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Financial Services Bill (HL Bill 48)

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55G Giving permission: special cases

(1) “The applicant” means an applicant for permission under section 55A.

(2) If the applicant—

(a) in relation to a particular regulated activity, is exempt from the
5general prohibition as a result of section 39(1) or an order made
under section 38(1), but

(b) has applied for permission in relation to another regulated
activity,

the application is to be treated as relating to all the regulated activities
10which, if permission is given, the applicant will carry on.

(3) If the applicant—

(a) in relation to a particular regulated activity, is exempt from the
general prohibition as a result of section 285(2) or (3), but

(b) has applied for permission in relation to another regulated
15activity,

the application is to be treated as relating only to that other regulated
activity.

(4) If the applicant—

(a) is a person to whom, in relation to a particular regulated
20activity, the general prohibition does not apply as a result of
Part 19, but

(b) has applied for permission in relation to another regulated
activity,

the application is to be treated as relating only to that other regulated
25activity.

(5) Subsection (6) applies where either regulator (“the responsible
regulator”) receives an application for permission under section 55A
which is in the regulator’s opinion similar to an application which was
previously made to the other regulator and was either—

(a) 30treated by the other regulator as not being a valid application to
that regulator because of the regulated activities to which it
related, or

(b) refused by the other regulator after being considered.

(6) The responsible regulator must have regard to the desirability of
35minimising—

(a) the additional work for the applicant in dealing with the new
application, and

(b) the time taken to deal with the new application.

Variation and cancellation of Part 4A permission
55H 40Variation by FCA at request of authorised person

(1) This section applies in relation to an authorised person who has a Part
4A permission but is not a PRA-authorised person.

(2) The FCA may, on the application of the authorised person, vary the
permission by—

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(a) adding a regulated activity, other than a PRA-regulated
activity, to those to which the permission relates;

(b) removing a regulated activity from those to which the
permission relates;

(c) 5varying the description of a regulated activity to which the
permission relates.

(3) The FCA may, on the application of the authorised person, cancel the
permission.

(4) The FCA may refuse an application under this section if it considers
10that it is desirable to do so in order to advance any of its operational
objectives.

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

(6) 15If as a result of a variation of a Part 4A permission under this section
there are no longer any regulated activities for which the authorised
person concerned has permission, the FCA must, once it is satisfied that
it is no longer necessary to keep the permission in force, cancel it.

(7) The FCA’s power to vary a Part 4A permission under this section
20extends to including in the permission as varied any provision that
could be included if a fresh permission were being given by it in
response to an application under section 55A.

55I Variation by PRA at request of authorised person

(1) On the application of a PRA-authorised person with a Part 4A
25permission, the PRA may with the consent of the FCA vary the
permission by—

(a) adding a regulated activity to those to which the permission
relates;

(b) removing a regulated activity from those to which the
30permission relates;

(c) varying the description of a regulated activity to which the
permission relates.

(2) On the application of a PRA-authorised person with a Part 4A
permission, the PRA may, after consulting the FCA, cancel the
35permission.

(3) On the application of an authorised person other than a PRA-
authorised person, the PRA may with the consent of the FCA vary the
permission by adding to the regulated activities to which the
permission relates one or more regulated activities which include a
40PRA-regulated activity.

(4) The PRA may refuse an application under this section if it appears to it
that it is desirable to do so in order to advance any of its objectives.

(5) The FCA may withhold its consent to a proposed variation under this
section if it appears to it that it is desirable to do so in order to advance
45one or more of its operational objectives.

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(6) If as a result of a variation of a Part 4A permission under this section
there are no longer any regulated activities for which the authorised
person concerned has permission, the PRA must, once it is satisfied
after consulting the FCA that it is no longer necessary to keep the
5permission in force, cancel it.

(7) The PRA’s power to vary a Part 4A permission under this section
extends to including in the permission as varied any provision that
could be included if a fresh permission were being given by it in
response to an application under section 55A.

(8) 10Consent given by the FCA for the purposes of subsection (1) may be
conditional on the manner in which the PRA exercises its powers under
section 55F(3) and (4) (as a result of subsection (7)).

