Financial Services and Markets Bill

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House of Commons

Session 1998-99
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Financial Services and Markets Bill

This is the text of the Financial Services and Markets Bill, as presented to the House of Commons on 17th June 1999.

EXPLANATORY NOTES
Explanatory Notes to the Bill, prepared by HM Treasury, are published separately as Bill 121- EN. HC Bill 121- EN.

EUROPEAN CONVENTION ON HUMAN RIGHTS

Mr Chancellor of the Exchequer has made the following statement under section 19(1)(a) of the Human Rights Act 1998:

In my view the provisions of the Financial Services and Markets Bill are compatible with the Convention rights.

Financial Services and Markets Bill

ARRANGEMENT OF CLAUSES

PART I

THE REGULATOR

Clause

1. The Financial Services Authority.

The Authority's general duties

2. The Authority's general duties.

The regulatory objectives

3. Market confidence.

4. Public awareness.

5. The protection of consumers.

6. The reduction of financial crime.

Arrangements for consulting practitioners and consumers

7. The Authority's general duty to consult.

8. The Practitioner Panel.

9. The Consumer Panel.

Reviews

10. Reviews.

11. Right to obtain documents and information.

Inquiries

12. Cases in which the Treasury may arrange independent inquiries.

13. Power to appoint person to hold an inquiry.

14. Powers of appointed person and procedure.

15. Conclusion of inquiry.

16. Obstruction and contempt.

PART II

REGULATED AND PROHIBITED ACTIVITIES

The general prohibition

17. The general prohibition.

Requirement for permission

18. Authorised persons acting without permission.

Financial promotion

19. Restrictions on financial promotion.

Regulated activities

20. The classes of activity and categories of investment.

Offences

21. Contravention of the general prohibition.

22. False claims to be authorised or exempt.

23. Contravention of section 19.

Enforceability of agreements

24. Agreements made by unauthorised persons.

25. Agreements made through unauthorised persons.

26. Agreements made unenforceable by section 24 or 25.

27. Enforceability of agreements resulting from unlawful communications.

PART III

AUTHORISATION AND EXEMPTION

Authorisation

28. Authorised persons.

29. Partnerships and unincorporated associations.

Ending of authorisation

30. Withdrawal of authorisation by the Authority.

31. EEA firms.

32. Treaty firms.

33. UCITS qualifiers.

Exemption

34. Exemption orders.

35. Exemption of appointed representatives.

PART IV

PERMISSION TO CARRY ON REGULATED ACTIVITIES

Application for permission

36. Application for permission.

Permission

37. Giving permission.

38. Imposition of requirements.

Variation and cancellation of Part IV permission

39. Variation etc at request of authorised person.

40. Variation etc on the Authority's own initiative.

41. Variation of permission on acquisition of control.

42. Exercise of powers in support of overseas regulator.

43. Prohibitions and restrictions.

Connected persons

44. Persons connected with an applicant.

Additional permissions

45. Authority's duty to consider other permissions etc.

Procedure

46. Applications under this Part.

47. Determination of applications.

48. When permission is given.

49. Refusal of application for permission.

50. Procedure on exercise of the Authority's own-initiative power.

51. Exercise of own-initiative power with immediate effect.

References to the Tribunal

52. Right to refer matters to the Tribunal.

PART V

PERFORMANCE OF REGULATED ACTIVITIES

Prohibition orders

53. Prohibition orders.

54. Prohibition orders: procedure and right to refer to Tribunal.

55. Applications relating to prohibitions: procedure and right to refer to Tribunal.

Approval

56. Approval for particular arrangements.

57. Applications for approval.

58. Determination of applications.

59. Applications for approval: procedure and right to refer to Tribunal.

60. Withdrawal of approval.

Conduct

61. Conduct: statements and codes.

62. Statements and codes: procedure.

63. Disciplinary powers.

64. Disciplinary measures: procedure and right to refer to Tribunal.

65. Notice for payment.

66. Publication.

67. Practice statements and guidance.

Breach of statutory duty

68. Actions for damages.

PART VI

OFFICIAL LISTING

The competent authority

69. The competent authority.

The official list

70. The official list.

Listing

71. Applications for listing.

72. Decision on application.

73. Discontinuance and suspension of listing.

Listing particulars

74. Listing particulars and other documents.

75. General duty of disclosure in listing particulars.

76. Supplementary listing particulars.

77. Exemptions from disclosure.

78. Registration of listing particulars.

Prospectuses

79. Prospectuses.

80. Publication of prospectus.

81. Application of this Part to prospectuses.

82. Approval of prospectus where no application for listing.

Compensation

83. Compensation for false or misleading particulars.

Penalties

84. Penalties for breach of listing rules.

85. Warning notices.

86. Statement of policy.

