Financial Services and Markets Act 2000
2000 CHAPTER 8cross-notes
An Act to make provision about the regulation of financial services and markets; to provide for the transfer of certain statutory functions relating to building societies, friendly societies, industrial and provident societies and certain other mutual societies; and for connected purposes.
[14th June 2000]
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
F1Part I The Regulator
notecase F11 The Financial Services Authority.
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F1 The Authority’s general duties
notecase F12 The Authority’s general duties.
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F1 The regulatory objectives
case F13 Market confidence.
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case F13A Financial stability
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case F14 Public awareness.
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notecase F15 The protection of consumers.
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notecase F16 The reduction of financial crime.
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F1Enhancing public understanding of financial matters etc
F16A Enhancing public understanding of financial matters etc
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F1 Corporate governance
note F17 Duty of Authority to follow principles of good governance.
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F1 Arrangements for consulting practitioners and consumers
note F18 F1 The Authority’s general duty to consult.
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F19 The Practitioner Panel.
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F110 The Consumer Panel.
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notecase F111 Duty to consider representations by the Panels.
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F1 Reviews
note F112 Reviews.
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notecase F113 Right to obtain documents and information.
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F1 Inquiries
note F114 Cases in which the Treasury may arrange independent inquiries.
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note F115 Power to appoint person to hold an inquiry.
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note F116 Powers of appointed person and procedure.
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notecase F117 Conclusion of inquiry.
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note F118 Obstruction and contempt.
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case [F1PART 1A The Regulators
CHAPTER 1 The Financial Conduct Authority
The Financial Conduct Authority
case 1A The Financial Conduct Authority cross-notes
(1)The body corporate previously known as the Financial Services Authority is renamed as the Financial Conduct Authority.
(2) The Financial Conduct Authority is in this Act referred to as “ the FCA ”.
(3)The FCA is to have the functions conferred on it by or under this Act.
(4)The FCA must comply with the requirements as to its constitution set out in Schedule 1ZA.
(5)Schedule 1ZA also makes provision about the status of the FCA and the exercise of certain of its functions.
SI (6)References in this Act or any other enactment to functions conferred on the FCA by or under this Act include references to functions conferred on the FCA by or under—
(a)the Insolvency Act 1986,
[F2 (aa)the Pensions Act 2008,F2]
(b)the Banking Act 2009,
(c)the Financial Services Act 2012, F3...
[F4 (cza)the Financial Guidance and Claims Act 2018,F4]
[F5 (czb)the Civil Liability Act 2018,F5]
[F6 (czc)the Financial Services and Markets Act 2023,F6]
[F7 (czd)Chapter 2 of Part 2 of the Pension Schemes Act 2026 (consolidation of small dormant pension pots);F7]
[F8 (ca)the Alternative Investment Fund Managers Regulations 2013, F9...F8]
SI (d)a [F10 qualifying provisionF10] that is specified, or of a description specified, for the purposes of this subsection by the Treasury by order.
[F11 (e)regulations made by the Treasury under section 8 of the European Union (Withdrawal) Act 2018.F11]
The FCA's general duties
case 1B The FCA's general duties cross-notes
(1)In discharging its general functions the FCA must, so far as is reasonably possible, act in a way which—
(a)is compatible with its strategic objective, and
(b)advances one or more of its operational objectives.
(2)The FCA's strategic objective is: ensuring that the relevant markets (see section 1F) function well.
(3)The FCA's operational objectives are—
(a)the consumer protection objective (see section 1C);
(b)the integrity objective (see section 1D);
(c)the competition objective (see section 1E).
(4)The FCA must, so far as is compatible with acting in a way which advances the consumer protection objective or the integrity objective, discharge its general functions in a way which promotes effective competition in the interests of consumers.
[F12 (4A)When discharging its general functions in the way mentioned in subsection (1) the FCA must, so far as reasonably possible, act in a way which, as a secondary objective, advances the competitiveness and growth objective (see section 1EB).F12]
(5)In discharging its general functions the FCA must have regard to—
(a)the regulatory principles in section 3B, and
(b)the importance of taking action intended to minimise the extent to which it is possible for a business carried on—
(i)by an authorised person or a recognised investment exchange, or
(ii)in contravention of the general prohibition,
to be used for a purpose connected with financial crime.
(6)For the purposes of this Chapter, the FCA's general functions are—
(a)its function of making rules under this Act (considered as a whole),
[F13 (aa)its function of making technical standards in accordance with Chapter 2A of Part 9A;F13]
(b)its function of preparing and issuing codes under this Act (considered as a whole),
(c)its functions in relation to the giving of general guidance under this Act (considered as a whole), and
(d)its function of determining the general policy and principles by reference to which it performs particular functions under this Act.
(7)Except to the extent that an order under section 50 of the Financial Services Act 2012 (orders relating to mutual societies functions) so provides, the FCA's general functions do not include functions that are transferred functions within the meaning of section 52 of that Act.
F14 (7A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8) “ General guidance ” has the meaning given in section 139B(5).
case 1C The consumer protection objective
(1)The consumer protection objective is: securing an appropriate degree of protection for consumers.
(2)In considering what degree of protection for consumers may be appropriate, the FCA must have regard to—
(a)the differing degrees of risk involved in different kinds of investment or other transaction;
(b)the differing degrees of experience and expertise that different consumers may have;
(c)the needs that consumers may have for the timely provision of information and advice that is accurate and fit for purpose;
(d)the general principle that consumers should take responsibility for their decisions;
(e)the general principle that those providing regulated financial services should be expected to provide consumers with a level of care that is appropriate having regard to the degree of risk involved in relation to the investment or other transaction and the capabilities of the consumers in question;
(f)the differing expectations that consumers may have in relation to different kinds of investment or other transaction;
F15 (g). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(h)any information which the scheme operator of the ombudsman scheme has provided to the FCA pursuant to section 232A.
case 1D The integrity objective
(1)The integrity objective is: protecting and enhancing the integrity of the dfnUK financial system.
(2) The “integrity” of the dfnUK financial system includes—
(a)its soundness, stability and resilience,
(b)its not being used for a purpose connected with financial crime,
(c)its not being affected by [F16 contraventions by persons of Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulationF16] ,
(d)the orderly operation of the financial markets, and
(e)the transparency of the price formation process in those markets.
case 1E The competition objective
(1)The competition objective is: promoting effective competition in the interests of consumers in the markets for—
(a)regulated financial services, or
(b)services provided by a recognised investment exchange in carrying on regulated activities in respect of which it is by virtue of section 285(2) exempt from the general prohibition.
(2)The matters to which the FCA may have regard in considering the effectiveness of competition in the market for any services mentioned in subsection (1) include—
(a)the needs of different consumers who use or may use those services, including their need for information that enables them to make informed choices,
(b)the ease with which consumers who may wish to use those services, including consumers in areas affected by social or economic deprivation, can access them,
(c)the ease with which consumers who obtain those services can change the person from whom they obtain them,
(d)the ease with which new entrants can enter the market, and
(e)how far competition is encouraging innovation.
[F171EB Competitiveness and growth objective
The competitiveness and growth objective is: facilitating, subject to aligning with relevant international standards—
(a)the international competitiveness of the economy of the United Kingdom (including in particular the financial services sector), and
(b)its growth in the medium to long term.F17]
Interpretation of terms used in relation to FCA's general duties
1F Meaning of “relevant markets” in strategic objective cross-notes
In section 1B(2) “ the relevant markets ” means—
(a)the financial markets,
(b)the markets for regulated financial services (see section 1H(2)), and
(c)the markets for services that are provided by persons other than authorised persons in carrying on regulated activities but are provided without contravening the general prohibition.
case 1G Meaning of “consumer” cross-notes
(1) In sections 1B to 1E “ consumers ” means persons [F18 who F18] —
(a)[F19 whoF19] use, have used or may use—
(i)regulated financial services, or
(ii)services that are provided by persons other than authorised persons but are provided in carrying on regulated activities, [F19 whoF19]
(b)[F19 whoF19] have relevant rights or interests in relation to any of those services,
(c)[F19 whoF19] have invested, or may invest, in financial instruments, F20...
(d)[F19 whoF19] have relevant rights or interests in relation to financial instruments [F21 , [F22 orF22]
(e)[F19 whoF19] have rights, interests or obligations that are affected by the level of a regulated benchmarkF21] [F23 ; or
(f)in respect of whom a person carries on an activity which is specified in article 89G of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (seeking out etc claims) whether that activity, as carried on by that person, is a regulated activity, or is, by reason of an exclusion provided for under the 2001 Order or the 2000 Act, not a regulated activity.F23]
(2) A person (“P”) has a “ relevant right or interest ” in relation to any services within subsection (1)(a) if P has a right or interest—
(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.
(3)If a person is providing a service within subsection (1)(a) as 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.
(4) A person who deals with another person (“B”) in the course of B providing a service within subsection (1)(a) is to be treated as using the service.
(5) A person (“P”) has a “ relevant right or interest ” in relation to any financial instrument if P has—
(a)a right or interest which is derived from, or is otherwise attributable to, investment in the instrument by others, or
(b)a right or interest which may be adversely affected by the investment in the instrument by persons acting on P's behalf or in a fiduciary capacity in relation to P.
1H Further interpretative provisions for sections 1B to 1G cross-notes
(1)The following provisions have effect for the interpretation of sections 1B to 1G.
(2) “ Regulated financial services ” means services provided—
(a)by authorised persons in carrying on regulated activities;
F24 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c)by authorised persons in communicating, or approving the communication by others of, invitations [F25 or inducementsF25] to engage in investment activity [F26 or to engage in claims management activityF26] ;
(d)by authorised persons who are investment firms, or [F27 qualifying credit institutionsF27] , in providing relevant ancillary services;
(e)by persons acting as appointed representatives;
(f)by payment service providers in providing payment services;
(g)by electronic money issuers in issuing electronic money;
(h)by sponsors to issuers of securities;
(i)by primary information providers to persons who issue financial instruments.
(3) “ Financial crime ” includes any offence involving—
(a)fraud or dishonesty,
(b)misconduct in, or misuse of information relating to, a financial market,
(c)handling the proceeds of crime, or
(d)the financing of terrorism.
(4) “ Offence ” includes an act or omission which would be an offence if it had taken place in the United Kingdom.
(5) “Issuer”, except in the expression “electronic money issuer”, has the meaning given in section 102A(6).
(6) “ Financial instrument ” has the meaning given in section 102A(4).
(7) “ Securities ” has the meaning given in section 102A(2).
[F28 (7A) “Regulated benchmark” means a benchmark, as defined in section 22 F29 ... [F30 (6A) F30] , in relation to which any provision made under section 22(1A) F31 ... [F32 (c) F32] has effect. F28]
(8)In this section—
F33 ...
F33 ...
F34 ...
“ electronic money ” has the same meaning as in the Electronic Money Regulations 2011 ;
“ electronic money issuer ” means a person who is an electronic money issuer as defined in regulation 2(1) of the Electronic Money Regulations 2011 other than a person falling within paragraph (f), (g) or (j) of the definition;
[F35 “ engage in claims management activity ” has the meaning given in section 21; F35]
“ engage in investment activity ” has the meaning given in section 21;
“ financial instrument ” has the meaning given in section 102A(4);
“ payment services ” has the same meaning as in the Payment Services Regulations [F36 2017 F36] ;
“ payment service provider ” means a person who is a payment service provider as defined in regulation 2(1) of the Payment Services Regulations [F37 2017 F37] other than a person falling within paragraph [F38 (i) or (j) F38] of the definition;
“ primary information provider ” has the meaning given in section 89P(2);
“ relevant ancillary service ” means any service of a kind mentioned in [F39 Part 3A of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 F39] the provision of which does not involve the carrying on of a regulated activity;
“ sponsor ” has the meaning given in section 88(2).
1I Meaning of “the UK financial system”
In this Act “ the UK financial system ” means the financial system operating in the United Kingdom and includes—
(a)financial markets and exchanges,
(b)regulated activities [F40 (including regulated claims management activities)F40] , and
(c)other activities connected with financial markets and exchanges.
[F41Modifications applying if core activity not regulated by PRA
1IA Modifications applying if core activity not regulated by PRA
(1)If and so long as any regulated activity is a core activity (see section 142B) without also being a PRA-regulated activity (see section 22A), the provisions of this Chapter are to have effect subject to the following modifications.
(2)Section 1B is to have effect as if—
(a)in subsection (3), after paragraph (c) there were inserted—
“(d)in relation to the matters mentioned in section 1EA(2), the continuity objective (see section 1EA).”, and
(b) in subsection (4), for “or the integrity objective,” there were substituted “, the integrity objective or (in relation to the matters mentioned in section 1EA(2)) the continuity objective,” .
(3)After section 1E there is to be taken to be inserted—
1EA Continuity objective
(1)In relation to the matters mentioned in subsection (2), the continuity objective is: protecting the continuity of the provision in the United Kingdom of core services (see section 142C).
(2)Those matters are—
(a)Part 9B (ring-fencing);
(b)ring-fenced bodies (see section 142A);
(c)any body corporate incorporated in the United Kingdom that has a ring-fenced body as a member of its group;
(d)applications under Part 4A which, if granted, would result, or would be capable of resulting, in a person becoming a ring-fenced body.
(3)The FCA's continuity objective is to be advanced primarily by—
(a)seeking to ensure that the business of ring-fenced bodies is carried on in a way that avoids any adverse effect on the continuity of the provision in the United Kingdom of core services,
(b)seeking to ensure that the business of ring-fenced bodies is protected from risks (arising in the United Kingdom or elsewhere) that could adversely affect the continuity of the provision in the United Kingdom of core services, and
(c)seeking to minimise the risk that the failure of a ring-fenced body or of a member of a ring-fenced body's group could adversely affect the continuity of the provision in the United Kingdom of core services.
(4)In subsection (3)(c), “failure” is to be read in accordance with section 2J(3) to (4).”F41]
Power to amend objectives
1J Power to amend objectives
The Treasury may by order amend any of the following provisions—
(a)in section 1E(1), paragraphs (a) and (b),
(b)section 1G, and
(c)section 1H(2) and (5) to (8).
[F42Recommendations
1JA Recommendations by Treasury in connection with general duties cross-notes
(1)The Treasury may at any time by notice in writing to the FCA make recommendations to the FCA about aspects of the economic policy of Her Majesty's Government to which the FCA should have regard when considering—
(a)how to act in a way which is compatible with its strategic objective,
(b)how to advance one or more of its operational objectives,
(c)how to discharge the duty in section 1B(4) (duty to promote effective competition in the interests of consumers),
[F43 (ca)how to discharge the duty in section 1B(4A) (duty to advance competitiveness and growth objective),F43]
(d)the application of the regulatory principles in section 3B, and
(e)the matter mentioned in section 1B(5)(b) (importance of taking action to minimise the extent to which it is possible for a business to be used for a purpose connected with financial crime).
(2)The Treasury must make recommendations under subsection (1) at least once in each Parliament.
[F44 (2A)The FCA must respond to each recommendation made to it under subsection (1) by notifying the Treasury in writing of—
(a)action that the FCA has taken or intends to take in accordance with the recommendation, or
(b)the reasons why the FCA has not acted or does not intend to act in accordance with the recommendation.
(2B)The notice under subsection (2A) must be given before the end of 12 months beginning with the date the notice containing the recommendation was given under subsection (1).
(2C)Where the FCA has given notice under subsection (2A) in relation to a recommendation, the FCA must by notice in writing update the Treasury on the matters mentioned in subsection (2A)(a) and (b) before the end of each subsequent period of 12 months.
(2D)Subsection (2C) does not apply if the Treasury have notified the FCA in writing that no update (or further update) is required.
