Financial Services Bill (HL Bill 60)

(9) The provision that may be made as a result of subsection (7) includes
provision corresponding to that made by section 30 (enforceability of
agreements resulting from unlawful communications).

(10) In this section—

(a) 5any reference to entering into an agreement includes inviting or
inducing persons to enter into an agreement, and

(b) any reference to an agreement includes an arrangement.

137D Orders under s.137C(1)(b)

(1) No order may be made under section 137C(1)(b) unless—

(a) 10a draft of the order has been laid before Parliament and
approved by a resolution of each House, or

(b) subsection (3) applies.

(2) Subsection (3) applies if an order under section 137C(1)(b) contains a
statement that the Treasury are of the opinion that, by reason of
15urgency, it is necessary to make the order without a draft being so laid
and approved.

(3) Where 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
20before 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).

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

(5) 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.

137E Rules requiring participation in benchmark

(1) 30The power of the FCA to make general rules includes power to make
rules requiring authorised persons to take specified steps in connection
with the setting by a specified person of a specified benchmark.

(2) The rules may in particular—

(a) require authorised persons to whom the rules apply to provide
35information of a specified kind, or expressions of opinion as to
specified matters, to persons determined in accordance with the
rules;

(b) make provision about the form in which and the time by which
any information or expression of opinion is to be provided;

(c) 40make provision by reference to any code or other document
published by the person responsible for the setting of the
benchmark or by any other person determined in accordance
with the rules, as the code or other document has effect from
time to time.

(3) 45Rules making provision of the kind mentioned in subsection (2)(c) may
provide that the code or other document is to be capable of affecting

obligations imposed by the rules only if specified requirements are met
in relation to it.

(4) In this section—

• “benchmark” has the meaning given in section 22(6);

• 5“specified” means specified in or determined in accordance with
  the rules.

137F The PRA’s general rules

(1) The PRA may make such rules applying to PRA-authorised persons—

(a) with respect to the carrying on by them of regulated activities,
10or

(b) with respect to the carrying on by them of activities which are
not regulated activities,

as appear to the PRA to be necessary or expedient for the purpose of
advancing any of its objectives.

(2) 15Rules made under this section are referred to in this Act as the PRA’s
general rules.

(3) The PRA’s general rules may make provision applying to PRA-
authorised persons even though there is no relationship between the
PRA-authorised persons to whom the rules will apply and the persons
20whose interests will be protected by the rules.

(4) The PRA’s general rules may contain requirements which take into
account, in the case of a PRA-authorised person who is a member of a
group, any activity of another member of the group.

(5) The PRA’s general rules may not—

(a) 25make provision prohibiting an EEA firm from carrying on, or
holding itself out as carrying on, any activity which it has
permission conferred by Part 2 of Schedule 3 to carry on in the
United Kingdom;

(b) make provision, as respects an EEA firm, about any matter for
30which responsibility is, under any of the single market
directives or the emission allowance auctioning regulation,
reserved to the firm’s home state regulator.

137G General rules about remuneration

(1) This section applies where either regulator exercises its power to make
35general rules so as to make rules prohibiting persons, or persons of a
specified description, from being remunerated in a specified way.

(2) The rules may—

(a) provide that any provision of an agreement that contravenes
such a prohibition is void, and

(b) 40provide for the recovery of any payment made, or other
property transferred, in pursuance of a provision that is void by
virtue of paragraph (a).

(3) A provision that, at the time the rules are made, is contained in an
agreement made before that time may not be rendered void under
45subsection (2)(a) unless it is subsequently amended so as to contravene
a prohibition referred to in that subsection.

137H Remuneration policies: Treasury direction to consider compliance

(1) This section applies where either regulator exercises its power to make
general rules so as to make rules requiring authorised persons, or
authorised persons of a description specified in the rules, to act in
5accordance with a remuneration policy.

(2) A “remuneration policy” is a policy about the remuneration by an
authorised person of—

(a) officers,

(b) employees, or

(c) 10other persons,

of a description specified in the rules.

(3) The Treasury may direct the regulator to consider whether the
remuneration policies of authorised persons specified in the direction
(or of authorised persons of a description so specified) comply with
15requirements imposed by rules made by that regulator as to the
contents of the policies.

(4) Before giving a direction under subsection (3), the Treasury must
consult the regulator concerned.

(5) If the regulator considers that a remuneration policy of an authorised
20person fails to make provision which complies with the requirements
mentioned in subsection (3), the regulator must take such steps as it
considers appropriate to deal with the failure.

(6) The steps that the regulator may take include requiring the
remuneration policy to be revised.

(7) 25“Authorised person”, in relation to the PRA, means PRA-authorised
person.