87. Appeals against penalties.

88. Notice for payment.

Miscellaneous

89. Obligations of issuers of listed securities.

90. Advertisements etc in connection with listing applications.

91. Fees.

92. Listing rules: general provisions.

93. Exemption from liability in damages.

94. Interpretation of this Part.

PART VII

PENALTIES FOR MARKET ABUSE

Market abuse

95. Market abuse.

The Code

96. The Code.

97. Effect of the Code.

Power to impose penalties

98. Power to impose penalties in cases of market abuse.

Statement of policy

99. Statement of policy.

Procedure

100. Warning notices.

101. Decision notices and right to refer to Tribunal.

102. Notice for payment.

Miscellaneous

103. Suspension of investigations.

104. Power of court to impose penalty in cases of market abuse.

105. Guidance.

106. Effect on transactions.

PART VIII

HEARINGS AND APPEALS

107. The Financial Services and Markets Tribunal.

108. Proceedings: general provision.

109. Further appeal on a point of law.

PART IX

RULES AND GUIDANCE

CHAPTER I

RULE-MAKING POWERS

110. General rule-making power.

111. Non-regulated activity rules.

112. Miscellaneous ancillary matters.

113. Insurance business: regulations supplementing Authority's rules.

114. Endorsement of codes etc. issued by other bodies.

Price stabilising and certain other rules

115. Price stabilising rules.

116. Financial promotion rules.

117. Money laundering rules.

Modification or waiver

118. Modification or waiver of rules.

Contravention of rules

119. Evidential provisions.

120. Actions for damages.

121. Limits on effect of contravening rules.

Procedural provisions

122. Notification of rules to Treasury.

123. Rule-making instruments.

124. Verification of rules.

125. Consultation.

126. General supplementary powers.

CHAPTER II

GUIDANCE

127. Guidance.

128. Notification of guidance to Treasury.

CHAPTER III

COMPETITION SCRUTINY

129. Interpretation.

130. Reports by Director General of Fair Trading.

131. Power of the Director to request information.

132. Powers and duties of Treasury.

Exclusions from UK competition law

133. The Fair Trading Act 1973.

134. The Competition Act 1998.

PART X

INFORMATION GATHERING AND INVESTIGATIONS

Powers to gather information

135. Authority's power to require information.

136. Reports by skilled persons.

Appointment of investigators

137. Appointment of persons to carry out general investigations.

138. Appointment of persons to carry out investigations in particular cases.

Assistance to overseas regulators

139. Investigations etc in support of overseas regulator.

Conduct of investigations

140. Investigations: general.

141. Powers of persons appointed under section 137.

142. Additional power of persons appointed as a result of section 138(1).

143. Powers of person appointed to investigate as a result of section 138(2).

144. Admissibility of statements made to investigators.

145. Information and documents: supplemental provisions.

146. Entry of premises under warrant.

Offences

147. Offences.

PART XI

CONTROL OVER AUTHORISED PERSONS

Notice of control

148. Obligation to notify the Authority.

Acquiring, increasing and reducing control

149. Acquiring control.

150. Increasing control.

151. Reducing control.

Acquiring or increasing control: procedure

152. Notification.

153. Duty of Authority in relation to notice of control.

154. Approval of acquisition of control.

155. Conditions attached to approval.

156. Objection to acquisition of control.

157. Notices of objection: procedure.

Improperly acquired shares

158. Improperly acquired shares.

Reducing control: procedure

159. Notification.

Offences

160. Offences under this Part.

Miscellaneous

161. Power to change definitions of control etc.

PART XII

INCOMING FIRMS: INTERVENTION BY AUTHORITY

Interpretation

162. Interpretation of this Part.

163. General grounds on which powers of intervention are exercisable.

164. Exercise of powers in support of overseas regulator.

165. The power of intervention.

Exercise of powers of intervention

166. Procedure.

167. Procedure in cases of urgency.

168. Power to apply to court for injunction in respect of certain overseas insurance companies.

169. Additional procedure for EEA firms in certain cases.

Supplemental

170. Rescission and variation of requirements.

171. Re-issue of certificate of authorisation.

172. Effect of certain requirements on other persons.

173. Actions for damages.

Powers of Director General of Fair Trading

174. Power to prohibit the carrying on of Consumer Credit Act business.

175. Power to restrict the carrying on of Consumer Credit Act business.

PART XIII

DISCIPLINARY MEASURES

176. Public censure.

177. Financial penalties.

178. Proposal to take disciplinary measures.

179. Decision notice.

180. Notice for payment.

181. Publication.

182. Statements of policy.

PART XIV

THE FINANCIAL SERVICES AND MARKETS COMPENSATION SCHEME

The scheme manager

183. The scheme manager.

The scheme

184. The compensation scheme.

Provisions of the scheme

185. General.

186. Rights of the scheme in relevant person's insolvency.

187. Continuity of long-term insurance policies.