(2E)The FCA is not required under subsection (2A) or (2C) to provide any information whose publication would in the opinion of the FCA be against the public interest.F44]
(3)The Treasury must—
(a)publish in such manner as they think fit any notice given under [F45 subsection (1), (2A) or (2C)F45] , and
(b)lay a copy of it before Parliament.F42]
Guidance about objectives
1K Guidance about objectives
(1)The general guidance given by the FCA under section 139A must include guidance about how it intends to advance its operational objectives in discharging its general functions in relation to different categories of authorised person or regulated activity.
[F46 (1A)The reference in subsection (1) to the FCA’s operational objectives includes, in its application as a secondary objective, the competitiveness and growth objective (see section 1EB).F46]
(2)Before giving or altering any guidance complying with subsection (1), the FCA must consult the PRA.
Supervision, monitoring and enforcement
1L Supervision, monitoring and enforcement cross-notes
(1)The FCA must maintain arrangements for supervising authorised persons.
(2)The FCA must maintain arrangements designed to enable it to determine whether persons other than authorised persons are complying—
(a)with requirements imposed on them by or under this Act, in cases where the FCA is the appropriate regulator for the purposes of Part 14 (disciplinary measures), F47...
[F48 (aa)with requirements imposed on them by the Alternative Investment Fund Managers Regulations 2013, orF48]
SI (b)with requirements imposed on them by any [F49 qualifying provisionF49] that is specified, or of a description specified, for the purposes of this subsection by the Treasury by order.
(3)The FCA must also maintain arrangements for enforcing compliance by persons other than authorised persons with relevant requirements, within the meaning of Part 14, in cases where the FCA is the appropriate regulator for the purposes of any provision of that Part.
Arrangements for consulting practitioners and consumers
case 1M The FCA's general duty to consult
The FCA must make and maintain effective arrangements for consulting practitioners and consumers on the extent to which its general policies and practices are consistent with its general duties under section 1B F50....
[F511MA Composition of Panels cross-notes
(1)A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under any of sections 1N to 1QA or 138IA.
SI (2)Subsection (1) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.
SI (3)Regulations under subsection (2) may make provision in respect of a panel—
(a)generally, or
(b)only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).F51]
1N The FCA Practitioner Panel
(1) Arrangements under section 1M must include the establishment and maintenance of a panel of persons (to be known as “ the FCA Practitioner Panel ”) to represent the interests of practitioners.
(2)The FCA must appoint one of the members of the FCA Practitioner Panel to be its chair.
(3)The Treasury's approval is required for the appointment or dismissal of the chair.
(4)The FCA must appoint to the FCA Practitioner Panel such—
(a)persons representing authorised persons, and
(b)persons representing recognised investment exchanges,
as it considers appropriate.
(5)The FCA may appoint to the FCA Practitioner Panel such other persons as it considers appropriate.
[F52 (6)Subsections (4) and (5) are subject to section 1MA.F52]
1O The Smaller Business Practitioner Panel
(1) Arrangements under section 1M must include the establishment and maintenance of a panel of persons (to be known as “ the Smaller Business Practitioner Panel ”) to represent the interests of eligible practitioners.
(2) “ Eligible practitioners ” means authorised persons of a description specified in a statement maintained by the FCA.
(3)The FCA must appoint one of the members of the Smaller Business Practitioner Panel to be its chair.
(4)The Treasury's approval is required for the appointment or dismissal of the chair.
(5)The FCA must appoint to the Smaller Business Practitioner Panel such—
(a)individuals who are eligible practitioners, and
(b)persons representing eligible practitioners,
as it considers appropriate.
(6)The FCA may appoint to the Smaller Business Practitioner Panel such other persons as it considers appropriate.
[F53 (6A)Subsections (5) and (6) are subject to section 1MA.F53]
(7)In making the appointments, the FCA must have regard to the desirability of ensuring the representation of eligible practitioners carrying on a range of regulated activities.
(8)The FCA may revise the statement maintained under subsection (2).
(9)The FCA must—
(a)give the Treasury a copy of the statement or revised statement without delay, and
(b)publish the statement as for the time being in force in such manner as it thinks fit.
1P The Markets Practitioner Panel
(1) Arrangements under section 1M must include the establishment and maintenance of a panel of persons (to be known as “ the Markets Practitioner Panel ”) to represent the interests of practitioners who are likely to be affected by the exercise by the FCA of its functions relating to markets, including its functions under Parts 6, 8A and 18.
(2)The FCA must appoint one of the members of the Markets Practitioner Panel to be its chair.
(3)The Treasury's approval is required for the appointment or dismissal of the chair.
(4)The FCA must appoint to the Markets Practitioner Panel such persons to represent the interests of persons within subsection (5) as it considers appropriate.
(5)The persons within this subsection are—
(a)authorised persons,
(b)persons who issue financial instruments,
(c)sponsors, as defined in section 88(2),
(d)recognised investment exchanges, and
(e)primary information providers, as defined in section 89P(2).
(6)The FCA may appoint to the Markets Practitioner Panel such other persons as it considers appropriate.
[F54 (7)Subsections (4) to (6) are subject to section 1MA.F54]
1Q The Consumer Panel cross-notes
(1) Arrangements under section 1M must include the establishment and maintenance of a panel of persons (to be known as “ the Consumer Panel ”) to represent the interests of consumers.
(2)The FCA must appoint one of the members of the Consumer Panel to be its chair.
(3)The Treasury's approval is required for the appointment or dismissal of the chair.
(4)The FCA may appoint to the Consumer Panel such consumers, or persons representing the interests of consumers, as it considers appropriate.
[F55 (4A)Subsection (4) is subject to section 1MA.F55]
(5)The FCA must secure that membership of the Consumer Panel is such as to give a fair degree of representation to those who are using, or are or may be contemplating using, services otherwise than in connection with businesses carried on by them.
[F56 (5A)If it appears to the Consumer Panel that any matter being considered by it is relevant to the extent to which the general policies and practices of the PRA are consistent with the PRA's general duties under sections 2B to 2H, it may communicate to the PRA any views relating to that matter.
(5B)The PRA may arrange to meet any of the FCA's expenditure on the Consumer Panel which is attributable to the Panel's functions under subsection (5A).F56]
(6) 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.
[F571QA The Listing Authority Advisory Panel
(1) Arrangements under section 1M must include the establishment and maintenance of a panel of persons (to be known as “ the Listing Authority Advisory Panel ”) to represent the interests of practitioners who are likely to be affected by the exercise by the FCA of its relevant functions.
(2)The reference in subsection (1) to the FCA’s relevant functions is to its functions relating to the listing, issue or trading of products on recognised investment exchanges and other markets the operation of which is regulated by the FCA, including in particular—
(a)the issuing of transferable securities, and
(b)the trading of transferable securities on regulated markets and multilateral trading facilities.
(3)The FCA must appoint one of the members of the Listing Authority Advisory Panel to be the chair of the Panel.
(4)The Treasury’s approval is required for the appointment or dismissal of the chair.
(5)The FCA must appoint to the Listing Authority Advisory Panel such persons to represent the interests of issuers and investors as it considers appropriate.
(6)The FCA may appoint to the Listing Authority Advisory Panel such other persons as it considers appropriate.
(7)Subsections (5) and (6) are subject to section 1MA.
(8)In this section—
“ multilateral trading facility ”, “ recognised investment exchange ” and “ regulated markets ” have the same meaning as in Part 18 (see section 313(1) );
“ transferable securities ” has the meaning given by section 102A(3). F57]
1R Duty to consider representations made by the Panels
(1)The FCA must consider representations that are made to it in accordance with arrangements made under section 1M.
(2)The FCA must from time to time publish in such manner as it thinks fit responses to the representations.
[F581RA Statement of policy on panel appointments
(1)The FCA must prepare and publish a statement of policy in relation to the appointment of members of its statutory panels.
(2)The statement must provide information about—
(a)the process adopted for making appointments;
(b)matters considered in determining who is appointed.
(3)The statement may provide whatever other information in relation to the making of appointments that the FCA considers appropriate.
(4)The FCA may alter or replace a statement published under this section.
(5)The FCA must publish a statement as altered or replaced under subsection (4).
(6)Before publishing a statement under this section the FCA must—
(a)consult the Treasury about the proposed statement, and
(b)have regard to any representations the Treasury make in response to the consultation.
(7)Publication under this section is to be made in such manner as the FCA considers best designed to bring the statement to the attention of the public.
(8) In this section “ statutory panel ” means a panel established under section 1N, 1O, 1P, 1Q, 1QA or 138IA. F58]
[F59Requirements for public consultation
1RB Requirements in connection with public consultations
(1)This section applies where the FCA issues a public consultation.
(2)The FCA must include information in the consultation about any engagement by the FCA with the statutory panels of the FCA, the PRA or the Payment Systems Regulator in relation to the matters being consulted on.
(3)The FCA is not required under subsection (2) to include any information whose publication would in the opinion of the FCA be against the public interest.
(4)For the purposes of this section, the FCA issues a public consultation if it publishes the draft of any proposals for the purpose of bringing them to the attention of the public (whether or not under a duty to do so imposed by an enactment).
(5) In this section “statutory panel”—
(a)in relation to the FCA, has the meaning given by section 1RA(8),
(b)in relation to the PRA, has the meaning given by section 2NA(8), and
(c)in relation to the Payment Systems Regulator, means a panel established under section 103(3) of the Financial Services (Banking Reform) Act 2013.F59]
Reviews
1S Reviews cross-notes
(1)The Treasury may appoint an independent person to conduct a review of the economy, efficiency and effectiveness with which the FCA has used its resources in discharging its functions.
(2)A review may be limited by the Treasury to such functions of the FCA (however described) as the Treasury may specify in appointing the person to conduct it.
(3)A review is not to be concerned with the merits of the FCA's general policy or principles in complying with its general duties under section 1B(1) and (4) F60....
(4)On completion of a review, the person conducting it must make a written report to the Treasury—
(a)setting out the result of the review, and
(b)making such recommendations (if any) as the person considers appropriate.
(5)A copy of the report must be—
(a)laid before Parliament, and
(b)published in such manner as the Treasury consider appropriate.
(6)Any expenses reasonably incurred in the conduct of the review are to be met by the Treasury out of money provided by Parliament.
(7) “ Independent ” means appearing to the Treasury to be independent of the FCA.
1T Right to obtain documents and information
(1)A person conducting a review under section 1S—
(a)has a right of access at any reasonable time to all such documents as the person may reasonably require for the purposes of the review, and
(b)may require any person holding or accountable for any such document to provide such information and explanation as are reasonably necessary for that purpose.
(2)Subsection (1) applies only to documents in the custody of or under the control of the FCA.
(3)An obligation imposed on a person as a result of the exercise of the powers conferred by subsection (1) is enforceable by injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.
CHAPTER 2 The Prudential Regulation Authority
The Prudential Regulation Authority
[F612A The Prudential Regulation Authority
(1) The “Prudential Regulation Authority” is the Bank of England.
(2)The Bank's functions as the Prudential Regulation Authority—
(a)are to be exercised by the Bank acting through its Prudential Regulation Committee (see Part 3A of the Bank of England Act 1998), and
(b)are not exercisable by the Bank in any other way.
(3)References in this Act or any other enactment to the Prudential Regulation Authority do not include the Bank of England acting otherwise than in its capacity as the Prudential Regulation Authority.
(4)References in this Act to the Bank of England do not (unless otherwise provided) include the Bank acting in its capacity as the Prudential Regulation Authority.
(5)Subsections (3) and (4) do not apply to this section.
(6)Subsection (4) does not apply for the interpretation of references to the court of directors of the Bank of England, or to a Deputy Governor or committee of the Bank.
(7)The Prudential Regulation Authority is referred to in this Act as the PRA.
2AB Functions of the PRA
(1)The PRA is to have the functions conferred on it by or under this Act.
(2)Schedule 1ZB makes provision about functions of the PRA.
(3)References in this Act or any other enactment to functions conferred on the PRA by or under this Act include references to functions conferred on the PRA by or under—
(a)the Insolvency Act 1986,
(b)the Banking Act 2009,
(c)the Financial Services Act 2012, F62...
[F63 (ca)the Financial Services and Markets Act 2023,F63]
(d)a [F64 qualifying provisionF64] that is specified, or of a description specified, for the purposes of this subsection by the Treasury by order.F61] [F65 or
(e)regulations made by the Treasury under section 8 of the European Union (Withdrawal) Act 2018.F65]
The PRA's general duties
2B The PRA's general objective
(1)In discharging its general functions the PRA must, so far as is reasonably possible, act in a way which advances its general objective.
(2)The PRA's general objective is: promoting the safety and soundness of PRA-authorised persons.
(3)That objective is to be advanced primarily by—
(a)seeking to ensure that the business of PRA-authorised persons is carried on in a way which avoids any adverse effect on the stability of the dfnUK financial system, F66...
(b)seeking to minimise the adverse effect that the failure of a PRA-authorised person could be expected to have on the stability of the dfnUK financial system [F67 , and
(c)discharging its general functions in relation to the matters mentioned in subsection (4A) in a way that seeks to—
(i)ensure that the business of ring-fenced bodies is carried on in a way that avoids any adverse effect on the continuity of the provision in the United Kingdom of core services,
(ii)ensure that the business of ring-fenced bodies is protected from risks (arising in the United Kingdom or elsewhere) that could adversely affect the continuity of the provision in the United Kingdom of core services, and
(iii)minimise the risk that the failure of a ring-fenced body or of a member of a ring-fenced body's group could affect the continuity of the provision in the United Kingdom of core servicesF67] .
(4)The adverse effects mentioned in [F68 subsection (3)(a) and (b)F68] may, in particular, result from the disruption of the continuity of financial services.
[F69 (4A)The matters referred to in subsection (3)(c) are—
(a)Part 9B (ring-fencing);
(b)ring-fenced bodies (see section 142A);
(c)any body corporate incorporated in the United Kingdom that has a ring-fenced body as a member of its group;
(d)applications under Part 4A which, if granted, would result, or would be capable of resulting, in a person becoming a ring-fenced body.F69]
(5) In this Act “ PRA-authorised person ” means an authorised person who has permission—
(a)given under Part 4A, or
(b)resulting from any other provision of this Act,
to carry on regulated activities that consist of or include one or more PRA-regulated activities (see section 22A).
(6)Subsection (1) is subject to sections 2C and 2D.
case 2C Insurance objective
(1)In discharging its general functions so far as relating to a PRA-regulated activity relating to the effecting or carrying out of contracts of insurance or PRA-authorised persons carrying on that activity, the PRA must, so far as is reasonably possible, act in a way—
(a)which is compatible with its general objective and its insurance objective, and
(b)which the PRA considers most appropriate for the purpose of advancing those objectives.
(2)The PRA's insurance objective is: contributing to the securing of an appropriate degree of protection for those who are or may become policyholders.
(3)This section applies only if the effecting or carrying out of contracts of insurance as principal is to any extent a PRA-regulated activity.
2D Power to provide for additional objectives
(1)Subsection (2) applies to an order under section 22A which—
(a)is made at any time after the coming into force of the first order under that section, and
(b)contains a statement by the Treasury that, in their opinion, the effect (or one of the effects) of the proposed order is that an activity would become a PRA-regulated activity.
(2) An order to which this subsection applies may specify an additional objective (“the specified objective”) in relation to specified activities that become PRA-regulated activities by virtue of the order (“the additional activities”).
(3)In discharging its general functions so far as relating to the additional activities or PRA-authorised persons carrying on those activities, the PRA must, so far as is reasonably possible, act in a way—
(a)which is compatible with its general objective and the specified objective, and
(b)which the PRA considers most appropriate for the purpose of advancing those objectives.
2E Strategy
(1)The PRA must—
(a)determine its strategy in relation to its objectives, and
(b)from time to time review, and if necessary revise, the strategy.
(2)Before determining or revising its strategy, the PRA must consult the court of directors of the Bank of England about a draft of the strategy or of the revisions.
(3)The PRA must determine its strategy within 12 months of the coming into force of this section.
(4)The PRA must carry out and complete a review of its strategy before the end of each relevant period.