137I Rules about recovery plans: duty to consult

(1) Before either regulator prepares a draft of any general rules that require
each relevant person (or each relevant person of a specified description)
30to prepare a recovery plan, the regulator must consult—

(a) the Treasury, and

(b) the Bank of England.

(2) A “relevant person” is an authorised person in relation to whom any
power under Part 1 of the Banking Act 2009 (special resolution regime)
35is exercisable.

(3) A “recovery plan” is a document containing information within
subsection (4) or (5).

(4) Information is within this subsection if it relates to action to be taken to
secure that, in the event of specified circumstances affecting the
40carrying on of the business (or any part of the business) of an
authorised person—

(a) the business of the authorised person, or

(b) a specified part of that business,

is capable of being carried on (whether or not by the authorised person
45and whether or not in the same way as previously).

(5) Information is within this subsection if it would facilitate the carrying
on of the business (or any part of the business) of an authorised person
by any other person.

(6) In this section—

• 5“authorised person”, in relation to the PRA, means PRA-
  authorised person;

• “specified” means specified in the rules.

137J PRA rules about resolution plans: duty to consult

(1) Before the PRA prepares a draft of any general rules that require each
10relevant person (or each relevant person of a specified description) to
prepare a resolution plan, the PRA must consult—

(a) the Treasury, and

(b) the Bank of England.

(2) A “relevant person” is a PRA-authorised person in relation to whom
15any power under Part 1 of the Banking Act 2009 (special resolution
regime) is exercisable.

(3) A “resolution plan” is a document containing information within
subsection (4) or (5).

(4) Information is within this subsection if it relates to action to be taken in
20the event of—

(a) circumstances arising in which it is likely that the business (or
any part of the business) of an authorised person will fail, or

(b) the failure of the business (or any part of the business) of an
authorised person.

(5) 25Information is within this subsection if it would facilitate anything
falling to be done by any person in consequence of that failure.

(6) An example of information within subsection (5) is information that, in
the event of that failure, would facilitate—

(a) planning by the Treasury in relation to the possible exercise of
30any of its powers under Part 1 of the Banking Act 2009, or

(b) planning by the Bank of England in relation to the possible
exercise of any of its powers under Part 1, 2 or 3 of that Act.

137K Interpretation of sections 137I and 137J

(1) This section has effect for the interpretation of sections 137I and 137J.

(2) 35References to the taking of action include the taking of action by—

(a) the authorised person,

(b) any other person in the same group as the authorised person, or

(c) a partnership of which the authorised person is a member.

(3) In subsection (2)(b) the definition of “group” in section 421 applies with
40the omission of subsection (1)(e) and (f) of that section.

(4) References to the business of an authorised person include the business
of—

(a) any person in the same group as the authorised person, and

(b) a partnership of which the authorised person is a member.

(5) For the purposes of section 137J the cases in which the business (or any
part of the business) of the authorised person (“A”) is to be regarded as
having failed include those where—

(a) A enters insolvency,

(b) 5any of the stabilisation options in Part 1 of the Banking Act 2009
is achieved in relation to A, or

(c) A falls to be taken for the purposes of the compensation scheme
to be unable, or likely to be unable, to satisfy claims against A.

(6) In subsection (5)(a) “insolvency” includes—

(a) 10bankruptcy,

(b) liquidation,

(c) bank insolvency,

(d) administration,

(e) bank administration,

(f) 15receivership,

(g) a composition between A and A’s creditors, and

(h) a scheme of arrangement of A’s affairs.

137L Special provision relating to adequacy of resolution plans

(1) This section applies where the PRA has exercised its power to make
20general rules so as to make rules requiring PRA-authorised persons, or
PRA-authorised persons of a specified description, to prepare a
resolution plan.

(2) The PRA must consult the Treasury and the Bank of England (“the
Bank”) about the adequacy of resolution plans required to be prepared
25by those rules, so far as relating to any matter which may be relevant to
the exercise by the Treasury or the Bank of any power under Part 1, 2
or 3 of the Banking Act 2009.

(3) After being consulted under subsection (2)—

(a) the Treasury or the Bank may notify the PRA that, in the
30opinion of the Treasury or the Bank, a resolution plan fails to
make satisfactory provision in relation to any such matter, and

(b) if the Treasury or the Bank give a notification under paragraph
(a), the Treasury or the Bank must give reasons for being of that
opinion to the PRA.

(4) 35The PRA must have regard to any notification given under subsection
(3)(a) before considering whether any resolution plan makes
satisfactory provision in relation to any such matter.

(5) If—

(a) a notification is given under subsection (3)(a), but

(b) 40the PRA is nonetheless of the opinion that the resolution plan
makes satisfactory provision in relation to any such matter,

the PRA must give reasons for being of that opinion to the person who
gave the notification.

