Financial Services Bill

House of Commons

Session 2009 - 10
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Financial Services Bill

Financial Services Bill
Schedule 2 — Minor and consequential amendments
Part 1 — Amendments of Financial Services and Markets Act 2000
59

      (4)
Before making the proposed rules after commencement, the FSA must have
regard to any representations made to it in accordance with sub-paragraph
(3)(c).
      (5)
If the FSA makes the proposed rules, it must publish an account, in general
terms, of—
5
(a)
the representations made to it in accordance with sub-paragraph
(3)(c), and
(b)
its response to them.
      (6)
If the rules differ from the draft published under sub-paragraph (2) in a way
which is, in the FSA’s opinion, significant, the FSA must (in addition to
10
complying with sub-paragraph (5)) publish details of the difference.
      (7)
If the FSA acts in accordance with this paragraph, section 155 of FSMA 2000
(which contains corresponding provision) does not apply.
      (8)
The FSA may charge a reasonable fee for providing a person with a copy of
a draft published under sub-paragraph (2).
15
      (9)
In this paragraph—
“commencement” means the commencement of paragraph 12 of
Schedule 1A to FSMA 2000;
“the FSA” means the Financial Services Authority;
“FSMA 2000” means the Financial Services and Markets Act 2000.
20
Schedule 2
Section 36

Minor and consequential amendments
Part 1
Amendments of Financial Services and Markets Act 2000
1
The Financial Services and Markets Act 2000 is amended as follows.
25
2     (1)
Section 3 (market confidence) is amended as follows.
      (2)
In subsection (1), for “the financial system” substitute “the UK financial
system”.
      (3)
In subsection (2), for ““The financial system”” substitute “In this Act “the UK
financial system””.
30
3
Until the commencement of the repeal of section 4 (public awareness) by
section 6(3) of this Act, section 4 has effect as if—
(a)
the reference in subsection (1) to the financial system were to the UK
financial system, and
(b)
subsection (3) were omitted.
35
4
In section 5 (the protection of consumers), for subsection (3) substitute—
“(3)
Sections 425A and 425B (meaning of “consumers”) apply for the
purposes of this section.”

Financial Services Bill
Schedule 2 — Minor and consequential amendments
Part 1 — Amendments of Financial Services and Markets Act 2000
60

5
In section 10 (the Consumer Panel), for subsection (7) substitute—
“(7)
Sections 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.”
6     (1)
Section 14 (cases in which the Treasury may arrange independent inquiries)
5
is amended as follows.
      (2)
In subsection (2)(a), for “the financial system” substitute “the UK financial
system”.
      (3)
For subsection (5) substitute—
“(5)
Sections 425A and 425B (meaning of “consumers”) apply for the
10
purposes of this section.”
      (4)
Omit subsection (6).
7
In the italic cross-heading before section 64, at the end insert “of approved
persons”.
8     (1)
Section 66 (performance of regulated activities: disciplinary powers) is
15
amended as follows.
      (2)
After subsection (5) insert—
“(5A)
“Approval” means an approval given under section 59.”
      (3)
In subsection (7), omit “under section 59”.
      (4)
After that subsection insert—
20
“(8)
In relation to any time while a suspension is in force under
subsection (3)(aa) in relation to part of a function, any reference in
section 59 or 63A to the performance of a function includes the
performance of part of a function.
(9)
If at any time a restriction imposed under subsection (3)(ab) is
25
contravened, the approval in relation to the person concerned is to be
treated for the purposes of sections 59 and 63A as if it had been
withdrawn at that time.”
9     (1)
Section 67 (disciplinary measures: procedure and right to refer to Tribunal)
is amended as follows.
30
      (2)
In subsection (1), at the end insert “; and if it proposes to take action under
subsection (3)(aa) or (ab) of that section, it must also give each of the other
interested parties a warning notice.”
      (3)
After subsection (2) insert—
“(2A)
A warning notice about a proposal—
35
(a)
to suspend an approval, or
(b)
to impose a restriction in relation to the performance of a
function,

must state the period for which the suspension or restriction is to
have effect.”
40

Financial Services Bill
Schedule 2 — Minor and consequential amendments
Part 1 — Amendments of Financial Services and Markets Act 2000
61

      (4)
In subsection (4), at the end insert “; and if it decides to take action under
subsection (3)(aa) or (ab) of that section, it must also give each of the other
interested parties a decision notice.”
      (5)
After subsection (5) insert—
“(5A)
A decision notice about—
5
(a)
the suspension of an approval, or
(b)
the imposition of a restriction in relation to the performance
of a function,

must state the period for which the suspension or restriction is to
have effect.”
10
      (6)
In subsection (7), at the end insert “; and if the Authority decides to take
action under section 66(3)(aa) or (ab), each of the other interested parties
may also refer the matter to the Tribunal.”
      (7)
After that subsection insert—
“(8)
“Approval” means an approval given under section 59.
15
(9)
“Other interested parties”, in relation to an approved person (“A”),
are—
(a)
the person on whose application the approval was given
(“B”); and
(b)
the person by whom A’s services are retained, if not B.
20