55J Variation or cancellation on initiative of regulator

(1) Either regulator may exercise its power under this section in relation to
15an authorised person with a Part 4A permission (“A”) if it appears to
the regulator that—

(a) A is failing, or is likely to fail, to satisfy the threshold conditions
for which the regulator is responsible,

(b) A has failed, during a period of at least 12 months, to carry on a
20regulated activity to which the Part 4A permission relates, or

(c) it is desirable to exercise the power in order to advance—

(i) in the case of the FCA, one or more of its operational
objectives,

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

(2) 25The FCA’s power under this section is the power—

(a) to vary the Part 4A permission by—

(i) adding a regulated activity other than a PRA-regulated
activity to those to which the permission relates,

(ii) removing a regulated activity from those to which the
30permission relates, or

(iii) varying the description of a regulated activity to which
the permission relates in a way which, if it is a PRA-
regulated activity, does not, in the opinion of the FCA,
widen the description, or

(b) 35to cancel the Part 4A permission.

(3) The PRA’s power under this section is the power—

(a) in the case of a PRA-authorised person, to vary the Part 4A
permission in any of the ways mentioned in section 55I(1) or to
cancel it;

(b) 40in the case of an authorised person who is not a PRA-authorised
person, to vary the Part 4A permission by adding a PRA-
regulated activity to those to which the permission relates and,
if the PRA does so, to vary the Part 4A permission in any of the
other ways mentioned in section 55I(1).

(4) 45The FCA—

(a) must consult the PRA before exercising its power under this
section in relation to—

(i) a PRA-authorised person, or

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(ii) a member of a group which includes a PRA-authorised
person, and

(b) in the case of a PRA-authorised person, may exercise the power
so as to add a new activity to those to which the permission
5relates or to widen the description of a regulated activity to
which the permission relates, only with the consent of the PRA.

(5) The PRA—

(a) must consult the FCA before exercising its power under this
section, and

(b) 10may exercise the power so as to add a new activity to those to
which the permission relates or to widen the description of a
regulated activity to which the permission relates, only with the
consent of the FCA.

(6) Without prejudice to the generality of subsections (1) to (3), a regulator
15may, in relation to an authorised person who is an investment firm,
exercise its power under this section to cancel the Part 4A permission if
it appears to it that any of the conditions in section 55K is met.

(7) Without prejudice to the generality of subsections (1) and (2), the FCA
may, in relation to an authorised person who has permission to carry
20on the regulated activity specified in article 24A of the Financial
Services and Markets Act 2000 (Regulated Activities) Order 2001
(which relates to bids in emission allowance auctions), exercise its
power under this section to vary the Part 4A permission of the person
concerned by removing that activity from those to which the
25permission relates if it appears to the FCA that the person has seriously
and systematically infringed the provisions of paragraph 2 or 3 of
Article 59 of the emission allowance auctioning regulation.

(8) If, as a result of a variation of a Part 4A permission under this section,
there are no longer any regulated activities for which the authorised
30person concerned has permission, the regulator responsible for the
variation must, once it is satisfied that it is no longer necessary to keep
the permission in force, cancel it.

(9) Before cancelling under subsection (8) a Part 4A permission which
relates to a person who (before the variation) was a PRA-authorised
35person, the regulator must consult the other regulator.

(10) The power of either regulator to vary a Part 4A permission under this
section extends to including in the permission as varied any provision
that could be included if a fresh permission were being given in
response to an application to that regulator under section 55A.

(11) 40Consent given by one regulator for the purpose of subsection (4)(b) or
(5)(b) may be conditional on the manner in which the other regulator
exercises its powers under section 55E(4) and (5) or 55F(3) and (4) (as a
result of subsection (10)).

(12) The power of the FCA or the PRA under this section is referred to in this
45Part as its own-initiative variation power.

