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Financial Services BillPage 230

14 (1) Section 381 (injunctions in case of market abuse) is amended as follows.

(2) In subsections (1) to (3), for “Authority” substitute “FCA”.

(3) In subsection (4), after “The court” insert “may”.

15 (1) Section 382 (restitution orders) is amended as follows.

(2) 5In subsection (1), for “Authority” substitute “appropriate regulator”.

(3) In subsections (2) and (3), for “Authority” substitute “regulator concerned”.

(4) In subsection (7), for “Authority” substitute “appropriate regulator”.

(5) In subsection (9)(a)—

(a) in the opening words, for “Authority” substitute “appropriate
10regulator”,

(b) in sub-paragraph (i), for the words from “any directly applicable” to
UCITS directive” substitute “a qualifying EU provision specified, or
of a description specified, for the purposes of this subsection by the
Treasury by order”, and

(c) 15in sub-paragraph (ii), for the words from “which the Authority” to
the end substitute “mentioned in section 402(1)”.

(6) In subsection (10), omit paragraph (a) (and the “and” at the end of it).

(7) After subsection (10) insert—

(11) The PRA is the “appropriate regulator” in the case of a contravention
20of—

(a) a requirement that is imposed by the PRA under any
provision of this Act,

(b) a requirement under section 56(6) where the authorised
person concerned is a PRA-authorised person and the
25prohibition order concerned is made by the PRA, or

(c) a requirement under section 59(1) or (2) where the authorised
person concerned is a PRA-authorised person and the
approval concerned falls to be given by the PRA.

(12) In the case of a contravention of a requirement that is imposed by a
30qualifying EU provision, “the appropriate regulator” is whichever of
the PRA or the FCA (or both) is specified by the Treasury by order in
relation to the qualifying EU provision for the purposes of this
section.

(13) In the case of a contravention of a requirement where the
35contravention constitutes an offence under this Act, the “appropriate
regulator” is the regulator which has power to prosecute the offence
(see section 401).

(14) The FCA is the “appropriate regulator” in the case of a contravention
of any other requirement.

(15) 40The Treasury may by order amend the definition of “appropriate
regulator”.

16 In section 383(1), (4), (5) and (9) (restitution orders in case of market abuse),
for “ Authority” substitute “FCA”.

Financial Services BillPage 231

17 (1) Section 384 (power of Authority to require restitution) is amended as
follows.

(2) In subsection (1)—

(a) for “The Authority” substitute “The appropriate regulator”, and

(b) 5after “authorised person” insert “or recognised investment
exchange”.

(3) In subsections (2) and (4), for “Authority” substitute “FCA”.

(4) In subsection (5)—

(a) for “Authority”, in the first place, substitute “regulator exercising the
10power (“the regulator concerned”)”, and

(b) for “Authority”, in each of the other places, substitute “regulator
concerned”.

(5) In subsection (6), for “Authority” substitute “regulator concerned”.

(6) In subsection (7)—

(a) 15in paragraph (a), for the words from “any directly applicable” to
UCITS directive” substitute “a qualifying EU provision specified, or
of a description specified, for the purposes of this subsection by the
Treasury by order”, and

(b) in paragraph (b), for the words from “in relation to which” to the end
20substitute “mentioned in section 402(1)”.

(7) Omit subsection (8).

(8) After subsection (8) insert—

(9) The PRA is the “appropriate regulator” in the case of a contravention
of—

(a) 25a requirement that is imposed by the PRA under any
provision of this Act,

(b) a requirement under section 56(6) where the authorised
person concerned is a PRA-authorised person and the
prohibition order concerned is made by the PRA, or

(c) 30a requirement under section 59(1) or (2) where the authorised
person concerned is a PRA-authorised person and the
approval concerned falls to be given by the PRA.

(10) In the case of a contravention of a requirement that is imposed by a
qualifying EU provision, “the appropriate regulator” is whichever of
35the PRA or the FCA (or both) is specified by the Treasury by order in
relation to the qualifying EU provision for the purposes of this
section.

(11) In the case of a contravention of a requirement where the
contravention constitutes an offence under this Act, the “appropriate
40regulator” is the regulator which has power to prosecute the offence
(see section 401).

