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Financial Services BillPage 130

Financial Services Compensation Scheme

38 The Financial Services Compensation Scheme

(1) Schedule 10 contains amendments of Part 15 of FSMA 2000 (the Financial
Services Compensation Scheme).

(2) 5In section 224F(1) of that Act (power to require FSCS manager to act in relation
to other schemes: rules about the schemes), for “Authority” substitute
“regulators”.

Financial ombudsman service

39 The financial ombudsman service

10Schedule 11 contains amendments of FSMA 2000 relating to the financial
ombudsman service.

Lloyd’s

40 Lloyd’s

(1) Part 19 of FSMA 2000 (Lloyd’s) is amended as follows.

(2) 15In section 314 (Authority’s general duty)—

(a) for subsection (1) substitute—

(1) So far as it is appropriate to do so for the purpose of advancing
one or more of its operational objectives, the FCA must keep
itself informed about—

(a) 20the way in which the Council supervises and regulates
the market at Lloyd’s, and

(b) the way in which regulated activities are being carried
on in that market.

(1A) So far as it is appropriate to do so for the purpose of advancing
25its general objective or (if section 2C applies) its insurance
objective, the PRA must keep itself informed about—

(a) the way in which the Council supervises and regulates
the market at Lloyd’s, and

(b) the way in which any PRA-regulated activities are being
30carried on in that market.,

(b) in subsection (2)—

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

(ii) in paragraph (b), for “section 315” substitute “provision made
by or under this Act”, and

(c) 35in the heading, for “Authority’s” substitute “Regulators’”.

(3) After that section insert—

314A The PRA’s objectives in relation to Lloyd’s etc

(1) This section modifies—

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(a) the effect of sections 2B and 2C (the PRA’s general objective and
insurance objective), and

(b) the effect of section 3I (power of PRA to require FCA to refrain
from specified action),

5in relation to anything done, or proposed to be done, by the PRA under
or for the purposes of this Part.

(2) This section applies only if PRA-authorised persons include—

(a) the Society, or

(b) other persons who carry on regulated activities in relation to
10anything done at Lloyd’s.

(3) Section 2B(2) and (3) have effect as if references to PRA-authorised
persons (or a PRA-authorised person) were references to the Society,
and the members of the Society, taken together (and sections 2G and
2J(3) are to be read accordingly).

(4) 15Section 2C(1) has effect as if the reference to the discharge of the PRA’s
general functions so far as relating to the activity mentioned there were
a reference to the discharge of its general functions so far as relating to
the carrying on by the Society or other persons of PRA-regulated
activities in relation to anything done at Lloyd’s.

(5) 20Section 3I(4)(b) has effect as if the reference to a PRA-authorised person
were a reference to the Society, and the members of the Society, taken
together.

(4) For section 315 substitute—

315 The Society: regulated activities

(1) 25This section applies if an activity carried on by the Society is of a kind
specified in an order made under section 22 (regulated activities).

(2) The order may provide that the Society is not to be subject to any
requirement of this Act concerning the registered office of a body
corporate.

(5) 30In section 316 (direction by Authority)—

(a) in subsection (1), for “the Authority” substitute “a regulator”,

(b) after that subsection insert—

(1A) A direction under subsection (1)—

(a) may be given by the FCA only if it considers that giving
35the direction is necessary or expedient for the purpose of
advancing one or more of its operational objectives, and

(b) may be given by the PRA only if it considers that giving
the direction is necessary or expedient for the purpose of
advancing its general objective or (if section 2C applies)
40the insurance objective.

(1B) A direction under subsection (1) which applies the general
prohibition to a member of the Society, or to the members of the
Society taken together, may be given by a regulator only with
the consent of the other regulator.,

(c) 45in subsection (4)—

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(i) for “the Authority”, in both places, substitute “the regulator
concerned”, and

(ii) in paragraph (c), for “section 315” substitute “provision made
by or under this Act”,

(d) 5in subsection (9)—

(i) after “subsection (1)” insert “given by a regulator”, and

(ii) for “the Authority” substitute “the regulator”,

(e) in subsection (10), for “The Authority” substitute “A regulator who
gives a direction under subsection (1)”,

(f) 10in subsection (11)—

(i) for “The Authority” substitute “A regulator who gives a
direction under subsection (1)”, and

(ii) for “any direction which it gives under this section” substitute
“the direction”, and

(g) 15in the heading, for “Authority” substitute “a regulator”.

(6) In section 317 (the core provisions), in subsection (1), for “X” substitute “9A”.

