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Financial Services BillPage 230

(4) After subsection (2) insert—

(2A) The appropriate regulator” means—

(a) where the incoming firm is a PRA-authorised person, the
FCA or the PRA;

(b) 5in any other case, the FCA.

(5) In subsection (4)—

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

(b) omit paragraph (b).

(6) 10In subsections (5) to (8), for “Authority”, in each place, substitute
“appropriate regulator”.

35 (1) Section 195A (contravention by relevant EEA firm or EEA UCITS of
directive requirement: home state regulator primarily responsible for
securing compliance) is amended as follows.

(2) 15For “the Authority” or “the Authority’s”, in each place, substitute “the
appropriate regulator” or “the appropriate regulator’s”.

(3) After subsection (11A) insert—

(11B) Subsection (4) is not to be regarded as requiring the PRA to notify the
home state regulator in relation to the contravention of a
20requirement falling within subsection (2) or (3) in a case where the
PRA is satisfied that the FCA is required to act, and is acting or has
acted, under subsection (4) in relation to that requirement.

(4) In subsection (12), before the definition of “home state” insert—

36 For section 196 substitute—

196 30The power of intervention

(1) If a regulator is entitled to exercise its power of intervention in
respect of an incoming firm under this Part, it may impose any
requirement in relation to the firm which that regulator could
impose if—

(a) 35the firm’s permission was a Part 4A permission; and

(b) the regulator was entitled to exercise its power under section
55L(3) or 55M(3).

(2) The FCA must consult the PRA before exercising its powers by virtue
of this section in relation to—

(a) 40a PRA-authorised person, or

(b) a member of a group which includes a PRA-authorised
person.

(3) The PRA must consult the FCA before exercising its powers by virtue
of this section.

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37 (1) Section 197 (procedure on exercise of power of intervention) is amended as
follows.

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

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

(4) 5In subsection (4)—

(a) in paragraph (c), for “Authority’s” substitute “regulator’s”, and

(b) in paragraph (d), for “Authority” substitute “regulator”.

(5) In subsections (5) to (7), for “Authority”, in each place, substitute
“regulator”.

38 (1) 10Section 198 (power to apply to court for injunction in respect of certain
overseas insurance companies) is amended as follows.

(2) In subsections (1) to (3), for “Authority”, in each place, substitute
“appropriate regulator”.

(3) After subsection (3) insert—

(3A) 15The appropriate regulator” means whichever regulator is, at the
time when the request is received, the competent authority for the
purposes of the provision referred to in subsection (1)(a), (b) or (c).

39 (1) Section 199 (additional procedure for EEA firms in certain cases) is amended
as follows.

(2) 20In subsection (1), for “the Authority” substitute “a regulator”.

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

(4) In subsections (3) to (11), for “the Authority” substitute “the regulator”.

(5) After subsection (11) insert—

(12) Subsection (3) is not to be regarded as requiring the PRA to take
25action in relation to the contravention of a relevant requirement in a
case where it is satisfied that the FCA is required to act, and is acting
or has acted, under subsection (3)—

(a) in relation to that requirement, or

(b) where that requirement is imposed by rules made by the
30PRA, in relation to an identical requirement imposed by rules
made by the FCA.

40 (1) Section 199A (management companies: loss of authorisation) is amended as
follows.

(2) In subsection (2), for “Authority”, in both places, substitute “appropriate
35regulator”.

(3) For subsection (4) substitute—

(4) In this section—

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41 (1) Section 200 (rescission and variation of requirements) is amended as follows.

(2) In subsection (1), for “The Authority” substitute “Either regulator”.

(3) In subsection (2)—

(a) for “the Authority”, in the first place, substitute “either regulator”,
5and

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

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

(5) In subsection (5)—

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

(b) in paragraph (a), for “the Authority” substitute “the regulator”.

42 For section 201 substitute—

201 Effect of certain requirements on other persons

If either regulator, in exercising its power of intervention, imposes on
15an incoming firm a requirement of the kind mentioned in subsection
(4) of section 55P, the requirement has the same effect in relation to
the firm as it would have in relation to an authorised person if it had
been imposed on the authorised person by the regulator acting
under section 55L or 55M.

43 20In section 202 (contravention of requirement imposed under Part 13), in
subsection (1), for “the Authority” substitute “a regulator”.

Section 14

SCHEDULE 5 Performance of regulated activities

1 Part 5 of FSMA 2000 is amended as follows.

2 (1) 25Section 58 (applications relating to prohibition orders: procedure and right
to refer to Tribunal) is amended as follows.