(5)The relevant period is 12 months beginning with the date on which the previous review was completed, except that in the case of the first review the relevant period is the period of 12 months beginning with the date on which the strategy was determined under subsection (3).
(6)The PRA must publish its strategy.
(7)If the strategy is revised the PRA must publish the revised strategy.
(8)Publication under subsection (6) or (7) is to be in such manner as the PRA thinks fit.
2F Interpretation of references to objectives
In this Act, a reference, in relation to any function of the PRA, to the objectives of the PRA is a reference to its general objective but—
(a)so far as the function is exercisable in relation to the activity of effecting or carrying out contracts of insurance, or PRA-authorised persons carrying on that activity, is a reference to its general objective and its insurance objective;
(b)so far as the function is exercisable in relation to an activity to which an objective specified by order by virtue of section 2D(2) relates, or PRA-authorised persons carrying on that activity, is a reference to its general objective and the objective specified by the order.
2G Limit on effect of sections 2B to 2D
Nothing in sections 2B to 2D is to be regarded as requiring the PRA to ensure that no PRA-authorised person fails.
[F702H Secondary [F71objectivesF71] and duty to have regard to regulatory principles cross-notes
[F72 (1)When discharging its general functions in a way that advances its objectives (see section 2F), the PRA must, so far as reasonably possible, act in a way that advances the following secondary objectives—
(a)the competition objective, and
(b)the competitiveness and growth objective.
(1A)The competition objective is: facilitating effective competition in the markets for services provided by PRA-authorised persons in carrying on regulated activities.
(1B)The competitiveness and growth objective is: facilitating, subject to aligning with relevant international standards—
(a)the international competitiveness of the economy of the United Kingdom (including in particular the financial services sector through the contribution of PRA-authorised persons), and
(b)its growth in the medium to long term.F72]
(2)In discharging its general functions, the PRA must also have regard to the regulatory principles in section 3B.F70]
2I Guidance about objectives
(1)The PRA must give, and from time to time review, guidance about how it intends to advance its objectives in discharging its general functions in relation to different categories of PRA-authorised person or PRA-regulated activity.
[F73 (1A)The reference in subsection (1) to the PRA’s objectives includes, in their application as secondary objectives, the competition objective and competitiveness and growth objective (see section 2H).F73]
(2)Before giving or altering any guidance complying with subsection (1), the PRA must consult the FCA.
(3)The PRA must publish the guidance as for the time being in force.
2J Interpretation of Chapter 2
(1)For the purposes of this Chapter, the PRA's general functions are—
(a)its function of making rules under this Act (considered as a whole),
[F74 (aa)its function of making technical standards in accordance with Chapter 2A of Part 9A;F74]
(b)its function of preparing and issuing codes under this Act (considered as a whole), and
(c)its function of determining the general policy and principles by reference to which it performs particular functions under this Act.
(2)Except to the extent that an order under section 50 of the Financial Services Act 2012 (orders relating to mutual societies functions) so provides, the PRA's general functions do not include functions that are transferred functions within the meaning of section 52 of that Act.
(3) For the purposes of this Chapter, the cases in which [F75 an authorised F75] person (“P”) is to be regarded as failing include those where—
(a)P enters insolvency,
(b)any of the stabilisation options in Part 1 of the Banking Act 2009 is achieved in relation to P, or
(c)P falls to be taken for the purposes of the compensation scheme to be unable, or likely to be unable, to satisfy claims against P.
[F76 (3A) For the purposes of this Chapter, the cases in which a person (“P”) other than an authorised person is to be regarded as failing include any case where P enters insolvency. F76]
(4) In [F77 subsections (3)(a) and (3A) F77] “ insolvency ” includes—
(a)bankruptcy,
(b)liquidation,
(c)bank insolvency,
(d)administration,
(e)bank administration,
(f)receivership,
(g)a composition between P and P's creditors, and
(h)a scheme of arrangement of P's affairs.
Supervision
2K Arrangements for supervision of PRA-authorised persons
The PRA must maintain arrangements for supervising PRA-authorised persons.
Arrangements for consulting practitioners
2L The PRA's general duty to consult
The PRA must make and maintain effective arrangements for consulting PRA-authorised persons or, where appropriate, persons appearing to the PRA to represent the interests of such persons on the extent to which its general policies and practices are consistent with its general duties under sections 2B to 2H.
[F782LA Composition of Panels cross-notes
(1)A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under any of sections 2M, 2MA or 138JA.
SI (2)Subsection (1) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.
SI (3)Regulations under subsection (2) may make provision in respect of a panel—
(a)generally, or
(b)only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).F78]
2M The PRA Practitioner Panel
(1) Arrangements under section 2L must include the establishment and maintenance of a panel of persons (to be known as “ the PRA Practitioner Panel ”) to represent the interests of practitioners.
(2)The PRA must appoint one of the members of the PRA Practitioner Panel to be its chair.
(3)The Treasury's approval is required for the appointment or dismissal of the chair.
(4)The PRA must appoint to the PRA Practitioner Panel such persons representing PRA-authorised persons as it considers appropriate.
(5)The PRA may appoint to the PRA Practitioner Panel such other persons as it considers appropriate.
[F79 (6)Subsections (4) and (5) are subject to section 2LA.F79]
[F802MA The Insurance Practitioner Panel
(1) Arrangements under section 2L must include the establishment and maintenance of a panel of persons (to be known as “ the Insurance Practitioner Panel ”) to represent the interests of practitioners involved in the carrying on of the activity of effecting or carrying out of contracts of insurance.
(2)The PRA must appoint one of the members of the Insurance Practitioner Panel to be the chair of the Panel.
(3)The Treasury’s approval is required for the appointment or dismissal of the chair.
(4)The PRA must appoint to the Insurance Practitioner Panel at least one person representing PRA-authorised persons engaged in the activity of effecting or carrying out of contracts of insurance.
(5)The PRA may appoint to the Insurance Practitioner Panel such other persons as it considers appropriate.
(6)Subsections (4) and (5) are subject to section 2LA.F80]
2N Duty to consider representations
(1)The PRA must consider representations that are made to it in accordance with arrangements made under section 2L.
(2)The PRA must from time to time publish in such manner as it thinks fit responses to the representations.
[F812NA Statement of policy on panel appointments
(1)The PRA must prepare and publish a statement of policy in relation to the appointment of members of its statutory panels.
(2)The statement must provide information about—
(a)the process adopted for making appointments;
(b)matters considered in determining who is appointed.
(3)The statement may provide whatever other information in relation to the making of appointments that the PRA considers appropriate.
(4)The PRA may alter or replace a statement published under this section.
(5)The PRA must publish a statement as altered or replaced under subsection (4).
(6)Before publishing a statement under this section the PRA must—
(a)consult the Treasury about the proposed statement, and
(b)have regard to any representations the Treasury make in response to the consultation.
(7)Publication under this section is to be made in such manner as the PRA considers best designed to bring the statement to the attention of the public.
(8) In this section “ statutory panel ” means a panel established under section 2M, 2MA or 138JA. F81]
[F82Requirements for public consultation
2NB Requirements in connection with public consultations
(1)This section applies where the PRA issues a public consultation.
(2)The PRA must include information in the consultation about any engagement by the PRA with the statutory panels of the FCA, the PRA or the Payment Systems Regulator in relation to the matters being consulted on.
(3)The PRA is not required under subsection (2) to include any information whose publication would in the opinion of the PRA be against the public interest.
(4)For the purposes of this section, the PRA issues a public consultation if it publishes the draft of any proposals for the purpose of bringing them to the attention of the public (whether or not under a duty to do so imposed by an enactment).
(5) In this section “ statutory panel ” has the meaning given by section 1RB(5). F82]
Reviews
F832O Reviews
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F842P Right to obtain documents and information
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHAPTER 3 Further provisions relating to FCA and PRA
Introductory
3A Meaning of “regulator”
(1)This section has effect for the interpretation of this Act.
(2) The FCA and the PRA are the “ regulators ”, and references to a regulator are to be read accordingly.
(3)Subsection (2) does not affect—
(a)the meaning of the following expressions—
“ home state regulator ”;
“ host state regulator ”;
“ overseas regulator ”; F85 ...
(b) the meaning of “ the appropriate regulator ” in Part 18 ( [F86 recognised investment exchanges, clearing houses and CSDs F86] ) [F87 or
(c) the meaning of “ regulator ” in sections 410A and 410B (fees to meet certain expenses of Treasury). F87]
Regulatory principles
case 3B Regulatory principles to be applied by both regulators
(1)In relation to the regulators, the regulatory principles referred to in section 1B(5)(a) and [F88 2H(2)F88] are as follows—
(a)the need to use the resources of each regulator in the most efficient and economic way;
(b)the principle that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction;
[F89 (c)the desirability of sustainable growth in the economy of the United Kingdom in the medium or long term;F89]
[F89 (c)the need to contribute towards achieving compliance by the Secretary of State with section 1 of the Climate Change Act 2008 (UK net zero emissions target) and section 5 of the Environment Act 2021 (environmental targets) where each regulator considers the exercise of its functions to be relevant to the making of such a contribution;F89]
(d)the general principle that consumers should take responsibility for their decisions;
(e)the responsibilities of the senior management of persons subject to requirements imposed by or under this Act, including those affecting consumers, in relation to compliance with those requirements;
(f)the desirability where appropriate of each regulator exercising its functions in a way that recognises differences in the nature of, and objectives of, businesses carried on by different persons [F90 (including different kinds of person such as mutual societies and other kinds of business organisation)F90] subject to requirements imposed by or under this Act;
(g)the desirability in appropriate cases of each regulator publishing information relating to persons on whom requirements are imposed by or under this Act, or requiring such persons to publish information, as a means of contributing to the advancement by each regulator of its objectives;
(h)the principle that the regulators should exercise their functions as transparently as possible.
(2) “ Consumer ” has the meaning given in section 1G.
[F91 (3) “Objectives”—
(a)in relation to the FCA means—
(i)operational objectives, and
(ii)in its application as a secondary objective, the competitiveness and growth objective (see section 1EB), and
(b)in relation to the PRA means—
(i)the PRA’s objectives, and
(ii)in their application as secondary objectives, the competition objective and competitiveness and growth objective (see section 2H).F91]
[F92 (3A) “Mutual society” has the same meaning as in section 138K. F92]
(4)The Treasury may by order amend subsection (2).
Corporate governance
3C Duty to follow principles of good governance
In managing its affairs, [F93 the FCAF93] must have regard to such generally accepted principles of good corporate governance as it is reasonable to regard as applicable to it.
Relationship between FCA and PRA
3D Duty of FCA and PRA to ensure co-ordinated exercise of functions cross-notes
(1)The regulators must co-ordinate the exercise of their respective functions conferred by or under this Act with a view to ensuring—
(a)that each regulator consults the other regulator (where not otherwise required to do so) in connection with any proposed exercise of a function in a way that may have a material adverse effect on the advancement by the other regulator of any of its objectives;
(b)that where appropriate each regulator obtains information and advice from the other regulator in connection with the exercise of its functions in relation to matters of common regulatory interest in cases where the other regulator may be expected to have relevant information or relevant expertise;
(c)that where either regulator exercises functions in relation to matters of common regulatory interest, both regulators comply with their respective duties under section 1B(5)(a) or 2H(1)(a), so far as relating to the regulatory principles in section 3B(1)(a) and (b).
(2)The duty in subsection (1) applies only to the extent that compliance with the duty—
(a)is compatible with the advancement by each regulator of any of its objectives, and
(b)does not impose a burden on the regulators that is disproportionate to the benefits of compliance.
(3)A function conferred on either regulator by or under this Act relates to matters of common regulatory interest if—
(a)the other regulator exercises similar or related functions in relation to the same persons,
(b)the other regulator exercises functions which relate to different persons but relate to similar subject-matter, or
(c)its exercise could affect the advancement by the other regulator of any of its objectives.
[F94 (4) In this section, “objectives”—
(a)in relation to the FCA means—
(i)operational objectives [F95 , or the purpose for which the FCA must exercise its functions under Part 8B (see section 131U(1))F95] , and
(ii)in its application as a secondary objective, the competitiveness and growth objective (see section 1EB), and
(b)in relation to the PRA means—
(i)the PRA’s objectives, and
(ii)in their application as secondary objectives, the competition objective and competitiveness and growth objective (see section 2H).
(5) Where a regulator is proposing to exercise a function that is not one of its general functions, the reference to “objectives” in subsection (1)(a) does not include the secondary objectives mentioned in subsection (4)(a)(ii) and (b)(ii).
(6) In this section, “general functions”—
(a)in relation to the FCA, has the same meaning as in section 1B(6), and
(b)in relation to the PRA, has the same meaning as in section 2J(1).F94]
3E Memorandum of understanding cross-notes
(1)The regulators must prepare and maintain a memorandum which describes in general terms—
(a)the role of each regulator in relation to the exercise of functions conferred by or under this Act which relate to matters of common regulatory interest, and
(b)how the regulators intend to comply with section 3D in relation to the exercise of such functions.
(2)The memorandum may in particular contain provisions about how the regulators intend to comply with section 3D in relation to—
(a)applications for Part 4A permission;
(b)the variation of permission;
(c)the imposition of requirements;
(d)the obtaining and disclosure of information;
(e)cases where a PRA-authorised person is a member of a group whose other members include one or more other authorised persons (whether or not PRA-authorised persons);
F96 (f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(g)the making of rules;
[F97 (ga)directions under section 71O (designated activities: directions);F97]
(h)directions under section 138A (modification or waiver of rules);
(i)powers to appoint competent persons under Part 11 (information gathering and investigations) to conduct investigations on their behalf;
(j)functions under Part 12 (control over authorised persons);
F98 (k). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(l)functions under Part 19 (Lloyd's);
(m)functions under section 347 (record of authorised persons etc.);
(n)functions under Part 24 (insolvency);
(o)fees payable to either regulator.
(3)The memorandum must contain provision about the co-ordination by the regulators of—
F99 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)their relations with regulatory bodies outside the United Kingdom, and
(c)the exercise of their functions in relation to the compensation scheme.
(4)The regulators must review the memorandum at least once in each calendar year.
(5)The regulators must give the Treasury a copy of the memorandum and any revised memorandum.
(6)The Treasury must lay before Parliament a copy of any document received by them under this section.
(7)The regulators must ensure that the memorandum as currently in force is published in the way appearing to them to be best calculated to bring it to the attention of the public.
(8)The memorandum need not relate to any aspect of compliance with section 3D if the regulators consider—
(a)that publication of information about that aspect would be against the public interest, or
(b)that that aspect is a technical or operational matter not affecting the public.
(9)The reference in subsection (1)(a) to matters of common regulatory interest is to be read in accordance with section 3D(3).
3F With-profits insurance policies
(1)The regulators must prepare and maintain a memorandum which describes in general terms—
(a)the role of each regulator in relation to the exercise of functions conferred by or under this Act so far as they relate to with-profits insurers, and
(b)how the regulators intend to comply with section 3D in relation to the exercise of those functions so far as they relate to the effecting or carrying out of with-profits policies by with-profits insurers.
(2)The memorandum required by this section may be combined with the memorandum required by section 3E.
(3)If the memorandum required by this section is contained in a separate document, the PRA and the FCA must publish the memorandum as currently in force in such manner as they think fit.
(4)Subsections (1) to (3) apply only if the effecting or carrying out of with-profits policies is a PRA-regulated activity.
(5)For the purposes of this section—
(a) a “with-profits policy” is a contract of insurance under which the policyholder is eligible to receive a financial benefit at the discretion of the insurer;
(b) a “with-profits insurer” is a PRA-authorised person who has a Part 4A permission, or permission resulting from any other provision of this Act, relating to the effecting or carrying out of with-profits policies (whether or not the permission also relates to contracts of insurance of other kinds).
(6) The Treasury may by order amend the definition of “with-profits policy” applying for the purposes of this section.