55K Investment firms: particular conditions that enable cancellation

(1) The conditions referred to in section 55J(6) are as follows—

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(a) that the firm has failed, during a period of at least 6 months, to
carry on a regulated activity which is an investment service or
activity for which it has a Part 4A permission;

(b) that the firm obtained the Part 4A permission by making a false
5statement or by other irregular means;

(c) that the firm no longer satisfies the requirements for
authorisation pursuant to Chapter I of Title II of the markets in
financial instruments directive, or pursuant to or contained in
any EU legislation made under that Chapter, in relation to a
10regulated activity which is an investment service or activity for
which it has a Part 4A permission;

(d) that the firm has seriously and systematically infringed the
operating conditions pursuant to Chapter II of Title II of the
markets in financial instruments directive, or pursuant to or
15contained in any EU legislation made under that Chapter, in
relation to a regulated activity which is an investment service or
activity for which it has a Part 4A permission.

(2) For the purposes of this section a regulated activity is an investment
service or activity if it falls within the definition of “investment services
20and activities” in section 417(1).

Imposition and variation of requirements
55L Imposition of requirements by FCA

(1) Where a person has applied (whether to the FCA or the PRA) for a Part
4A permission or the variation of a Part 4A permission, the FCA may
25impose on that person such requirements, taking effect on or after the
giving or variation of the permission, as the FCA considers appropriate.

(2) The FCA may exercise its power under subsection (3) in relation to an
authorised person with a Part 4A permission (whether given by it or by
the PRA) (“A”) if it appears to the FCA that—

(a) 30A is failing, or is likely to fail, to satisfy the threshold conditions
for which the FCA is responsible,

(b) A has failed, during a period of at least 12 months, to carry on a
regulated activity to which the Part 4A permission relates, or

(c) it is desirable to exercise the power in order to advance one or
35more of the FCA’s operational objectives.

(3) The FCA’s power under this subsection is a power—

(a) to impose a new requirement,

(b) to vary a requirement imposed by the FCA under this section,
or

(c) 40to cancel such a requirement.

(4) The FCA’s power under subsection (3) is referred to in this Part as its
own-initiative requirement power.

(5) The FCA may, on the application of an authorised person with a Part
4A permission—

(a) 45impose a new requirement,

(b) vary a requirement imposed by the FCA under this section, or

(c) cancel such a requirement.

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(6) The FCA must consult the PRA before imposing or varying a
requirement which relates to—

(a) a person who is, or will on the granting of an application for
Part 4A permission be, a PRA-authorised person, or

(b) 5a person who is a member of a group which includes a PRA-
authorised person.

55M Imposition of requirements by PRA

(1) Where—

(a) a person has applied for a Part 4A permission in relation to
10activities which consist of or include a PRA-regulated activity,

(b) a PRA-authorised person has applied for a Part 4A permission
or the variation of a Part 4A permission, or

(c) an authorised person other than a PRA-authorised person has
applied for a Part 4A permission to be varied by adding to the
15regulated activities to which it relates one or more regulated
activities which include a PRA-regulated activity,

the PRA may impose on that person such requirements, taking effect on
or after the giving or variation of the permission, as the PRA considers
appropriate.

(2) 20The PRA may exercise its power under subsection (3) in relation to a
PRA-authorised person with a Part 4A permission (“P”) if it appears to
the PRA that—

(a) P is failing, or is likely to fail, to satisfy the threshold conditions
for which the PRA is responsible,

(b) 25P has failed, during a period of at least 12 months, to carry on a
regulated activity to which the Part 4A permission relates, or

(c) it is desirable to exercise the power in order to advance any of
the PRA’s objectives.

(3) The PRA’s power under this subsection is a power—

(a) 30to impose a new requirement,

(b) to vary a requirement imposed by the PRA under this section,
or

(c) to cancel such a requirement.

(4) The PRA’s power under subsection (3) is referred to in this Part as its
35own-initiative requirement power.

(5) The PRA may, on the application of a PRA-authorised person with a
Part 4A permission—

(a) impose a new requirement,

(b) vary a requirement imposed by the PRA under this section, or

(c) 40cancel such a requirement.

(6) The PRA must consult the FCA before imposing or varying a
requirement.

