exercising
20
any power under section 59(3)(a).
(3)
Any reference in this section to the exercise of a power includes its
exercise by way of amendment or revocation of provision previously
made in the exercise of the power.
(4)
“Approval” means an an approval under section 59.
25
(5)
Any expression which is used both in this section and section 59 has the
same meaning in this section as in that section.
59B
Role of FCA in relation to PRA decisions
(1)
The FCA may arrange with the PRA that in such cases as may be
described in the arrangements the PRA may give approval under
30
section 59 without obtaining the consent of the FCA.
(2)
Arrangements under this section must be in writing, and must specify
the date on which they come into force.
(3)
The regulators must publish any arrangements under this section in
such manner as they think fit.
35
(4)
Section 59(4)(b) has effect subject to any arrangements in force under
this section.”
(3)
In section 63 (withdrawal of approval), for subsection (1) substitute—
“(1)
The FCA may withdraw an approval under section 59 given by the
FCA or the PRA in relation to the performance by a person of a function
40
if the FCA considers that the person is not a fit and proper person to
perform the function.
(1A)
The PRA may withdraw an approval under section 59 in relation to the
performance by a person (“A”) of a function if—

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Part 2 — Amendments of Financial Services and Markets Act 2000
63

(a)
the PRA gave the approval, or the FCA gave the approval and
the function is a significant-influence function performed in
relation to the carrying on by a PRA-authorised person of a
regulated activity, and
(b)
the PRA considers that A is not a fit and proper person to
5
perform the function.
(1B)
“Significant-influence function” has the same meaning as in section 59.
(1C)
Before one regulator withdraws an approval given by the other
regulator, it must consult the other regulator.”
(4)
In section 64 of FSMA 2000 (conduct of approved persons: statement and
10
codes), for subsection (1) substitute—
“(1)
The FCA may issue statements of principle with respect to the conduct
expected of persons in relation to whom either regulator has given its
approval under section 59.
(1A)
The PRA may issue statements of principle with respect to—
15
(a)
the conduct expected of persons in relation to whom it has
given its approval under section 59, and
(b)
the conduct expected of persons in relation to whom the FCA
has given its approval under section 59 in respect of the
performance by them of significant-influence functions in
20
relation to the carrying on by PRA-authorised persons of
regulated activities.
(1B)
A statement of principle issued by either regulator may relate to
conduct expected of persons in relation to—
(a)
the performance by them of controlled functions, or
25
(b)
the performance by them of any other functions in relation to
the carrying on by authorised persons of regulated activities.”
13
Further amendments relating to performance of regulated activities
Schedule 5 contains further amendments of Part 5 of FSMA 2000 (performance
of regulated activities).
30
Official listing
14
FCA to exercise functions under Part 6 of FSMA 2000
(1)
FSMA 2000 is amended as follows.
(2)
In each of the provisions of Part 6 (official listing etc) mentioned in subsection
(3)—
35
(a)
for “competent authority” or “competent authority’s”, in each place,
substitute “FCA” or “FCA’s”, and
(b)
for “the authority” or “the Authority”, in each place, substitute “the
FCA”.
(3)
Those provisions are—
40
(a)
sections 73A to 84;
(b)
section 86;

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(c)
section 87A to 87D (including the heading to section 87A);
(d)
section 87G;
(e)
sections 87J to 87O (including the italic heading before section 87J);
(f)
sections 87Q to 88;
(g)
sections 89A to 97 (including the italic heading before section 89H and
5
the heading to that section);
(h)
section 101(2);
(i)
section 103(1).
(4)
Before section 73A insert an italic heading “Rules”.
(5)
In section 77(3) (discontinuance and suspension of listing), for “sections 96 and
10
99” substitute “section 96 and paragraph 20(5) of Schedule 1ZA”.
(6)
In section 87E (transfer by competent authority of application for approval)—
(a)
in subsection (1), for “competent authority”, in the first place, substitute
“FCA”,
(b)
in subsections (2) to (4), for “competent authority” substitute “FCA”,
15
and
(c)
in the heading, for “competent authority” substitute “FCA”.
(7)
In section 87F (transfer to competent authority of application for approval)—
(a)
in subsection (1)—
(i)
for “Where the competent authority” substitute “Where the
20
FCA”, and
(ii)
in paragraph (b), for “competent authority” substitute “FCA”,
(b)
in subsection (2), for “competent authority” substitute “FCA”, and
(c)
in the heading, for “competent authority” substitute “FCA”.
(8)
In section 87H (prospectus approved in another EEA State), in subsection (1),
25
for “competent authority”, in the second and third places, substitute “FCA”.
(9)
In section 87I (provision of information to host member State)—
(a)
in subsection (1)—
(i)
for “competent authority”, in the first place, substitute “FCA”,
(ii)
in paragraph (b), for “competent authority” substitute “FCA”,
30
and
(iii)
in paragraph (c), omit “other”, and
(b)
in subsections (3) to (5), for “competent authority” substitute “FCA”.
(10)
In section 87P (exercise of powers at request of competent authority of another
EEA State)—
35
(a)
in subsection (1)(c), for “competent authority”, in the second place,
substitute “FCA”, and
(b)
in subsection (2), for “competent authority” substitute “FCA”.
(11)
In section 100A (exercise of powers where UK is host member State)—
(a)
in subsections (1) and (2), for “competent authority” substitute “FCA”,
40
(b)
in subsection (3), for “the authority”, in both places, substitute “the
FCA”,
(c)
in subsection (4), for “The authority” substitute “The FCA”,
(d)
in subsections (5) and (6), for “the authority” substitute “the FCA”.

