Financial Services Bill (HL Bill 48)

(d) Directive 2009/138/EC of the European Parliament and the
Council of 25 November 2009 on the taking-up and pursuit of
the business of Insurance and Reinsurance (Solvency II).

(4) The supervising regulator may, if it considers it necessary to do so for
5the effective consolidated supervision of the relevant group, give the
other regulator a direction under this section.

(5) A direction under this section is a direction requiring the other
regulator to exercise, or not to exercise, a relevant function in a
specified manner in relation to authorised persons who are members of
10the relevant group.

(6) The direction may relate to members of the relevant group other than
the members in respect of which consolidated supervision is required.

(7) A “relevant function”, in relation to either regulator, is a function
conferred by or under this Act which relates to the regulation of
15authorised persons, but does not include—

(a) the regulator’s function of making rules under this Act;

(b) its function of preparing and issuing codes under this Act;

(c) its function of determining the general policy and principles by
reference to which it performs particular functions;

(d) 20the FCA’s functions in relation to the giving of general
guidance;

(e) the PRA’s functions in relation to the giving of guidance under
section 2I;

(f) the FCA’s functions in relation to consent for the purposes of
25section 55F or 55I.

(8) The direction may not require the regulator to which it is given (“the
directed regulator”) to do anything that it has no power to do, but the
direction is relevant to the exercise of any discretion conferred on the
directed regulator.

(9) 30The directed regulator must comply with the direction as soon as
practicable, but this is subject to subsections (10) and (11).

(10) The directed regulator is not required to comply with a direction under
this section if or to the extent that in its opinion compliance would be
incompatible with any EU obligation or any other international
35obligation of the United Kingdom.

(11) Directions given by the FCA under this section are subject to any
directions given to the FCA under section 3I.

3M Revocation of directions under section 3L

(1) The supervising regulator may at any time by notice to the other
40regulator revoke a direction under section 3L.

(2) The revocation of the direction does not affect the validity of anything
previously done in accordance with it.

(3) Expressions defined for the purposes of section 3L have the same
meaning in this section.

3N Further provisions about directions under section 3L

(1) Before giving a direction under section 3L, the supervising regulator
must consult the other regulator.

(2) A direction under section 3L must be given or confirmed in writing,
5and must be accompanied by a statement of the reasons for giving it.

(3) A notice revoking a direction under section 3L must be given or
confirmed in writing.

(4) The regulator to which a direction under section 3L is given must give
a copy of the direction and statement to each of the authorised persons
10to whom the direction relates.

(5) The supervising regulator must publish the direction and statement, or
the notice, in such manner as it thinks fit.

(6) But subsection (4) or (5) does not apply in a case where the regulator on
which the duty is imposed considers that compliance with that
15subsection would be against the public interest.

(7) In a case where a regulator decides that compliance with subsection (4)
or (5) would be against the public interest, the regulator must from time
to time review that decision and if it subsequently decides that
compliance is no longer against the public interest it must comply with
20the subsection.

(8) Expressions defined for the purposes of section 3L have the same
meaning in this section.

3O Consultation by regulator complying with direction

(1) If the directed regulator is required by this Act to consult any person
25other than the supervising regulator before exercising the relevant
function to which the direction relates, the directed regulator must give
the supervising regulator copies of any written representations
received from the persons consulted.

(2) Expressions defined for the purposes of section 3L have the same
30meaning in this section.

Co-operation with Bank of England

3P Co-operation by FCA and PRA with Bank of England

(1) Each regulator must take such steps as it considers appropriate to co-
operate with the Bank of England in connection with—

(a) 35the pursuit by the Bank of its Financial Stability Objective, and

(b) the Bank’s compliance with its duties under sections 57 and 58
of the Financial Services Act 2012 (duty to notify Treasury of
possible need for public funds and of subsequent changes).

(2) Co-operation under subsection (1) may include the sharing of
40information that the regulator is not prevented from disclosing.

Arrangements for provision of services

3Q Arrangements for provision of services

(1) The regulators may enter into arrangements with each other for the
provision of services by one of them to the other.

(2) 5Either regulator may enter into arrangements with the Bank of England
for the provision of services—

(a) by the Bank to the regulator, or

(b) by the regulator to the Bank.

(3) Either regulator may enter into arrangements with any of the bodies
10specified in subsection (4) for the provision of services by the regulator
to that body.

