Financial Services and Markets Bill - continued        House of Commons

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Authority's general duty.     289. - (1) The Authority 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 regulated activities are being carried on in that market.
      (2) The Authority must keep under review the desirability of exercising-
    (a) any of its powers under this Part;
    (b) any powers which it has in relation to the Society as a result of section 290.
The Society
The Society: authorisation and permission.     290. - (1) The Society is an authorised person.
      (2) The Society-
    (a) has permission to carry on a regulated activity of any of the following kinds-
      (i) arranging deals in contracts of insurance written at Lloyd's ("the basic market activity");
      (ii) arranging deals in participation in Lloyd's syndicates ("the secondary market activity"); and
      (iii) an activity carried on in connection with, or for the purposes of, the basic or secondary market activity; and
    (b) must be issued by the Authority with a certificate of authorisation.
      (3) For the purposes of Part IV, the Society's permission is to be treated as if it had been given on an application for permission under that Part.
      (4) The power conferred on the Authority by section 40 may be exercised in anticipation of the coming into force of the Society's permission (or at any other time).
      (5) The Society is not subject to any requirement of this Act concerning the registered office of a body corporate.
Power to apply Act to Lloyd's underwriting
Direction by Authority.     291. - (1) The general prohibition or (if the general prohibition is not applied under this section) a core provision applies to the carrying on of an insurance market activity by-
    (a) a member of the Society, or
    (b) the members of the Society taken together,
  only if the Authority so directs.
      (2) A direction given under subsection (1) which applies a core provision is referred to in this Part as "an insurance market direction".
      (3) In subsection (1)-
    "core provision" means a provision of this Act mentioned in section 292; and
    "insurance market activity" means a regulated activity relating to contracts of insurance written at Lloyd's.
      (4) In deciding whether to give a direction under subsection (1), the Authority must have particular regard to-
    (a) the interests of policyholders and potential policyholders;
    (b) any failure by the Society to satisfy an obligation to which it is subject as a result of a provision of the law of another EEA State which-
      (i) gives effect to any of the insurance directives; and
      (ii) is applicable to an activity carried on in that State by a person to whom this section applies;
    (c) the need to ensure the effective exercise of the functions which the Authority has in relation to the Society as a result of section 290.
      (5) A direction under subsection (1) must be in writing.
      (6) A direction under subsection (1) applying the general prohibition may apply it in relation to different classes of person.
      (7) An insurance market direction-
    (a) must specify each core provision, class of person and kind of activity to which it applies;
    (b) may apply different provisions in relation to different classes of person and different kinds of activity.
      (8) A direction under subsection (1) has effect from the date specified in it ("the effective date"), which may not be earlier than the date on which it is made.
The core provisions.     292. - (1) The core provisions are Parts V, IX, X, XI, XX and XXIV.
      (2) References in an applied core provision to an authorised person are (where necessary) to be read as references to a person in the class to which the insurance market direction applies.
Exercise of powers through Council.     293 - (1) The Authority may give a direction under this subsection to the Council or to the Society (acting through the Council) or to both.
      (2) A direction under subsection (1) is one given to the body concerned-
    (a) in relation to the exercise of its powers generally with a view to achieving, or in support of, a specified objective; or
    (b) in relation to the exercise of a specified power which it has, whether in a specified manner or with a view to achieving, or in support of, a specified objective.
      (3) "Specified" means specified in the direction.
      (4) A direction under subsection (1) may be given-
    (a) instead of giving a direction under section 291(1); or
    (b) if the Authority considers it necessary or expedient to do so, at the same time as, or following, the giving of such a direction.
      (5) A direction may also be given under subsection (1) in respect of underwriting agents as if they were among the persons mentioned in section 291(1).
      (6) A direction under this section-
    (a) does not, at any time, prevent the exercise by the Authority of any of its powers;
    (b) must be in writing.
Consultation.     294. - (1) If the Authority proposes to give a direction under section 291 or 293, it must publish a draft of the proposed direction.
      (2) The draft must be accompanied by-
    (a) an estimate of the costs, and an analysis of the benefits, that will arise if the direction is given ("a cost benefit analysis"); and
    (b) a statement that representations about the proposed direction may be made to the Authority within a reasonable time.
      (3) Before giving the proposed direction, the Authority must have regard to any representations made to it in accordance with subsection (2)(b).
      (4) If the Authority gives the proposed direction it must publish a statement describing, in general terms-
    (a) the representations made to it in accordance with subsection (2)(b); and
    (b) its response to them.
      (5) If the direction differs from the draft published under subsection (1) in a way which is, in the opinion of the Authority, significant-
    (a) the Authority must publish a statement of the difference; and
    (b) the statement must be accompanied by a cost benefit analysis.
      (6) Subsections (1) to (5) do not apply if the Authority considers that the delay involved in complying with them would be prejudicial to the interests of consumers.
      (7) Subsection (2)(a) does not apply if the Authority considers that the costs incurred by those who would be affected by the proposed direction, if it were to be given-
    (a) would be less, or no more, than costs presently incurred by them ("present costs"); or
    (b) would result in an increase in present costs which is of minimal significance.
      (8) The Authority may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
      (9) When the Authority is required to publish a document under this section it must do so in the way appearing to it to be best calculated to bring it to the attention of the public.
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Prepared 14 December 1999