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(12)
In Schedule 10 (compensation: exemptions), for “competent authority”, in each
place, substitute “FCA”.
(13)
Omit the following provisions—
(a)
section 72 (Financial Services Authority to exercise functions of the
competent authority under Part 6) and the italic heading before it;
5
(b)
section 73 (general duty of the competent authority);
(c)
section 99 (fees);
(d)
section 100 (penalties);
(e)
in section 101 (general provisions), subsections (1) and (3) to (8);
(f)
section 102 (exemption from liability in damages);
10
(g)
in section 103 (interpretation), subsections (2) and (3);
(h)
in section 195 (exercise of power in support of overseas regulator),
subsection (4)(b);
(i)
in section 410 (international obligations), subsection (4)(b);
(j)
in section 415 (jurisdiction in civil proceedings), subsection (1)(b);
15
(k)
Schedule 7 (modification of Act in its application to the Financial
Services Authority when acting as competent authority for purposes of
Part 6);
(l)
Schedule 8 (power to transfer functions under Part 6 to other persons).
15
Discontinuance or suspension at the request of the issuer: procedure
20
(1)
FSMA 2000 is amended as follows.
(2)
In section 78A (discontinuance or suspension at the request of the issuer:
procedure)—
(a)
in subsection (1), for paragraphs (a) and (b) substitute—
“(a)
immediately, if the notification under subsection (2) so
25
provides;
(b)
in any other case, on such date as may be provided for
in that notification.”,
(b)
in subsection (2), for “give him written notice” substitute “notify the
issuer (whether in writing or otherwise)”, and
30
(c)
for subsection (3) substitute—
“(3)
The notification must—
(a)
notify the issuer of the date on which the discontinuance
or suspension took effect or will take effect, and
(b)
notify the issuer of such other matters (if any) as are
35
specified in listing rules.”
(3)
In section 395(13) (definition of “supervisory notice”), after “a notice” insert “or
notification”.
16
Listing rules: disciplinary powers in relation to sponsors
(1)
FSMA 2000 is amended as follows.
40
(2)
In section 88 (provision that may be made by listing rules in relation to
sponsors)—

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
66

(a)
in subsection (3), at the end insert—
“(e)
provide for limitations or other restrictions to be
imposed on the services to which an approval relates
(whether or not the approval has already been granted);
(f)
provide for the approval of a sponsor to be suspended
5
on the application of the sponsor.”,
(b)
in subsection (4), in paragraph (a), for “for approval as a sponsor”
substitute “under sponsor rules”,
(c)
after that paragraph (but before the “or” at the end) insert—
“(aa)
to impose limitations or other restrictions on the services
10
to which a person’s approval relates,”,
(d)
in subsection (5), in paragraph (a), for “for approval” substitute “under
sponsor rules”,
(e)
after that paragraph (but before the “or” at the end) insert—
“(aa)
not to impose limitations or other restrictions on the
15
services to which a person’s approval relates,”,
(f)
in subsection (6), in paragraph (a), for “for approval” substitute “under
sponsor rules”,
(g)
after that paragraph (a) (but before the “or” at the end) insert—
“(aa)
to impose limitations or other restrictions on the services
20
to which a person’s approval relates,”, and
(h)
after subsection (7) insert—
“(8)
In this section any reference to an application under sponsor
rules means—
(a)
an application for approval as a sponsor,
25
(b)
an application for the suspension of an approval as a
sponsor,
(c)
an application for the withdrawal of the suspension of
an approval as a sponsor, or
(d)
an application for the withdrawal or variation of a
30
limitation or other restriction on the services to which a
sponsor’s approval relates.”
(3)
The power to make provision under section 88(3)(e) of FSMA 2000 (as inserted
by subsection (2)(a) above) includes power to make provision in relation to
persons who were approved as sponsors before the coming into force of
35
subsection (2)(a) above.
(4)
For section 89 substitute—
“88A
Disciplinary powers: contravention of s.88(3)(c) or (e)
(1)
The FCA may take action against a sponsor under this section if it
considers that the sponsor has contravened a requirement or restriction
40
imposed on the sponsor by rules made as a result of section 88(3)(c) or
(e).
(2)
If the FCA is entitled to take action under this section against a sponsor,
it may do one or more of the following—
(a)
impose a penalty on the sponsor of such amount as it considers
45
appropriate;
(b)
suspend, for such period as it considers appropriate, the
sponsor’s approval;