(4) Those bodies are—

(a) the consumer financial education body (see section 3R(2)),

(b) the scheme manager (see section 212(1)), and

(c) 15the scheme operator (see section 225(2)).

(5) The FCA may enter into arrangements with—

(a) a local weights and measures authority in England, Wales or
Scotland, or

(b) the Department of Enterprise, Trade and Investment in
20Northern Ireland,

for the provision by the authority or department to the FCA of services
which relate to activities to which this subsection applies.

(6) Subsection (5) applies to activities that are regulated activities by virtue
of—

(a) 25an order made under section 22(1) in relation to an investment
of a kind falling within paragraph 23 or 23B of Schedule 2, or

(b) an order made under section 22(1A).

(7) Arrangements under this section are to be on such terms as may be
agreed by the parties.

30Enhancing public understanding of financial matters etc.

3R The consumer financial education body

(1) The consumer financial education body continues to have the
consumer financial education function.

(2) The “consumer financial education body” means the body corporate
35originally established by the Financial Services Authority under section
6A of this Act (as it had effect before the passing of the Financial
Services Act 2012).

(3) The consumer financial education function is to enhance—

(a) the understanding and knowledge of members of the public of
40financial matters (including the UK financial system), and

(b) the ability of members of the public to manage their own
financial affairs.

(4) The consumer financial education function includes, in particular—

(a) promoting awareness of the benefits of financial planning;

(b) promoting awareness of the financial advantages and
disadvantages in relation to particular decisions relating to
different kinds of goods or services;

(c) 5promoting awareness of the benefits and risks associated with
different kinds of financial dealing (which includes informing
the FCA and other bodies of those benefits and risks);

(d) the publication of educational materials or the carrying out of
other educational activities;

(e) 10the provision of information and advice to members of the
public;

(f) assisting members of the public with the management of debt;

(g) working with other organisations which provide debt services,
with a view to improving—

(i) 15the availability to the public of those services;

(ii) the quality of the services provided;

(iii) consistency in the services available, in the way in which
they are provided and in the advice given.

(5) In subsection (4) “debt services” means debt advice or assistance with
20the management of debt.

(6) Schedule 1A makes further provision about the consumer financial
education body.”

(2) For Schedule 1 to FSMA 2000 substitute the Schedules 1ZA and 1ZB set out in
Schedule 3 to this Act.

25Regulated activities

7 Extension of scope of regulation

(1) In section 22 of FSMA 2000 (the classes of activity and categories of
investment)—

(a) after subsection (1) insert—

“(1A) 30An activity is also a regulated activity for the purposes of this
Act if it is an activity of a specified kind which is carried on by
way of business and relates to information about a person’s
financial standing.”

(b) in subsection (3), after “(1)” insert “or (1A)”, and

(c) 35for the heading substitute “Regulated activities”.

(2) Schedule 2 to FSMA 2000 (regulated activities) is amended as follows.

(3) For paragraph 23 (and the italic heading before it) substitute—

“Loans and other forms of credit

23 (1) Rights under any contract under which one person provides another
40with credit.

(2) “Credit” includes any cash loan or other financial accommodation.

(3) “Cash” includes money in any form.

(4) It is immaterial for the purposes of sub-paragraph (1) whether or not
the obligation of the borrower is secured on property of any kind.”

(4) After paragraph 23A insert—

“Contracts for hire of goods

23B (1) 5Rights under a contract for the bailment or (in Scotland) hiring of
goods to a person other than a body corporate.

(2) “Goods” has the meaning given in section 61(1) of the Sale of Goods
Act 1979.

(3) It is immaterial for the purposes of sub-paragraph (1) whether the
10rights of the person to whom the goods are bailed or hired have been
assigned to a body corporate.”

(5) After paragraph 24 insert—

“ Part 2A Regulated activities relating to information about persons’ financial
15standing

24A General

The matters with respect to which provision may be made under
section 22(1A) include, in particular, those described in general
terms in this Part of this Schedule.

24B 20Providing credit reference services

Furnishing persons with information that—

(a) is relevant to the financial standing of persons other than
bodies corporate, and

(b) is collected for that purpose by the person furnishing it.

24C 25Providing credit information services

(1) Taking steps on behalf of a person other than a body corporate in
connection with information relevant to that person’s financial
standing that is or may be held by a regulated person.

(2) “Regulated person” means—

(a) 30a person who is carrying on a regulated activity, or

(b) a person who is carrying on a business in respect of which a
licence under section 21 of the Consumer Credit Act 1974 is
required.