(6) In this section—

• 45“resolution plan” has the same meaning as in section 137J;

• “specified” means specified in the rules.

137M Recovery plans and resolution plans: restriction on duty of confidence

(1) A contractual or other requirement imposed on a person (“P”) to keep
information in confidence does not apply if—

(a) the information is or may be relevant to anything required to be
5done as a result of a requirement imposed by general rules
made by either regulator to prepare a recovery plan or a
resolution plan,

(b) an authorised person or a skilled person requests or requires P
to provide the information for the purpose of securing that
10those things are done, and

(c) the regulator in question has approved the making of the
request or the imposition of the requirement before it is made or
imposed.

(2) An authorised person may provide information (whether received
15under subsection (1) or otherwise) that would otherwise be subject to a
contractual or other requirement to keep it in confidence if it is
provided for the purposes of anything required to be done as a result of
a requirement imposed by general rules to prepare a recovery plan or a
resolution plan.

(3) 20In this section, references to preparing a recovery plan or a resolution
plan include—

(a) keeping that plan up to date, and

(b) collecting specified information for the purposes of that plan.

(4) In this section, references to a skilled person are to a person appointed
25in accordance with section 166A.

(5) In this section—

• “authorised person”, in relation to rules of the PRA, means a PRA-
  authorised person;

• “specified” means specified in the rules.

30Specific rule-making powers

137N Threshold condition code

(1) Either regulator may make rules supplementing any of the conditions
for the time being set out in or specified under Schedule 6 that is
expressed to be relevant to the discharge of that regulator’s functions.

(2) 35Rules made under this section by a regulator are referred to as that
regulator’s “threshold condition code”.

(3) A threshold condition code may in particular—

(a) specify requirements which a person must satisfy in order to be
regarded as satisfying a particular condition in relation to any
40regulated activities;

(b) specify matters which are, or may be, or are not, relevant in
determining whether a person satisfies a particular condition in
relation to any regulated activities.

(4) Except where a regulator’s threshold condition code so provides, it is
45not to be regarded as limiting the matters that are, or may be, relevant

in determining whether a person satisfies a particular condition in
relation to any regulated activities.

(5) A threshold condition code cannot impose obligations that are
enforceable against authorised persons otherwise than through the
5threshold conditions.

137O Control of information rules

(1) Either regulator may make rules (“control of information rules”) about
the disclosure and use of information held by an authorised person
(“A”).

(2) 10Control of information rules may—

(a) require the withholding of information which A would
otherwise be required to disclose to a person (“B”) for or with
whom A does business in the course of carrying on any
regulated or other activity;

(b) 15specify circumstances in which A may withhold information
which A would otherwise be required to disclose to B;

(c) require A not to use for the benefit of B information—

(i) which is held by A, and

(ii) which A would otherwise be required to use for the
20benefit of B;

(d) specify circumstances in which A may decide not to use for the
benefit of B information within paragraph (c).

137P Price stabilising rules

(1) The FCA may make rules (“price stabilising rules”) as to—

(a) 25the circumstances and manner in which,

(b) the conditions subject to which, and

(c) the time when or the period during which,

action may be taken for the purpose of stabilising the price of
investments of specified kinds.

(2) 30Price stabilising rules—

(a) are to be made so as to apply only to authorised persons;

(b) may make different provision in relation to different kinds of
investment.

(3) The FCA may make rules which, for the purposes of the relevant
35exemption provisions, treat a person who acts or engages in conduct—

(a) for the purpose of stabilising the price of investments, and

(b) in conformity with such provisions corresponding to price
stabilising rules and made by a body or authority outside the
United Kingdom as may be specified in rules made by the FCA,

40as acting, or engaging in that conduct, for that purpose and in
conformity with price stabilising rules.

(4) “The relevant exemption provisions” are the following provisions of
the Financial Services Act 2012—

(a) section 90(9)(b);

(b) 45section 91(4)(a).

137Q Financial promotion rules

(1) The FCA may make rules applying to authorised persons about the
communication by them, or their approval of the communication by
others, of invitations or inducements—

(a) 5to engage in investment activity, or

(b) to participate in a collective investment scheme.

(2) Rules under this section may, in particular, make provision about the
form and content of communications.

(3) Subsection (1) applies only to communications which—

(a) 10if made by a person other than an authorised person, without
the approval of an authorised person, would contravene section
21(1), and

(b) may be made by an authorised person without contravening
section 238(1).

(4) 15But subsection (3) does not prevent the FCA from making rules under
subsection (1) in relation to a communication that would not
contravene section 21(1) if made by a person other than an authorised
person, without the approval of an authorised person, if the conditions
set out in subsection (5) are satisfied.

