Memorandum from HM Treasury
FINANCIAL SERVICES AND MARKETS ACT 2000 (TRANSITIONAL
PROVISIONS) (PARTLY COMPLETED PROCEDURES) ORDER 2001 (S.I. 2001/3592)
1. HM Treasury submit this memorandum in response
to the request dated 4 December 2001 on the point set out below:
Article 9(3) provides that in a case where the
body to whom the application, notice or request was originally
made or sent was -
(a) not subject to an express requirement to determine
it within a particular period or
(b) was subject to such a requirement but had,
for the purposes of that requirement, determined it before commencement,
the application is to be treated for the purposes of section 52(1)
and (2) as if has been received by the Authority on commencement.
(i) whether sub-paragraph (a) is intended to apply
where the body had not made its determination before commencement
(ii) why sub-paragraph (b) makes provision for
the case where the body had made a determination before commencement,
given the terms of article 9(1) and of article 3(1) which is limited
to the case where an application was made but had not been decided
before commencement by the body.
2. The operation of article 9(3) depends on the distinction
drawn in the Order between when an application is "decided"
and when an application is "determined". According to
article 2(4) of the Order, an application is not "decided"
until all avenues of appeal have been exhausted. The word "determined"
is, in contrast, used in the Order and in the Act to signify that
a 'first instance' decision has been taken in relation to the
application, that is to say the body has determined to reject
the application but the matter may still be capable of being referred
to an appeal body or has been so referred and that appeal body
has not yet completed its consideration of the application.
3. Thus, the obligation on the Authority in section
52(1) of the Act is to "determine" the application within
six months. That obligation is satisfied in a case where the Authority
rejects the application within six months, even if that rejection
is referred to the Tribunal under section 55 and the Tribunal
only concludes the case after the expiry of the six month period.
4. The effect of article 9(3) is therefore as follows,
using as an example a case where -
(a) a self-regulating organisation has a rule that
the body must determine an application for membership within six
(b) the organisation rejects an application within
that time period and thereby determines it for the purposes of
(c) the disappointed applicant appeals the matter
to the internal SRO tribunal;
(d) commencement occurs before the internal SRO tribunal
decides the matter.
5. In that case, the appeal before the internal SRO
tribunal lapses with the repeal of the Financial Services Act
1986 and the application falls within article 3(1) of the Order.
It also falls within article 9(1)(b) so that the six month period
referred to in section 52 runs from commencement rather than from
the date when the application was received by the SRO.
6. In respect of question (i), sub-paragraph (a)
is intended to apply to any application which has not been finally
decided (within the meaning of article 2(4)) by an organisation
which did not have an express time limit. It will apply whether
or not the body has made its first instance determination so that
the time limit in section 52(1) will run from commencement.
7. In respect of question (ii), sub-paragraph (b)
is intended to apply where the body has made its first instance
determination (and has thereby satisfied its pre-commencement
time limit) but the matter has not been finally decided (within
the meaning of article 2(4)).
7 December 2001