(12) The FCA is the “appropriate regulator” in the case of a contravention
of any other requirement.

(13) The Treasury may by order amend the definition of “appropriate
45regulator”.

Financial Services BillPage 232

(9) In the heading, for “Authority” substitute “FCA or PRA”.

(10) In the italic heading before section 384, for “Authority” substitute “FCA or
PRA”.

18 (1) Section 385 (warning notices) is amended as follows.

(2) 5In subsection (1), for “the Authority” substitute “a regulator”.

(3) In subsection (2), for “the Authority” substitute “the regulator”.

19 In section 386(1) and (3) (decision notices), for “Authority” substitute
“regulator”.

Part 6 10Notice procedures

20 (1) Section 387 (warning notices) is amended as follows.

(2) In subsection (1)(a), for “Authority” substitute “regulator giving the notice
(“the regulator concerned”)”.

(3) After subsection (1) insert—

(1A) 15Where the PRA is the regulator concerned and the FCA proposes to
refuse consent for the purposes of section 55F, 55I or 59 or to give
conditional consent as mentioned in section 55F(5) or 55I(8), the
warning notice given by the PRA must—

(a) state that fact, and

(b) 20give the reasons for the FCA’s proposal.

(4) In subsection (2)—

(a) for “The warning” substitute “A warning”,

(b) for “28 days” substitute “14 days”, and

(c) for “Authority” substitute “regulator concerned”.

(5) 25In subsection (3), for “The Authority” substitute “The regulator concerned”.

(6) After subsection (3) insert—

(3A) Where the PRA receives any representations in response to a
warning notice given by it under section 55X(1) or (2) or 62(2) in a
case falling within subsection (1A) it must—

(a) 30if the representations are in writing, give a copy to the FCA,
or

(b) if they are not in writing and have not been given directly to
the FCA by the person making them, provide the FCA with a
record of them.

(7) 35In subsection (4), for “The Authority” substitute “The regulator concerned”.

21 (1) Section 388 (decision notices) is amended as follows.

(2) In subsection (1)(b), for “the Authority’s reasons” substitute “the reasons of
the regulator giving the notice (“the regulator concerned”)”.

Financial Services BillPage 233

(3) After subsection (1) insert—

(1A) Where the PRA is the regulator concerned and the FCA has decided
to refuse consent for the purposes of section 55F, 55I or 59 or to give
conditional consent as mentioned in section 55F(5) or 55I(8), the
5decision notice given by the PRA must—

(a) state that fact, and

(b) give the reasons for the FCA’s decision.

(4) In subsections (3) and (4), for “The Authority” substitute “The regulator
concerned”.

22 10In section 389(1) (notices of discontinuance)—

(a) for “the Authority” substitute “a regulator”, and

(b) in paragraphs (a) and (b), after “notice” insert “given by it”.

23 (1) Section 390 (final notices) is amended as follows.

(2) In subsection (1)—

(a) 15for “the Authority”, in the first place, substitute “a regulator”, and

(b) for “the Authority”, in the second place, substitute “the regulator”.

(3) In subsection (2)—

(a) for “the Authority”, in the first place, substitute “a regulator”, and

(b) for “the Authority”, in the second place, substitute “the regulator”.

(4) 20In subsections (9) and (10), for “the Authority” substitute “the regulator
giving the notice”.

24 (1) Section 391 (publication) is amended as follows.

(2) For subsection (1) substitute—

(1) In the case of a warning notice falling within subsection (1ZB)—

(a) 25neither the regulator giving the notice nor a person to whom
it is given or copied may publish the notice;

(b) a person to whom the notice is given or copied may not
publish any details concerning the notice unless the regulator
giving the notice has published those details; and

(c) 30after consulting the persons to whom the notice is given or
copied, the regulator giving the notice may publish such
information about the matter to which the notice relates as it
considers appropriate.

(1ZA) In the case of a warning notice not falling within subsection (1ZB),
35neither the regulator giving the notice nor a person to whom it is
given or copied may publish the notice or any details concerning it.

