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Financial Services Bill (HL Bill 48)

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(2) If either regulator is considering whether, and if so how, to exercise its
own-initiative variation power or its own-initiative requirement power
in relation to an additional Part 4A permission, it must take into
account—

(a) 5the home state authorisation of the authorised person
concerned,

(b) any relevant directive, and

(c) relevant provisions of the Treaty.

Persons whose interests are protected
55T 10Persons whose interests are protected

For the purpose of any provision of this Part which refers to the FCA’s
operational objectives or the PRA’s objectives in relation to the exercise
of a power in relation to a particular person, it does not matter whether
there is a relationship between that person and the persons whose
15interests will be protected by the exercise of the power.

Procedure
55U Applications under this Part

(1) An application for a Part 4A permission must—

(a) contain a statement of the regulated activity or regulated
20activities which the applicant proposes to carry on and for
which the applicant wishes to have permission, and

(b) give the address of a place in the United Kingdom for service on
the applicant of any notice or other document which is required
or authorised to be served on the applicant under this Act.

(2) 25An application for the variation of a Part 4A permission must contain a
statement—

(a) of the desired variation, and

(b) of the regulated activity or regulated activities which the
applicant proposes to carry on if the permission is varied.

(3) 30An application for the variation of a requirement imposed under
section 55L or 55M or for the imposition of a new requirement must
contain a statement of the desired variation or requirement.

(4) An application under this Part must—

(a) be made in such manner as the regulator to which it is to be
35made may direct, and

(b) contain, or be accompanied by, such other information as that
regulator may reasonably require.

(5) At any time after the application is received and before it is determined,
the appropriate regulator may require the applicant to provide it with
40such 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.

(6) In subsection (5), the “appropriate regulator” means—

(a) in a case where the application is made to the FCA, the FCA;

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(b) in a case where the application is made to the PRA, the FCA or
the PRA.

(7) Different directions may be given, and different requirements imposed,
in relation to different applications or categories of application.

(8) 5Each regulator may require an applicant to provide information which
the applicant is required to provide to it under this section in such form,
or to verify it in such a way, as the regulator may direct.

(9) The PRA must consult the FCA before—

(a) giving a direction under this section in relation to a class of
10applications, or

(b) imposing a requirement under this section in relation to a class
of applications.

55V Determination of applications

(1) An application under this Part must be determined by the regulator to
15which it is required to be made (“the appropriate regulator”) before the
end of the period of 6 months beginning with the date on which it
received the completed application.

(2) The appropriate regulator may determine an incomplete application if
it considers it appropriate to do so; and it must in any event determine
20such an application within 12 months beginning with the date on which
it received the application.

(3) Where the application cannot be determined by the appropriate
regulator without the consent of the other regulator, the other
regulator’s decision must also be made within the period required by
25subsection (1) or (2).

(4) The applicant may withdraw the application, by giving the appropriate
regulator written notice, at any time before the appropriate regulator
determines it.

(5) If the appropriate regulator grants an application—

(a) 30for Part 4A permission,

(b) for the variation or cancellation of a Part 4A permission,

(c) for the variation or cancellation of a requirement imposed
under section 55L or 55M, or

(d) for the imposition of a new requirement under either of those
35sections,

it must give the applicant written notice.

(6) The notice must state the date from which the permission, variation,
cancellation or requirement has effect.

(7) A notice under this section which is given by the PRA and relates to the
40grant of an application for Part 4A permission or for the variation of a
Part 4A permission must state that the FCA has given its consent to the
grant of the application.

55W Applications under this Part: communications between regulators

The PRA must as soon as practicable notify the FCA of the receipt or
45withdrawal of—

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(a) an application for permission under section 55A,

(b) an application under section 55I, or

(c) an application under section 55M(5).

55X Determination of applications: warning notices and decision notices

(1) 5If a regulator proposes—

(a) to give a Part 4A permission but to exercise its power under
section 55E(5)(a) or (b) or 55F(4)(a) or (b),

(b) to give a Part 4A permission but to exercise its power under
section 55L(1) or 55M(1) in connection with the application for
10permission,

(c) to vary a Part 4A permission on the application of an authorised
person but to exercise its power under section 55E(5)(a) or (b) or
55F(4)(a) or (b),

(d) to vary a Part 4A permission but to exercise its power under
15section 55L(1) or 55M(1) in connection with the application for
variation,

(e) in the case of the FCA, to exercise its power under section 55L(1)
in connection with an application to the PRA for a Part 4A
permission or the variation of a Part 4A permission,

20it must give the applicant a warning notice.

(2) If a regulator proposes to refuse an application made under this Part, it
must (unless subsection (3) applies) give the applicant a warning
notice.