Giving advice to a person other than a body corporate in relation to
35the taking of any steps of the kind mentioned in paragraph 24C(1).”

8 Orders under section 22 of FSMA 2000

(1) Schedule 2 to FSMA 2000 (regulated activities) is amended as follows.

(2) In paragraph 25(1)—

(a) after “22(1)” insert “or (1A)”, and

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

(3) For paragraph 26 substitute—

“Parliamentary control

26 (1) 5This paragraph applies to any order made under section 22(1) or (1A)
which contains a statement by the Treasury that, in their opinion, the
effect (or one of the effects) of the proposed order would be that an
activity which is not a regulated activity would become a regulated
activity.

(2) 10No order to which this paragraph applies may be made unless—

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

(b) sub-paragraph (4) applies.

(3) Sub-paragraph (4) applies if an order to which this paragraph
15applies also contains a statement 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 and approved.

(4) Where this sub-paragraph applies the order—

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

(b) 20ceases 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).

(5) 25The “relevant period” is a period of 28 days beginning with the day
on which the order is made.

(6) 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.”

9 30Designation of activities requiring prudential regulation by PRA

After section 22 of FSMA 2000 insert—

“22A Designation of activities requiring prudential regulation by PRA

(1) The Treasury may by order specify the regulated activities that are
“PRA-regulated activities” for the purposes of this Act.

(2) 35An order under subsection (1) may—

(a) provide for exceptions;

(b) confer powers on the Treasury or either regulator;

(c) authorise the making of rules or other instruments by either
regulator for purposes of, or connected with, any relevant
40provision;

(d) make provision in respect of any information or document
which in the opinion of the Treasury or either regulator is

relevant for purposes of, or connected with, any relevant
provision;

(e) make such consequential, transitional, or supplemental
provision as the Treasury considers appropriate for purposes
5of, or connected with, any relevant provision.

(3) Provision made as a result of subsection (2)(e) may amend any primary
or subordinate legislation, including any provision of, or made under,
this Act.

(4) “Relevant provision” means this section or any provision made under
10this section.

22B Parliamentary control in relation to certain orders under section 22A

(1) This section applies to the first order made under section 22A(1).

(2) This section also applies to any subsequent order made under section
22A(1) which—

(a) 15contains a statement by the Treasury that, in their opinion, the
effect (or one of the effects) of the proposed order would be—

(i) that an activity would become a PRA-regulated activity,
or

(ii) that a PRA-regulated activity would become a regulated
20activity that is not a PRA-regulated activity, or

(b) amends primary legislation.

(3) No order to which this section applies may be made unless—

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

(b) 25subsection (5) applies.

(4) Subsection (5) applies if an order to which this section applies contains
a statement 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
and approved.

(5) 30Where this subsection applies the order—

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

(b) ceases 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
35affecting anything done under the order or the power to make
a new order).

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

(7) In calculating the relevant period no account is to be taken of any time
40during which Parliament is dissolved or prorogued or during which
both Houses are adjourned for more than 4 days.”

Permission to carry on regulated activities

10 Permission to carry on regulated activities

(1) In section 31 (authorised persons), in subsection (1)(a), for “Part IV permission”
substitute “Part 4A permission”.

(2) 5For sections 40 to 55 of FSMA 2000 substitute—

“ Part 4A Permission to carry on regulated activities

Application for permission

55A Application for permission

(1) 10An application for permission to carry on one or more regulated
activities may be made to the appropriate regulator by—

(a) an individual,

(b) a body corporate,

(c) a partnership, or

(d) 15an unincorporated association.

(2) “The appropriate regulator”, in relation to an application under this
section, means—

(a) the PRA, in a case where—

(i) the regulated activities to which the application relates
20consist of or include a PRA-regulated activity, or

(ii) the applicant is a PRA-authorised person otherwise than
by virtue of a Part 4A permission;

(b) the FCA, in any other case.

(3) An authorised person who has a permission under this Part which is in
25force may not apply for permission under this section.

(4) An EEA firm may not apply for permission under this section to carry
on a regulated activity which it is, or would be, entitled to carry on in
exercise of an EEA right, whether through a United Kingdom branch or
by providing services in the United Kingdom.

(5) 30A permission given by the appropriate regulator under this Part or
having effect as if so given is referred to in this Act as “a Part 4A
permission”.

55B The threshold conditions

(1) “The threshold conditions”, in relation to a regulated activity, means
35the conditions set out in Schedule 6, as read with any threshold
condition code made by either regulator under section 137M.