188. Insurers in financial difficulties.

Annual report

189. Annual report.

Information and documents

190. Scheme manager's power to require information.

191. Scheme manager's power to inspect information held by liquidator etc.

192. Powers of court where information required.

Miscellaneous

193. Statutory immunity.

194. Management expenses.

195. Tax treatment of levies and repayments.

196. Scheme manager's power to inspect documents held by Official Receiver etc.

PART XV

THE FINANCIAL SERVICES OMBUDSMAN

The scheme

197. The scheme and the scheme operator.

198. Compulsory jurisdiction.

199. Voluntary jurisdiction.

Determination of complaints

200. Determination under the compulsory jurisdiction.

201. Awards.

202. Costs.

Information

203. Ombudsman's power to require information.

204. Powers of court where information required.

Funding

205. Industry funding.

PART XVI

COLLECTIVE INVESTMENT SCHEMES

CHAPTER I

INTERPRETATION

206. Collective investment schemes.

207. Other definitions.

CHAPTER II

RESTRICTIONS ON PROMOTION

208. Restrictions on promotion.

209. Single property schemes.

210. Restriction on approval of promotion.

211. Actions for damages.

CHAPTER III

AUTHORISED UNIT TRUST SCHEMES

Applications for authorisation

212. Applications for authorisation of unit trust schemes.

213. Authorisation orders.

214. Determination of applications.

Applications refused

215. Procedure when refusing an application.

Certificates

216. Certificates.

Rules

217. Rules.

218. Scheme particulars rules.

219. Disqualification of auditor for breach of trust scheme rules.

220. Modification or waiver of rules.

Alterations of schemes

221. Alteration of schemes and changes of manager or trustee.

222. Procedure when refusing approval of change of manager or trustee.

Exclusion clauses

223. Avoidance of exclusion clauses.

Ending of authorisation

224. Revocation of authorisation order otherwise than by consent.

225. Procedure.

226. Requests for revocation of authorisation order.

Powers of intervention

227. Directions.

228. Applications to the court.

229. Procedure: giving directions and varying them otherwise than as requested.

230. Procedure: refusal to revoke or vary direction.

231. Procedure: revocation of direction and grant of request for variation.

232. Procedure in cases of urgency.

CHAPTER IV

OPEN-ENDED INVESTMENT COMPANIES

233. Open-ended investment companies.

234. Amendment of section 716 Companies Act 1985.

CHAPTER V

RECOGNISED OVERSEAS SCHEMES

Schemes constituted in other EEA States

235. Schemes constituted in other EEA States.

236. Representations and references to the Tribunal.

237. Disapplication of rules.

238. Power of Authority to suspend promotion of scheme.

Schemes authorised in designated countries or territories

239. Schemes authorised in designated countries or territories.

240. Procedure.

Individually recognised overseas schemes

241. Individually recognised overseas schemes.

242. Matters that may be taken into account.

243. Applications for recognition of individual schemes.

244. Determination of applications.

245. Procedure when refusing an application.

246. Alteration of schemes and changes of operator, trustee or depositary.

Rules and information gathering: schemes recognised under sections 239 and 241

247. Rules as to scheme particulars.

248. Power to require information.

Revocation of recognition under sections 239 and 241

249. Revocation of recognition.

250. Procedure.

Powers of intervention: schemes recognised under sections 239 and 241

251. Directions.

252. Procedure.

253. Procedure in cases of urgency.

Facilities and information in UK

254. Facilities and information in UK.

CHAPTER VI

INVESTIGATIONS

255. Power to investigate.

PART XVII

RECOGNISED INVESTMENT EXCHANGES AND CLEARING HOUSES

CHAPTER I

EXEMPTION

General

256. Exemption for recognised investment exchanges and clearing houses.

257. Qualification for recognition.

Applications for recognition

258. Application by an investment exchange.

259. Application by a clearing house.

260. Applications: supplementary.

261. Recognition orders.

262. Liability in relation to recognised body's regulatory functions

263. Overseas investment exchanges and clearing houses.

Supervision

264. Notification requirements.

265. Modification or waiver of rules.

266. Notification: overseas investment exchanges and overseas clearing houses.

267. Authority's power to give directions.

268. Revoking recognition.

269. Directions and revocation: procedure.

270. Complaints about recognised bodies.

Other matters

271. Supervision of certain contracts.

CHAPTER II

COMPETITION SCRUTINY

272. Interpretation.

273. Examination of rules and guidance.

274. Continuing scrutiny.

275. Initial report by Director General of Fair Trading.

276. Further reports by Director General of Fair Trading.

277. Reports: supplementary.

278. Investigations by Director General of Fair Trading.

279. Procedure on exercise of certain powers by Treasury.

CHAPTER III

EXCLUSION FROM OTHER UK COMPETITION LAW

The Fair Trading Act 1973

280. Monopoly situations etc.

The Competition Act 1998 (c.41.)