(1ZB) A warning notice falls within this subsection if it is given under—

(a) section 63B;

(b) section 67;

(c) 40section 87M;

(d) section 88B;

(e) section 89K;

(f) section 89R;

(g) section 92;

Financial Services BillPage 234

(h) section 126;

(i) section 131H;

(j) section 192L;

(k) section 207;

(l) 5section 312G;

(m) section 345B (whether as a result of section 345(2) or 345A(3)
or section 249(1)).

(3) In subsections (1A), (2) and (3), for “Authority” substitute “regulator giving
the notice”.

(4) 10In subsection (4)—

(a) for “The Authority” substitute “The regulator giving a decision or
final notice”, and

(b) for “a decision notice or final notice” substitute “the notice”.

(5) In subsection (5), for “Authority” substitute “regulator giving the notice”.

(6) 15For subsection (6) substitute—

(6) The FCA may not publish information under this section if, in its
opinion, publication of the information would be—

(a) unfair to the person with respect to whom the action was
taken (or was proposed to be taken),

(b) 20prejudicial to the interests of consumers, or

(c) detrimental to the stability of the UK financial system.

(6A) The PRA may not publish information under this section if, in its
opinion, publication of the information would be—

(a) unfair to the person with respect to whom the action was
25taken (or was proposed to be taken),

(b) prejudicial to the safety and soundness of PRA-authorised
persons, or

(c) in a case where section 2C applies, prejudicial to securing the
appropriate degree of protection for policyholders.

(7) 30In subsection (7), for “Authority” substitute “regulator”.

25 (1) Section 392 (application of sections 393 and 394) is amended as follows.

(2) In paragraph (a)—

(a) for “54(1)” substitute “55Z(1)”, and

(b) after “131H(1),” insert “192L(1),”.

(3) 35In paragraph (b)—

(a) for “54(2)” substitute “55Z(2)”, and

(b) after “131H(4),” insert “192L(4),”.

26 (1) Section 393 (third party rights) is amended as follows.

(2) In subsections (1)(b) and (2), for “Authority” substitute “regulator giving the
40notice”.

(3) In subsection (3)—

(a) for “28 days” substitute “14 days”, and

(b) for “the Authority” substitute “the regulator giving the notice”.

Financial Services BillPage 235

(4) In subsections (4)(b), (6), (7), (9)(b) and (11)(b), for “the Authority” substitute
“the regulator giving the notice”.

(5) In subsection (12), for “which the Authority must disclose” substitute “to
which access must be given”.

27 (1) 5Section 394 (access to Authority material) is amended as follows.

(2) In subsection (1)—

(a) in the opening words, for “the Authority” substitute “a regulator”,
and

(b) in paragraph (b), for “, in the opinion of the Authority,” substitute
10“, in the regulator’s opinion,”.

(3) In subsection (2), for “the Authority”, in both places, substitute “the
regulator giving the notice”.

(4) In subsection (3), for “The Authority” substitute “The regulator giving the
notice”.

(5) 15In subsection (4)—

(a) for “the Authority” substitute “the regulator giving the notice”, and

(b) for “the Authority’s” substitute “the regulator’s”.

(6) In subsection (5), for “the Authority” substitute “the regulator giving the
notice”.

(7) 20In subsection (6)—

(a) in paragraph (a), for “the Authority” substitute “the regulator giving
the notice”, and

(b) in paragraph (b), for “the Authority in connection with the matter to
which the notice to which this section applies” substitute “the
25regulator giving the notice in connection with the matter to which
that notice”.

(8) In the heading, for “Authority” substitute “FCA or PRA”.

28 (1) Section 395 (the Authority’s procedures) is amended as follows.

(2) For subsection (1) substitute—

(1) 30Each regulator must determine the procedure that it proposes to
follow in relation to the following—

(a) a decision which gives rise to an obligation to give a
supervisory notice,

(b) in the case of the FCA, a decision which—

(i) 35gives rise to an obligation for it to give a warning
notice or decision notice, or

(ii) gives rise to an obligation for the PRA to include a
statement under section 387(1A) in a warning notice
or a statement under section 388(1A) in a decision
40notice,

(c) in the case of the PRA, a decision which gives rise to an
obligation for it to give a warning notice or decision notice,
other than a decision which depends entirely on a decision of
the FCA of the kind mentioned in paragraph (b)(ii).

