Session 2012 - 13
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Financial Services Bill


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

97

 

138L    

Consultation: general exemptions

(1)   

Sections 138I(1)(b) and (2) to (5) and 138K do not apply in relation to

rules made by the FCA if the FCA considers that the delay involved in

complying with them would be prejudicial to the interests of

consumers, as defined in section 425A.

5

(2)   

Sections 138J(1)(b) and (2) to (5) and 138K do not apply in relation to

rules made by the PRA if the PRA considers that the delay involved in

complying with them would—

(a)   

be prejudicial to the safety and soundness of PRA-authorised

persons, or

10

(b)   

in a case where section 2C applies, be prejudicial to securing the

appropriate degree of protection for policy holders.

(3)   

The exception in subsection (1) does not apply in relation to rules made

by the FCA under section 131B (short selling rules).

(4)   

The provisions listed in subsection (5) do not apply if the regulator

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concerned considers that, making the appropriate comparison—

(a)   

there will be no increase in costs, or

(b)   

there will be an increase in costs but that increase will be of

minimal significance.

(5)   

Those provisions are—

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(a)   

subsections (2)(a) and (5)(a) of section 138I;

(b)   

subsections (2)(a) and (5)(a) of section 138J.

(6)   

The “appropriate comparison” means—

(a)   

in relation to section 138I(2)(a) or 138J(2)(a), a comparison

between the overall position if the rules are made and the

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overall position if the rules are not made;

(b)   

in relation to section 138I(5)(a) or 138J(5)(a), a comparison

between the overall position after the making of the rules and

the overall position before they were made.

138M    

Consultation: exemptions for temporary product intervention rules

30

(1)   

Sections 138I(1)(b) and (2) to (5) and 138K do not apply in relation to

product intervention rules made by the FCA if it considers that it is

necessary or expedient not to comply with them for the purpose of

advancing—

(a)   

the consumer protection objective or the competition objective,

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or

(b)   

if an order under section 137C(1)(b) is in force, the integrity

objective.

(2)   

Any rules made as a result of subsection (1) (“temporary product

intervention rules”) are to cease to have effect at the end of the period

40

specified in the rules.

(3)   

The longest period that may be specified is the period of 12 months

beginning with the day on which the rules come into force.

(4)   

Nothing in subsection (2) prevents the FCA from revoking temporary

product intervention rules before the end of the period mentioned

45

there.

 
 

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

98

 

(5)   

If the FCA has made temporary product intervention rules (“the initial

rules”), it may not make further temporary product intervention rules

containing the same, or substantially the same, provision as that

contained in the initial rules until the prohibited period has ended.

(6)   

“The prohibited period” means the period of one year beginning with

5

the day on which the period mentioned in subsection (2) ends (whether

or not the initial rules have been revoked before the end of the period

mentioned there).

138N    

Temporary product intervention rules: statement of policy

(1)   

The FCA must prepare and issue a statement of its policy with respect

10

to the making of temporary product intervention rules.

(2)   

The FCA may at any time alter or replace a statement issued under this

section.

(3)   

If a statement issued under this section is altered or replaced, the FCA

must issue the altered or replaced statement.

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(4)   

The FCA must, without delay, give the Treasury a copy of any

statement which it publishes under this section.

(5)   

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

attention of the public.

20

(6)   

The FCA may charge a reasonable fee for providing a person with a

copy of the statement.

138O    

Statement of policy under section 138N: procedure

(1)   

Before issuing a statement under section 138N, the FCA must publish a

draft of the proposed statement in the way appearing to the FCA to be

25

best calculated to bring it to the attention of the public.

(2)   

The draft must be accompanied by notice that representations about the

proposal may be made to the FCA within a specified time.

(3)   

Before issuing the proposed statement, the FCA must have regard to

any representations made to it in accordance with subsection (2).

30

(4)   

If the FCA issues the proposed statement it must publish an account, in

general terms, of—

(a)   

the representations made to it in accordance with subsection (2),

and

(b)   

its response to them.

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(5)   

If the statement differs from the draft published under subsection (1) in

a way which is, in the opinion of the FCA, significant, the FCA must (in

addition to complying with subsection (4)) publish details of the

difference.

(6)   

The FCA may charge a reasonable fee for providing a person with a

40

copy of a draft published under subsection (1).

(7)   

This section also applies to a proposal to alter or replace a statement.

 
 

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

99

 

Chapter 3

Guidance

139A    

Power of the FCA to give guidance

(1)   

The FCA may give guidance consisting of such information and advice

as it considers appropriate—

5

(a)   

with respect to the operation of specified parts of this Act and of

any rules made by the FCA;

(b)   

with respect to any other matter relating to functions of the

FCA;

(c)   

with respect to any other matters about which it appears to the

10

FCA to be desirable to give information or advice.

(2)   

The FCA may give financial or other assistance to persons giving

information or advice of a kind which the FCA could give under this

section.

(3)   

Subsection (5) applies where the FCA proposes to give guidance to

15

FCA-regulated persons generally, or to a class of FCA-regulated

persons, in relation to rules to which those persons are subject.