3G Power to establish boundary between FCA and PRA responsibilities
(1)The Treasury may by order specify matters that, in relation to the exercise by either regulator of its functions relating to PRA-authorised persons, are to be, or are to be primarily, the responsibility of one regulator rather than the other.
(2)The order may—
(a)provide that one regulator is or is not to have regard to specified matters when exercising specified functions;
(b)require one regulator to consult the other.
3H Parliamentary control of orders under section 3G
(1)No order may be made under section 3G unless—
(a)a draft of the order has been laid before Parliament and approved by a resolution of each House, or
(b)subsection (3) applies.
(2)Subsection (3) applies if an order under section 3G contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without a draft being so laid and approved.
(3)Where this subsection applies the order—
(a)must be laid before Parliament after being made, and
(b)ceases to have effect at the end of the relevant period unless before the end of that period the order is approved by a resolution of each House of Parliament (but without that affecting anything done under the order or the power to make a new order).
(4) The “relevant period” is a period of 28 days beginning with the day on which the order is made.
(5)In calculating the relevant period no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.
Power of PRA to restrain proposed action by FCA
3I Power of PRA to require FCA to refrain from specified action cross-notes
(1)Where the first, second and third conditions are met, the PRA may give a direction under this section to the FCA.
(2)The first condition is that the FCA is proposing—
(a)to exercise any of its regulatory powers in relation to PRA-authorised persons generally, a class of PRA-authorised persons or a particular PRA-authorised person, or
(b)to exercise any of its insolvency powers in relation to—
(i)a PRA-authorised person,
(ii)an appointed representative whose principal, or one of whose principals, is a PRA-authorised person, or
(iii)a person who is carrying on a PRA-regulated activity in contravention of the general prohibition.
(3)In subsection (2)—
(a) “ regulatory powers ”, in relation to the FCA, means
[F100 (i)F100] its powers in relation to the regulation of authorised persons, other than its powers in relation to consent for the purposes of section 55F or 55I [F101 , a power conferred on it by sections 234I to 234MF101] or its powers under Part 24 [F102 , or
(ii)its powers in relation to designated activities under Part 5A;F102]
(b) “ insolvency powers ”, in relation to the FCA, means its powers under Part 24.
(4)The second condition is that the PRA is of the opinion that the exercise of the power in the manner proposed may—
(a)threaten the stability of the dfnUK financial system, F103...
(b)result in the failure of a PRA-authorised person in a way that would adversely affect the dfnUK financial system [F104 , or
(c)threaten the continuity of core services provided in the United KingdomF104] .
(5)The third condition is that the PRA is of the opinion that the giving of the direction is necessary in order to avoid the possible consequence falling within subsection (4).
(6)A direction under this section is a direction requiring the FCA not to exercise the power or not to exercise it in a specified manner.
(7)The direction may be expressed to have effect during a specified period or until revoked.
(8)The FCA is not required to comply with a direction under this section if or to the extent that in the opinion of the FCA compliance would be incompatible with any F105... international obligation of the United Kingdom.
(9) The reference in subsection (4)(b) to the “failure” of a PRA-authorised person is to be read in accordance with section 2J(3) and (4).
3J Power of PRA in relation to with-profits policies cross-notes
(1)Where the first, second and third conditions are met, the PRA may give a direction under this section to the FCA.
(2)The first condition is that the FCA is proposing to exercise any of its regulatory powers in relation to with-profits insurers, a class of with-profits insurers or a particular with-profits insurer.
(3) In subsection (2) “ regulatory powers ”, in relation to the FCA, means its powers in relation to the regulation of authorised persons, including its powers under Part 24 (insolvency) but not its powers in relation to consent for the purposes of section 55F or 55I.
(4)The second condition is that the proposed exercise of the power relates to the provision of financial benefits under with-profits policies at the discretion of the insurer, or affects or may affect the amount, timing or distribution of financial benefits that are so provided or the entitlement to future benefits that are so provided.
(5)The third condition is that the PRA is of the opinion that the giving of the direction is desirable in order to advance the PRA's general objective or its insurance objective.
(6)A direction under this section is a direction requiring the FCA not to exercise the power or not to exercise it in a specified manner.
(7)The direction may be expressed to have effect during a specified period or until revoked.
(8)The FCA is not required to comply with a direction under this section if or to the extent that in the opinion of the FCA compliance would be incompatible with any F106... international obligation of the United Kingdom.
(9)Subsections (1) to (8) apply only if the effecting or carrying out of with-profits policies is a PRA-regulated activity.
(10) In this section “ with-profits insurer ” and “ with-profits policy ” have the same meaning as they have for the purposes of section 3F.
3K Revocation of directions under section 3I or 3J cross-notes
(1)The PRA may at any time by notice to the FCA revoke a direction under section 3I or 3J.
(2)The revocation of a direction under section 3I or 3J does not affect the validity of anything previously done in accordance with it.
3L Further provisions about directions under section 3I or 3J
(1)Before giving a direction under section 3I or 3J, the PRA must consult the FCA.
(2)A direction under section 3I or 3J must be given or confirmed in writing, and must be accompanied by a statement of the reasons for giving it.
(3)A notice revoking a direction under section 3I or 3J must be given or confirmed in writing.
(4)The PRA must—
(a)publish the direction and statement, or the notice, in such manner as it thinks fit, and
(b)where the direction or notice relates to a particular authorised person or a particular with-profits insurer, give a copy of the direction and statement, or the notice, to that person.
(5)The PRA must give the Treasury a copy of—
(a)a direction under section 3I;
(b)a statement relating to such a direction;
(c)a notice revoking such a direction.
(6)The Treasury must lay before Parliament any document received by them under subsection (5).
(7)Subsection (4) does not apply where the PRA, after consulting the Treasury, decides that compliance with that subsection would be against the public interest, and at any time when this subsection excludes the application of subsection (4) in relation to a direction under section 3I, subsection (6) also does not apply.
(8)Where the PRA decides that compliance with subsection (4) would be against the public interest, it must from time to time review that decision and if it subsequently decides that compliance is no longer against the public interest it must—
(a)comply with that subsection, and
(b)in the case of a direction under section 3I, notify the Treasury for the purposes of subsection (6).
Directions relating to consolidated supervision
3M Directions relating to consolidated supervision of groups
(1) This section applies where one of the regulators (“the supervising regulator”), but not the other, is the competent authority for the purpose of consolidated supervision that is required in relation to some or all of the members of a group (“the relevant group”) in pursuance of [F107 —
(a)any implementing provision contained in subordinate legislation (within the meaning of the Interpretation Act 1978) made otherwise than by any of the following—
(i)statutory instrument, and
(ii)statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)); F108...
(b)any other implementing provision (as amended from time to time),F107]
[F109 (c)Part 9C rules;
(d)CRR rules; or
(e)rules made under section 192XA.F109]
(2) “ Consolidated supervision ” includes supplementary supervision.
[F110 (2A) “ Implementing provision ” means an enactment that immediately before IP completion day implemented provisions of any of the relevant directives. F110]
(3) The “relevant directives” are—
(a)the [F111 capital requirements directiveF111] ;
(b)Directive 2002/87/EC of the European Parliament and of the Council on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate;
F112 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d)Directive 2009/138/EC of the European Parliament and the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).
[F113 (e)Directive 2014/59/EU of the European Parliament and of the Council of 15th May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms.F113]
(4)The supervising regulator may, if it considers it necessary to do so for the effective consolidated supervision of the relevant group, give the other regulator a direction under this section.
(5)A direction under this section is a direction requiring the other regulator to exercise, or not to exercise, a relevant function in a specified manner in relation to authorised persons who are members of the relevant group.
(6)The direction may relate to members of the relevant group other than the members in respect of which consolidated supervision is required.
(7) A “ relevant function ”, in relation to either regulator, is a function conferred by or under this Act which relates to the regulation of authorised persons, but does not include—
(a)the regulator's function of making rules under this Act;
(b)its function of preparing and issuing codes under this Act;
(c)its function of determining the general policy and principles by reference to which it performs particular functions;
(d)the FCA's functions in relation to the giving of general guidance;
(e)the PRA's functions in relation to the giving of guidance under section 2I;
(f)the FCA's functions in relation to consent for the purposes of section 55F or 55I.
(8) The direction may not require the regulator to which it is given (“the directed regulator”) to do anything that it has no power to do, but the direction is relevant to the exercise of any discretion conferred on the directed regulator.
(9)The directed regulator must comply with the direction as soon as practicable, but this is subject to subsections (10) and (11).
(10)The directed regulator is not required to comply with a direction under this section if or to the extent that in its opinion compliance would be incompatible with any F114... international obligation of the United Kingdom.
(11)Directions given by the FCA under this section are subject to any directions given to the FCA under section 3I or 3J.
3N Revocation of directions under section 3M
(1)The supervising regulator may at any time by notice to the other regulator revoke a direction under section 3M.
(2)The revocation of the direction does not affect the validity of anything previously done in accordance with it.
(3)Expressions defined for the purposes of section 3M have the same meaning in this section.
3O Further provisions about directions under section 3M
(1)Before giving a direction under section 3M, the supervising regulator must consult the other regulator.
(2)A direction under section 3M must be given or confirmed in writing, and must be accompanied by a statement of the reasons for giving it.
(3)A notice revoking a direction under section 3M must be given or confirmed in writing.
(4)The regulator to which a direction under section 3M is given must give a copy of the direction and statement to each of the authorised persons to whom the direction relates.
(5)The supervising regulator must publish the direction and statement, or the notice, in such manner as it thinks fit.
(6)But subsection (4) or (5) does not apply in a case where the regulator on which the duty is imposed considers that compliance with that subsection would be against the public interest.
(7)In a case where a regulator decides that compliance with subsection (4) or (5) would be against the public interest, the regulator must from time to time review that decision and if it subsequently decides that compliance is no longer against the public interest it must comply with the subsection.
(8)Expressions defined for the purposes of section 3M have the same meaning in this section.
3P Consultation by regulator complying with direction
(1)If the directed regulator is required by this Act to consult any person other than the supervising regulator before exercising the relevant function to which the direction relates, the directed regulator must give the supervising regulator copies of any written representations received from the persons consulted.
(2)Expressions defined for the purposes of section 3M have the same meaning in this section.
Co-operation with Bank of England
3Q Co-operation by FCA F115... with Bank of England
(1)[F116 The FCAF116] must take such steps as it considers appropriate to co-operate with the Bank of England in connection with—
(a)the pursuit by the Bank of its Financial Stability Objective, and
(b)the Bank's compliance with its duties under sections 58 and 59 of the Financial Services Act 2012 (duty to notify Treasury of possible need for public funds and of subsequent changes).
(2)Co-operation under subsection (1) may include the sharing of information that the [F117 FCAF117] is not prevented from disclosing.
Arrangements for provision of services
3R Arrangements for provision of services
(1)The regulators may enter into arrangements with each other for the provision of services by one of them to the other.
(2)[F118 The FCAF118] may enter into arrangements with the Bank of England for the provision of services—
(a)by the Bank to the [F119 FCAF119] , or
(b)by the [F120 FCAF120] to the Bank.
(3)Either regulator may enter into arrangements with any of the bodies specified in subsection (4) for the provision of services by the regulator to that body.
(4)Those bodies are—
[F121 (a)the [F122 Money and Pensions ServiceF122] (see Part 1 of the Financial Guidance and Claims Act 2018),F121]
(b)the scheme manager (see section 212(1)), and
(c)the scheme operator (see section 225(2)).
(5)The FCA may enter into arrangements with—
(a)a local weights and measures authority in England, Wales or Scotland, or
(b)the Department of Enterprise, Trade and Investment in Northern Ireland,
for the provision by the authority or department to the FCA of services which relate to activities to which this subsection applies.
(6)Subsection (5) applies to activities that are regulated activities by virtue of—
(a)an order made under section 22(1) in relation to an investment of a kind falling within paragraph 23 or 23B of Schedule 2, or
(b)an order made under section 22(1A)(a).
(7)Arrangements under this section are to be on such terms as may be agreed by the parties.
[F123Rules
3RA Duty of FCA and PRA to review rules
(1)Each regulator must keep under review generally any rules made by the regulator under this Act or any other enactment (whenever passed or made).
(2)Subsection (1) does not apply to rules made for the purpose of complying with a direction or recommendation of the Financial Policy Committee of the Bank of England under—
(a)section 9H of the Bank of England Act 1998 (directions to FCA or PRA requiring macro-prudential measures), or
(b)section 9Q of that Act (recommendations to FCA and PRA).
3RB Statement of policy relating to review of rules
(1)Each regulator must prepare and publish a statement of its policy with respect to its review of rules under section 3RA.
(2)The statement must provide information about—
(a)how representations (including by a statutory panel) can be made to each regulator with respect to its review of rules under section 3RA, and
(b)the arrangements to ensure that those representations are considered.
(3) In this section “ statutory panel ” has the meaning given by section 1RB(5).
(4)If a statement published under this section is altered or replaced by a regulator, the regulator must publish the altered or replaced statement.
(5)A statement prepared under this section must be published by the regulator in the way appearing to that regulator to be best designed to bring it to the attention of the public.
3RC Requirement to review specified rules
(1)The Treasury may by direction require a regulator to carry out a review of specified rules if—
(a)the rules have been in force for at least 12 months,
(b)the Treasury consider that it is in the public interest that the rules are reviewed, and
(c)it does not appear to the Treasury that—
(i)the regulator is carrying out, or proposes to carry out, a review of those rules, or
(ii)if the regulator proposes to carry out a review, the proposals are appropriate for the purposes of carrying out an effective review.
(2)Subsection (1) only applies to rules falling within section 3RA(1).
(3)The Treasury must consult the regulator concerned before giving a direction under subsection (1).
(4)In exercising the power under this section, the Treasury must have regard to the desirability of minimising any adverse effect that the carrying out of the review may have on the exercise by the regulator of any of its other functions.
(5)A direction under subsection (1) may—
(a)specify the period within which a review must be carried out;
(b)determine the scope and conduct of a review;
(c)require the provision of interim reports during the carrying out of a review.
(6)Provision made in a direction under subsection (5)(b) may include a requirement—
(a)for a review to be carried out by a person appointed by the regulator who is independent of the regulator;
(b)for any such appointment to be made only with the approval of the Treasury.
(7)As soon as practicable after giving a direction under subsection (1) the Treasury must—
(a)lay before Parliament a copy of the direction, and
(b)publish the direction in such manner as the Treasury think fit.
(8)Subsection (7) does not apply where the Treasury consider that publication of the direction would be against the public interest.
(9)A direction under subsection (1) may be varied or revoked by the giving of a further direction.
3RD Report on certain reviews
(1)This section applies where the Treasury have given a direction to a regulator under section 3RC(1) to carry out a review.
(2)The regulator must make a written report to the Treasury as to the opinion of the regulator in relation to the following matters—
(a)if the regulator is the FCA, whether the rules under review—
(i)are compatible with the FCA’s strategic objective,
(ii)advance one or more of the FCA’s operational objectives, and
(iii)advance the competitiveness and growth objective;
(b)if the regulator is the PRA, whether the rules under review—
(i)advance one or more of the PRA’s objectives, and
(ii)advance the PRA’s competition objective and the PRA’s competitiveness and growth objective;
(c)whether and to what extent the rules are functioning effectively and achieving their intended purpose;
(d)whether any amendments should be made to the rules and, if so, what those amendments should be;
(e)whether any rules should be revoked (with or without replacement);
(f)whether any other action should be taken and, if so, what that action should be.
(3)As soon as practicable after receiving the report the Treasury must—
(a)lay before Parliament a copy of the report, and
(b)publish the report in such manner as the Treasury think fit.
(4)When complying with subsection (3) the Treasury may withhold material from the report if the Treasury consider that publication of the material would be against the public interest.