(3) 45In subsection (2)—

Financial Services BillPage 236

(a) omit the words from “which gives” to “such notice”, and

(b) at the end insert “, or by 2 or more persons who include a person not
directly involved in establishing that evidence”.

(4) In subsection (3), for the words from “taken” to the end substitute “taken
5otherwise as mentioned in subsection (2) if the person taking the decision is
of a level of seniority laid down by the procedure and—

(a) in the case of procedure proposed by the FCA, the FCA
considers that, in the particular case, it is necessary in order
to advance one or more of its operational objectives, or

(b) 10in the case of procedure proposed by the PRA, the PRA
considers that, in the particular case, it is necessary in order
to advance any of its objectives.

(5) In subsection (5)—

(a) for “The Authority” substitute “Each regulator”, and

(b) 15for “the procedure” substitute “its procedure”.

(6) In subsection (6)—

(a) for “the Authority” substitute “the regulator issuing it”, and

(b) for “it” substitute “the statement”.

(7) In subsection (7), for “The Authority” substitute “The regulator issuing the
20statement”.

(8) In subsection (8)—

(a) for “The Authority” substitute “The regulator issuing a statement
under this section”, and

(b) for “any statement which it issues under this section” substitute “the
25statement”.

(9) In subsection (9)—

(a) for “giving” substitute “a regulator gives”,

(b) after “decision notice,” insert “other than a warning notice or
decision notice relating to a decision of the PRA that is required by a
30a decision of the FCA of the kind mentioned in subsection (1)(b)(ii)”,
and

(c) for “the Authority” substitute “the regulator”.

(10) After subsection (9) insert—

(9A) When the FCA takes a decision falling within subsection (1)(b)(ii), it
35must follow its stated procedure.

(11) In subsection (10)—

(a) for “the Authority” substitute “a regulator”, and

(b) for “the procedure” substitute “its procedure”.

(12) In subsection (11), for “The Authority’s” substitute “A regulator’s”.

(13) 40In subsection (13), for paragraph (a) substitute—

(a) 55Y(4), (7) or (8)(b);.

(14) In the heading, for “Authority’s” substitute “FCA’s and PRA’s”.

(15) In the italic heading before that section, for “Authority’s” substitute “FCA’s
and PRA’s”.

Financial Services BillPage 237

29 (1) Section 396 (statements under s.395: consultation) is amended as follows.

(2) In subsection (1)—

(a) after “a statement of” insert “its”,

(b) for “the Authority”, in the first place, substitute “the regulator”,

(c) 5for “the Authority”, in the second place, substitute “it”, and

(d) for “it” substitute “the draft”.

(3) In subsection (2), for “Authority” substitute “regulator publishing the draft”.

(4) In subsection (3), for “Before issuing the proposed statement of procedure,
the Authority” substitute “Before a regulator issues the proposed statement
10of its procedure, it”.

(5) In subsection (4), for “Authority issues the proposed statement of
procedure” substitute “regulator issues the proposed statement of its
procedure,”.

(6) In subsection (5)—

(a) 15for “statement of procedure differs from the draft published”
substitute “statement of the regulator’s procedure differs from the
draft published by it”,

(b) for “, in the opinion of the Authority,” substitute “, in its opinion,”,
and

(c) 20for “the Authority must” substitute “it must”.

(7) In subsection (6)—

(a) for “The Authority” substitute “The regulator publishing a draft
under subsection (1)”, and

(b) for “a draft published under subsection (1)” substitute “the draft”.

25Part 7 Offences

30 (1) Section 398 (misleading the Authority: residual cases) is amended as
follows.

(2) In subsection (1), for “the Authority” substitute “a regulator”.

(3) 30In the heading, for “the Authority” substitute “FCA or PRA”.

31 (1) Section 401 (proceedings for offences) is amended as follows.

(2) In subsections (2)(a) and (3)(a), for “Authority” substitute “appropriate
regulator”.