The reference in this subsection to an approved person has the same
meaning as in section 64.”
10    (1)
Section 69 (statement of policy) is amended as follows.
      (2)
In subsection (1), for paragraphs (a) and (b) substitute—
“(a)
the imposition of penalties, suspensions or restrictions under
25
section 66;
(b)
the amount of penalties under that section; and
(c)
the period for which suspensions or restrictions under that
section are to have effect.”
      (3)
In subsection (2)—
30
(a)
in the opening words, after “should be” insert “, or what the period
for which a suspension or restriction is to have effect should be,”, and
(b)
in paragraph (c), for “the person on whom the penalty is to be
imposed” substitute “the person against whom action is to be taken”.
11
In section 138 (general rule-making power), omit subsections (3) and (7) to
35
(9).
12
In section 150(4) (actions for damages), after paragraph (a) (but before the
“or” at the end of it) insert—
“(aa)
rules under section 131B (short selling rules);”.
13
In section 155(9) (consultation: exception to general rule that cost benefit
40
analysis required), after paragraph (d) insert—
“(e)
paragraph 12 of Schedule 1A.”

Financial Services Bill
Schedule 2 — Minor and consequential amendments
Part 1 — Amendments of Financial Services and Markets Act 2000
62

14
In section 157 (guidance), after subsection (3) insert—
“(3A)
Subsection (3) also applies in relation to guidance which the
Authority proposes to give to persons generally, or to a class of
person, in relation to rules under section 131B (short selling rules) to
which those persons are subject.”
5
15
In section 165 (FSA’s power to require information), in the heading, at the
end insert “: authorised persons etc”.
16    (1)
Section 168 (appointment of persons to carry out investigations in particular
cases) is amended as follows.
      (2)
In subsection (4), in paragraph (c), for “an authorised person” substitute “a
10
person”.
      (3)
In that subsection, after paragraph (h) insert—
“(ha)
a person may have performed a controlled function without
approval for the purposes of section 63A;”.
17
In section 176(11)(a) (entry of premises under warrant), after “165” insert
15
“, 165A, 169A”.
18    (1)
Section 207 (proposal to take disciplinary measures) is amended as follows.
      (2)
In subsection (1), omit the “or” before paragraph (b) and at the end of that
paragraph insert “or
(c)
to suspend a permission of an authorised person or impose a
20
restriction in relation to the carrying on of a regulated activity
by an authorised person (under section 206A),”.
      (3)
At the end insert—
“(4)
A warning notice about a proposal to suspend a permission or
impose a restriction must state the period for which the suspension
25
or restriction is to have effect.”
19    (1)
Section 208 (decision notice) is amended as follows.
      (2)
In subsection (1), omit the “or” before paragraph (b) and at the end of that
paragraph insert “or
(c)
to suspend a permission or impose a restriction under section
30
206A (whether or not in the manner proposed),”.
      (3)
After subsection (3) insert—
“(3A)
In the case of a suspension or restriction, the decision notice must
state the period for which the suspension or restriction is to have
effect.”
35
      (4)
In subsection (4), omit the “or” before paragraph (b) and at the end of that
paragraph insert “or
(c)
suspend a permission of an authorised person, or impose a
restriction in relation to the carrying on of a regulated activity
by an authorised person, under section 206A,”.
40
20    (1)
Section 210 (statements of policy) is amended as follows.

Financial Services Bill
Schedule 2 — Minor and consequential amendments
Part 1 — Amendments of Financial Services and Markets Act 2000
63

      (2)
In subsection (1), for paragraphs (a) and (b) substitute—
“(a)
the imposition of penalties, suspensions or restrictions under
this Part;
(b)
the amount of penalties under this Part; and
(c)
the period for which suspensions or restrictions under this
5
Part are to have effect.”
      (3)
In subsection (2)—
(a)
in the opening words, after “should be” insert “, or what the period
for which a suspension or restriction is to have effect should be,”, and
(b)
in paragraph (c), for “the person on whom the penalty is to be
10
imposed” substitute “the person against whom action is to be taken”.
      (4)
In subsection (7), after “206” insert “or 206A”.
21
In section 212(2) (the scheme manager), after “those functions” insert “and
the functions conferred on it by or under Part 15A”.
22
In section 219(3A) (scheme manager’s power to require information), for
15
“applying regulations under section 214B(3) above” substitute “determining
the matters mentioned in section 214D(2)(a) and (b) above”.
23
In section 221A(3) (delegation of functions of FSCS manager), after
“management expenses of the scheme manager” insert “except where the
function in question is one under Part 15A”.
20
24    (1)
Section 223 (FSCS manager’s management expenses) is amended as follows.
      (2)
In subsection (3), in paragraph (c), after “214B” insert “or 214D”.
      (3)
After that paragraph insert—
“(d)
under Part 15A.”
25    (1)
Section 224A (functions under the Banking Act 2009) is amended as follows.
25
      (2)
The existing provision becomes subsection (1) of that section.
      (3)
After that subsection insert—
“(2)
Any payment required to be made by the scheme manager by virtue
of section 61 of that Act (special resolution regime: compensation) is
to be treated for the purposes of this Part as an expense under the
30
compensation scheme.”
26
In section 354 (FSA’s duty to co-operate with others), after subsection (1A)
insert—
“(1B)
In pursuing its financial stability objective, the Authority must take
such steps as it considers appropriate to co-operate with other
35
relevant bodies (including the Treasury and the Bank of England).”
27
In section 391 (publication), for subsection (11) substitute—
“(11)
Section 425A (meaning of “consumers”) applies for the purposes of
this section.”
28    (1)
Section 392 (warning and decision notices: third party rights and access to
40
evidence) is amended as follows.
      (2)
In paragraph (a)—