SI [F1243RE Power of Treasury to require making of rules by regulations
(1)The Treasury may by regulations require a regulator to exercise a power under this Act to make rules in relation to a specified activity or a specified description of person.
(2)Regulations under this section may—
(a)specify matters that the rules must cover;
(b)specify a period within which the rules must be made.
(3)But except so far as permitted by subsection (2), regulations under this section may not require rules to be made—
(a)in a specified form or with specified content, or
(b)to achieve or advance a specified outcome.
(4)If no period is specified under subsection (2)(b) the rules must be made as soon as reasonably practicable after the coming into force of the regulations.F124,F123]]
Enhancing public understanding of financial matters etc.F1]
F1253S The consumer financial education body
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F126Interpretation
3T Interpretation
In this Part “ enactment ” includes—
(a)an enactment contained in subordinate legislation within the meaning of the Interpretation Act 1978;
(b)an enactment contained in, or in an instrument made under, an Act of the Scottish Parliament;
(c)an enactment contained in, or in an instrument made under, a Measure or Act of the National Assembly for Wales;
(d)an enactment contained in, or in an instrument made under, Northern Ireland legislation.F126]
case Part II Regulated And Prohibited Activities
The general prohibition
notecase 19 The general prohibition. cross-notes
(1)No person may carry on a regulated activity in the United Kingdom, or purport to do so, unless he is—
(a)an authorised person; or
(b)an exempt person.
(2)The prohibition is referred to in this Act as the general prohibition.
Requirement for permission
notecase 20 Authorised persons acting without permission. cross-notesI1
(1)If an authorised person[F127 other than a PRA-authorised personF127] carries on a regulated activity in the United Kingdom, or purports to do so, otherwise than in accordance with permission—
[F128 (a)given to that person under Part 4A, orF128]
(b)resulting from any other provision of this Act,
he is to be taken to have contravened a requirement imposed on him by the [F129FCAF129] under this Act.
[F130 (1A)If a PRA-authorised person carries on a regulated activity in the United Kingdom, or purports to do so, otherwise than in accordance with permission given to the person under Part 4A or resulting from any other provision of this Act, the person is to be taken to have contravened—
(a)a requirement imposed by the FCA, and
(b)a requirement imposed by the PRA.F130]
[F131 (2)A contravention within subsection (1) or (1A)—
(a)does not, except as provided by section 23(1A), make a person guilty of an offence,
(b)does not, except as provided by section 26A, make any transaction void or unenforceable, and
(c)does not, except as provided by subsection (3), give rise to any right of action for breach of statutory duty.F131]
SI (3)In prescribed cases [F132a contravention within subsection (1) or (1A)F132] is actionable at the suit of a person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.
[F133 (4)Subsections (1) and (1A) are subject to section 39(1D).
(5)References in this Act to an authorised person acting in contravention of this section are references to the person acting in a way that results in a contravention within subsection (1) or (1A).F133]
Financial promotion
notecaseSI 21 Restrictions on financial promotion. cross-notesI2
(1) A person (“ A ”) must not, in the course of business, communicate an invitation or inducement to
[F134 (a)F134] engage in investment activity [F135, or
(b)to engage in claims management activity.F135]
(2)But subsection (1) does not apply if—
(a)A is an authorised person; or
(b)the content of the communication is approved for the purposes of this section by an authorised person.
[F136 (2A)The content of a communication may be approved for the purposes of this section by an authorised person only if the giving of the approval—
(a)is permitted under section 55NA (which enables approval to be given with FCA permission), or
(b)falls within an exemption conferred by regulations under section 55NB.F136]
(3)In the case of a communication originating outside the United Kingdom, subsection (1) applies only if the communication is capable of having an effect in the United Kingdom.
(4)The Treasury may by order specify circumstances in which a person is to be regarded for the purposes of subsection (1) as—
(a)acting in the course of business;
(b)not acting in the course of business.
SI (5)The Treasury may by order specify circumstances (which may include compliance with financial promotion rules) in which subsection (1) does not apply.
SI (6)An order under subsection (5) may, in particular, provide that subsection (1) does not apply in relation to communications—
(a)of a specified description;
(b)originating in a specified country or territory outside the United Kingdom;
(c)originating in a country or territory which falls within a specified description of country or territory outside the United Kingdom; or
(d)originating outside the United Kingdom.
(7)The Treasury may by order repeal subsection (3).
(8) “ Engaging in investment activity ” means—
(a)entering or offering to enter into an agreement the making or performance of which by either party constitutes a controlled activity; or
(b)exercising any rights conferred by a controlled investment to acquire, dispose of, underwrite or convert a controlled investment.
SI (9)An activity is a controlled activity if—
(a)it is an activity of a specified kind or one which falls within a specified class of activity; and
(b)it relates to an investment of a specified kind, or to one which falls within a specified class of investment.
SI (10)An investment is a controlled investment if it is an investment of a specified kind or one which falls within a specified class of investment.
[F137 (10A) “ Engaging in claims management activity ” means entering into or offering to enter into an agreement the making or performance of which by either party constitutes a controlled claims management activity.
SI (10B) An activity is a “controlled claims management activity” if—
(a)it is an activity of a specified kind,
(b)it is, or relates to, claims management services, and
(c)it is carried on in Great Britain.F137]
SI (11)Schedule 2 (except paragraph 26) applies for the purposes of subsections (9) and (10) with references to section 22 being read as references to each of those subsections.
(12)Nothing in Schedule 2, as applied by subsection (11), limits the powers conferred by subsection (9) or (10).
SI[F138 (12A)Paragraph 25 of Schedule 2 applies for the purposes of subsection (10B) with the references to section 22 in sub-paragraph (3) of that paragraph being read as references to subsection (10B).F138]
(13) “ Communicate ” includes causing a communication to be made.
(14) “ Investment ” includes any asset, right or interest [F139 (including where an asset, right or interest is, or comprises or represents, a cryptoasset) F139] .
SI (15) “ Specified ” means specified in an order made by the Treasury.
Regulated activities
notecaseSI 22 [F140Regulated activitiesF140] cross-notes
SI (1)An activity is a regulated activity for the purposes of this Act if it is an activity of a specified kind which is carried on by way of business and—
(a)relates to an investment of a specified kind; or
(b)in the case of an activity of a kind which is also specified for the purposes of this paragraph, is carried on in relation to property of any kind.
SI[F141 (1A)An activity is also a regulated activity for the purposes of this Act if it is an activity of a specified kind which is carried on by way of business and relates to—
(a)information about a person's financial standing, F142... [F143 or F143]
F144 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F145 (c)administering a benchmark.F145,F141]]
SI[F146 (1B)An activity is also a regulated activity for the purposes of this Act if it is an activity of a specified kind which—
(a)is carried on by way of business in Great Britain, and
(b)is, or relates to, claims management services.F146]
(2)Schedule 2 makes provision supplementing this section.
(3)Nothing in Schedule 2 limits the powers conferred by [F147subsection (1) [F148 or (1A)F148,F147]] [F147 subsections (1) to (1B)F147] .
(4) “ Investment ” includes any asset, right or interest [F149 (including where an asset, right or interest is, or comprises or represents, a cryptoasset) F149] .
SI (5) “ Specified ” means specified in an order made by the Treasury.
F150 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F151 (6A) For the purposes of subsection (1A)(c), “ benchmark ” has the meaning given by Article 3 of the EU Benchmarks Regulation 2016, and “administering” a benchmark means acting as an administrator of that benchmark within the meaning of that Article. F151]
SI [F15222A Designation of activities requiring prudential regulation by PRA
(1) The Treasury may by order specify the regulated activities that are “ PRA-regulated activities ” for the purposes of this Act.
(2)An order under subsection (1) may—
(a)provide for exceptions;
(b)confer powers on the Treasury or either regulator;
(c)authorise the making of rules or other instruments by either regulator for purposes of, or connected with, any relevant provision;
(d)make provision in respect of any information or document which in the opinion of the Treasury or either regulator is relevant for purposes of, or connected with, any relevant provision;
(e)make such consequential, transitional, or supplemental provision as the Treasury consider appropriate for purposes of, or connected with, any relevant provision.
(3)Provision made as a result of subsection (2)(e) may amend any primary or subordinate legislation, including any provision of, or made under, this Act.
(4) “ Relevant provision ” means this section or any provision made under this section.
22B Parliamentary control in relation to certain orders under section 22A
(1)This section applies to the first order made under section 22A(1).
(2)This section also applies to any subsequent order made under section 22A(1) which—
(a)contains a statement by the Treasury that, in their opinion, the effect (or one of the effects) of the proposed order would be—
(i)that an activity would become a PRA-regulated activity, or
(ii)that a PRA-regulated activity would become a regulated activity that is not a PRA-regulated activity, or
(b)amends primary legislation.
(3)No order to which this section applies may be made unless—
(a)a draft of the order has been laid before Parliament and approved by a resolution of each House, or
(b)subsection (5) applies.
(4)Subsection (5) applies if an order to which this section applies contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without a draft being so laid and approved.
(5)Where this subsection applies the order—
(a)must be laid before Parliament after being made, and
(b)ceases to have effect at the end of the relevant period unless before the end of that period the order is approved by a resolution of each House of Parliament (but without that affecting anything done under the order or the power to make a new order).
(6) The “relevant period” is a period of 28 days beginning with the day on which the order is made.
(7)In calculating the relevant period no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.F152]
Offences
notecase 23 Contravention of the general prohibition [F153or section 20(1) or (1A)F153] .
(1)A person who contravenes the general prohibition is guilty of an offence and liable—
(a)on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum, or both;
(b)on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.
[F154 (1A) An authorised person (“A”) is guilty of an offence if A carries on a credit-related regulated activity in the United Kingdom, or purports to do so, otherwise than in accordance with permission—
(a)given to that person under Part 4A, or
(b)resulting from any other provision of this Act.
SI (1B) In this Act “ credit-related regulated activity ” means a regulated activity of a kind designated by the Treasury by order.
(1C)The Treasury may designate a regulated activity under subsection (1B) only if the activity involves a person—
(a)entering into or administering an agreement under which the person provides another person with credit,
(b)exercising or being able to exercise the rights of the lender under an agreement under which another person provides a third party with credit, or
(c)taking steps to procure payment of debts due under an agreement under which another person is provided with credit.
(1D)But a regulated activity may not be designated under subsection (1B) if the agreement in question is one under which the obligation of the borrower is secured on land.
(1E) “ Credit ” includes any cash loan or other financial accommodation.
(1F)A person guilty of an offence under subsection (1A) is liable—
(a)on summary conviction, to imprisonment for a term not exceeding the applicable maximum term or a fine not exceeding the statutory maximum, or both;
(b)on conviction on indictment, to imprisonment for a term not exceeding two years, or a fine, or both.
(1G) The “applicable maximum term” is—
(a)in England and Wales, [F155 the general limit in a magistrates’ courtF155] (or 6 months, if the offence was committed before the commencement of [F156 2 May 2022F156] );
(b)in Scotland, 12 months;
(c)in Northern Ireland, 6 months.F154]
(2) In this Act “ an authorisation offence ” means an offence under this section.
(3)In proceedings for an authorisation offence it is a defence for the accused to show that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.
[F157 (4)Subsection (1A) is subject to section 39(1D).
(5)No proceedings may be brought against a person in respect of an offence under subsection (1A) in a case where either regulator has taken action under section 205, 206 or 206A in relation to the alleged contravention within section 20(1) or (1A).F157]
[F15823A Parliamentary control in relation to certain orders under section 23
(1)This section applies to the first order made under section 23(1B).
(2)This section also applies to any subsequent order made under section 23(1B) which contains a statement by the Treasury that, in their opinion, the effect (or one of the effects) of the proposed order would be that an activity would become a credit-related regulated activity.
(3)An order to which this section applies may not be made unless a draft of the order has been laid before Parliament and approved by a resolution of each House.F158]
notecase 24 False claims to be authorised or exempt.
(1)A person who is neither an authorised person nor, in relation to the regulated activity in question, an exempt person is guilty of an offence if he—
(a)describes himself (in whatever terms) as an authorised person;
(b)describes himself (in whatever terms) as an exempt person in relation to the regulated activity; or
(c)behaves, or otherwise holds himself out, in a manner which indicates (or which is reasonably likely to be understood as indicating) that he is—
(i)an authorised person; or
(ii)an exempt person in relation to the regulated activity.
(2)In proceedings for an offence under this section it is a defence for the accused to show that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.
(3)A person guilty of an offence under this section is liable on summary conviction to imprisonment for a term not exceeding six months or a fine not exceeding level 5 on the standard scale, or both.
(4)[F159 But where the conduct constituting the offence involved or included the public display of any material, the maximum fine for the offence is level 5 on the standard scale multiplied by the number of days for which the display continued.F159]
notecase 25 Contravention of section 21. cross-notes
(1)A person who contravenes section 21(1) is guilty of an offence and liable—
(a)on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum, or both;
(b)on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.
(2)In proceedings for an offence under this section it is a defence for the accused to show—
(a)that he believed on reasonable grounds that the content of the communication was prepared, or approved for the purposes of section 21 [F160in accordance with subsection (2A) of that sectionF160] , by an authorised person; or
(b)that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.
Enforceability of agreements
notecase 26 Agreements made by unauthorised persons. cross-notes
(1)An agreement made by a person in the course of carrying on a regulated activity in contravention of the general prohibition is unenforceable against the other party.
(2)The other party is entitled to recover—
(a)any money or other property paid or transferred by him under the agreement; and
(b)compensation for any loss sustained by him as a result of having parted with it.
(3) “ Agreement ” means an agreement—
(a)made after this section comes into force; and
(b)the making or performance of which constitutes, or is part of, the regulated activity in question.
(4)This section does not apply if the regulated activity is accepting deposits.
[F16126A Agreements relating to credit
(1)An agreement that is made by an authorised person in contravention of section 20 is unenforceable against the other party if the agreement is entered into in the course of carrying on a credit-related regulated activity involving matters falling within section 23(1C)(a).
(2)The other party is entitled to recover—
(a)any money or other property paid or transferred by that party under the agreement, and
(b)compensation for any loss sustained by that party as a result of having parted with it.
(3) In subsections (1) and (2) “ agreement ” means an agreement—
(a)which is made after this section comes into force, and
(b)the making or performance of which constitutes, or is part of, the credit-related regulated activity.
(4)If the administration of an agreement involves the carrying on of a credit-related regulated activity, the agreement may not be enforced by a person for the time being exercising the rights of the lender under the agreement unless that person
[F162 (a)F162] has permission, given under Part 4A or resulting from any other provision of this Act, in relation to that activity
[F163 (b)is an appointed representative in relation to that activity,
(c)is an exempt person in relation to that activity, or
(d)is a person to whom, as a result of Part 20, the general prohibition does not apply in relation to that activityF163] .
(5)If the taking of steps to procure payment of debts due under an agreement involves the carrying on of a credit-related regulated activity, the agreement may not be enforced by a person for the time being exercising the rights of the lender under the agreement unless
[F164 (a)F164] the agreement is enforced in accordance with permission—
[F165 (i)F165] given under Part 4A to the person enforcing the agreement, or
[F165 (ii)F165] resulting from any other provision of this Act.
[F166 (b)that person is an appointed representative in relation to that activity,
(c)that person is an exempt person in relation to that activity, or
(d)that person is a person to whom, as a result of Part 20, the general prohibition does not apply in relation to that activity.F166,F161]]
notecase 27 Agreements made through unauthorised persons. cross-notes
[F167 (1)This section applies to an agreement that—
(a) is made by an authorised person (“ the provider ”) in the course of carrying on a regulated activity,
(b)is not made in contravention of the general prohibition,
(c)if it relates to a credit-related regulated activity, is not made in contravention of section 20, and
(d) is made in consequence of something said or done by another person (“ the third party ”) in the course of—
(i)a regulated activity carried on by the third party in contravention of the general prohibition, or
(ii)a credit-related regulated activity carried on by the third party in contravention of section 20.