(3) After subsection (3) insert—

(3A) 35For the purposes of subsections (2)(a) and (3)(a), the PRA is the
“appropriate regulator” in respect of each of the following offences—

(a) an offence under section 55P(10) where the contravention is
of a requirement imposed by the PRA;

(b) an offence under section 56(4) where the prohibition order is
40made by the PRA;

(c) an offence under section 177(3) where the investigation is
being, or is likely to be, conducted on behalf of the PRA;

Financial Services BillPage 238

(d) an offence under section 177(4) where the requirement is
imposed by the PRA;

(e) an offence under section 177(6) where the warrant is issued as
a result of information on oath given by the PRA or a person
5appointed by the PRA to conduct an investigation on its
behalf;

(f) an offence under section 191F(1) where the notice should
have been given to the PRA;

(g) an offence under any of section 191F(2) to (7) where the
10notice, approval or information was given to or by the PRA;

(h) an offence under section 366(3), unless the activity of
effecting or carrying out long-term contracts of insurance is
not to any extent a PRA-regulated activity;

(i) an offence under section 398(1) where the information was
15given to the PRA.

(3B) For the purposes of subsections (2)(a) and (3)(a), the FCA is the
“appropriate regulator” in respect of all other offences under this Act
or subordinate legislation made under this Act.

(4) In subsection (5), for “Authority” substitute “appropriate regulator”.

32 (1) 20Section 402 (power of the Authority to institute proceedings for certain other
offences) is amended as follows.

(2) In subsections (1) and (2), for “Authority” substitute “FCA”.

(3) In the heading, for “the Authority” substitute “FCA”.

Part 8 25Co-operation

33 After section 415A insert—

Consultation

415B Consultation in relation to taking certain enforcement action

(1) The FCA must consult the PRA before taking a qualifying step in
30relation to a person who—

(a) is a PRA-authorised person, or

(b) has a qualifying relationship with a PRA-authorised person.

(2) The PRA must consult the FCA before taking a qualifying step.

(3) In this section any reference to the taking of a qualifying step is a
35reference to—

(a) the giving of a warning notice or decision notice under
section 63B (performance of controlled functions without
approval),

(b) the giving of a warning notice or decision notice under
40section 67 (disciplinary powers in relation to approved
person),

(c) the giving of a warning notice under section 126 or a decision
notice under section 127 (market abuse),

Financial Services BillPage 239

(d) the giving of a warning notice or decision notice under
section 131H (short selling),

(e) the giving of a warning notice under section 207 or a decision
notice under section 208 (breaches of requirements imposed
5by or under Act etc.),

(f) the giving of a warning notice under section 312G or a
decision notice under section 312H (recognised bodies),

(g) the making of an application to the court under section
380, 381, 382 or 383 (injunctions or restitution), or

(h) 10the giving of a warning notice under section 385 or a decision
notice under section 386 (power of FCA or PRA to require
restitution).

(4) A person has a qualifying relationship with a PRA-authorised
person (“A”) for the purposes of this section if—

(a) 15the person is a member of A’s immediate group, or

(b) in the case of a qualifying step within subsection (3)(a) or (b),
the person performs a significant-influence function under
an arrangement entered into by A, or by a contractor of A, in
relation to the carrying on by A of a regulated activity.

20“Significant-influence function” and “arrangement” have the same
meanings as in section 59.

Section 35

SCHEDULE 10 The Financial Services Compensation Scheme

1 Part 15 of FSMA 2000 (the Financial Services Compensation Scheme) is
25amended as follows.

2 (1) Section 212 (the scheme manager) is amended as follows.

(2) For subsections (1) and (2) substitute—

(1) The scheme manager” means the body corporate established by the
Financial Services Authority under this section as originally enacted.

(2) 30The regulators must take such steps as are necessary to ensure that
the scheme manager is, at all times, capable of exercising the
functions conferred on it by or under this Part or Part 15A.

(3) In subsections (4) and (5) for “Authority” substitute “regulators”.

3 (1) Section 213 (the compensation scheme) is amended as follows.

(2) 35In each place, for “Authority” substitute “regulators”.

(3) In subsection (1)—

(a) after “rules” insert “made in accordance with an order under
subsection (1A)”, and

(b) for the words from “cases where” to the end substitute “cases
40where—

(a) relevant persons are unable, or likely to be unable, to
satisfy claims against them, or

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