Financial Services Bill (HL Bill 60)

(ii) is comprised in the carrying on of the business for which
A’s principal has accepted responsibility.”

(3) For subsection (2) substitute—

“(2) In this Act “appointed representative” means—

(a) 5a person who is exempt as a result of subsection (1), or

(b) a person carrying on a regulated activity in circumstances
where, as a result of subsection (1D), sections 20(1) and (1A) and
23(1A) do not apply.”

Permission to carry on regulated activities

11 10Permission to carry on regulated activities

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

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

“ Part 4A 15Permission to carry on regulated activities

Application for permission

55A Application for permission

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

(a) 20an individual,

(b) a body corporate,

(c) a partnership, or

(d) an unincorporated association.

(2) “The appropriate regulator”, in relation to an application under this
25section, means—

(a) the PRA, in a case where—

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

(ii) the applicant is a PRA-authorised person otherwise than
30by virtue of a Part 4A permission;

(b) the FCA, in any other case.

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

(4) An EEA firm may not apply for permission under this section to carry
35on a regulated activity which it is, or would be, entitled to carry on in
exercise of an EEA right, whether through a United Kingdom branch or
by providing services in the United Kingdom.

(5) A permission given by the appropriate regulator under this Part or
having effect as if so given is referred to in this Act as “a Part 4A
40permission”.

55B The threshold conditions

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

(2) 5Any reference in this Part to the threshold conditions for which either
regulator is responsible is to be read as a reference to the conditions set
out in or specified under Schedule 6 that are expressed to be relevant to
the discharge by that regulator of its functions, as read with any
threshold condition code made by that regulator under section 137N.

(3) 10In giving or varying permission, imposing or varying a requirement, or
giving consent, under any provision of this Part, each regulator must
ensure that the person concerned will satisfy, and continue to satisfy, in
relation to all of the regulated activities for which the person has or will
have permission, the threshold conditions for which that regulator is
15responsible.

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

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

(b) 20in the case of the PRA, any of its objectives.

55C Power to amend Schedule 6

(1) The Treasury may by order amend Parts 1 and 2 of Schedule 6 by
altering, adding or repealing provisions, or by substituting for those
Parts as they have effect for the time being provisions specified in the
25order.

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

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

(b) in relation to different regulated activities;

(c) in relation to persons who carry on, or seek to carry on, activities
30that consist of or include a PRA-regulated activity and in
relation to other persons.

55D Firms based outside EEA

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

(a) who is a body incorporated in, or formed under the law of, or is
35an individual who is a national of, any country or territory
outside the EEA, and

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

(2) 40In determining whether the non-EEA firm is satisfying or will satisfy,
and continue to satisfy, any one or more of the threshold conditions for
which a UK regulator is responsible, the UK regulator may have regard
to any opinion notified to it by a regulatory authority in the overseas
state (“the overseas regulator”) which relates to the non-EEA firm and
45appears to the UK regulator to be relevant to compliance with those
conditions.

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

(4) 5In this section “UK regulator” means the FCA or the PRA.

55E Giving permission: the FCA

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

(2) The FCA may give permission for the applicant to carry on the
10regulated activity or activities to which the application relates or such
of them as may be specified in the permission.

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

(4) 15If it gives permission, the FCA must specify the permitted regulated
activity or activities, described in such manner as the FCA considers
appropriate.

(5) The FCA may—

(a) incorporate in the description of a regulated activity such
20limitations (for example as to circumstances in which the
activity may, or may not, be carried on) as it considers
appropriate;

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

(c) 25give permission for the carrying on of a regulated activity which
is not included among those to which the application relates
and is not a PRA-regulated activity.

55F Giving permission: the PRA

(1) This section applies where the PRA is the appropriate regulator in
30relation to an application for permission under section 55A.

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

(3) 35If it gives permission, the PRA must specify the permitted regulated
activity or activities, described in such manner as the PRA considers
appropriate.