(4)   

Subsection (5) also applies in relation to guidance which the FCA

proposes to give to persons generally, or to a class of person, in relation

to rules under section 131B (short selling rules) to which those persons

20

are subject.

(5)   

Where this subsection applies, subsections (1), (2)(e) and (3) of section

138I (consultation) apply to the proposed guidance as they apply to

proposed rules, unless the FCA considers that the delay in complying

with those provisions would be prejudicial to the interests of

25

consumers.

(6)   

The FCA may—

(a)   

publish its guidance,

(b)   

offer copies of its published guidance for sale at a reasonable

price, and

30

(c)   

if it gives guidance in response to a request made by any person,

make a reasonable charge for that guidance.

(7)   

In this Chapter, references to guidance made by the FCA include

references to any recommendations made by the FCA to FCA-

regulated persons generally, or to any class of FCA-regulated person.

35

(8)   

“Consumers” has the meaning given in section 1G.

(9)   

“FCA-regulated person” means—

(a)   

an authorised person, or

(b)   

any person who is otherwise subject to rules made by the FCA.

139B    

Notification of FCA guidance to the Treasury

40

(1)   

On giving any general guidance, the FCA must give written notice to

the Treasury without delay.

(2)   

If the FCA alters any of its guidance, it must give written notice to the

Treasury without delay.

 
 

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

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(3)   

The notice under subsection (2) must include details of the alteration.

(4)   

If the FCA revokes any of its general guidance, it must give written

notice to the Treasury without delay.

(5)   

“General guidance” means guidance given by the FCA under section

139A which is—

5

(a)   

given to persons generally, to FCA-regulated persons generally

or to a class of FCA-regulated person,

(b)   

intended to have continuing effect, and

(c)   

given in writing or other legible form.

(6)   

“FCA-regulated person” has the same meaning as in section 139A.

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Chapter 4

Competition scrutiny

140A    

Interpretation

(1)   

In this Chapter—

“market in the United Kingdom” includes—

15

(a)   

so far as it operates in the United Kingdom or a part of

the United Kingdom, any market which operates there

and in another country or territory or in a part of another

country or territory, and

(b)   

any market which operates only in a part of the United

20

Kingdom;

“the OFT” means the Office of Fair Trading;

“practices”, in relation to each regulator, means practices adopted

by that regulator in the exercise of functions under this Act;

“regulating provisions” means—

25

(a)   

in relation to the FCA, any—

(i)   

rules of the FCA;

(ii)   

general guidance (as defined by section 139B(5));

(iii)   

statement issued by the FCA under section 64;

(iv)   

code issued by the FCA under section 64 or 119;

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(b)   

in relation to the PRA, any—

(i)   

rules of the PRA;

(ii)   

statement issued by the PRA under section 64;

(iii)   

code issued by the PRA under section 64.

(2)   

In this Chapter each of the Competition Commission and the OFT is “a

35

competition authority”.

(3)   

For the purposes of this Chapter, any reference to a feature of a market

in the United Kingdom for goods or services is to be read as a reference

to—

(a)   

the structure of the market concerned or any aspect of that

40

structure,

(b)   

any conduct (whether or not in the market concerned) of one or

more than one person who supplies or acquires goods or

services in the market concerned, or

 
 

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

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(c)   

any conduct relating to the market concerned of customers of

any person who supplies or acquires goods or services.

(4)   

In subsection (3) “conduct” includes any failure to act (whether or not

intentional) and any other unintentional conduct.

140B    

Advice about effect of regulating provision or practice

5

(1)   

In this Chapter, any reference to the giving of “section 140B advice” to

a regulator is to be read in accordance with this section.

(2)   

The OFT gives “section 140B advice” to a regulator if—

(a)   

it gives advice to the regulator under section 7 of the Enterprise

Act 2002 (provision of competition advice to Ministers etc.), and

10

(b)   

the advice states that in the opinion of the OFT one or more of

the things mentioned in subsection (4) may cause, or contribute

to, the effect mentioned in subsection (5), or might be expected

to do so in the future.

(3)   

The Competition Commission gives “section 140B advice” to a

15

regulator if a report published by it under section 136 of the Enterprise

Act 2002 (investigations and reports on market investigation reference)

contains—

(a)   

a decision that one or more of the things mentioned in

subsection (4) may cause, or contribute to, the effect mentioned

20

in subsection (5), and

(b)   

a recommendation that any action should be taken by that

regulator.

(4)   

Those things are—

(a)   

a regulating provision or practice of the regulator,

25

(b)   

two or more regulating provisions or practices (of that regulator

or of both regulators) taken together,

(c)   

a particular combination of regulating provision or practices (of

that regulator or of both regulators), or

(d)   

a feature, or combination of features, of a market in the United

30

Kingdom that could be dealt with by regulating provision or

practices (of that regulator or of both regulators).

(5)   

That effect is the prevention, restriction or distortion of competition in

connection with the supply or acquisition of any goods or services in

the United Kingdom or a part of the United Kingdom.