55N Requirements under section 55L or 55M: further provisions

(1) A requirement may, in particular, be imposed—

(a) 45so as to require the person concerned to take specified action, or

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(b) so as to require the person concerned to refrain from taking
specified action.

(2) A requirement may extend to activities which are not regulated
activities.

(3) 5A requirement may be imposed by reference to the person’s
relationship with—

(a) the person’s group, or

(b) other members of the person’s group.

(4) A requirement expires at the end of such period as the regulator
10imposing it may specify, but this does not affect the regulator’s power
to impose a new requirement.

(5) A requirement may refer to the past conduct of the person concerned
(for example, by requiring the person concerned to review or take
remedial action in respect of past conduct).

(6) 15In this section “requirement” means a requirement imposed under
section 55L or 55M.

55O Imposition of requirements on acquisition of control

(1) This section applies if it appears to the appropriate regulator that—

(a) a person has acquired control over a UK authorised person who
20has a Part 4A permission, but

(b) there are no grounds for exercising its own-initiative
requirement power.

(2) If it appears to the appropriate regulator that the likely effect of the
acquisition of control on the UK authorised person, or on any of its
25activities, is uncertain, the appropriate regulator may—

(a) impose on the UK authorised person a requirement that could
be imposed by that regulator under section 55L or 55M (as the
case may be) on the giving of permission, or

(b) vary a requirement imposed by that regulator under that
30section on the UK authorised person.

(3) “The appropriate regulator” means—

(a) in a case where the UK authorised person is a PRA-authorised
person, the FCA or the PRA;

(b) in any other case, the FCA.

(4) 35This section does not affect any duty of the appropriate regulator to
consult or obtain the consent of the other regulator in connection with
the imposition of the requirement.

(5) Any reference to a person having acquired control is to be read in
accordance with Part 12.

55P 40Prohibitions and restrictions

(1) This section applies if—

(a) on a person being given a Part 4A permission, either regulator
imposes an assets requirement on that person,

(b) an assets requirement is imposed on an authorised person, or

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(c) an assets requirement previously imposed on such a person is
varied.

(2) A person on whom an assets requirement is imposed is referred to in
this section as “A”.

(3) 5The “appropriate regulator” is the regulator which imposed the
requirement.

(4) “Assets requirement” means a requirement under section 55L or 55M

(a) prohibiting the disposal of, or other dealing with, any of A’s
assets (whether in the United Kingdom or elsewhere) or
10restricting such disposals or dealings, or

(b) that all or any of A’s assets, or all or any assets belonging to
consumers but held by A or to A’s order, must be transferred to
and held by a trustee approved by the appropriate regulator.

(5) If the appropriate regulator—

(a) 15imposes a requirement of the kind mentioned in subsection
(4)(a), and

(b) gives notice of the requirement to any institution with whom A
keeps an account,

the notice has the effects mentioned in subsection (6).

(6) 20Those effects are that—

(a) the institution does not act in breach of any contract with A if,
having been instructed by A (or on A’s behalf) to transfer any
sum or otherwise make any payment out of A’s account, it
refuses to do so in the reasonably held belief that complying
25with the instruction would be incompatible with the
requirement, and

(b) if the institution complies with such an instruction, it is liable to
pay to the appropriate regulator an amount equal to the amount
transferred from, or otherwise paid out of, A’s account in
30contravention of the requirement.

(7) If the appropriate regulator imposes a requirement of the kind
mentioned in subsection (4)(b), no assets held by a person as trustee in
accordance with the requirement may, while the requirement is in
force, be released or dealt with except with the consent of the
35appropriate regulator.

(8) If, while a requirement of the kind mentioned in subsection (4)(b) is in
force, A creates a charge over any assets of A held in accordance with
the requirement, the charge is (to the extent that it confers security over
the assets) void against the liquidator and any of A’s creditors.

(9) 40Assets held by a person as trustee (“T”) are to be taken to be held by T
in accordance with any requirement mentioned in subsection (4)(b)
only if—

(a) A has given T written notice that those assets are to be held by
T in accordance with the requirement, or

(b) 45they are assets into which assets to which paragraph (a) applies
have been transposed by T on the instructions of A.

