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Session 1999-2000
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Financial Services and Markets Bill

This is the text of the Financial Services and Markets Bill, as amended in Committee in the House of Commons and printed on 9th December 1999.

 
 
  
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.Part XVI 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.Restriction on managers of authorised unit trust schemes.
114.Insurance business rules.
115.Insurance business: regulations supplementing Authority's rules.
116.Endorsement of codes etc. issued by other bodies.

Price stabilising and certain other rules
117.Price stabilising rules.
118.Financial promotion rules.
119.Money laundering rules.

Modification or waiver
120.Modification or waiver of rules.

Contravention of rules
121.Evidential provisions.
122.Actions for damages.
123.Limits on effect of contravening rules.

Procedural provisions
124.Notification of rules to Treasury.
125.Rule-making instruments.
126.Verification of rules.
127.Consultation.
128.General supplementary powers.

CHAPTER II
GUIDANCE
129.Guidance.
130.Notification of guidance to Treasury.

CHAPTER III
COMPETITION SCRUTINY
131.Interpretation.
132.Reports by Director General of Fair Trading.
133.Power of the Director to request information.
134.Powers and duties of Treasury.

Exclusions from UK competition law
135.The Fair Trading Act 1973.
136.The Competition Act 1998.

PART X
INFORMATION GATHERING AND INVESTIGATIONS
Powers to gather information
137.Authority's power to require information.
138.Reports by skilled persons.

Appointment of investigators
139.Appointment of persons to carry out general investigations.
140.Appointment of persons to carry out investigations in particular cases.

Assistance to overseas regulators
141.Investigations etc in support of overseas regulator.

Conduct of investigations
142.Investigations: general.
143.Powers of persons appointed under section 139.
144.Additional power of persons appointed as a result of section 140(1).
145.Powers of person appointed to investigate as a result of section 140(2).
146.Admissibility of statements made to investigators.
147.Information and documents: supplemental provisions.
148.Entry of premises under warrant.

Offences
149.Offences.

PART XI
CONTROL OVER AUTHORISED PERSONS
Notice of control
150.Obligation to notify the Authority.

Acquiring, increasing and reducing control
151.Acquiring control.
152.Increasing control.
153.Reducing control.

Acquiring or increasing control: procedure
154.Notification.
155.Duty of Authority in relation to notice of control.
156.Approval of acquisition of control.
157.Conditions attached to approval.
158.Objection to acquisition of control.
159.Objection to existing control.
160.Notices of objection under section 159: procedure.

Improperly acquired shares
161.Improperly acquired shares.

Reducing control: procedure
162.Notification.

Offences
163.Offences under this Part.

Miscellaneous
164.Power to change definitions of control etc.

PART XII
INCOMING FIRMS: INTERVENTION BY AUTHORITY
Interpretation
165.Interpretation of this Part.
166.General grounds on which powers of intervention are exercisable.
167.Exercise of powers in support of overseas regulator.
168.The power of intervention.

Exercise of powers of intervention
169.Procedure.
170.Procedure in cases of urgency.
171.Power to apply to court for injunction in respect of certain overseas insurance companies.
172.Additional procedure for EEA firms in certain cases.

Supplemental
173.Rescission and variation of requirements.
174.Re-issue of certificate of authorisation.
175.Effect of certain requirements on other persons.
176.Actions for damages.

Powers of Director General of Fair Trading
177.Power to prohibit the carrying on of Consumer Credit Act business.
178.Power to restrict the carrying on of Consumer Credit Act business.

PART XIII
DISCIPLINARY MEASURES
179.Public censure.
180.Financial penalties.
181.Proposal to take disciplinary measures.
182.Decision notice.
183.Notice for payment.
184.Publication.
185.Statements of policy.

PART XIV
THE FINANCIAL SERVICES COMPENSATION SCHEME
The scheme manager
186.The scheme manager.

The scheme
187.The compensation scheme.

Provisions of the scheme
188.General.
189.Rights of the scheme in relevant person's insolvency.
190.Continuity of long-term insurance policies.
191.Insurers in financial difficulties.

Annual report
192.Annual report.

Information and documents
193.Scheme manager's power to require information.
194.Scheme manager's power to inspect information held by liquidator etc.
195.Powers of court where information required.

Miscellaneous
196.Statutory immunity.
197.Management expenses.
198.Tax treatment of levies and repayments.
199.Scheme manager's power to inspect documents held by Official Receiver etc.

PART XV
THE OMBUDSMAN SCHEME
The scheme
200.The scheme and the scheme operator.
201.Compulsory jurisdiction.
202.Voluntary jurisdiction.