(2) In subsections (2) to (5), for “Authority” substitute “appropriate regulator”.

(3) After subsection (5) insert—

(6) The appropriate regulator” means the regulator to which the
30application is made.

3 In section 59 (approval for particular arrangements), omit subsection (9).

4 (1) Section 60 (applications for approval), for “Authority” or “Authority’s”, in
each place, substitute “appropriate regulator” or “appropriate regulator’s”.

(2) For subsection (3) substitute—

(3) 35At any time after the application is received and before it is
determined, the appropriate regulator may require the applicant to
provide it with such further information as it reasonably considers
necessary to enable it to determine the application or, as the case
requires, to decide whether to give consent.

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(3) In subsection (6), for “Part IV” substitute “Part 4A”.

(4) After subsection (6) insert—

(7) The PRA must consult the FCA before—

(a) giving a direction under subsection (2)(a) in relation to a class
5of applicants, or

(b) imposing a requirement under subsection (2)(b) on a class of
applicants.

(8) The PRA must as soon as practicable notify the FCA of the receipt or
withdrawal of an application to the PRA, unless the case is one in
10which by virtue of arrangements under section 59B the consent of the
FCA is not required.

(9) “The appropriate regulator”—

(a) in relation to a controlled function which is of a description
specified in rules made by the FCA, means the FCA;

(b) 15in relation to a controlled function which is of a description
specified in rules made by the PRA, means the PRA, and for
the purposes of subsection (3) also includes the FCA in cases
where the consent of the FCA is required.

5 (1) Section 61 (determination of applications) is amended as follows.

(2) 20In subsection (1), for “The Authority may grant an application made under
section 60” substitute “The regulator to which an application is made under
section 60 may grant the application”.

(3) In subsection (2)—

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

(b) 25after “general rules” insert “made by that regulator”.

(4) After subsection (2) insert—

(2A) Subsections (1) and (2) apply in relation to the giving by the FCA of
any required consent as they apply in relation to the grant of the
application.

(5) 30In subsection (3), for the words from the beginning to “determine” substitute
“The regulator to which an application is made under section 60 must,
before the end of the period for consideration, determine”.

(6) After subsection (3) insert—

(3A) The period for consideration”—

(a) 35in any case where the application under section 60 is made by
a person applying for permission under Part 4A (see section
60(6)), means whichever ends last of—

(i) the period within which the application for that
permission must be determined under section 55V(1)
40or (2), and

(ii) the period of 3 months beginning with the date on
which the regulator receives the application under
section 60, and

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(b) in any other case, means the period of 3 months beginning
with the date on which the regulator receives the application
under section 60.

(7) In subsection (4), for “the Authority”, in each place, substitute “a regulator”.

(8) 5In subsection (5)—

(a) for “Authority”, in the first place, substitute “regulator to which the
application was made”, and

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

6 (1) Section 62 (applications for approval: procedure and right to refer to
10Tribunal) is amended as follows.

(2) In subsection (1), for the words from “If” to “, it” substitute “If the regulator
to which an application is made under section 60 (“an application”) decides
to grant the application, it”.

(3) In subsections (2) to (4)—

(a) 15for “the Authority” substitute “the regulator to which an application
is made”, and

(b) for “an application” substitute “the application”.

7 (1) Section 63 (withdrawal of approval) is amended as follows.

(2) In subsection (2)—

(a) 20for “its approval, the Authority may take into account any matter
which it could take into account if it were” substitute “an approval,
the FCA or the PRA may take into account any matter which could
be taken into account in”, and

(b) at the end insert “(on the assumption, if it is not the case, that the
25application was one falling to be considered by it)”.

(3) In subsections (3) to (5)—

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

(b) for “its approval” substitute “an approval”.

8 In section 63A (performance of controlled functions without approval:
30power to impose penalties), for “Authority”, in each place, substitute
“appropriate regulator”.

9 In section 63B (procedure and right to refer to Tribunal), for “the Authority”,
in each place, substitute “a regulator”.

10 (1) Section 63C (statement of policy) is amended as follows.

(2) 35In subsection (1), for “The Authority” substitute “Each regulator”.

(3) In subsections (2) and (3), for “The Authority’s” substitute “Each
regulator’s”.

(4) In subsection (4), for “the Authority” substitute “the regulator that has
issued the statement”.

(5) 40In subsection (5)—

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

(b) after “issued” insert “by it”.