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(c)
impose, for such period as it considers appropriate, such
limitations or other restrictions in relation to the performance of
services to which the sponsor’s approval relates as it considers
appropriate;
(d)
publish a statement to the effect that the sponsor has
5
contravened a requirement or restriction imposed on the
sponsor by rules made as a result of section 88(3)(c) or (e).
(3)
The period for which a suspension or restriction is to have effect may
not exceed 12 months.
(4)
A suspension may relate only to the performance in specified
10
circumstances of a service to which the approval relates.
(5)
A restriction may, in particular, be imposed so as to require the sponsor
to take, or refrain from taking, specified action.
(6)
The FCA may—
(a)
withdraw a suspension or restriction; or
15
(b)
vary a suspension or restriction so as to reduce the period for
which it has effect or otherwise to limit its effect.
(7)
The FCA may not take action against a sponsor under this section after
the end of the limitation period unless, before the end of that period, it
has given a warning notice to the sponsor under section 88B(1).
20
(8)
“The limitation period” means the period of 3 years beginning with the
first day on which the FCA knew that the sponsor had contravened the
requirement or restriction.
(9)
For this purpose the FCA is to be treated as knowing that a sponsor has
contravened a requirement or restriction if it has information from
25
which that can reasonably be inferred.
88B
Action under s.88A: procedure and right to refer to Tribunal
(1)
If the FCA proposes to take action against a sponsor under section 88A,
it must give the sponsor a warning notice.
(2)
A warning notice about a proposal to impose a penalty must state the
30
amount of the penalty.
(3)
A warning notice about a proposal—
(a)
to suspend an approval, or
(b)
to impose a restriction in relation to the performance of a
service,
35

must state the period for which the suspension or restriction is to have
effect.
(4)
A warning notice about a proposal to publish a statement must set out
the terms of the statement.
(5)
If the FCA decides to take action against a sponsor under section 88A,
40
it must give the sponsor a decision notice.
(6)
A decision notice about the imposition of a penalty must state the
amount of the penalty.
(7)
A decision notice about—

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(a)
the suspension of an approval, or
(b)
the imposition of a restriction in relation to the performance of
a service,

must state the period for which the suspension or restriction is to have
effect.
5
(8)
A decision notice about the publication of a statement must set out the
terms of the statement.
(9)
If the FCA decides to take action against a sponsor under section 88A,
the sponsor may refer the matter to the Tribunal.
88C
Action under s.88A: statement of policy
10
(1)
The FCA must prepare and issue a statement of its policy with respect
to—
(a)
the imposition of penalties, suspensions or restrictions under
section 88A,
(b)
the amount of penalties under that section, and
15
(c)
the period for which suspensions or restrictions under that
section are to have effect.
(2)
The FCA’s policy in determining what the amount of a penalty should
be, or what the period for which a suspension or restriction is to have
effect should be, must include having regard to—
20
(a)
the seriousness of the contravention in question in relation to
the nature of the requirement concerned,
(b)
the extent to which that contravention was deliberate or
reckless, and
(c)
whether the sponsor concerned is an individual.
25
(3)
The FCA may at any time alter or replace a statement issued under this
section.
(4)
If a statement issued under this section is altered or replaced, the FCA
must issue the altered or replaced statement.
(5)
In exercising, or deciding whether to exercise, its power under section
30
88A in the case of any particular contravention, the FCA must have
regard to any statement of policy published under this section and in
force at a time when the contravention in question occurred.
(6)
A statement issued under this section must be published by the FCA in
the way appearing to the FCA to be best calculated to bring it to the
35
attention of the public.
(7)
The FCA may charge a reasonable fee for providing a person with a
copy of the statement.
(8)
The FCA must, without delay, give the Treasury a copy of any
statement which it publishes under this section.
40
88D
Statement of policy under s.88C: procedure
(1)
Before issuing a statement under section 88C, the FCA must publish a
draft of the proposed statement in the way appearing to the FCA to be
best calculated to bring it to the attention of the public.