281. The Chapter I prohibition.

282. The Chapter II prohibition.

CHAPTER IV

Interpretation

283. Interpretation of this Part.

PART XVIII

LLOYD'S

General

284. Authority's general duty.

The Society

285. The Society: authorisation and permission.

Power to apply Act to Lloyd's underwriting

286. Direction by Authority.

287. The core provisions.

288. Exercise of powers through Council.

Former underwriting members

289. Former underwriting members.

Supplemental

290. Interpretation of this Part.

PART XIX

MUTUAL SOCIETIES

Friendly societies

291. The Friendly Societies Commission.

292. The Registry of Friendly Societies.

Building societies

293. The Building Societies Commission.

294. The Building Societies Investor Protection Board.

Industrial and provident societies

295. Industrial and provident societies.

Supplemental

296. Supplemental provisions.

PART XX

AUDITORS AND ACTUARIES

Appointment

297. Appointment.

Information

298. Auditor or actuary's access to books etc.

299. Information given by auditor or actuary to the Authority.

300. Information given by auditor or actuary to the Authority: persons with close links.

301. Duty of auditor or actuary resigning etc. to give notice.

Disqualification

302. Disqualification.

Offence

303. Provision of false or misleading information to auditor or actuary.

PART XXI

PUBLIC RECORD AND DISCLOSURE OF INFORMATION

The public record

304. The record of authorised persons etc.

Disclosure of information

305. Restrictions on disclosure of confidential information by Authority etc.

306. Exceptions from section 305.

307. Offences.

308. Removal of other restrictions on disclosure.

PART XXII

INSOLVENCY

Interpretation

309. Interpretation of this Part.

Company voluntary arrangements

310. Authority's powers to participate in proceedings.

Administration orders

311. Petitions.

312. Insurance companies.

313. Administrator's duty to report to Authority.

314. Authority's powers to participate in proceedings.

Voluntary winding up

315. Authority's powers to participate in proceedings.

316. Insurance companies carrying on long-term business.

Winding up by the court

317. Winding-up petitions.

318. Winding-up petitions: EEA and Treaty firms.

319. Insurance companies: service of petition etc. on Authority.

320. Liquidator's duty to report to Authority.

321. Authority's powers to participate in proceedings.

Bankruptcy

322. Petitions.

323. Insolvency practitioner's duty to report to Authority.

324. Authority's powers to participate in proceedings.

Provisions against debt avoidance

325. Authority's right to apply for an order.

Supplemental provisions concerning insurance companies

326. Continuation of long term business while in liquidation.

327. Reducing the value of contracts instead of winding up.

328. Treatment of assets on winding up.

329. Winding up rules.

PART XXIII

INJUNCTIONS AND RESTITUTION

Injunctions

330. Injunctions.

331. Injunctions in cases of market abuse.

Restitution orders

332. Restitution orders.

333. Restitution orders in cases of market abuse.

Restitution required by Authority

334. Power of Authority to require restitution.

335. Warning notices.

336. Decision notices.

337. Notice for payment.

PART XXIV

NOTICES