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(6) In subsection (6), for “replaced, the Authority” substitute “replaced by a
regulator, the regulator”.

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

(8) In subsection (8)—

(a) 5after “section” insert “by a regulator”, and

(b) for “Authority”, in both places, substitute “regulator”.

(9) In subsection (9), for “Authority” substitute “regulator”.

(10) In subsection (10)—

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

(b) 10after “published” insert “by it”.

11 (1) Section 63D (statement of policy: procedure) is amended as follows.

(2) In subsection (1)—

(a) for “issuing” substitute “a regulator issues”, and

(b) for “Authority”, in both places, substitute “regulator”.

(3) 15In subsections (2), (3), (4) and (5) (in both places), for “Authority” substitute
“regulator”.

(4) In subsection (6)—

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

(b) after “published” insert “by it”.

12 (1) 20Section 64 (conduct of approved persons: statement and codes) is amended
as follows.

(2) In subsection (2)—

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

(b) after “subsection (1)” insert “or (1A)”.

(3) 25In subsection (3)(a) to (c), for “Authority” substitute “regulator issuing the
code”.

(4) In subsection (4)—

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

(b) after “issued” insert “by it”.

(5) 30In subsection (5)—

(a) after “replaced” insert “by a regulator”, and

(b) for “Authority” substitute “regulator”.

(6) In subsection (6)—

(a) for “the Authority”, in the first place, substitute “the regulator that
35issued it”, and

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

(7) In subsection (10), for “The Authority” substitute “A regulator”.

(8) In subsection (11), for paragraph (b) substitute—

(b) is to be treated for the purposes of section 1B(6)(a) as part of
40the FCA’s rule-making functions (where the power is
exercisable by the FCA) and is to be treated for the purposes

Financial Services BillPage 236

of section 2J(1)(a) as part of the PRA’s rule-making functions
(where the power is exercisable by the PRA).

(9) In subsection (12)—

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

(b) 5after “published” insert “by it”.

(10) For subsection (13) substitute—

(13) Any expression which is used both in this section and section 59 has
the same meaning in this section as in that section.

13 (1) Section 65 (statements and codes: procedure) is amended as follows.

(2) 10For subsection (1) substitute—

(1) Before a regulator issues a statement or code under section 64, it
must—

(a) consult the other regulator; and

(b) after doing so, publish a draft of the statement or code in the
15way appearing to it to be best calculated to bring the
statement or code to the attention of the public.

(1A) The duty of the FCA to consult the PRA under subsection (1)(a)
applies only in so far as the statement or code applies to persons in
relation to whom approval is given under section 59 in respect of the
20performance by them of significant-influence functions (within the
meaning of that section) in relation to the carrying on by PRA-
authorised persons of regulated activities.

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

(4) 25In subsection (3)—

(a) for “issuing” substitute “a regulator issues”, and

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

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

(6) In subsection (5)—

(a) 30for “the Authority”, in the first place, substitute “the regulator
issuing the statement or code”, and

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

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

(8) For subsection (7) substitute—

(7) 35Subsections (1)(b) and (2) to (6) do not apply in relation to—

(a) a statement or code issued by the FCA if it considers that the
delay involved in complying with them would be prejudicial
to the interests of consumers, as defined in section 425A; or

(b) a statement or code issued by the PRA if it considers that the
40delay involved in complying with them would—

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

Financial Services BillPage 237

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

(9) In subsection (9)—

(a) 5for “The Authority” substitute “A regulator”, and

(b) after “published” insert “by it”.

(10) For subsection (11) substitute—

(11) Cost benefit analysis” means—

(a) an analysis of the costs together with an analysis of the
10benefits that will arise—

(i) if the proposed statement or code is issued, or

(ii) if subsection (5)(b) applies, from the statement or
code that has been issued, and

(b) subject to subsection (11A), an estimate of those costs and of
15those benefits.

(11A) If, in the opinion of the regulator concerned—

(a) the costs or benefits referred to in subsection (11) cannot
reasonably be estimated, or

(b) it is not reasonably practicable to produce an estimate,

20the cost benefit analysis need not estimate them, but must include a
statement of the opinion of the regulator concerned and an
explanation of it.

14 (1) Section 66 (disciplinary powers) is amended as follows.

(2) In subsection (1)—

(a) 25in the opening words—

(i) for “The Authority” substitute “A regulator”, and

(ii) after “this section” insert “(whether or not it has given its
approval in relation to the person)”, and

(b) in paragraphs (a) and (b), for “ Authority” substitute “ regulator”.

