Financial Services Bill (HL Bill 25)

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(d) doing anything within paragraph (c) unless requirements
specified in the rules have been satisfied.

(3) “Specified agreements” means agreements of a description specified in
general rules made by the FCA.

(4) 5“Specified persons” means persons of a description specified in general
rules made by the FCA.

(5) It is of no relevance—

(a) whether the entering into of a specified agreement itself
constitutes the carrying on of a regulated activity, or

(b) 10whether, in a case within subsection (2)(c) or (d), the specified
agreements are with the authorised persons concerned or
anyone else.

(6) The requirements that may be specified under subsection (2)(b) or (d)
include in particular—

(a) 15requirements as to the terms and conditions that are to be, or are
not to be, included in specified or other agreements, and

(b) requirements limiting invitations or inducements to enter into
specified or other agreements to those made to specified
persons.

(7) 20In relation to contraventions of product intervention rules, the rules
may—

(a) provide for a relevant agreement or obligation to be
unenforceable against any person or specified person;

(b) provide for the recovery of any money or other property paid or
25transferred under a relevant agreement or obligation by any
person or specified person;

(c) provide for the payment of compensation for any loss sustained
by any person or specified person as a result of paying or
transferring any money or other property under a relevant
30agreement or obligation.

(8) “A relevant agreement or obligation” means—

(a) a specified agreement;

(b) an agreement entered into in contravention of any rule made as
a result of subsection (2)(c) or (d);

(c) 35an obligation to which a person is subject as a result of
exercising a right conferred by an agreement within paragraph
(a) or (b) of this subsection.

(9) The provision that may be made as a result of subsection (7) includes
provision corresponding to that made by section 30 (enforceability of
40agreements resulting from unlawful communications).

(10) In this section—

(a) any reference to entering into an agreement includes inviting or
inducing persons to enter into an agreement, and

(b) any reference to an agreement includes an arrangement.

137D 45Orders under s.137C(1)(b)

(1) No order may be made under section 137C(1)(b) unless—

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(a) a draft of the order has been laid before Parliament and
approved by a resolution of each House, or

(b) subsection (3) applies.

(2) Subsection (3) applies if an order under section 137C(1)(b) contains a
5statement that the Treasury are of the opinion that, by reason of
urgency, it is necessary to make the order without a draft being so laid
an approved.

(3) Where this subsection applies the order—

(a) must be laid before Parliament after being made, and

(b) 10ceases to have effect at the end of the relevant period unless
before the end of that period the order is approved by a
resolution of each House of Parliament (but without that
affecting anything done under the order or the power to make
a new order).

(4) 15The “relevant period” is a period of 28 days beginning with the day on
which the order is made.

(5) In calculating the relevant period no account is to be taken of any time
during which Parliament is dissolved or prorogued or during which
both Houses are adjourned for more than 4 days.

137E 20The PRA’s general rules

(1) The PRA may make such rules applying to PRA-authorised persons—

(a) with respect to the carrying on by them of regulated activities,
or

(b) with respect to the carrying on by them of activities which are
25not regulated activities,

as appear to the PRA to be necessary or expedient for the purpose of
advancing any of its objectives.

(2) Rules made under this section are referred to in this Act as the PRA’s
general rules.

(3) 30The PRA’s general rules may make provision applying to PRA-
authorised persons even though there is no relationship between the
PRA-authorised persons to whom the rules will apply and the persons
whose interests will be protected by the rules.

(4) The PRA’s general rules may contain requirements which take into
35account, in the case of a PRA-authorised person who is a member of a
group, any activity of another member of the group.

(5) The PRA’s general rules may not—

(a) make provision prohibiting an EEA firm from carrying on, or
holding itself out as carrying on, any activity which it has
40permission conferred by Part 2 of Schedule 3 to carry on in the
United Kingdom;

(b) make provision, as respects an EEA firm, about any matter for
which responsibility is, under any of the single market
directives, reserved to the firm’s home state regulator.

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137F General rules about remuneration

(1) This section applies where either regulator exercises its power to make
general rules so as to make rules prohibiting persons, or persons of a
specified description, from being remunerated in a specified way.

(2) 5The rules may—

(a) provide that any provision of an agreement that contravenes
such a prohibition is void, and

(b) provide for the recovery of any payment made, or other
property transferred, in pursuance of a provision that is void by
10virtue of paragraph (a).

(3) A provision that, at the time the rules are made, is contained in an
agreement made before that time may not be rendered void under
subsection (2)(a) unless it is subsequently amended so as to contravene
a prohibition referred to in that subsection.

137G 15Remuneration policies: Treasury direction to consider compliance

(1) This section applies where either regulator exercises its power to make
general rules so as to make rules requiring authorised persons, or
authorised persons of a description specified in the rules, to act in
accordance with a remuneration policy.