Warning notices

338. Warning notices.

Decision notice

339. Decision notices.

The Authority's procedures

340. The Authority's procedures.

PART XXV

OFFENCES

Miscellaneous offences

341. Misleading statements and practices.

342. Misleading the Authority: residual cases.

Bodies corporate and partnerships

343. Offences by bodies corporate etc.

Institution of proceedings

344. Proceedings for offences.

345. Power of the Authority to institute proceedings for certain other offences.

PART XXVI

MISCELLANEOUS

Third countries: Community measures

346. Directions.

347. Interpretation of section 346.

348. Consequences of a direction under section 346.

349. EFTA firms.

International obligations

350. International obligations.

Gaming contracts

351. Gaming contracts.

PART XXVII

INTERPRETATION

352. Definitions.

353. Carrying on activities in the United Kingdom.

354. Parent and subsidiary undertaking.

355. Group.

356. Controller.

357. Manager.

358. Expressions relating to insurance.

359. Expressions relating to authorisation elsewhere in the single market.

360. Privileged communications.

PART XXVIII

SUPPLEMENTAL

361. Consequential and supplementary provision.

362. Regulations and orders.

363. Parliamentary control of statutory instruments.

364. Northern Ireland.

365. Commencement.

366. Minor and consequential amendments, transitional provisions and repeals.

367. Short title.

SCHEDULES:

    Schedule 1 - The Financial Services Authority.

    Part I - General.

    Part II - Status.

    Part III - Penalties and Fees.

    Part IV - Miscellaneous.

    Schedule 2 - Regulated Activities.

    Part I - Regulated Activities.

    Part II - Investments.

    Part III - Supplemental Provisions.

    Schedule 3 - EEA Passport Rights.

    Part I - Defined terms.

    Part II - Exercise of Passport Rights by EEA Firms.

    Part III - Exercise of Passport Rights by UK Firms.

    Schedule 4 - Treaty Rights.

    Schedule 5 - Persons Concerned in Collective Investment Schemes.

    Schedule 6 - Qualifying Conditions.

    Part I - Section 36 Authorisation.

    Part II - Authorisation.

    Part III - Additional Conditions.

    Schedule 7 - Transfer of functions under Part VI.

    Schedule 8 - Non-listing Prospectuses.

    Schedule 9 - Compensation: Exemptions.

    Schedule 10 - Offers of Securities.

    Schedule 11 - The Financial Services and Markets Tribunal.

    Part I - General.

    Part II - The Tribunal.

    Part III - Constitution of Tribunal.

    Part IV - Tribunal Procedure.

    Schedule 12 - Information and Investigations: Connected Persons.

    Part I - Rules for Specific Bodies.

    Part II - Additional Rules.

    Schedule 13 - Prohibitions and Restrictions imposed by Director General of Fair Trading.

    Schedule 14 - Financial Services Ombudsman Scheme.

    Part I - General.

    Part II - The Scheme Operator.

    Part III - The Compulsory Jurisdiction.

    Part IV - The Voluntary Jurisdiction.

    Schedule 15 - Mutuals.

    Part I - Friendly Societies.

    Part II - Building Societies.

    Part III - Industrial and Provident Societies.

    Schedule 16 - Minor and Consequential Amendments.

    Schedule 17 - Repeals.

© Parliamentary copyright 1999
Prepared 17 June 1999