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140C    

Consultation with regulator

Before giving section 140B advice, a competition authority must consult

the regulator to which the advice is to be given.

140D    

Investigation powers of OFT

Where the OFT is deciding whether to exercise its power under section

40

7 of the Enterprise Act 2002 to give advice which, if given, would be

section 140B advice, section 174 of that Act has effect as if—

(a)   

in subsection (1), for the words from “make a reference” to the

end there were substituted “give advice which would for the

purposes of Chapter 4 of Part 9A of the Financial Services and

45

Markets Act 2000 be section 140B advice”, and

 
 

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

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(b)   

in subsection (2), for “make such a reference” there were

substituted “give such advice”.

140E    

Publication by OFT of section 140B advice

The OFT must publish in such manner as it thinks fit any section 140B

advice given by it to either regulator.

5

140F    

Duty of Competition Commission to send report to regulator

(1)   

Where the publication of a report of the Competition Commission

under section 142 of the Enterprise Act 2002 constitutes the giving of

section 140B advice to either regulator, the Commission must give a

copy of the report to that regulator.

10

(2)   

The day on which the copy is given is the day on which the regulator is

to be taken to receive the section 140B advice.

140G    

Duty of regulator to publish response

(1)   

A regulator must, within 90 days after the day on which it receives

section 140B advice, publish a response stating how it proposes to deal

15

with the advice and in particular—

(a)   

whether it has decided to take any action, or to take no action,

in response to the advice,

(b)   

if it has decided to take action, what action it proposes to take,

and

20

(c)   

its reasons for its proposals.

(2)   

Publication is to be in such manner as the regulator thinks fit.

140H    

Role of the Treasury

(1)   

This section applies where—

(a)   

a competition authority has given section 140B advice and the

25

regulator has published a response under section 140G, and

(b)   

the competition authority remains of the opinion that one or

more of the things mentioned in section 140B(4) may cause or

contribute to, the effect mentioned in section 140B(5).

(2)   

The competition authority may refer the section 140B advice to the

30

Treasury by sending the Treasury—

(a)   

a copy of the section 140B advice and of the response, and

(b)   

a request to consider the advice and the response.

(3)   

In referring the section 140B advice, the competition authority may give

advice to the Treasury as to what action, if any, ought to be taken by the

35

regulator.

(4)   

If section 140B advice is referred to them, the Treasury may give a

direction to the regulator to which the advice was given requiring the

regulator to take such action as may be specified in the direction.

(5)   

In considering whether to give a direction and, if so, what action to

40

specify, the Treasury must have regard to—

(a)   

any advice the competition authority has given under

subsection (3),

 
 

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

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(b)   

any action which the section 140B advice suggests that the

regulator should take, and

(c)   

the response of the regulator to the section 140B advice.

(6)   

The direction may not require the regulator to do anything that it has

no power to do, but the existence of the direction is relevant to the

5

exercise of any discretion conferred on the regulator.

(7)   

Before giving a direction under this section, the Treasury must consult

the regulator to which it is to be given.

(8)   

If the Treasury give a direction under this section they must—

(a)   

publish in such manner as they think fit a statement giving

10

details of the direction and of their reasons for giving it, and

(b)   

lay a copy of the statement before Parliament.

Chapter 5

Power to make consequential amendments

141A    

Power to make consequential amendments of references to rules etc.

15

(1)   

This section applies if—

(a)   

a provision of primary or subordinate legislation (whenever

passed or made) contains a reference (however expressed) to

rules of either regulator or to guidance of the FCA,

(b)   

it appears to the Treasury or the Secretary of State that the

20

reference requires amendment in consequence of the exercise

by that regulator of its power under this Part to make, alter or

revoke its rules or the exercise by the FCA or its power to make,

alter or revoke its guidance.

(2)   

The Treasury or the Secretary of State may by order make such

25

amendment of the legislation referred to in subsection (1)(a) as appears

to them to be necessary or expedient in consequence of the exercise by

the regulator of the power mentioned in subsection (1)(b).

(3)   

The power conferred by subsection (2) includes power—

(a)   

to replace a reference to the rules of one regulator with a

30

reference to the rules of the other regulator or to the rules of

both regulators;

(b)   

to replace a reference to the rules of both regulators with a

reference to the rules of one regulator.

(4)   

In subsection (1)(a) “subordinate legislation” does not include rules of

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either regulator.”

(2)   

In section 391 of FSMA 2000 (publication), after subsection (5) insert—

“(5A)   

Subsection (5) does not apply in relation to a notice given in accordance

with section 137Q(5) or (8)(a) (but see section 137Q(11)).”

(3)   

In section 395 of FSMA 2000 (procedures in relation to giving of supervisory

40

notices etc), in subsection (13), after paragraph (bb) insert—

“(bba)   

section 137Q(5) or (8)(a);”.

(4)   

Omit Schedule 14 to FSMA 2000 (role of the Competition Commission).

 
 

 
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