(2) 20A “remuneration policy” is a policy about the remuneration by an
authorised person of—

(a) officers,

(b) employees, or

(c) other persons,

25of a description specified in the rules.

(3) The Treasury may direct the regulator to consider whether the
remuneration policies of authorised persons specified in the direction
(or of authorised persons of a description so specified) comply with
requirements imposed by rules made by that regulator as to the
30contents of the policies.

(4) Before giving a direction under subsection (3), the Treasury must
consult the regulator concerned.

(5) If the regulator considers that a remuneration policy of an authorised
person fails to make provision which complies with the requirements
35mentioned in subsection (3), the regulator must take such steps as it
considers appropriate to deal with the failure.

(6) The steps that the regulator may take include requiring the
remuneration policy to be revised.

(7) “Authorised person”, in relation to the PRA, means PRA-authorised
40person.

137H Rules about recovery plans: duty to consult

(1) Before either regulator prepares a draft of any general rules that require
each relevant person (or each relevant person of a specified description)
to prepare a recovery plan, the regulator must consult—

(a) 45the Treasury, and

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(b) the Bank of England.

(2) A “relevant person” is an authorised person in relation to whom any
power under Part 1 of the Banking Act 2009 (special resolution regime)
is exercisable.

(3) 5A “recovery plan” is a document containing information within
subsection (4) or (5).

(4) Information is within this subsection if it relates to action to be taken to
secure that, in the event of specified circumstances affecting the
carrying on of the business (or any part of the business) of an
10authorised person—

(a) the business of the authorised person, or

(b) a specified part of that business,

is capable of being carried on (whether or not by the authorised person
and whether or not in the same way as previously).

(5) 15Information is within this subsection if it would facilitate the carrying
on of the business (or any part of the business) of an authorised person
by any other person.

(6) In this section—

  • “authorised person”, in relation to the PRA, means PRA-
    20authorised person;

  • “specified” means specified in the rules.

137I PRA rules about resolution plans: duty to consult

(1) Before the PRA prepares a draft of any general rules that require each
relevant person (or each relevant person of a specified description) to
25prepare a resolution plan, the PRA must consult—

(a) the Treasury, and

(b) the Bank of England.

(2) A “relevant person” is a PRA-authorised person in relation to whom
any power under Part 1 of the Banking Act 2009 (special resolution
30regime) is exercisable.

(3) A “resolution plan” is a document containing information within
subsection (4) or (5).

(4) Information is within this subsection if it relates to action to be taken in
the event of—

(a) 35circumstances arising in which it is likely that the business (or
any part of the business) of an authorised person will fail, or

(b) the failure of the business (or any part of the business) of an
authorised person.

(5) Information is within this subsection if it would facilitate anything
40falling to be done by any person in consequence of that failure.

(6) An example of information within subsection (5) is information that, in
the event of that failure, would facilitate—

(a) planning by the Treasury in relation to the possible exercise of
any of its powers under Part 1 of the Banking Act 2009, or

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(b) planning by the Bank of England in relation to the possible
exercise of any of its powers under Part 1, 2 or 3 of that Act.

137J Interpretation of sections 137H and 137I

(1) This section has effect for the interpretation of sections 137H and 137I.

(2) 5References to the taking of action include the taking of action by—

(a) the authorised person,

(b) any other person in the same group as the authorised person, or

(c) a partnership of which the authorised person is a member.

(3) In subsection (2)(b) the definition of “group” in section 421 applies with
10the omission of subsection (1)(e) and (f) of that section.

(4) References to the business of an authorised person include the business
of—

(a) any person in the same group as the authorised person, and

(b) a partnership of which the authorised person is a member.

(5) 15For the purposes of section 137I the cases in which the business (or any
part of the business) of the authorised person (“A”) is to be regarded as
having failed include those where—

(a) A enters insolvency,

(b) any of the stabilisation options in Part 1 of the Banking Act 2009
20is achieved in relation to A, or

(c) A falls to be taken for the purposes of the compensation scheme
to be unable, or likely to be unable, to satisfy claims against A.

(6) In subsection (5)(a) “insolvency” includes—

(a) bankruptcy,

(b) 25liquidation,

(c) bank insolvency,

(d) administration,

(e) bank administration,

(f) receivership,

(g) 30a composition between A and A’s creditors, and

(h) a scheme of arrangement of A’s affairs.

137K Special provision relating to adequacy of resolution plans

(1) This section applies where the PRA has exercised its power to make
general rules so as to make rules requiring PRA-authorised persons, or
35PRA-authorised persons of a specified description, to prepare a
resolution plan.