Determination of complaints
203.Determination under the compulsory jurisdiction.
204.Awards.
205.Costs.

Information
206.Ombudsman's power to require information.
207.Powers of court where information required.
208.Data protection.

Funding
209.Industry funding.

PART XVI
COLLECTIVE INVESTMENT SCHEMES
CHAPTER I
INTERPRETATION
210.Collective investment schemes.
211.Other definitions.

CHAPTER II
RESTRICTIONS ON PROMOTION
212.Restrictions on promotion.
213.Single property schemes.
214.Restriction on approval of promotion.
215.Actions for damages.

CHAPTER III
AUTHORISED UNIT TRUST SCHEMES
Applications for authorisation
216.Applications for authorisation of unit trust schemes.
217.Authorisation orders.
218.Determination of applications.

Applications refused
219.Procedure when refusing an application.

Certificates
220.Certificates.

Rules
221.Rules.
222.Scheme particulars rules.
223.Disqualification of auditor for breach of trust scheme rules.
224.Modification or waiver of rules.

Alterations of schemes
225.Alteration of schemes and changes of manager or trustee.
226.Procedure when refusing approval of change of manager or trustee.

Exclusion clauses
227.Avoidance of exclusion clauses.

Ending of authorisation
228.Revocation of authorisation order otherwise than by consent.
229.Procedure.
230.Requests for revocation of authorisation order.

Powers of intervention
231.Directions.
232.Applications to the court.
233.Procedure: giving directions and varying them otherwise than as requested.
234.Procedure: refusal to revoke or vary direction.
235.Procedure: revocation of direction and grant of request for variation.
236.Procedure in cases of urgency.

CHAPTER IV
OPEN-ENDED INVESTMENT COMPANIES
237.Open-ended investment companies.
238.Amendment of section 716 Companies Act 1985.

CHAPTER V
RECOGNISED OVERSEAS SCHEMES
Schemes constituted in other EEA States
239.Schemes constituted in other EEA States.
240.Representations and references to the Tribunal.
241.Disapplication of rules.
242.Power of Authority to suspend promotion of scheme.

Schemes authorised in designated countries or territories
243.Schemes authorised in designated countries or territories.
244.Procedure.

Individually recognised overseas schemes
245.Individually recognised overseas schemes.
246.Matters that may be taken into account.
247.Applications for recognition of individual schemes.
248.Determination of applications.
249.Procedure when refusing an application.
250.Alteration of schemes and changes of operator, trustee or depositary.

Rules and information gathering: schemes recognised under sections 243 and 245
251.Rules as to scheme particulars.
252.Power to require information.

Revocation of recognition under sections 243 and 245
253.Revocation of recognition.
254.Procedure.

Powers of intervention: schemes recognised under sections 243 and 245
255.Directions.
256.Procedure.
257.Procedure in cases of urgency.

Facilities and information in UK
258.Facilities and information in UK.

CHAPTER VI
INVESTIGATIONS
259.Power to investigate.

PART XVII
RECOGNISED INVESTMENT EXCHANGES AND CLEARING HOUSES
CHAPTER I
EXEMPTION
General
260.Exemption for recognised investment exchanges and clearing houses.
261.Qualification for recognition.

Applications for recognition
262.Application by an investment exchange.
263.Application by a clearing house.
264.Applications: supplementary.
265.Recognition orders.
266.Liability in relation to recognised body's regulatory functions.
267.Overseas investment exchanges and clearing houses.

Supervision
268.Notification requirements.
269.Modification or waiver of rules.
270.Notification: overseas investment exchanges and overseas clearing houses.
271.Authority's power to give directions.
272.Variation of recognition order in relation to recognised nominee.
273.Revoking recognition.
274.Directions and revocation: procedure.
275.Complaints about recognised bodies.

Other matters
276.Supervision of certain contracts.

CHAPTER II
COMPETITION SCRUTINY
277.Interpretation.
278.Examination of rules and guidance.
279.Continuing scrutiny.
280.Initial report by Director General of Fair Trading.
281.Further reports by Director General of Fair Trading.
282.Reports: supplementary.
283.Investigations by Director General of Fair Trading.
284.Procedure on exercise of certain powers by Treasury.

CHAPTER III
EXCLUSION FROM OTHER UK COMPETITION LAW
The Fair Trading Act 1973
285.Monopoly situations etc.

The Competition Act 1998 (c.41.)
286.The Chapter I prohibition.
287.The Chapter II prohibition.

CHAPTER IV
Interpretation
288.Interpretation of Part XVII.

PART XVIII
LLOYD'S
General
289.Authority's general duty.

The Society
290.The Society: authorisation and permission.