[F168 (1ZA)But this section does not apply to a regulated credit agreement or a regulated consumer hire agreement unless the provider knows before the agreement is made that the third party had some involvement in the making of the agreement or matters preparatory to its making.F168]
(1A)[F169 An agreement to which this section appliesF169] is unenforceable against the other party.F167]
(2)The other party is entitled to recover—
(a)any money or other property paid or transferred by him under the agreement; and
(b)compensation for any loss sustained by him as a result of having parted with it.
(3) “ Agreement ” means an agreement—
(a)made after this section comes into force; and
(b)the making or performance of which constitutes, or is part of, the regulated activity in question carried on by the provider.
(4)This section does not apply if the regulated activity is accepting deposits.
[F170 (5)For the purposes of subsection (1ZA)—
“ regulated consumer hire agreement ” has the meaning given by article 60N of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ( S.I. 2001/544);
“ regulated credit agreement ” has the meaning given by article 60B of that Order. F170]
notecase 28 Agreements made unenforceable by section 26 or 27 [F171: general casesF171] . cross-notes
(1)This section applies to an agreement which is unenforceable because of section 26 or 27 [F172, other than an agreement entered into in the course of carrying on a credit-related regulated activityF172] .
(2)The amount of compensation recoverable as a result of that section is—
(a)the amount agreed by the parties; or
(b)on the application of either party, the amount determined by the court.
(3)If the court is satisfied that it is just and equitable in the circumstances of the case, it may allow—
(a)the agreement to be enforced; or
(b)money and property paid or transferred under the agreement to be retained.
(4)In considering whether to allow the agreement to be enforced or (as the case may be) the money or property paid or transferred under the agreement to be retained the court must—
(a)if the case arises as a result of section 26, have regard to the issue mentioned in subsection (5); or
(b)if the case arises as a result of section 27, have regard to the issue mentioned in subsection (6).
(5)The issue is whether the person carrying on the regulated activity concerned reasonably believed that he was not contravening the general prohibition by making the agreement.
(6)The issue is whether the provider knew that the third party was (in carrying on the regulated activity) contravening the general prohibition.
(7)If the person against whom the agreement is unenforceable—
(a)elects not to perform the agreement, or
(b)as a result of this section, recovers money paid or other property transferred by him under the agreement,
he must repay any money and return any other property received by him under the agreement.
(8)If property transferred under the agreement has passed to a third party, a reference in section 26 or 27 or this section to that property is to be read as a reference to its value at the time of its transfer under the agreement.
(9)The commission of an authorisation offence does not make the agreement concerned illegal or invalid to any greater extent than is provided by section 26 or 27.
case [F17328A Credit-related agreements made unenforceable by section 26, 26A or 27 cross-notes
(1)This section applies to an agreement that—
(a)is entered into in the course of carrying on a credit-related regulated activity, and
(b)is unenforceable because of section 26, 26A or 27.
(2)The amount of compensation recoverable as a result of that section is—
(a)the amount agreed by the parties, or
(b)on the application of either party, the amount specified in a written notice given by the FCA to the applicant.
(3)If on application by the relevant firm the FCA is satisfied that it is just and equitable in the circumstances of the case, it may by written notice to the applicant allow—
(a)the agreement to be enforced, or
(b)money paid or property transferred under the agreement to be retained.
(4)In considering whether to allow the agreement to be enforced or (as the case may be) the money or property paid or transferred under the agreement to be retained the FCA must—
(a)if the case arises as a result of section 26 or 26A, have regard to the issue mentioned in subsection (5), or
(b)if the case arises as a result of section 27, have regard to the issue mentioned in subsection (6).
(5)The issue is whether the relevant firm reasonably believed that by making the agreement the relevant firm was neither contravening the general prohibition nor contravening section 20.
(6)The issue is whether the provider knew that the third party was (in carrying on the credit-related regulated activity) either contravening the general prohibition or contravening section 20.
(7)An application to the FCA under this section by the relevant firm may relate to specified agreements or to agreements of a specified description or made at a specified time.
(8) “ The relevant firm ” means—
(a)in a case falling within section 26, the person in breach of the general prohibition;
(b)in a case falling within section 26A or 27, the authorised person concerned.
(9)If the FCA thinks fit, it may when acting under subsection (2)(b) or (3)—
(a)limit the determination in its notice to specified agreements, or agreements of a specified description or made at a specified time;
(b)make the determination in its notice conditional on the doing of specified acts by the applicant.
28B Decisions under section 28A: procedure
(1)A notice under section 28A(2)(b) or (3) must—
(a)give the FCA's reasons for its determination, and
(b)give an indication of—
(i)the right to have the matter referred to the Tribunal that is conferred by subsection (3), and
(ii)the procedure on such a reference.
(2)The FCA must, so far as it is reasonably practicable to do so, give a copy of the notice to any other person who appears to it to be affected by the determination to which the notice relates.
(3)A person who is aggrieved by the determination of an application under section 28A(2)(b) or (3) may refer the matter to the Tribunal.F173]
notecase 29 Accepting deposits in breach of general prohibition.
(1) This section applies to an agreement between a person (“ the depositor ”) and another person (“ the deposit-taker ”) made in the course of the carrying on by the deposit-taker of accepting deposits in contravention of the general prohibition.
(2)If the depositor is not entitled under the agreement to recover without delay any money deposited by him, he may apply to the court for an order directing the deposit-taker to return the money to him.
(3)The court need not make such an order if it is satisfied that it would not be just and equitable for the money deposited to be returned, having regard to the issue mentioned in subsection (4).
(4)The issue is whether the deposit-taker reasonably believed that he was not contravening the general prohibition by making the agreement.
(5) “ Agreement ” means an agreement—
(a)made after this section comes into force; and
(b)the making or performance of which constitutes, or is part of, accepting deposits.
notecase 30 Enforceability of agreements resulting from unlawful communications. cross-notes
(1)In this section—
“ unlawful communication ” means a communication in relation to which there has been a contravention of section 21(1);
“ controlled agreement ” means an agreement the making or performance of which by either party constitutes a controlled activity for the purposes of that section; and
“ controlled investment ” has the same meaning as in section 21.
(2)If in consequence of an unlawful communication a person enters as a customer into a controlled agreement, it is unenforceable against him and he is entitled to recover—
(a)any money or other property paid or transferred by him under the agreement; and
(b)compensation for any loss sustained by him as a result of having parted with it.
(3)If in consequence of an unlawful communication a person exercises any rights conferred by a controlled investment, no obligation to which he is subject as a result of exercising them is enforceable against him and he is entitled to recover—
(a)any money or other property paid or transferred by him under the obligation; and
(b)compensation for any loss sustained by him as a result of having parted with it.
(4)But the court may allow—
(a)the agreement or obligation to be enforced, or
(b)money or property paid or transferred under the agreement or obligation to be retained,
if it is satisfied that it is just and equitable in the circumstances of the case.
(5)In considering whether to allow the agreement or obligation to be enforced or (as the case may be) the money or property paid or transferred under the agreement to be retained the court must have regard to the issues mentioned in subsections (6) and (7).
(6)If the applicant made the unlawful communication, the issue is whether he reasonably believed that he was not making such a communication.
(7)If the applicant did not make the unlawful communication, the issue is whether he knew that the agreement was entered into in consequence of such a communication.
(8) “ Applicant ” means the person seeking to enforce the agreement or obligation or retain the money or property paid or transferred.
(9)Any reference to making a communication includes causing a communication to be made.
(10)The amount of compensation recoverable as a result of subsection (2) or (3) is—
(a)the amount agreed between the parties; or
(b)on the application of either party, the amount determined by the court.
(11)If a person elects not to perform an agreement or an obligation which (by virtue of subsection (2) or (3)) is unenforceable against him, he must repay any money and return any other property received by him under the agreement.
(12)If (by virtue of subsection (2) or (3)) a person recovers money paid or property transferred by him under an agreement or obligation, he must repay any money and return any other property received by him as a result of exercising the rights in question.
(13)If any property required to be returned under this section has passed to a third party, references to that property are to be read as references to its value at the time of its receipt by the person required to return it.
Part III Authorisation and Exemption
Authorisation
case 31 Authorised persons. cross-notesI3
(1)The following persons are authorised for the purposes of this Act—
(a)a person who has a [F174Part 4A permissionF174] to carry on one or more regulated activities;
F175 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F176 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d)a person who is otherwise authorised by a provision of, or made under, this Act.
(2) In this Act “ authorised person ” means a person who is authorised for the purposes of this Act.
note 32 Partnerships and unincorporated associations.
(1)If a firm is authorised—
(a)it is authorised to carry on the regulated activities concerned in the name of the firm; and
(b)its authorisation is not affected by any change in its membership.
(2)If an authorised firm is dissolved, its authorisation continues to have effect in relation to any [F177individual orF177] firm which succeeds to the business of the dissolved firm.
[F178 (3)For the purposes of this section, an individual or firm is to be regarded as succeeding to the business of a dissolved firm only if succession is to the whole or substantially the whole of the business of the former firm.F178]
(4) “ Firm ” means—
(a)a partnership; or
(b)an unincorporated association of persons.
(5) “Partnership” does not include a partnership which is constituted under the law of any place outside the United Kingdom and is a body corporate.
Ending of authorisation
note 33 F179 Withdrawal of authorisation ....
(1)This section applies if—
(a)an authorised person’s [F180Part 4A permissionF180] is cancelled; and
(b)as a result, there is no regulated activity for which he has permission.
(2)The [F181appropriate regulatorF181] must give a direction withdrawing that person’s status as an authorised person.
[F182 (2A) In subsection (2) “ the appropriate regulator ” means—
(a)in the case of a PRA-authorised person, the PRA, and
(b)in any other case, the FCA.F182]
note F18334 EEA firms.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase F18435 Treaty firms.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note [F18536 Authorised open-ended investment companies
Schedule 5 makes provision about authorised open-ended investment companies.F185]
Exercise of EEA rights by UK firms
note F18637 Exercise of EEA rights by UK firms.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exemption
notecaseSI 38 Exemption orders. cross-notes
SI (1) The Treasury may by order (“ an exemption order ”) provide for—
(a)specified persons, or
(b)persons falling within a specified class,
to be exempt from the general prohibition.
(2)But a person cannot be an exempt person as a result of an exemption order if he has a [F187Part 4A permissionF187] .
SI (3)An exemption order may provide for an exemption to have effect—
(a)in respect of all regulated activities;
(b)in respect of one or more specified regulated activities;
(c)only in specified circumstances;
(d)only in relation to specified functions;
(e)subject to conditions.
SI (4) “ Specified ” means specified by the exemption order.
notecaseSI 39 Exemption of appointed representatives. cross-notesI4
SI (1)If a person (other than an authorised person)—
(a) is a party to a contract with an authorised person (“ his principal ”) which—
(i)permits or requires him to carry on business of a prescribed description, and
(ii)complies with such requirements as may be prescribed, and
(b)is someone for whose activities in carrying on the whole or part of that business his principal has accepted responsibility in writing,
he is exempt from the general prohibition in relation to any regulated activity comprised in the carrying on of that business for which his principal has accepted responsibility.
[F188 (1ZA)But a person is not exempt as a result of subsection (1) if subsection (1A) [F189 , (1AA)F189] or (1BA) applies to the person.F188]
[F190 (1A)[F191 This subsection applies to a personF191] —
(a)if his principal is an investment firm [F192 , a [F193 qualifying credit institutionF193] , or [F194 a firm which has a Part 4A permission to carry on regulated activities as an exempt investment firm within the meaning of regulation 8 of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701)F194,F192]] , and
(b)so far as the business for which his principal has accepted responsibility is investment services business,
unless he is entered on the applicable register.
[F195 (1AA)This subsection applies to a person—
(a)if the person’s principal is an investment firm [F196 , a [F197 qualifying credit institutionF197] , or a person mentioned in Article 3.1 (optional exemptions) of the markets in financial instruments directiveF196] , and
(b)so far as the business for which the person’s principal has accepted responsibility is selling, or advising clients on, structured deposits F198...,
unless the person is entered on the applicable register.F195]
(1B) [F199 In subsections (1A) and (1AA) F199] The “applicable register” is [F200 the record maintained by the FCA by virtue of section 347(1)(ha) F200] .
[F201 (1BA) This subsection applies to a person (“A”)—
(a)if A’s principal is a mortgage intermediary, and
(b)so far as the business for which A’s principal has accepted responsibility is of a kind [F202 thatF202] —
(i)[F203 isF203] specified in article 25A (arranging regulated mortgage contracts), article 36A (credit broking), article 53A (advising on regulated mortgage contracts) or article 53DA (advising on regulated credit agreements the purpose of which is to acquire land) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; and
[F204 (ii)relates to mortgage agreements entered into on or after 21st March 2016,F204]
unless A meets the requirements of subsection (1BB).
(1BB)The requirements of this subsection are—
(a)that A is entered on the record maintained by the FCA by virtue of section 347(1)(hb);
(b)that A’s principal is a person who has a Part 4A permission to carry on one or more of the regulated activities mentioned in subsection (1BA)(b)(i); and
(c)that A’s principal is not a tied mortgage intermediary.F201]
SI[F205 (1C) Subsection (1D) applies where an authorised person (“A”)—
(a)has permission under Part 4A, or permission resulting from any other provision of this Act, only in relation to one or more qualifying activities,
(b) is a party to a contract with another authorised person (A's “principal”) which—
(i) permits or requires A to carry on business of a prescribed description (“the relevant business”), and
(ii)complies with such requirements as may be prescribed, and
(c)is someone for whose activities in carrying on the whole or part of the relevant business A's principal has accepted responsibility in writing.
(1D)Sections 20(1) and (1A) and 23(1A) do not apply in relation to the carrying on by A of a relevant additional activity.
SI (1E)In subsections (1C) and (1D)—
(a) “ qualifying activity ” means a regulated activity which is of a prescribed kind and relates—
(i)to rights under a contract of the kind mentioned in paragraph 23 of Schedule 2, other than one under which the obligation of the borrower to repay is secured on land, or
(ii)to rights under a contract of the kind mentioned in paragraph 23B of that Schedule;
(b) “ relevant additional activity ” means a regulated activity which—
(i)is not one to which A's permission relates, and
(ii)is comprised in the carrying on of the business for which A's principal has accepted responsibility.F205]
[F206 (2) In this Act “ appointed representative ” means—
(a)a person who is exempt as a result of subsection (1), or
(b)a person carrying on a regulated activity in circumstances where, as a result of subsection (1D), sections 20(1) and (1A) and 23(1A) do not apply.F206]
(3)The principal of an appointed representative is responsible, to the same extent as if he had expressly permitted it, for anything done or omitted by the representative in carrying on the business for which he has accepted responsibility.
[F207 (4)In determining whether an authorised person has complied with—
(a)a provision contained in or made under this Act, F208...
[F209 (aa)a provision contained in or made under the Securitisation Regulations 2024, orF209]
SI (b)a [F210 qualifying provisionF210] that is specified, or of a description specified, for the purposes of this subsection by the Treasury by order,
anything which a relevant person has done or omitted as respects business for which the authorised person has accepted responsibility is to be treated as having been done or omitted by the authorised person.F207]
(5) “ Relevant person ” means a person who at the material time is or was an appointed representative by virtue of being a party to a contract with the authorised person.
(6)Nothing in subsection (4) is to cause the knowledge or intentions of an appointed representative to be attributed to his principal for the purpose of determining whether the principal has committed an offence, unless in all the circumstances it is reasonable for them to be attributed to him.