(2) Any reference in this Part to the threshold conditions for which either
regulator is responsible is to be read as a reference to the conditions set
out in Schedule 6 that are expressed to be relevant to the discharge by
40that regulator of its functions, as read with any threshold condition
code made by that regulator under section 137M.

(3) In giving or varying permission, imposing or varying a requirement, or
giving consent, under any provision of this Part, each regulator must
ensure that the person concerned will satisfy, and continue to satisfy, in
relation to all of the regulated activities for which the person has or will
5have permission, the threshold conditions for which that regulator is
responsible.

(4) But the duty imposed by subsection (3) does not prevent a regulator,
having due regard to that duty, from taking such steps as it considers
are necessary, in relation to a particular person, in order to advance—

(a) 10in the case of the FCA, any of its operational objectives;

(b) in the case of the PRA, any of its objectives.

55C Power to amend Schedule 6

(1) The Treasury may by order amend Parts 1 and 2 of Schedule 6 by
altering, adding or repealing provisions, or by substituting for those
15Parts as they have effect for the time being provisions specified in the
order.

(2) Different provision may be made under this section—

(a) in relation to the discharge of the functions of each regulator;

(b) in relation to different regulated activities;

(c) 20in relation to persons who carry on, or seek to carry on, activities
that consist of or include a PRA-regulated activity and in
relation to other persons.

55D Firms based outside EEA

(1) This section applies in relation to a person (“the non-EEA firm”)—

(a) 25who is a body incorporated in, or formed under the law of, or is
an individual who is a national of, any country or territory
outside the EEA, and

(b) who is carrying on a regulated activity in any country or
territory outside the United Kingdom in accordance with the
30law of that country or territory (“the overseas state”).

(2) In determining whether the non-EEA firm is satisfying or will satisfy,
and continue to satisfy, any one or more of the threshold conditions for
which a UK regulator is responsible, the UK regulator may have regard
to any opinion notified to it by a regulatory authority in the overseas
35state (“the overseas regulator”) which relates to the non-EEA firm and
appears to the UK regulator to be relevant to compliance with those
conditions.

(3) In considering how much weight (if any) to attach to the opinion, the
UK regulator must have regard to the nature and scope of the
40supervision exercised in relation to the non-EEA firm by the overseas
regulator.

(4) In this section “UK regulator” means the FCA or the PRA.

55E Giving permission: the FCA

(1) This section applies where the FCA is the appropriate regulator in
45relation to an application for permission under section 55A.

(2) The FCA may give permission for the applicant to carry on the
regulated activity or activities to which the application relates or such
of them as may be specified in the permission.

(3) If the applicant is a member of a group which includes a PRA-
5authorised person, the FCA must consult the PRA before determining
the application.

(4) If it gives permission, the FCA must specify the permitted regulated
activity or activities, described in such manner as the FCA considers
appropriate.

(5) 10The FCA may—

(a) incorporate in the description of a regulated activity such
limitations (for example as to circumstances in which the
activity may, or may not, be carried on) as it considers
appropriate;

(b) 15specify a narrower or wider description of regulated activity
than that to which the application relates;

(c) give permission for the carrying on of a regulated activity which
is not included among those to which the application relates
and is not a PRA-regulated activity.

55F 20Giving permission: the PRA

(1) This section applies where the PRA is the appropriate regulator in
relation to an application for permission under section 55A.

(2) The PRA may with the consent of the FCA give permission for the
applicant to carry on the regulated activity or activities to which the
25application relates or such of them as may be specified in the
permission.

(3) If it gives permission, the PRA must specify the permitted regulated
activity or activities, described in such manner as the PRA considers
appropriate.

(4) 30The PRA may—

(a) incorporate in the description of a regulated activity such
limitations (for example as to circumstances in which the
activity may, or may not, be carried on) as it considers
appropriate;

(b) 35specify a narrower or wider description of regulated activity
than that to which the application relates;

(c) give permission for the carrying on of a regulated activity which
is not included among those to which the application relates.

(5) Consent given by the FCA for the purposes of this section may be
40conditional on the manner in which the PRA exercises its powers under
subsections (3) and (4).

(6) Subsections (3) and (4)(b) and (c) do not enable the PRA to give
permission that relates only to activities that are not PRA-regulated
activities, except where the applicant is a PRA-authorised person
45otherwise than by virtue of a Part 4A permission.