(5) 20Those conditions are—

(a) that the communication would not contravene subsection (1) of
section 21 because it is a communication to which that
subsection does not apply as a result of an order under
subsection (5) of that section,

(b) 25that the FCA considers that any of the requirements of—

(i) paragraphs 1 to 8 of Article 19 of the markets in financial
instruments directive,

(ii) any implementing measure made under paragraph 10
of that Article, or

(iii) 30Article 77 of the UCITS directive,

apply to the communication, and

(c) that the FCA considers that the rules are necessary to secure that
the communication satisfies such of the requirements
mentioned in paragraph (b) as the FCA considers apply to the
35communication.

(6) “Engage in investment activity” has the same meaning as in section 21.

(7) The Treasury may by order impose limitations on the power to make
rules under this section.

137R Financial promotion rules: directions given by FCA

(1) 40The FCA may give a direction under this section if—

(a) an authorised person has made, or proposes to make, a
communication or has approved, or proposes to approve,
another person’s communication, and

(b) the FCA considers that there has been, or is likely to be, a
45contravention of financial promotion rules in respect of the
communication or approval.

(2) A direction under this section may require the authorised person—

(a) to withdraw the communication or approval;

(b) to refrain from making the communication or giving the
approval (whether or not it has previously been made or given);

(c) 5to publish details of the direction;

(d) to do anything else specified in the direction in relation to the
communication or approval.

(3) A requirement in a direction under this section to refrain from making
or approving a communication includes a requirement to refrain from
10making or approving another communication where—

(a) the other communication is in all material respects the same as,
or substantially the same as, the communication to which the
direction relates, and

(b) in all the circumstances a reasonable person would think that
15another direction would be given under this section in relation
to the other communication.

(4) The requirements contained in a direction under this section have effect
as follows—

(a) a requirement to publish details of the direction has effect at
20such time (if any) as the FCA gives a notice under subsection
(8)(a);

(b) any other requirement takes effect immediately.

(5) If the FCA gives a direction under this section to an authorised
person—

(a) 25it must give written notice to the authorised person, and

(b) if the direction relates to the approval by the authorised person
of another person’s communication, it must also give written
notice to that other person.

(6) The notice must—

(a) 30give details of the direction;

(b) inform the person to whom the notice is given that the direction
takes effect immediately;

(c) state the FCA’s reasons for giving the direction; and

(d) inform the person to whom the notice is given that the person
35may make representations to the FCA within such period as
may be specified in the notice (which may be extended by the
FCA).

(7) The FCA may amend the direction if, having considered any
representations made by a person to whom notice is given under
40subsection (5), it considers it appropriate to do so.

(8) If, having considered any such representations, the FCA decides not to
revoke the direction—

(a) the FCA must give separate written notice to the persons
mentioned in subsection (5)(a) or (b), and

(b) 45any such person may refer the matter to the Tribunal.

(9) A notice under subsection (8)(a) must—

(a) give details of the direction and of any amendment of it,

(b) state the FCA’s reasons for deciding not to revoke the direction
and, if relevant, for amending it,

(c) inform the person to whom the notice is given of the person’s
right to refer the matter to the Tribunal, and

(d) 5give an indication of the procedure on such a reference.

(10) If, having considered any representations made by a person to whom
notice is given under subsection (5), the FCA decides to revoke the
direction, it must give separate written notice to those persons.

(11) After the period for making representations in relation to a direction
10given under this section has ended, the FCA may publish such
information about the direction as it considers appropriate (even if the
direction is revoked).

(12) Nothing in this section requires a notice to be given to a person
mentioned in subsection (5)(b) if the FCA considers it impracticable to
15do so.

Supplementary powers

137S General supplementary powers

Rules made by either regulator—

(a) may make different provision for different cases and may, in
20particular, make different provision in respect of different
descriptions of authorised persons, activity or investment,

(b) may make provision by reference to rules made by the other
regulator, as those rules have effect from time to time, and

(c) may contain such incidental, supplemental, consequential and
25transitional provision as the regulator making the rule
considers appropriate.

CHAPTER 2 Rules: modification, waiver, contravention and procedural provisions

Modification or waiver of rules

138A Modification or waiver of rules

(1) 30Either regulator may, on the application or with the consent of a person
who is subject to rules made by that regulator, direct that all or any of
those rules—

(a) are not to apply to that person, or

(b) are to apply to that person with such modifications as may be
35specified in the direction.

(2) Subsection (1) does not apply to—

(a) rules made by either regulator under section 137N (threshold
condition code);

(b) rules made by the FCA under section 247 (trust scheme rules) or
40section 248 (scheme particulars rules).