[F211 (7) A person carries on “investment services business” if, under the full and unconditional responsibility of only one investment firm on whose behalf the person acts, the person—
(a)promotes investment services or ancillary services to the firm's clients or prospective clients,
(b)receives and transmits instructions or orders from clients in respect of investment services or financial instruments,
(c)places financial instruments, or
(d)provides advice to clients or prospective clients in respect of investment services or financial instruments.F211]
[F212 (8)In this section—
“ ancillary services ” means any of the services and activities listed in Part 3A of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) ;
“ financial instruments ” means those instruments specified in Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ;
“ investment services ” means any of the services and activities listed in Part 3 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 , relating to any of the instruments listed in Part 1 of that Schedule;
“ structured deposit ” has the meaning given by Article 2.1.23 of the markets in financial instruments regulation. F212,F190]]
[F21339A Certain tied agents operating outside United Kingdom
(1)This section applies to an authorised person whose relevant office is in the United Kingdom if—
(a)he is a party to a contract with a person (other than an authorised person) who is [F214 established in the United Kingdom; andF214]
(b)the contract is a relevant contract.
(2) A contract is a “relevant contract” if it satisfies conditions A to C.
(3) Condition A is that the contract permits or requires the person mentioned in subsection (1)(a) (the “agent”) to carry on investment services business.
(4)Condition B is that [F215 the FCA is satisfied that no such business is, or is likely to be, carried on by the agent in the United Kingdom.F215]
(5)Condition C is that the business is of a description that, if carried on in the United Kingdom, would be prescribed for the purposes of section 39(1)(a)(i).
(6)An authorised person to whom this section applies who—
(a)enters into or continues to perform a relevant contract with an agent which does not comply with the applicable requirements,
(b)enters into or continues to perform a relevant contract without accepting or having accepted responsibility in writing for the agent's activities in carrying on investment services business,
[F216 (c)enters into a relevant contract with an agent who is not entered on—
(i)the record maintained by the FCA by virtue of section 347(1)(ha), or
F217 (ii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F216]
(d)continues to perform a relevant contract with an agent when he knows or ought to know that the agent is not entered on that record F218... ,
is to be taken for the purposes of this Act to have contravened a requirement imposed on him by or under this Act.
(7) The “applicable requirements” are the requirements prescribed for the purposes of subsection (1)(a)(ii) of section 39 which have effect in the case of a person to whom subsection (1A) of that section applies.
[F219 (8)Section 39(7) applies for the purposes of this section.F219]
(9)In this section—
F220 ...
“ relevant office ” means—
(a)in relation to a body corporate, its registered office or, if it has no registered office, its head office, and
(b)in relation to a person other than a body corporate, the person's head office.F213]
case F221Part IV Permission to Carry on Regulated Activities
F221 Application for permission
note F22140 Application for permission.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F22141 The threshold conditions.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F221 Permission
note F22142 Giving permission.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase F22143 Imposition of requirements.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F221 Variation and cancellation of Part IV permission
note F22144 Variation etc. at request of authorised person.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase F22145 Variation etc. on the Authority’s own initiative.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F22146 Variation of permission on acquisition of control.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F22147 Exercise of power in support of overseas regulator.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase F22148 Prohibitions and restrictions.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F221 Connected persons
note F22149 Persons connected with an applicant.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F221 Additional permissions
note F22150 Authority’s duty to consider other permissions etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F221 Procedure
note F22151 Applications under this Part.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F22152 Determination of applications.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F22153 Exercise of own-initiative power: procedure.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F22154 Cancellation of Part IV permission: procedure.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F221[F222NotificationF222]
F22154A. Notification of ESMA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F22154B. Notification of EBA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F221 References to the Tribunal
notecase F22155 Right to refer matters to the Tribunal.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
case [F221PART 4A Permission to carry on regulated activities cross-notes
Application for permission
case 55A Application for permission cross-notes
(1)An application for permission to carry on one or more regulated activities may be made to the appropriate regulator by—
(a)an individual,
(b)a body corporate,
(c)a partnership, or
(d)an unincorporated association.
(2) “ The appropriate regulator ”, in relation to an application under this section, means [F223 (subject to subsection (2B)) F223] —
(a)the PRA, in a case where—
(i)the regulated activities to which the application relates consist of or include a PRA-regulated activity, or
(ii)the applicant is a PRA-authorised person otherwise than by virtue of a Part 4A permission;
(b)the FCA, in any other case.
[F224 (2A)An application under this section for permission to carry on the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 may not include an application for permission to carry on any other regulated activity.
(2B)The appropriate regulator, in relation to an application under this section for permission to carry on the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, is the FCA.F224]
(3)An authorised person who has a permission under this Part which is in force may not apply for permission under this section.
F225 (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) A permission given by the appropriate regulator under this Part or having effect as if so given is referred to in this Act as “ a Part 4A permission ”.
[F226 (6)References in this section to permission under this Part do not include references to permission under section 55NA.F226]
case 55B The threshold conditions cross-notes
(1) “ The threshold conditions ”, in relation to a regulated activity, means the conditions set out in or specified under Schedule 6, as read with any threshold condition code made by either regulator under section 137O.
(2)Any reference in this Part to the threshold conditions for which either regulator is responsible is to be read as a reference to the conditions set out in or specified under Schedule 6 that are expressed to be relevant to the discharge by that regulator of its functions, as read with any threshold condition code made by that regulator under section 137O.
(3)In giving or varying permission, imposing or varying a requirement, or giving consent, under any provision of this Part, each regulator must ensure that the person concerned will satisfy, and continue to satisfy, in relation to all of the regulated activities for which the person has or will have permission, the threshold conditions for which that regulator is responsible.
(4)But the duty imposed by subsection (3) does not prevent a regulator, having due regard to that duty, from taking such steps as it considers are necessary, in relation to a particular person, in order to advance—
(a)in the case of the FCA, any of its operational objectives;
(b)in the case of the PRA, any of its objectives.
[F227 (5)The duty imposed by subsection (3) does not apply in relation to the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (administering a benchmark).F227]
SI 55C Power to amend Schedule 6
(1)The Treasury may by order amend Parts 1 and 2 of Schedule 6 by altering, adding or repealing provisions, or by substituting for those Parts as they have effect for the time being provisions specified in the order.
(2)Different provision may be made under this section—
(a)in relation to the discharge of the functions of each regulator;
(b)in relation to different regulated activities;
(c)in relation to persons who carry on, or seek to carry on, activities that consist of or include a PRA-regulated activity and in relation to other persons.
55D Firms based outside [F228the United KingdomF228]
(1) This section applies in relation to a person (“the [F229 dfnnon-UK F229] firm”)—
(a)who is a body incorporated in, or formed under the law of, or is an individual who is a national of, any country or territory outside the [F230 United KingdomF230] , and
(b) who is carrying on a regulated activity in any country or territory outside the United Kingdom in accordance with the law of that country or territory (“the overseas state”).
(2) In determining whether the [F229 dfnnon-UK F229] firm is satisfying or will satisfy, and continue to satisfy, any one or more of the threshold conditions for which a dfnUK regulator is responsible, the dfnUK regulator may have regard to any opinion notified to it by a regulatory authority in the overseas state (“the overseas regulator”) which relates to the [F229 dfnnon-UK F229] firm and appears to the dfnUK regulator to be relevant to compliance with those conditions.
(3)In considering how much weight (if any) to attach to the opinion, the dfnUK regulator must have regard to the nature and scope of the supervision exercised in relation to the [F229 dfnnon-UKF229] firm by the overseas regulator.
(4) In this section “ UK regulator ” means the FCA or the PRA.
case 55E Giving permission: the FCA cross-notes
(1)This section applies where the FCA is the appropriate regulator in relation to an application for permission under section 55A.
(2)The FCA may give permission for the applicant to carry on the regulated activity or activities to which the application relates or such of them as may be specified in the permission.
(3)If the applicant is a member of a group which includes a PRA-authorised person, the FCA must consult the PRA before determining the application.
[F231 (3A)The FCA must consult the PRA before determining an application for permission to carry on the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (administering a benchmark) made by a person who is a PRA-authorised person otherwise than by virtue of a Part 4A permission.F231]
(4)If it gives permission, the FCA must specify the permitted regulated activity or activities, described in such manner as the FCA considers appropriate.
(5)The FCA may—
(a)incorporate in the description of a regulated activity such limitations (for example as to circumstances in which the activity may, or may not, be carried on) as it considers appropriate;
(b)specify a narrower or wider description of regulated activity than that to which the application relates;
(c)give permission for the carrying on of a regulated activity which is not included among those to which the application relates and is not a PRA-regulated activity.
55F Giving permission: the PRA cross-notes
(1)This section applies where the PRA is the appropriate regulator in relation to an application for permission under section 55A.
(2)The PRA may with the consent of the FCA give permission for the applicant to carry on the regulated activity or activities to which the application relates or such of them as may be specified in the permission.
(3)If it gives permission, the PRA must specify the permitted regulated activity or activities, described in such manner as the PRA considers appropriate.
(4)The PRA may—
(a)incorporate in the description of a regulated activity such limitations (for example as to circumstances in which the activity may, or may not, be carried on) as it considers appropriate;
(b)specify a narrower or wider description of regulated activity than that to which the application relates;
(c)give permission for the carrying on of a regulated activity which is not included among those to which the application relates.
(5)Consent given by the FCA for the purposes of this section may be conditional on the manner in which the PRA exercises its powers under subsections (3) and (4).
(6)Subsections (3) and (4)(b) and (c) do not enable the PRA to give permission that relates only to activities that are not PRA-regulated activities, except where the applicant is a PRA-authorised person otherwise than by virtue of a Part 4A permission.
55G Giving permission: special cases
(1) “ The applicant ” means an applicant for permission under section 55A.
(2)If the applicant—
(a)in relation to a particular regulated activity, is exempt from the general prohibition as a result of section 39(1) or an order made under section 38(1), but
(b)has applied for permission in relation to another regulated activity,
the application is to be treated as relating to all the regulated activities which, if permission is given, the applicant will carry on.
(3)If the applicant—
(a)in relation to a particular regulated activity, is exempt from the general prohibition as a result of F232[F233 ... section 285F233] , but
(b)has applied for permission in relation to another regulated activity,
the application is to be treated as relating only to that other regulated activity.
(4)If the applicant—
(a)is a person to whom, in relation to a particular regulated activity, the general prohibition does not apply as a result of Part 19, but
(b)has applied for permission in relation to another regulated activity,
the application is to be treated as relating only to that other regulated activity.
(5) Subsection (6) applies where either regulator (“the responsible regulator”) receives an application for permission under section 55A which is in the regulator's opinion similar to an application which was previously made to the other regulator and was either—
(a)treated by the other regulator as not being a valid application to that regulator because of the regulated activities to which it related, or
(b)refused by the other regulator after being considered.
(6)The responsible regulator must have regard to the desirability of minimising—
(a)the additional work for the applicant in dealing with the new application, and
(b)the time taken to deal with the new application.
Variation and cancellation of Part 4A permission
55H Variation by FCA at request of authorised person
F234 (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)The FCA may, on the application of [F235 an authorised person who has a Part 4A permission but is not a PRA-authorised personF235] , vary the permission by—
(a)adding a regulated activity, other than a PRA-regulated activity, to those to which the permission relates;
(b)removing a regulated activity from those to which the permission relates;
(c)varying the description of a regulated activity to which the permission relates.
(3)The FCA may, on the application of [F236 an authorised person who has a Part 4A permission but is not a PRA-authorised personF236] , cancel the permission.
[F237 (3A)The FCA may, on the application of a PRA-authorised person with a Part 4A permission, vary the permission by—
(a)adding to the regulated activities to which the permission relates the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (administering a benchmark),
(b)removing that regulated activity from those to which the permission relates, or
(c)varying the description of that regulated activity.
(3B)The FCA must consult the PRA before exercising its power under subsection (3A).F237]
(4)The FCA may refuse an application under this section if it appears to it that it is desirable to do so in order to advance any of its operational objectives [F238 , or the purpose for which the FCA must exercise its functions under Part 8B (see section 131U(1))F238] .
[F239 (4A)The FCA may also refuse an application under this section if it appears to the FCA that the authorised person would not comply with requirements in Part 5 of the Alternative Investment Fund Managers Regulations 2013 (AIFs which acquire control of non-listed companies and issuers) that would apply to the authorised person.F239]
(5)If [F240 on an application under subsection (2) or (3)F240] the applicant is a member of a group which includes a PRA-authorised person, the FCA must consult the PRA before determining the application.
(6)If as a result of a variation of a Part 4A permission under this section there are no longer any regulated activities for which the authorised person concerned has permission, the FCA must, once it is satisfied that it is no longer necessary to keep the permission in force, cancel it.
(7)The FCA's power to vary a Part 4A permission under this section extends to including in the permission as varied any provision that could be included if a fresh permission were being given by it in response to an application under section 55A.
55I Variation by PRA at request of authorised person
(1)On the application of a PRA-authorised person with a Part 4A permission, the PRA may with the consent of the FCA vary the permission by—
(a)adding a regulated activity to those to which the permission relates;
(b)removing a regulated activity from those to which the permission relates;
(c)varying the description of a regulated activity to which the permission relates
[F241 but the PRA may not under this subsection add, remove or vary the description of the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (administering a benchmark).F241]
(2)On the application of a PRA-authorised person with a Part 4A permission, the PRA may, after consulting the FCA, cancel the permission [F242 , but the PRA may not under this subsection cancel a permission where the only regulated activity to which the permission relates is the regulated activity in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (administering a benchmark)F242] .
(3)On the application of an authorised person other than a PRA-authorised person, the PRA may with the consent of the FCA vary the permission by adding to the regulated activities to which the permission relates one or more regulated activities which include a PRA-regulated activity [F243 , but the PRA may not under this subsection add the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (administering a benchmark)F243] .
(4)The PRA may refuse an application under this section if it appears to it that it is desirable to do so in order to advance any of its objectives.
(5)The FCA may withhold its consent to a proposed variation under this section if it appears to it that it is desirable to do so in order to advance one or more of its operational objectives.
(6)If as a result of a variation of a Part 4A permission under this section there are no longer any regulated activities for which the authorised person concerned has permission, the PRA must, once it is satisfied after consulting the FCA that it is no longer necessary to keep the permission in force, cancel it.
(7)The PRA's power to vary a Part 4A permission under this section extends to including in the permission as varied any provision that could be included if a fresh permission were being given by it in response to an application under section 55A.
(8)Consent given by the FCA for the purposes of subsection (1) may be conditional on the manner in which the PRA exercises its powers under section 55F(3) and (4) (as a result of subsection (7)).
case 55J Variation or cancellation on initiative of regulator cross-notes
(1) Either regulator may exercise its power under this section in relation to an authorised person with a Part 4A permission (“A”) if it appears to the regulator that—
(a)A is failing, or is likely to fail, to satisfy the threshold conditions for which the regulator is responsible,
(b)A has failed, during a period of at least 12 months, to carry on a regulated activity to which the Part 4A permission relates, F244...
(c)it is desirable to exercise the power in order to advance—
(i)in the case of the FCA, one or more of its operational objectives,
(ii)in the case of the PRA, any of its objectives [F245 , or
(d)in the case of the FCA, A has failed to comply with a requirement in Part 5 of the Alternative Investment Fund Managers Regulations 2013 (AIFs which acquire control of non-listed companies and issuers), or it is for some other reason desirable to exercise the power for the purposes of ensuring compliance with such a requirementF245] .
(2)The FCA's power under this section is the power—
(a)to vary the Part 4A permission by—
(i)adding a regulated activity other than a PRA-regulated activity to those to which the permission relates,
(ii)removing a regulated activity from those to which the permission relates, or
(iii)varying the description of a regulated activity to which the permission relates in a way which, if it is a PRA-regulated activity, does not, in the opinion of the FCA, widen the description, or
(b)to cancel the Part 4A permission.
(3)The PRA's power under this section is the power—
(a)in the case of a PRA-authorised person, to vary the Part 4A permission in any of the ways mentioned in section 55I(1) or to cancel it;
(b)in the case of an authorised person who is not a PRA-authorised person, to vary the Part 4A permission by adding a PRA-regulated activity to those to which the permission relates and, if the PRA does so, to vary the Part 4A permission in any of the other ways mentioned in section 55I(1).