Power to apply Act to Lloyd's underwriting
291.Direction by Authority.
292.The core provisions.
293.Exercise of powers through Council.
294.Consultation.

Former underwriting members
295.Former underwriting members.
296.Requirements imposed under section 295.

Supplemental
297.Interpretation of this Part.

PART XIX
MUTUAL SOCIETIES
Friendly societies
298.The Friendly Societies Commission.
299.The Registry of Friendly Societies.

Building societies
300.The Building Societies Commission.
301.The Building Societies Investor Protection Board.

Industrial and provident societies and credit unions
302.Industrial and provident societies and credit unions.

Supplemental
303.Supplemental provisions.

PART XX
AUDITORS AND ACTUARIES
Appointment
304.Appointment.

Information
305.Auditor or actuary's access to books etc.
306.Information given by auditor or actuary to the Authority.
307.Information given by auditor or actuary to the Authority: persons with close links.
308.Duty of auditor or actuary resigning etc. to give notice.

Disqualification
309.Disqualification.

Offence
310.Provision of false or misleading information to auditor or actuary.

PART XXI
PUBLIC RECORD AND DISCLOSURE OF INFORMATION
The public record
311.The record of authorised persons etc.

Disclosure of information
312.Restrictions on disclosure of confidential information by Authority etc.
313.Exceptions from section 312.
314.Disclosure of information by the Inland Revenue.
315.Offences.
316.Removal of other restrictions on disclosure.

PART XXII
INSOLVENCY
Interpretation
317.Interpretation of this Part.

Voluntary arrangements
318.Authority's powers to participate in proceedings: company voluntary arrangements.
319.Authority's powers to participate in proceedings: individual voluntary arrangements.

Administration orders
320.Petitions.
321.Insurance companies.
322.Administrator's duty to report to Authority.
323.Authority's powers to participate in proceedings.

Receivership
324.Authority's powers to participate in proceedings.
325.Receiver's duty to report to Authority.

Voluntary winding up
326.Authority's powers to participate in proceedings.
327.Insurance companies carrying on long-term business.

Winding up by the court
328.Winding-up petitions.
329.Winding-up petitions: EEA and Treaty firms.
330.Insurance companies: service of petition etc. on Authority.
331.Liquidator's duty to report to Authority.
332.Authority's powers to participate in proceedings.

Bankruptcy
333.Petitions.
334.Insolvency practitioner's duty to report to Authority.
335.Authority's powers to participate in proceedings.

Provisions against debt avoidance
336.Authority's right to apply for an order.

Supplemental provisions concerning insurance companies
337.Continuation of long term business while in liquidation.
338.Reducing the value of contracts instead of winding up.
339.Treatment of assets on winding up.
340.Winding- up rules.

PART XXIII
INJUNCTIONS AND RESTITUTION
Injunctions
341.Injunctions.
342.Injunctions in cases of market abuse.

Restitution orders
343.Restitution orders.
344.Restitution orders in cases of market abuse.

Restitution required by Authority
345.Power of Authority to require restitution.
346.Warning notices.
347.Decision notices.
348.Notice for payment.

PART XXIV
NOTICES
Warning notices
349.Warning notices.

Decision notice
350.Decision notices.

The Authority's procedures
351.The Authority's procedures.

PART XXV
OFFENCES
Miscellaneous offences
352.Misleading statements and practices.
353.Misleading the Authority: residual cases.

Bodies corporate and partnerships
354.Offences by bodies corporate etc.

Institution of proceedings
355.Proceedings for offences.
356.Power of the Authority to institute proceedings for certain other offences.

PART XXVI
MISCELLANEOUS
Third countries: Community measures
357.Directions.
358.Interpretation of section 357.
359.Consequences of a direction under section 357.
360.EFTA firms.

International obligations
361.International obligations.

Gaming contracts
362.Gaming contracts.

PART XXVII
INTERPRETATION
363.Definitions.
364.Carrying on activities in the United Kingdom.
365.Parent and subsidiary undertaking.
366.Group.
367.Controller.
368.Manager.
369.Expressions relating to insurance.
370.Expressions relating to authorisation elsewhere in the single market.
371.Privileged communications.

PART XXVIII
SUPPLEMENTAL
372.Consequential and supplementary provision.
373.Regulations and orders.
374.Parliamentary control of statutory instruments.
375.Northern Ireland.
376.Commencement.
377.Minor and consequential amendments, transitional provisions and repeals.
378.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-The 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.
    Part IV-Credit Unions.
    Schedule 16-Minor and Consequential Amendments.
    Schedule 17-Repeals.
 


 
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© Parliamentary copyright 1999
Prepared 14 December 1999