(2) The PRA must consult the Treasury and the Bank of England (“the
Bank”) about the adequacy of resolution plans required to be prepared
by those rules, so far as relating to any matter which may be relevant to
40the exercise by the Treasury or the Bank of any power under Part 1, 2
or 3 of the Banking Act 2009.

(3) After being consulted under subsection (2)—

(a) the Treasury or the Bank may notify the PRA that, in the
opinion of the Treasury or the Bank, a resolution plan fails to
45make satisfactory provision in relation to any such matter, and

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(b) if the Treasury or the Bank give a notification under paragraph
(a), the Treasury or the Bank must give reasons for being of that
opinion to the PRA.

(4) The PRA must have regard to any notification given under subsection
5(3)(a) before considering whether any resolution plan makes
satisfactory provision in relation to any such matter.

(5) If—

(a) a notification is given under subsection (3)(a), but

(b) the PRA is nonetheless of the opinion that the resolution plan
10makes satisfactory provision in relation to any such matter,

the PRA must give reasons for being of that opinion to the person who
gave the notification.

(6) In this section—

  • “resolution plan” has the same meaning as in section 137I;

  • 15“specified” means specified in the rules.

137L Recovery plans and resolution plans: restriction on duty of confidence

(1) A contractual or other requirement imposed on a person (“P”) to keep
information in confidence does not apply if—

(a) the information is or may be relevant to anything required to be
20done as a result of a requirement imposed by general rules
made by either regulator to prepare a recovery plan or a
resolution plan,

(b) an authorised person or a skilled person requests or requires P
to provide the information for the purpose of securing that
25those things are done, and

(c) the regulator in question has approved the making of the
request or the imposition of the requirement before it is made or
imposed.

(2) An authorised person may provide information (whether received
30under subsection (1) or otherwise) that would otherwise be subject to a
contractual or other requirement to keep it in confidence if it is
provided for the purposes of anything required to be done as a result of
a requirement imposed by general rules to prepare a recovery plan or a
resolution plan.

(3) 35In this section, references to preparing a recovery plan or a resolution
plan include—

(a) keeping that plan up to date, and

(b) collecting specified information for the purposes of that plan.

(4) In this section, references to a skilled person are to a person appointed
40in accordance with section 166A.

(5) In this section—

  • “authorised person”, in relation to rules of the PRA, means a PRA-
    authorised person;

  • “specified” means specified in the rules.

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Specific rule-making powers
137M Threshold condition code

(1) Either regulator may make rules supplementing any of the conditions
for the time being set out in Schedule 6 that is expressed to be relevant
5to the discharge of that regulator’s functions.

(2) Rules made under this section by a regulator are referred to as that
regulator’s “threshold condition code”.

(3) A threshold condition code may in particular—

(a) specify requirements which a person must satisfy in order to be
10regarded as satisfying a particular condition in relation to any
regulated activities;

(b) specify matters which are, or may be, or are not, relevant in
determining whether a person satisfies a particular condition in
relation to any regulated activities.

(4) 15Except where a regulator’s threshold condition code so provides, it is
not to be regarded as limiting the matters that are, or may be, relevant
in determining whether a person satisfies a particular condition in
relation to any regulated activities.

(5) A threshold condition code cannot impose obligations that are
20enforceable against authorised persons otherwise than through the
threshold conditions.

137N Control of information rules

(1) Either regulator may make rules (“control of information rules”) about
the disclosure and use of information held by an authorised person
25(“A”).

(2) Control of information rules may—

(a) require the withholding of information which A would
otherwise be required to disclose to a person (“B”) for or with
whom A does business in the course of carrying on any
30regulated or other activity;

(b) specify circumstances in which A may withhold information
which A would otherwise be required to disclose to B;

(c) require A not to use for the benefit of B information—

(i) which is held by A, and

(ii) 35which A would otherwise be required to use for the
benefit of B;

(d) specify circumstances in which A may decide not to use for the
benefit of B information within paragraph (c).

137O Price stabilising rules

(1) 40The FCA may make rules (“price stabilising rules”) as to—

(a) the circumstances and manner in which,

(b) the conditions subject to which, and

(c) the time when or the period during which,

action may be taken for the purpose of stabilising the price of
45investments of specified kinds.

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(2) Price stabilising rules—

(a) are to be made so as to apply only to authorised persons;

(b) may make different provision in relation to different kinds of
investment.

(3) 5The FCA may make rules which, for the purposes of section 397(5)(b),
treat a person who acts or engages in conduct—

(a) for the purpose of stabilising the price of investments, and

(b) in conformity with such provisions corresponding to price
stabilising rules and made by a body or authority outside the
10United Kingdom as may be specified in rules made by the FCA,

as acting, or engaging in that conduct, for that purpose and in
conformity with price stabilising rules.