(7) In section 318 (exercise of powers through Council)—

(a) in subsection (1), for “The Authority” substitute “A regulator”,

(b) after subsection (3) insert—

(3A) 20A direction under subsection (1)—

(a) may be given by the FCA only if it considers that giving
the direction is necessary or expedient for the purpose of
advancing one or more of its operational objectives, and

(b) may be given by the PRA only if it considers that giving
25the direction is necessary or expedient for the purpose of
advancing its general objective or (if section 2C applies)
the insurance objective.,

(c) in subsection (4)(b), for “the Authority” substitute “the regulator
concerned”,

(d) 30in subsection (6)(a), for “the Authority” substitute “a regulator”,

(e) in subsection (7)—

(i) after “subsection (1)” insert “given by a regulator”, and

(ii) for “the Authority” substitute “the regulator”,

(f) in subsection (8), for “The Authority” substitute “A regulator who gives
35a direction under subsection (1)”, and

(g) in subsection (9)—

(i) for “The Authority” substitute “A regulator who gives a
direction under subsection (1)”, and

(ii) for “any direction which it gives under this section” substitute
40“the direction”.

(8) In section 319 (consultation)—

(a) for subsection (1) substitute—

(1) Before a regulator gives a direction under section 316 or 318, it
must—

(a) 45in a case where section 316(1B) requires the regulator to
obtain the consent of the other regulator, obtain that
consent,

(b) in any other case, consult the other regulator, and

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(c) after complying with paragraph (a) or (b), publish a
draft of the proposed direction.,

(b) in subsection (2)(b), for “the Authority” substitute “the regulator”,

(c) for subsection (3) substitute—

(3) 5Before a regulator gives the proposed direction—

(a) it must have regard to any representations made to it in
accordance with subsection (2)(b), and

(b) if it was required by subsection (1)(b) to consult the
other regulator and proposes to give a direction which
10differs from the draft published under subsection (1) in
a way which is, in the opinion of the regulator,
significant, it must again consult the other regulator.,

(d) in subsections (4) and (5) (in both places), for “the Authority” substitute
“the regulator”,

(e) 15for subsection (6) substitute—

(6) Subsections (1)(c) and (2) to (5) do not apply in relation to—

(a) a direction given by the FCA if it considers that the delay
involved in complying with them would be prejudicial
to the interests of consumers, as defined in section 425A,
20or

(b) a direction given by the PRA if it considers that the delay
involved in complying with them would—

(i) be prejudicial to the safety and soundness of the
Society, and the members of the Society, taken
25together, or

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

(f) in subsection (7), for “the Authority” substitute “the regulator
30concerned”,

(g) in subsection (8)—

(i) for “The Authority” substitute “A regulator who publishes a
draft under subsection (1)”, and

(ii) for “a draft published under subsection (1)” substitute “the
35draft”,

(h) in subsection (9), for “the Authority” substitute “a regulator”, and

(i) for subsection (10) substitute—

(10) Cost benefit analysis” means—

(a) an analysis of the costs together with an analysis of the
40benefits that will arise—

(i) if the proposed direction is given, or

(ii) if subsection (5)(b) applies, from the direction
that has been given, and

(b) subject to subsection (10A), an estimate of those costs
45and of those benefits.

(10A) If, in the opinion of the regulator concerned—

(a) the costs or benefits referred to in subsection (10) cannot
reasonably be estimated, or

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

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

(9) In section 320 (former underwriting members)—

(a) 5in subsection (2), for “Part IV permission” substitute “Part 4A
permission”,

(b) in subsection (3), for “The Authority” substitute “The PRA”, and

(c) at the end insert—

(5) In the event that the activity of effecting or carrying out
10contracts of insurance as principal is not to any extent a PRA-
regulated activity, the function conferred on the PRA by
subsection (3) is exercisable instead by the FCA.

(6) Accordingly, in that case—

(a) references in section 321 to the PRA are to be read as
15references to the FCA, and

(b) the reference in section 321(13) to the FCA is to be read
as a reference to the PRA.

(10) In section 321 (requirements imposed under section 320)—

(a) in subsection (2), for “the Authority” substitute “the PRA”,

(b) 20in subsection (3)(b), for “the Authority’s” substitute “the PRA’s”,

(c) in subsections (3)(c), (4) to (9) and (11), for “Authority” substitute
“PRA”, and

(d) after subsection (12) insert—

(13) Before giving a notice under any provision of this section, the
25PRA must consult the FCA.