(4) The PRA may—

(a) incorporate in the description of a regulated activity such
40limitations (for example as to circumstances in which the
activity may, or may not, be carried on) as it considers
appropriate;

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

(c) 45give permission for the carrying on of a regulated activity which
is not included among those to which the application relates.

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

(6) Subsections (3) and (4)(b) and (c) do not enable the PRA to give
5permission that relates only to activities that are not PRA-regulated
activities, except where the applicant is a PRA-authorised person
otherwise than by virtue of a Part 4A permission.

55G Giving permission: special cases

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

(2) 10If the applicant—

(a) in relation to a particular regulated activity, is exempt from the
general 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
15activity,

the application is to be treated as relating to all the regulated activities
which, 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
20general prohibition as a result of section 285(2) or (3), 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
activity.

(4) 25If the applicant—

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

(b) has applied for permission in relation to another regulated
30activity,

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

(5) Subsection (6) applies where either regulator (“the responsible
regulator”) receives an application for permission under section 55A
35which is in the regulator’s opinion similar to an application which was
previously made to the other regulator and was either—

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

(b) 40refused by the other regulator after being considered.

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

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

(b) 45the time taken to deal with the new application.

Variation and cancellation of Part 4A permission

55H Variation 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) 5The FCA may, on the application of the authorised person, vary the
permission by—

(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
10permission relates;

(c) varying 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) 15The FCA may refuse an application under this section if it considers
that 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
20the application.

(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 FCA must, once it is satisfied that
it is no longer necessary to keep the permission in force, cancel it.

(7) 25The FCA’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.

55I Variation by PRA at request of authorised person

(1) 30On the application of a PRA-authorised person with a Part 4A
permission, 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) 35removing a regulated activity from those to which the
permission 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
40permission, the PRA may, after consulting the FCA, cancel the
permission.

(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
45permission relates one or more regulated activities which include a
PRA-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
5one or more of its operational objectives.

(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
10permission 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) 15Consent 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
20an 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
25regulated 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) 30The 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
35permission 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) 40to 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) 45in 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) The FCA—

(a) must consult the PRA before exercising its power under this
5section in relation to—

(i) a PRA-authorised person, or

(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
10so 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 PRA.

(5) The PRA—

(a) must consult the FCA before exercising its power under this
15section, and

(b) may 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) 20Without prejudice to the generality of subsections (1) to (3), a regulator
may, 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
25may, in relation to an authorised person who has permission to carry
on 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
30concerned by removing that activity from those to which the
permission 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,
35there are no longer any regulated activities for which the authorised
person 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
40relates to a person who (before the variation) was a PRA-authorised
person, 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
45response to an application to that regulator under section 55A.

(11) Consent 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
Part 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—

(a) 5that 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
statement or by other irregular means;

(c) 10that 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
regulated activity which is an investment service or activity for
15which 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
contained in any EU legislation made under that Chapter, in
20relation 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
and activities” in section 417(1).

25Imposition 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
impose on that person such requirements, taking effect on or after the
30giving 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) A is failing, or is likely to fail, to satisfy the threshold conditions
35for 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
more of the FCA’s operational objectives.

(3) 40The 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) to cancel such a requirement.

(4) 45The 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) impose a new requirement,

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

(c) 5cancel such a requirement.

(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) 10a 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
15activities 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
20regulated 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) 25The 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) 30P 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) 35to 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
40own-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) 45cancel 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) so as to require the person concerned to take specified action, or

(b) so as to require the person concerned to refrain from taking
5specified action.

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

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

(a) 10the person’s group, or

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

(4) A requirement may be expressed to expire at the end of such period as
the regulator imposing it may specify, but the imposition of a
requirement that expires at the end of a specified period does not affect
15the 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) In this section “requirement” means a requirement imposed under
20section 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
has a Part 4A permission, but

(b) 25there 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
activities, is uncertain, the appropriate regulator may—

(a) 30impose 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
section on the UK authorised person.

(3) 35“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) This section does not affect any duty of the appropriate regulator to
40consult 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.