(3) This subsection applies if it appears to the regulator that—

(a) 25the applicant is an EEA firm, and

(b) the application is made with a view to carrying on a regulated
activity in a manner in which the applicant is, or would be,
entitled to carry on that activity in the exercise of an EEA right
whether through a United Kingdom branch or by providing
30services in the United Kingdom.

(4) If a regulator decides—

(a) to give a Part 4A permission but to exercise its power under
section 55E(5)(a) or (b) or 55F(4)(a) or (b),

(b) to give a Part 4A permission but to exercise its power under
35section 55L(1) or 55M(1) in connection with the giving of the
permission,

(c) to vary a Part 4A permission on the application of an authorised
person but to exercise its power under section 55E(5)(a) or (b) or
55F(4)(a) or (b),

(d) 40to vary a Part 4A permission on the application of an authorised
person but to exercise its power under section 55L(1) or 55M(1)
in connection with the variation,

(e) in the case of the FCA, to exercise its power under section 55L(1)
in connection with an application to the PRA for a Part 4A
45permission or the variation of a Part 4A permission, or

(f) to refuse an application under this Part,

it must give the applicant a decision notice.

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55Y Exercise of own-initiative power: procedure

(1) This section applies to an exercise of either regulator’s own-initiative
variation power or own-initiative requirement power in relation to an
authorised person (“A”).

(2) 5A variation of a permission or the imposition or variation of a
requirement takes effect—

(a) immediately, if the notice given under subsection (4) states that
that is the case,

(b) on such date as may be specified in the notice, or

(c) 10if no date is specified in the notice, when the matter to which the
notice relates is no longer open to review.

(3) A variation of a permission, or the imposition or variation of a
requirement, may be expressed to take effect immediately (or on a
specified date) only if the regulator concerned, having regard to the
15ground on which it is exercising its own-initiative variation power or
own-initiative requirement power, reasonably considers that it is
necessary for the variation, or the imposition or variation of the
requirement, to take effect immediately (or on that date).

(4) If either regulator proposes to vary a Part 4A permission or to impose
20or vary a requirement, or varies a Part 4A permission or imposes or
varies a requirement, with immediate effect, it must give A written
notice.

(5) The notice must—

(a) give details of the variation of the permission or the
25requirement or its variation,

(b) state the regulator’s reasons for the variation of the permission
or the imposition or variation of the requirement,

(c) inform A that A may make representations to the regulator
within such period as may be specified in the notice (whether or
30not A has referred the matter to the Tribunal),

(d) inform A of when the variation of the permission or the
imposition or variation of the requirement takes effect, and

(e) inform A of A’s right to refer the matter to the Tribunal.

(6) The regulator may extend the period allowed under the notice for
35making representations.

(7) If, having considered any representations made by A, the regulator
decides—

(a) to vary the permission, or impose or vary the requirement, in
the way proposed, or

(b) 40if the permission has been varied or the requirement imposed or
varied, not to rescind the variation of the permission or the
imposition or variation of the requirement,

it must give A written notice.

(8) If, having considered any representations made by A, the regulator
45decides—

(a) not to vary the permission, or impose or vary the requirement,
in the way proposed,

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(b) to vary the permission or requirement in a different way, or
impose a different requirement, or

(c) to rescind a variation or requirement which has effect,

it must give A written notice.

(9) 5A notice under subsection (7) must inform A of A’s right to refer the
matter to the Tribunal.

(10) A notice under subsection (8)(b) must comply with subsection (5).

(11) If a notice informs A of A’s right to refer a matter to the Tribunal, it
must give an indication of the procedure on such a reference.

(12) 10For the purposes of subsection (2)(c), whether a matter is open to
review is to be determined in accordance with section 391(8).

55Z Cancellation of Part 4A permission: procedure

(1) If a regulator proposes to cancel an authorised person’s Part 4A
permission otherwise than at the person’s request, it must give the
15person a warning notice.

(2) If a regulator decides to cancel an authorised person’s Part 4A
permission otherwise than at the person’s request, it must give the
person a decision notice.

Notification
55Z1 20Notification of ESMA

A regulator must notify ESMA of—

(a) the giving by it of a Part 4A permission to an investment firm,
where the regulated activities to which the permission relates
are investment services and activities,

(b) 25the giving by it of a Part 4A permission to a management
company (as defined in section 237(2)), where the regulated
activities to which the permission relates fall within paragraph
8 of Schedule 2,

(c) the cancellation by it of a Part 4A permission of a description
30falling within paragraph (b), or

(d) the cancellation by it of a Part 4A permission under section
55J(6), in reliance on any one or more of the conditions in section
55K(1)(b) to (d).

55Z2 Notification of EBA

(1) 35A regulator must notify EBA of—

(a) the giving by it of a Part 4A permission to a credit institution,
where the regulated activity to which the permission relates
falls within paragraph 4 of Schedule 2,

(b) the cancellation by it of a Part 4A permission of a description
40falling within paragraph (a).