(11) In section 322 (rules applicable to former underwriting members)—

(a) in subsection (1), for “The Authority” substitute “The PRA”,

(b) in subsection (4), for “Part X (except sections 152 to 154)” substitute
“Part 9A (except sections 137S, 138F, 138G and 138H)”, and

(c) 30at the end insert—

(5) In the event that the activity of effecting or carrying out
contracts of insurance as principal is not to any extent a PRA-
regulated activity, the function conferred on the PRA by
subsection (1) is exercisable instead by the FCA.

35Information

41 Information, investigations, disclosure etc.

Schedule 12 contains miscellaneous amendments of FSMA 2000, including
amendments relating to information gathering, investigations and disclosure.

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Auditors and actuaries

42 Auditors and actuaries

Schedule 13 contains miscellaneous amendments of Part 22 of FSMA 2000
(auditors and actuaries).

5Consumer protection and competition

43 Provisions about consumer protection and competition

After section 234B of FSMA 2000 insert—

Part 16A
10Consumer protection and competition
Super-complaints and references to FCA
234C Complaints by consumer bodies

(1) A designated consumer body may make a complaint to the FCA that a
feature, or combination of features, of a market in the United Kingdom
15for financial services is, or appears to be, significantly damaging the
interests of consumers.

(2) “Designated consumer body” means a body designated by the
Treasury by order.

(3) The Treasury—

(a) 20may designate a body only if it appears to them to represent the
interests of consumers of any description, and

(b) must publish in such manner as they think fit (and may from
time to time vary) criteria to be applied by them in determining
whether to make or revoke a designation.

(4) 25Sections 425A and 425B (meaning of “consumers”) apply for the
purposes of this section, but the references to consumers in this section
do not include consumers who are authorised persons.

(5) In this section—

(a) “market in the United Kingdom” has the meaning given in
30section 140A;

(b) the reference to a feature of a market in the United Kingdom for
financial services has a meaning corresponding to that which a
reference to a feature of a market in the United Kingdom for
goods and services has (by virtue of section 140A(3)) for the
35purposes of Chapter 4 of Part 9A.

234D Reference by scheme operator or regulated person

(1) A relevant person may make a reference to the FCA where it appears to
that person that either the first set of conditions or the second set of
conditions are satisfied.

(2) 40Each of the following is a “relevant person”—

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(a) the scheme operator;

(b) a regulated person.

(3) The first set of conditions is—

(a) that there may have been—

(i) 5in the case of a reference by the scheme operator, a
regular failure by one or more regulated persons to
comply with requirements applicable to the carrying on
by them of any activity, or

(ii) in the case of a reference by a regulated person, a regular
10failure by that person to comply with requirements
applicable to the carrying on by that person of any
activity, and

(b) that as a result consumers have suffered, or may suffer, loss or
damage in respect of which, if they brought legal proceedings,
15a remedy or relief would be available in the proceedings.

(4) The reference to the failure by a regulated person (“R”) to comply with
a requirement applicable to the carrying on by R of any activity
includes anything done, or omitted to be done, by R in carrying on the
activity—

(a) 20which is a breach of a duty or other obligation, prohibition or
restriction, or

(b) which otherwise gives rise to the availability of remedy or relief
in legal proceedings.

(5) It does not matter whether—

(a) 25the duty or other obligation, prohibition or restriction, or

(b) the remedy or relief,

arises as a result of any provision made by or under this or any other
Act, a rule of law or otherwise.

(6) The second set of conditions is—

(a) 30in the case of a reference by the scheme operator, that one or
more regulated persons have, on a regular basis, acted or failed
to act, in such a way that, if a complaint were made under the
ombudsman scheme in relation to that conduct, the
ombudsman would be likely to determine the complaint in
35favour of the complainant,

(b) in the case of a reference by a regulated person, that the
regulated person has, on a regular basis, acted or failed to act in
such a way that, if a complaint were made under the
ombudsman scheme in relation to that conduct, the
40ombudsman would be likely to determine the complaint in
favour of the complainant, and

(c) in either case, that—

(i) if the complaint would fall within the compulsory
jurisdiction or the consumer credit jurisdiction, the
45ombudsman would be likely to make an award under
section 229(2)(a) or give a direction under section
229(2)(b), or

(ii) if voluntary jurisdiction rules made for the purposes of
section 227 provide for the making of an award against
50a respondent or the giving of a direction that a

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respondent take certain steps in relation to a
complainant, and the complaint would fall within the
voluntary jurisdiction, the ombudsman would be likely
to make such an award or give such a direction.

(7) 5“Consumers” has the meaning given in section 1G.