137P Financial promotion rules

(1) The FCA may make rules applying to authorised persons about the
15communication by them, or their approval of the communication by
others, of invitations or inducements—

(a) to engage in investment activity, or

(b) to participate in a collective investment scheme.

(2) Rules under this section may, in particular, make provision about the
20form and content of communications.

(3) Subsection (1) applies only to communications which—

(a) if made by a person other than an authorised person, without
the approval of an authorised person, would contravene section
21(1), and

(b) 25may be made by an authorised person without contravening
section 238(1).

(4) But subsection (3) does not prevent the FCA from making rules under
subsection (1) in relation to a communication that would not
contravene section 21(1) if made by a person other than an authorised
30person, without the approval of an authorised person, if the conditions
set out in subsection (5) are satisfied.

(5) Those conditions are—

(a) that the communication would not contravene subsection (1) of
section 21 because it is a communication to which that
35subsection does not apply as a result of an order under
subsection (5) of that section,

(b) that the FCA considers that any of the requirements of—

(i) paragraphs 1 to 8 of Article 19 of the markets in financial
instruments directive,

(ii) 40any implementing measure made under paragraph 10
of that Article, or

(iii) Article 77 of the UCITS directive,

apply to the communication, and

(c) that the FCA considers that the rules are necessary to secure that
45the communication satisfies such of the requirements
mentioned in paragraph (b) as the FCA considers apply to the
communication.

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(6) “Engage in investment activity” has the same meaning as in section 21.

(7) The Treasury may by order impose limitations on the power to make
rules under this section.

137Q Financial promotion rules: directions given by FCA

(1) 5The FCA may give a direction under this section if—

(a) an authorised person has made, or proposes to make, a
communication or has approved, or proposes to approve,
another person’s communication, and

(b) the FCA considers that there has been, or is likely to be, a
10contravention of financial promotion rules in respect of the
communication or approval.

(2) A direction under this section may require the authorised person—

(a) to withdraw the communication or approval;

(b) to refrain from making the communication or giving the
15approval (whether or not it has previously been made or given);

(c) to publish details of the direction;

(d) to do anything else specified in the direction in relation to the
communication or approval.

(3) A requirement in a direction under this section to refrain from making
20or approving a communication includes a requirement to refrain from
making or approving another communication where—

(a) the other communication is in all material respects the same as,
or substantially the same as, the communication to which the
direction relates, and

(b) 25in all the circumstances a reasonable person would think that
another direction would be given under this section in relation
to the other communication.

(4) The requirements contained in a direction under this section have effect
as follows—

(a) 30a requirement to publish details of the direction has effect at
such time (if any) as the FCA gives a notice under subsection
(8)(a);

(b) any other requirement takes effect immediately.

(5) If the FCA gives a direction under this section to an authorised
35person—

(a) it must give written notice to the authorised person, and

(b) if the direction relates to the approval by the authorised person
of another person’s communication, it must also give written
notice to that other person.

(6) 40The notice must—

(a) give details of the direction;

(b) inform the person to whom the notice is given that the direction
takes effect immediately;

(c) state the FCA’s reasons for giving the direction; and

(d) 45inform the person to whom the notice is given that the person
may make representations to the FCA within such period as

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may be specified in the notice (which may be extended by the
FCA).

(7) The FCA may amend the direction if, having considered any
representations made by a person to whom notice is given under
5subsection (5), it considers it appropriate to do so.

(8) If, having considered any such representations, the FCA decides not to
revoke the direction—

(a) the FCA must give separate written notice to the persons
mentioned in subsection (5)(a) or (b), and

(b) 10any such person may refer the matter to the Tribunal.

(9) A notice under subsection (8)(a) must—

(a) give details of the direction and of any amendment of it,

(b) state the FCA’s reasons for deciding not to revoke the direction
and, if relevant, for amending it,

(c) 15inform the person to whom the notice is given of the person’s
right to refer the matter to the Tribunal, and

(d) give an indication of the procedure on such a reference.

(10) If, having considered any representations made by a person to whom
notice is given under subsection (5), the FCA decides to revoke the
20direction, it must give separate written notice to those persons.

(11) After the period for making representations in relation to a direction
given under this section has ended, the FCA must publish such
information about the direction as it considers appropriate (even if the
direction is revoked).

(12) 25Nothing in this section requires a notice to be given to a person
mentioned in subsection (5)(b) if the FCA considers it impracticable to
do so.

Supplementary powers
137R General supplementary powers

30Rules made by either regulator—

(a) may make different provision for different cases and may, in
particular, make different provision in respect of different
descriptions of authorised persons, activity or investment,

(b) may make provision by reference to rules made by the other
35regulator, as those rules have effect from time to time, and

(c) may contain such incidental, supplemental, consequential and
transitional provision as the regulator making the rule
considers appropriate.