(3) 30For subsection (2) substitute—

(2) For the purposes of action by the FCA, a person is guilty of
misconduct if, while an approved person—

(a) the person has failed to comply with a statement of principle
issued by the FCA under section 64, or

(b) 35the person has been knowingly concerned in a contravention
by the relevant authorised person of a requirement imposed
on that authorised person—

(i) by or under this Act, or

(ii) by any qualifying EU provision specified, or of a
40description specified, for the purposes of this
subsection by the Treasury by order.

(2A) For the purposes of action by the PRA, a person is guilty of
misconduct if, while an approved person in respect of the
performance of a significant-influence function in relation to the
45carrying on by a PRA-authorised person of a regulated activity—

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(a) the person has failed to comply with a statement of principle
issued by the PRA under section 64, or

(b) the person has been knowingly concerned in a contravention
by the relevant authorised person of a requirement imposed
5on that authorised person—

(i) by or under this Act, or

(ii) by any qualifying EU provision specified, or of a
description specified, for the purposes of this
subsection by the Treasury by order.

(4) 10In subsection (3), for “ Authority” substitute “regulator”.

(5) In subsection (3D), for “The Authority” substitute “The regulator taking
action under this section”.

(6) In subsection (4)—

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

(b) 15for “the Authority”, in the second place, substitute “the regulator”.

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

(8) For subsection (6) substitute—

(6) Approved person” means a person in relation to whom an approval
is given under that section.

15 (1) 20Section 67 (disciplinary measures: procedure and right to refer to Tribunal)
is amended as follows.

(2) In subsections (1) and (4), for “the Authority” substitute “a regulator”.

(3) In subsection (7)—

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

(b) 25for “the Authority”, in the second place, substitute “the regulator”.

(4) In subsection (9)—

(a) for “an approved person (“A”),” substitute “a person (“A”) in relation
to whom approval has been given,”, and

(b) omit the second sentence.

16 30In section 68 (publication), for “the Authority” substitute “the regulator
publishing it”.

17 (1) Section 69 (statement of policy) is amended as follows.

(2) In subsection (1), for “The Authority must” substitute “Each regulator must”.

(3) In subsection (2), for “The Authority’s” substitute “A regulator’s”.

(4) 35In subsection (3)—

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

(b) after “issued” insert “by it”.

(5) In subsection (4), for “replaced, the Authority” substitute “replaced by a
regulator, the regulator”.

(6) 40In subsection (5), for “The Authority” substitute “A regulator”.

(7) In subsection (6)—

Financial Services BillPage 239

(a) after “section” insert “by a regulator”, and

(b) for “the Authority”, in both places, substitute “the regulator”.

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

(9) In subsection (8)—

(a) 5for “the Authority” substitute “a regulator”, and

(b) after “published” insert “by it”.

18 (1) Section 70 (statements of policy: procedure) is amended as follows.

(2) In subsection (1)—

(a) for “issuing” substitute “a regulator issues”, and

(b) 10for “Authority”, in both places, substitute “regulator”.

(3) In subsections (2), (3), (4) and (5) (in both places), for “Authority” substitute
“regulator”.

(4) In subsection (6)—

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

(b) 15after “published” insert “by it”.

Section 21

SCHEDULE 6 Control of business transfers

1 Part 7 of FSMA 2000 is amended as follows.

2 Before section 104 insert—

103A 20 Meaning of “the appropriate regulator”

(1) In this Part “the appropriate regulator” means—

(a) in relation to a scheme in respect of which the authorised
person concerned is a PRA-authorised person, the PRA;

(b) in any other case, the FCA.

(2) 25In this Part, “the authorised person concerned”—

(a) in the case of an insurance business transfer scheme, is to be
read in accordance with section 105(2);

(b) in the case of a banking business transfer scheme, is to be read
in accordance with section 106(2);

(c) 30in the case of a reclaim fund business transfer scheme, means
the reclaim fund to whose business the scheme relates.

3 (1) Section 109 (scheme reports) is amended as follows.

(2) For “Authority”, in each place, substitute “appropriate regulator”.

(3) After subsection (3) insert—

(4) 35Where the appropriate regulator is the PRA, it must consult the FCA
before—

(a) nominating or approving a person under subsection (2)(b), or

(b) approving a form under subsection (3).

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Contents page 130-139 140-149 150-159 160-169 170-188 189-189 190-199 200-209 210-219 220-229 230-239 240-249 250-259 260-269 270-279 280-289 290-299 300-309 310-319 320-329 330-339 Last page