(8) “Regulated person” means—

(a) an authorised person,

(b) an electronic money issuer, as defined in section 1H(8),

(c) a payment service provider, as defined in section 1H(8).

234E 10Response by FCA

(1) The FCA must within 90 days after the day on which it receives a
complaint under section 234C or a reference under section 234D
publish a response stating how it proposes to deal with the complaint
or reference, and in particular—

(a) 15whether it has decided to take any action, or to take no action,
and

(b) if it has decided to take action, what action it proposes to take.

(2) The response must—

(a) include a copy of the complaint or reference, and

(b) 20state the FCA’s reasons for its proposals.

(a)(a)include a copy of the complaint or reference, and

(b) state the FCA’s reasons for its proposals.

(3) The Treasury may by order amend subsection (1) by substituting any
period for the period for the time being specified there.

234F 25Section 234E: exceptions

(1) This section applies where the FCA has received a reference under
section 234D from a person who is a relevant person as a result of
subsection (2)(b) of that section.

(2) The duty to respond in section 234E does not apply if the FCA considers
30that the reference is frivolous, vexatious or has been made in bad faith.

(3) The FCA must within 90 days after the day on which it receives the
reference inform the person who made it—

(a) that the duty to respond under section 234E does not apply by
virtue of this section, and

(b) 35of its reasons for reaching the conclusion in paragraph (a).

(4) The Treasury may by order amend subsection (3) by substituting any
period for the period for the time being specified there.

234G Guidance

(1) The guidance given by the FCA under section 139A—

(a) 40must include guidance about the presentation of a reasoned
case for a complaint under section 234C or a reference under
section 234D, and

(b) may include guidance about such other matters as appears to
the FCA to be appropriate for the purposes of section 234C or
45234D.

(2)

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Guidance given under this section is to be taken to be general guidance
as defined in section 139B(5).

Competition
234H Power of FCA to make request to Office of Fair Trading

(1) 5The FCA may ask the Office of Fair Trading (“the OFT”) to consider
whether a feature, or combination of features, of a market in the United
Kingdom for financial services may prevent, restrict or distort
competition in connection with the supply or acquisition of any
financial services in the United Kingdom or a part of the United
10Kingdom.

(2) The OFT must, within 90 days after the day on which it receives the
request, publish a response stating how it proposes to deal with the
request and in particular—

(a) whether it has decided to take any action, or to take no action,
15in response to the request, and

(b) if it has decided to take action, what action it proposes to take.

(3) The response must state the OFT’s reasons for its proposals.

(4) The Treasury may by order amend subsection (2) by substituting any
period for the period for the time being specified there.

(5) 20In this section—

(a) “market in the United Kingdom” has the meaning given in
section 140A(1);

(b) the reference to a feature of a market in the United Kingdom for
financial services has a meaning corresponding to that which a
25reference to a feature of a market in the United Kingdom for
goods and services has (by virtue of section 140A(3)) for the
purposes of Chapter 4 of Part 9A.

Insolvency

44 Insolvency

30Schedule 14 contains amendments of Part 24 of FSMA 2000 (insolvency).

Miscellaneous amendments of FSMA 2000

45 The consumer financial education body

Schedule 15 contains amendments of FSMA 2000 relating to the consumer
financial education body.

46 35Members of the professions

Schedule 16 contains miscellaneous amendments of FSMA 2000 relating to
financial services provided by members of the professions.

Financial Services BillPage 139

47 International obligations

In section 410 of FSMA 2000 (international obligations), in subsection (4), for
paragraph (a) substitute—

(a) the FCA;

(aa) 5the PRA;

(ab) the Bank of England when exercising functions conferred on it
by Part 18;.

48 Interpretation of FSMA 2000

(1) In section 417 of FSMA 2000 (definitions), in subsection (1)—

(a) 10omit the definition of “the Authority”,

(b) in the definition of “control of information rules” for “section 147(1)”
substitute “section 137O”,

(c) after that definition insert—

(d) after the definition of “exempt person” insert—

(e) in the definition of “financial promotion rules” for “section 145”
substitute “section 137Q”,

(f) 20for the definition of “general rules” substitute—

(g) omit the definition of “money laundering rules”;

(h) omit the definition of “notice of control”;

(i) for the definition of “Part IV permission” substitute—

(j) after the definition of “partnership” insert—

(k) in the definition of “price stabilising rules” for “section 144” substitute
“section 137P”,

(l) after that definition insert—

(m) in the definition of “regulating provisions” for “section “159(1)”
substitute “section 140A”,

(n) after that definition insert—

(o) omit the definitions of “regulatory objectives” and “regulatory
provisions”,

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