(2) “Credit institution” has the meaning given in section 1H(8).

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References to the Tribunal
55Z3 Right to refer matters to the Tribunal

(1) An applicant who is aggrieved by the determination of an application
made under this Part may refer the matter to the Tribunal.

(2) 5An authorised person who is aggrieved by the exercise by either
regulator of its own-initiative variation power or its own-initiative
requirement power may refer the matter to the Tribunal.

Interpretation
55Z4 Interpretation of Part 4A

10In this Part—

  • “own-initiative requirement power”, in relation to the FCA or the
    PRA, is to be read in accordance with section 55L(4) or 55M(4);

  • “own-initiative variation power”, in relation to the FCA or the
    PRA, is to be read in accordance with section 55J(12).

(3) 15In Schedule 6 to FSMA 2000 (the threshold conditions), omit paragraph 9.

Passporting

11 Passporting: exercise of EEA rights and Treaty rights

Schedule 4 contains amendments of the following provisions of FSMA 2000—

(a) Schedule 3 (EEA passport rights),

(b) 20Schedule 4 (Treaty rights),

(c) sections 34 and 35 (EEA firms and Treaty firms), and

(d) Part 13 (incoming firms: powers of intervention).

Performance of regulated activities

12 Prohibition orders

(1) 25Section 56 of FSMA 2000 (performance of regulated activities: prohibition
orders) is amended as follows.

(2) For subsection (1) substitute—

(1) The FCA may make a prohibition order if it appears to it that an
individual is not a fit and proper person to perform functions in
30relation to a regulated activity carried on by—

(a) an authorised person,

(b) a person who is an exempt person in relation to that activity, or

(c) a person to whom, as a result of Part 20, the general prohibition
does not apply in relation to that activity.

(1A) 35The PRA may make a prohibition order if it appears to it that an
individual is not a fit and proper person to perform functions in
relation to a regulated activity carried on by—

(a) a PRA-authorised person, or

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(b) a person who is an exempt person in relation to a PRA-
regulated activity carried on by the person.

(3) In subsection (2), for “The Authority may make an order (“a prohibition
order”)” substitute “A “prohibition order” is an order”.

(4) 5In subsection (3), for paragraph (b) substitute—

(b) all persons falling within subsection (3A) or a particular
paragraph of that subsection or all persons within a specified
class of person falling within a particular paragraph of that
subsection.

(5) 10After subsection (3) insert—

(3A) A person falls within this subsection if the person is—

(a) an authorised person,

(b) an exempt person, or

(c) a person to whom, as a result of Part 20, the general prohibition
15does not apply in relation to a regulated activity.

(3A)(b)an exempt person, or

(c) a person to whom, as a result of Part 20, the general prohibition
does not apply in relation to a regulated activity.

(6) In subsection (6), for “An authorised person” substitute “A person falling
20within subsection (3A)”.

(7) In subsection (7)—

(a) for “The Authority” substitute “The regulator that has made a
prohibition order”, and

(b) for “a prohibition order” substitute “the order”.

(8) 25After subsection (7) insert—

(7A) If—

(a) the FCA proposes to vary or revoke a prohibition order, and

(b) as a result of the proposed variation or revocation, an
individual—

(i) 30will no longer be prohibited from performing a function
of interest to the PRA, or

(ii) will be prohibited from performing such a function,

the FCA must consult the PRA before varying or revoking the order.

(7B) A function is of interest to the PRA if it is performed in relation to a
35regulated activity carried on by—

(a) a PRA-authorised person, or

(b) a person who is an exempt person in relation to a PRA-
regulated activity carried on by the person.

(7C) The PRA must consult the FCA before varying or revoking a
40prohibition order.

(9) Omit subsection (8).

(10) Section 57 of FSMA 2000 (prohibition orders: procedure and right to refer to
Tribunal) is amended as follows.

(11) In subsections (1) and (3), for “the Authority” substitute “a regulator”.

(12) 45At the end insert—

(6) If—

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(a) the FCA proposes to make a prohibition order, and

(b) as a result of the proposed order, an individual will be
prohibited from performing a function of interest to the PRA,

the FCA must consult the PRA before giving a warning notice under
5this section.

(7) A function is of interest to the PRA if it is performed in relation to a
regulated activity carried on by—

(a) a PRA-authorised person, or

(b) a person who is an exempt person in relation to a PRA-
10regulated activity carried on by the person.

(8) The PRA must consult the FCA before giving a warning notice under
this section.