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(10) A person who contravenes subsection (7) is guilty of an offence and
liable on summary conviction to a fine not exceeding level 5 on the
standard scale.

(11) “Charge” includes a mortgage (or in Scotland a security over property).

(12) 5Subsections (7) and (9) do not affect any equitable interest or remedy in
favour of a person who is a beneficiary of a trust as a result of a
requirement of the kind mentioned in subsection (4)(b).

Exercise of power in support of overseas regulator
55Q Exercise of power in support of overseas regulator

(1) 10Either UK regulator’s own-initiative powers may be exercised in
respect of an authorised person at the request of, or for the purpose of
assisting, an overseas regulator of a prescribed kind.

(2) Subsection (1) applies whether or not the UK regulator has powers
which are exercisable in relation to the authorised person by virtue of
15any provision of Part 13.

(3) Subsection (1) does not affect any duty of one UK regulator to consult
or obtain the consent of the other UK regulator in relation to the
exercise of its own-initiative powers.

(4) If a request to a UK regulator for the exercise of its own-initiative
20powers has been made by an overseas regulator who is—

(a) of a prescribed kind, and

(b) acting in pursuance of provisions of a prescribed kind,

the UK regulator must, in deciding whether or not to exercise those
powers in response to the request, consider whether it is necessary to
25do so in order to comply with an EU obligation.

(5) In deciding whether or not to do so, in any case in which the UK
regulator does not consider that the exercise of its own-initiative
powers is necessary in order to comply with an EU obligation, it may
take into account in particular—

(a) 30whether in the country or territory of the overseas regulator
concerned, corresponding assistance would be given to a
United Kingdom regulatory authority;

(b) whether the case concerns the breach of a law, or other
requirement, which has no close parallel in the United Kingdom
35or involves the assertion of a jurisdiction not recognised by the
United Kingdom;

(c) the seriousness of the case and its importance to persons in the
United Kingdom;

(d) whether it is otherwise appropriate in the public interest to give
40the assistance sought.

(6) The UK regulator may decide not to exercise its own-initiative powers,
in response to a request, unless the overseas regulator concerned
undertakes to make such contribution towards the cost of their exercise
as the UK regulator considers appropriate.

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(7) Subsection (6) does not apply if the UK regulator decides that it is
necessary for it to exercise its own-initiative powers in order to comply
with an EU obligation.

(8) In subsection (6) “request” means a request of a kind mentioned in
5subsection (1).

(9) In this section—

(a) UK regulator” means the FCA or the PRA;

(b) “overseas regulator” means a regulator outside the United
Kingdom;

(c) 10“own-initiative powers”, in relation to the FCA or the PRA,
means its own-initiative variation power and its own-initiative
requirement power.

Connected persons
55R Persons connected with an applicant

(1) 15In considering—

(a) an application for a Part 4A permission,

(b) whether to vary or cancel a Part 4A permission,

(c) whether to impose or vary a requirement under this Part, or

(d) whether to give any consent required by any provision of this
20Part,

the regulator concerned may have regard to any person appearing to it
to be, or likely to be, in a relationship with the applicant or a person
given permission which is relevant.

(2) Before—

(a) 25giving permission in response to an application under section
55A made by a person who is connected with an EEA firm
(other than an EEA firm falling within paragraph 5(e) of
Schedule 3 (insurance and reinsurance intermediaries)), or

(b) cancelling or varying a Part 4A permission given to such a
30person,

the regulator concerned must in prescribed circumstances consult the
firm’s home state regulator.

(3) A person (“A”) is connected with an EEA firm if—

(a) A is a subsidiary undertaking of the firm, or

(b) 35A is a subsidiary undertaking of a parent undertaking of the
firm.

Additional permissions
55S Duty of FCA or PRA to consider other permissions

(1) “Additional Part 4A permission” —

(a) 40in relation to either regulator, means a Part 4A permission
which is in force in relation to an EEA firm or a Treaty firm, and

(b) in relation to the FCA, also includes Part 4A permission which
is in force in relation to a person authorised as a result of
paragraph 1(1) of Schedule 5.