Financial Services Bill
Schedule 2 — Minor and consequential amendments
Part 1 — Amendments of Financial Services and Markets Act 2000
64

(a)
after “63(3),” insert “63B(1),”, and
(b)
after “126(1),” insert “131G(1),”.
      (3)
In paragraph (b)—
(a)
after “63(4),” insert “63B(3),”, and
(b)
after “127(1),” insert “131G(4),”.
5
29
After section 415 insert—
“Powers of the Authority
415A
  Powers of the Authority
  Any power which the Authority has under any provision of this Act
is not limited in any way by any other power which it has under any
10
other provision of this Act.”
30
In section 417(1) (definitions), after the definition of “UK authorised person”
(but before the “and” at the end of it) insert—
““the UK financial system” has the meaning given in section 3;”.
31
After section 425 insert—
15
“425A
  Consumers: regulated activities etc carried on by authorised persons
(1)
This section has effect for the purposes of the provisions of this Act
which apply this section.
(2)
“Consumers” means persons who—
(a)
use, have used or may use any of the services within
20
subsection (3); or
(b)
have relevant rights or interests in relation to any of those
services.
(3)
The services within this subsection are services provided by—
(a)
authorised persons in carrying on regulated activities;
25
(b)
authorised persons who are investment firms, or credit
institutions, in providing relevant ancillary services; or
(c)
persons acting as appointed representatives.
(4)
A person (“P”) has a “relevant right or interest” in relation to any
services within subsection (3) if P has a right or interest—
30
(a)
which is derived from, or is otherwise attributable to, the use
of the services by others; or
(b)
which may be adversely affected by the use of the services by
persons acting on P’s behalf or in a fiduciary capacity in
relation to P.
35
(5)
If a person is providing a service within subsection (3) as a trustee,
the persons who are, have been or may be beneficiaries of the trust
are to be treated as persons who use, have used or may use the
service.
(6)
A person who deals with another person (“A”) in the course of A
40
providing a service within subsection (3) is to be treated as using the
service.

Financial Services Bill
Schedule 2 — Minor and consequential amendments
Part 1 — Amendments of Financial Services and Markets Act 2000
65

(7)
In this section—
“credit institution” means—
(a)
a credit institution authorised under the banking
consolidation directive; or
(b)
an institution which would satisfy the requirements
5
for authorisation as a credit institution under that
directive if it had its registered office (or if does not
have one, its head office) in an EEA State;
“relevant ancillary service” means any service of a kind
mentioned in Section B of Annex I to the markets in financial
10
instruments directive the provision of which does not
involve the carrying on of a regulated activity.
425B
Consumers: regulated activities carried on by others
(1)
This section has effect for the purposes of the provisions of this Act
which apply this section.
15
(2)
“Consumers” means persons who, in relation to regulated activities
carried on otherwise than by authorised persons, would be
consumers as defined by section 425A if the activities were carried on
by authorised persons.”
32    (1)
Section 429 (Parliamentary control of statutory instruments) is amended as
20
follows.
      (2)
In subsection (1)(a)—
(a)
omit “404”, and
(b)
after “236(5),” insert “404F”.
      (3)
In subsection (2), after “214B” insert “, 214D”.
25
      (4)
In subsection (8), after “one made under section” insert “165A(2)(d) or”.
33    (1)
Schedule 1 (general provision about the FSA) is amended as follows.
      (2)
In paragraph 5(2)(a), after “paragraph 1(2)(a) to (d)” insert “or in
determining or reviewing its strategy in relation to the financial stability
objective”.
30
      (3)
After paragraph 19A insert—
“Amounts required by rules to be paid to the Authority
19B
Any amount (other than a fee) which is required by rules to be
paid to the Authority may be recovered as a debt due to the
Authority.”
35
34    (1)
In Schedule 4 (treaty rights), paragraph 1 is amended as follows.
      (2)
The existing provision becomes sub-paragraph (1) of that paragraph.
      (3)
In that sub-paragraph, omit the definition of “consumers”.
      (4)
After that sub-paragraph insert—
    “(2)
Section 425A (meaning of “consumers”) applies for the purposes
40
of this Schedule.”