13 Approval for particular arrangements

(1) In section 59 of FSMA 2000 (approval for particular arrangements)—

(a) 15in subsections (1) and (2), for “the Authority” substitute “the
appropriate regulator”, and

(b) for subsections (3) to (7) substitute—

(3) Controlled function”—

(a) in relation to the carrying on of a regulated activity by a
20PRA-authorised person, means a function of a
description specified in rules made by the FCA or the
PRA, and

(b) in relation to the carrying on of a regulated activity by
any other authorised person, means a function of a
25description specified in rules made by the FCA.

(4) “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, and

(b) 30in relation to a controlled function which is of a
description specified in rules made by the PRA, means
the PRA with the consent of the FCA.

(5) The FCA may specify a description of function under
subsection (3)(a) or (b) only if, in relation to the carrying on of a
35regulated activity by an authorised person, it is satisfied that the
function is—

(a) a customer-dealing function, or

(b) a significant-influence function.

(6) The PRA may specify a description of function under
40subsection (3)(a) only if, in relation to the carrying on of a
regulated activity by a PRA-authorised person, it is satisfied
that the function is a significant-influence function.

(7) In determining whether a function is a significant-influence
function, the FCA or the PRA may take into account the likely
45consequences of a failure to discharge the function properly.

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(7A) “Customer-dealing function”, in relation to the carrying on of a
regulated activity by an authorised person (“A”), means a
function that will involve the person performing it in dealing
with—

(a) 5customers of A, or

(b) property of customers of A,

in a manner substantially connected with the carrying on of the
activity.

(7B) “Significant-influence function”, in relation to the carrying on of
10a regulated activity by an authorised person, means a function
that is likely to enable the person responsible for its
performance to exercise a significant influence on the conduct
of the authorised person’s affairs, so far as relating to the
activity.

(2) 15After section 59 of FSMA 2000 insert—

59A Specifying functions as controlled functions: supplementary

(1) The FCA must—

(a) keep under review the exercise of its power under section
59(3)(a) to specify any significant-influence function as a
20controlled function, and

(b) exercise that power in a way that it considers will minimise the
likelihood that approvals fall to be given by both the FCA and
the PRA in respect of the performance by a person of
significant-influence functions in relation to the carrying on of a
25regulated activity by the same PRA-authorised person.

(2) The FCA and the PRA must each consult the other before exercising
any power under section 59(3)(a).

(3) Any reference in this section to the exercise of a power includes its
exercise by way of amendment or revocation of provision previously
30made in the exercise of the power.

(4) “Approval” means an approval under section 59.

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

59B Role of FCA in relation to PRA decisions

(1) 35The FCA may arrange with the PRA that in such cases as may be
described in the arrangements the PRA may give approval under
section 59 without obtaining the consent of the FCA.

(2) Arrangements under this section must be in writing, and must specify
the date on which they come into force.

(3) 40The regulators must publish any arrangements under this section in
such manner as they think fit.

(4) Section 59(4)(b) has effect subject to any arrangements in force under
this section.

(3) In section 63 of FSMA 2000 (withdrawal of approval), for subsection (1)

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substitute—

(1) The FCA may withdraw an approval under section 59 given by the
FCA or the PRA in relation to the performance by a person of a function
if the FCA considers that the person is not a fit and proper person to
5perform the function.

(1A) The PRA may withdraw an approval under section 59 in relation to the
performance by a person (“A”) of a function if—

(a) the PRA gave the approval, or the FCA gave the approval and
the function is a significant-influence function performed in
10relation to the carrying on by a PRA-authorised person of a
regulated activity, and

(b) the PRA considers that A is not a fit and proper person to
perform the function.

(1B) “Significant-influence function” has the same meaning as in section 59.

(1C) 15Before one regulator withdraws an approval given by the other
regulator, it must consult the other regulator.

(4) In section 64 of FSMA 2000 (conduct of approved persons: statement and
codes), for subsection (1) substitute—

(1) The FCA may issue statements of principle with respect to the conduct
20expected of persons in relation to whom either regulator has given its
approval under section 59.

(1A) The PRA may issue statements of principle with respect to—

(a) the conduct expected of persons in relation to whom it has
given its approval under section 59, and

(b) 25the conduct expected of persons in relation to whom the FCA
has given its approval under section 59 in respect of the
performance by them of significant-influence functions in
relation to the carrying on by PRA-authorised persons of
regulated activities.

(1B) 30A statement of principle issued by either regulator may relate to
conduct expected of persons in relation to—

(a) the performance by them of controlled functions, or

(b) the performance by them of any other functions in relation to
the carrying on by authorised persons of regulated activities.

14 35Further amendments relating to performance of regulated activities

Schedule 5 contains further amendments of Part 5 of FSMA 2000 (performance
of regulated activities).

Official listing

15 FCA to exercise functions under Part 6 of FSMA 2000

(1) 40FSMA 2000 is amended as follows.

(2) In each of the provisions of Part 6 (official listing etc) mentioned in subsection
(3)