(4)The FCA—
(a)must consult the PRA before exercising its power under this section in relation to—
(i)a PRA-authorised person, or
(ii)a member of a group which includes a PRA-authorised person, and
(b)in the case of a PRA-authorised person, may exercise the power so as to add a new activity to those to which the permission relates or to widen the description of a regulated activity to which the permission relates, only with the consent of the PRA
[F246 , but paragraph (b) does not apply in relation to the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (administering a benchmark).F246]
(5)The PRA—
(a)must consult the FCA before exercising its power under this section, and
(b)may exercise the power so as to add a new activity to those to which the permission relates or to widen the description of a regulated activity to which the permission relates, only with the consent of the FCA.
(6)Without prejudice to the generality of subsections (1) to (3), a regulator may, in relation to an authorised person who is an investment firm, exercise its power under this section to cancel the Part 4A permission if it appears to it that any of the conditions in section 55K is met.
[F247 (6A)Without prejudice to the generality of subsections (1) to (3), the FCA may, in relation to an authorised person who is a full-scope UKAIFM, exercise its power under this section to cancel the Part 4A permission if it appears to it that any of the following conditions is met—
(a)the person has failed, during a period of at least six months, to carry on the regulated activity of managing an AIF;
(b)the person obtained the Part 4A permission to carry on the regulated activity of managing an AIF by making a false statement or by any other irregular means;
(c)in a case where the Part 4A permission includes permission to [F248 carry on the management of portfolios of investments in accordance with mandates given by investors on a discretionary, and client-by-client, basisF248] , the person no longer complies with [F249 Part 9C rulesF249] ;
(d)the person no longer meets the conditions that a person must meet in order to obtain a Part 4A permission to carry on the regulated activity of managing an AIF;
(e)the person has seriously or systematically infringed—
[F250 (i)an AIFMD requirement;F250]
F251 (ii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F251 (iii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F252 (iv). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . or
[F253 (v)an MMF requirement.F253,F247]]
[F254 (6AA)For the purposes of subsection (6A)(e)—
(a)an AIFMD requirement is a provision of—
(i)the Alternative Investment Fund Managers Regulations 2013,
(ii)any EU regulation, originally made under the alternative investment fund managers directive, which is [F255 assimilated directF255] legislation,
(iii)any provision made by or under this Act that immediately before IP completion day implemented provisions of the alternative investment fund managers directive (as that implementing provision is amended from time to time), or
(iv)any subordinate legislation (within the meaning of the Interpretation Act 1978) which is made under a power substituted for a power of an EU entity to make a directly applicable regulation under the alternative investment fund managers directive by regulations made under section 8 of the European Union (Withdrawal) Act 2018;
F256 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c)an MMF requirement is a provision of—
(i)the MMF Regulation,
(ii)any EU regulation, originally made under the MMF Regulation, which is [F257 assimilated directF257] legislation, or
(iii)any subordinate legislation (within the meaning of the Interpretation Act 1978) made under the MMF Regulation on or after IP completion day.F254]
[F258 (6B)Without prejudice to the generality of subsections (1) to (3), the FCA may, in relation to an authorised person who is a mortgage intermediary and who has a Part 4A permission to carry on a relevant mortgage activity, exercise its power under this section to cancel the Part 4A permission or to vary the Part 4A permission by removing a relevant mortgage activity from the activities to which the permission relates, if it appears to the FCA that any of the following conditions is met—
(a)during a period of at least six months, the person has not carried on a relevant mortgage activity;
(b)the person obtained the Part 4A permission to carry on a relevant mortgage activity by making a false statement or by any other irregular means;
(c)the person no longer meets the conditions which the person was F259... required to meet in order to be granted a Part 4A permission to carry on a relevant mortgage activity; or
(d)the person has seriously or systematically infringed any provision made by or under this Act which [F260 setsF260] the operating conditions for mortgage intermediaries F261....
(6C) In subsection (6B) “relevant mortgage activity” means—
(a)an activity of a kind specified in article 25A (arranging regulated mortgage contracts), article 53A (advising on regulated mortgage contracts) or article 53DA (advising on regulated credit agreements the purpose of which is to acquire land) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, or
(b)an activity of a kind specified in article 36A of that Order (credit broking) which is referred to in Article 33(1)(a) of the mortgages directive.F258]
F262 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F263 (7ZA)Without prejudice to the generality of subsections (1) and (2), if it appears to the FCA that there has been a serious failure, by a person with permission to carry on the regulated activity specified in article 51ZA of the Financial Services and Markets Act (Regulated Activities) Order 2001 (managing a [F264 UKF264] UCITS), to comply with the requirements imposed—
(a)by or under this Act in pursuance of the UCITS Directive, F265...
(b)by the Undertakings for Collective Investment in Transferable Securities Regulations 2011, [F266 orF266]
[F267 (c)an MMF requirement,F267]
the FCA may exercise its powers under this section to vary the Part 4A permission of the person concerned by removing that activity from those to which the permission relates, or to cancel the person’s Part 4A permission.F263]
(7ZB)Without prejudice to the generality of subsections (1) and (2), the FCA may, in relation to an authorised person who is an investment firm, exercise its power under this section if it appears to it that the authorised person has failed to comply with a requirement [F268 imposed by—
(a)the market abuse regulation,
(b)any EU regulation, originally made under the market abuse regulation, which is [F269 assimilated directF269] legislation, or
(c)any subordinate legislation (within the meaning of the Interpretation Act 1978) made under the market abuse regulation on or after IP completion day.F268]
[F270 (7ZC)Without prejudice to the generality of subsections (1) and (2), if it appears to the FCA, in relation to a person who has a permission to carry on the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (administering a benchmark), that the conditions in Article 35(1) of the EU Benchmarks Regulation 2016 are met, the FCA may exercise its powers under this section—
(a)to vary the Part 4A permission by removing that activity from those to which the permission relates, or
(b)to cancel the Part 4A permission.F270]
F271 (7A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F271 (7B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F271 (7C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8)If, as a result of a variation of a Part 4A permission under this section, there are no longer any regulated activities for which the authorised person concerned has permission, the regulator responsible for the variation must, once it is satisfied that it is no longer necessary to keep the permission in force, cancel it.
(9)Before cancelling under subsection (8) a Part 4A permission which relates to a person who (before the variation) was a PRA-authorised person, the regulator must consult the other regulator.
(10)The power of either regulator to vary a Part 4A permission under this section extends to including in the permission as varied any provision that could be included if a fresh permission were being given in response to an application to that regulator under section 55A.
(11)Consent given by one regulator for the purpose of subsection (4)(b) or (5)(b) may be conditional on the manner in which the other regulator exercises its powers under section 55E(4) and (5) or 55F(3) and (4) (as a result of subsection (10)).
(12)The power of the FCA or the PRA under this section is referred to in this Part as its own-initiative variation power.
[F272 (13) In this section “ enactment ” has the meaning given by section 3T. F272]
[F27355JA Variation or cancellation on initiative of FCA: additional power
(1)Schedule 6A confers an additional power on the FCA to vary or cancel an FCA-authorised person's Part 4A permission.
(2) In this section and that Schedule “ FCA-authorised person ” means an authorised person who is not a PRA-authorised person. F273]
55K Investment firms: particular conditions that enable cancellation cross-notes
(1)The conditions referred to in section 55J(6) are as follows—
(a)that the firm has failed, during a period of at least 6 months, to carry on a regulated activity which is an investment service or activity for which it has a Part 4A permission;
(b)that the firm obtained the Part 4A permission by making a false statement or by other irregular means;
(c)that the firm no longer satisfies the requirements for authorisation F274... in relation to a regulated activity which is an investment service or activity for which it has a Part 4A permission;
(d)that the firm has seriously and systematically infringed [F275 any [F276 assimilated directF276] legislation, or any provision made by or under this Act, which sets the operating conditionsF275] in relation to a regulated activity which is an investment service or activity for which it has a Part 4A permission;
[F277 (e)that the firm has seriously or systematically infringed the markets in financial instruments regulation.F277]
(2) For the purposes of this section a regulated activity is an investment service or activity if it falls within the definition of “investment services and activities” in section 417(1).
F27855KA. Insurance undertakings, reinsurance undertakings and third-country insurance undertakings: particular conditions that enable cancellation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Imposition and variation of requirements
case 55L Imposition of requirements by FCA cross-notes
(1)Where a person has applied (whether to the FCA or the PRA) for a Part 4A permission or the variation of a Part 4A permission, the FCA may impose on that person such requirements, taking effect on or after the giving or variation of the permission, as the FCA considers appropriate.
(2) The FCA may exercise its power under subsection (3) in relation to an authorised person with a Part 4A permission (whether given by it or by the PRA) (“A”) if it appears to the FCA that—
(a)A is failing, or is likely to fail, to satisfy the threshold conditions for which the FCA is responsible,
(b)A has failed, during a period of at least 12 months, to carry on a regulated activity to which the Part 4A permission relates, or
(c)it is desirable to exercise the power in order to advance one or more of the FCA's operational objectives.
(3)The FCA's power under this subsection is a power—
(a)to impose a new requirement,
(b)to vary a requirement imposed by the FCA under this section, or
(c)to cancel such a requirement.
(4)The FCA's power under subsection (3) is referred to in this Part as its own-initiative requirement power.
(5)The FCA may, on the application of an authorised person with a Part 4A permission—
(a)impose a new requirement,
(b)vary a requirement imposed by the FCA under this section, or
(c)cancel such a requirement.
(6)The FCA may refuse an application under subsection (5) if it appears to it that it is desirable to do so in order to advance any of its operational objectives [F279 , or the purpose for which the FCA must exercise its functions under Part 8B (see section 131U(1))F279] .
(7)The FCA must consult the PRA before imposing or varying a requirement which relates to—
(a)a person who is, or will on the granting of an application for Part 4A permission be, a PRA-authorised person, or
(b)a person who is a member of a group which includes a PRA-authorised person.
55M Imposition of requirements by PRA cross-notes
(1)Where—
(a)a person has applied for a Part 4A permission in relation to activities which consist of or include a PRA-regulated activity,
(b)a PRA-authorised person has applied for a Part 4A permission or the variation of a Part 4A permission, or
(c)an authorised person other than a PRA-authorised person has applied for a Part 4A permission to be varied by adding to the regulated activities to which it relates one or more regulated activities which include a PRA-regulated activity,
the PRA may impose on that person such requirements, taking effect on or after the giving or variation of the permission, as the PRA considers appropriate.
(2) The PRA may exercise its power under subsection (3) in relation to a PRA-authorised person with a Part 4A permission (“P”) if it appears to the PRA that—
(a)P is failing, or is likely to fail, to satisfy the threshold conditions for which the PRA is responsible,
(b)P has failed, during a period of at least 12 months, to carry on a regulated activity to which the Part 4A permission relates, or
(c)it is desirable to exercise the power in order to advance any of the PRA's objectives.
(3)The PRA's power under this subsection is a power—
(a)to impose a new requirement,
(b)to vary a requirement imposed by the PRA under this section, or
(c)to cancel such a requirement.
(4)The PRA's power under subsection (3) is referred to in this Part as its own-initiative requirement power.
(5)The PRA may, on the application of a PRA-authorised person with a Part 4A permission—
(a)impose a new requirement,
(b)vary a requirement imposed by the PRA under this section, or
(c)cancel such a requirement.
(6)The PRA may refuse an application under subsection (5) if it appears to it that it is desirable to do so in order to advance any of its objectives.
[F280 (6A)The PRA may not exercise its powers under this section to impose a requirement relating to the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (administering a benchmark).F280]
(7)The PRA must consult the FCA before imposing or varying a requirement.
case 55N Requirements under section 55L or 55M: further provisions cross-notes
(1)A requirement may, in particular, be imposed—
(a)so as to require the person concerned to take specified action, or
(b)so as to require the person concerned to refrain from taking specified action.
(2)A requirement may extend to activities which are not regulated activities.
(3)A requirement may be imposed by reference to the person's relationship with—
(a)the person's group, or
(b)other members of the person's group.
(4)A requirement may be expressed to expire at the end of such period as the regulator imposing it may specify, but the imposition of a requirement that expires at the end of a specified period does not affect the regulator's power to impose a new requirement.
(5)A requirement may refer to the past conduct of the person concerned (for example, by requiring the person concerned to review or take remedial action in respect of past conduct).
(6) In this section “ requirement ” means a requirement imposed under section 55L or 55M.
[F28155NA General requirement relating to financial promotion approval cross-notes
(1)An authorised person must not approve the content of a communication for the purposes of section 21 unless the person has permission to do so given by the FCA under this section.
(2)An authorised person who approves the content of a communication for the purposes of section 21 otherwise than in accordance with permission granted under this section is to be taken to have contravened a requirement imposed on the person by the FCA under this Act.
(3)Permission may be granted by the FCA under this section on the application of—
(a)an authorised person, or
(b)an applicant for Part 4A permission that has yet to be determined.
(4)The FCA may grant a person permission under this section—
(a)on the terms sought in the application (which may include the grant of permission to give approvals generally for the purposes of section 21), or
(b)subject to any other terms the FCA considers appropriate (which may in particular provide for the giving of permission in a narrower description of case than that sought in the application).
(5)Where the FCA grants permission to a person under this section, the FCA may vary or cancel the permission—
(a)on the application of the person to whom it was given, or
(b)of its own initiative,
and subsection (4)(b) applies to the variation of permission as it applies to its grant.
(6)If the FCA grants or varies permission under this section it must set out the terms on which the permission is given, described in such way as it considers appropriate.
(7)The FCA may refuse to grant an application for permission under this section, or for its variation or cancellation under subsection (5)(a), if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.
(8)The FCA may vary or cancel a person’s permission under subsection (5)(b) if it appears to the FCA that—
(a)the person has failed, during a period of at least 12 months, to give, or to refuse to give, any approvals for the purposes of section 21 in accordance with the permission, or
(b)it is desirable to vary or cancel the permission in order to advance one or more of its operational objectives.
(9)The FCA must consult—
(a)the PRA before giving permission under this section to, or before varying or cancelling permission under this section given to—
(i)a person who is, or will on the granting of an application for Part 4A permission be, a PRA-authorised person, or
(ii)a person who is a member of a group which includes a PRA-authorised person;
(b)the Gibraltar regulator (within the meaning of Schedule 2A) before giving permission under this section to, or before varying or cancelling permission under this section given to, a Gibraltar-based person.
(10)Subsection (9)(b) does not apply in a case where the FCA varies or cancels permission of a Gibraltar-based person in exercise of its power under subsection (5)(b), but the FCA must inform the Gibraltar regulator in writing of the variation or cancellation.
(11)Subsections (1) and (2) do not apply if the giving of approval falls within an exemption conferred by regulations made under section 55NB.
(12)Nothing in this section limits any other power under this Act to impose requirements in relation to approvals given for the purposes of section 21 so far as those requirements are additional to the requirement imposed by subsection (1) of this section (but any such other requirement that is inconsistent with the requirement imposed by that subsection is of no effect to the extent of that inconsistency).
55NB Section 55NA: power to provide for exemptions
SI (1)The Treasury may by regulations provide for exemptions from the requirement imposed by section 55NA(1) not to give approvals for the purposes of section 21 without permission.
(2)Regulations under subsection (1) may provide for an exemption to have effect—
(a)in respect of specified persons;
(b)in respect of persons falling within a specified class;
(c)in respect of approval given in relation to activities of a specified description;
(d)only in specified circumstances;
(e)subject to specified conditions.
(3) In this section “ specified ” means specified in regulations under this section. F281]
55O Imposition of requirements on acquisition of control
(1)This section applies if it appears to the appropriate regulator that—
(a)a person has acquired control over a UK authorised person who has a Part 4A permission, but
(b)there are no grounds for exercising its own-initiative requirement power [F282 or (as the case may be) the power under section 55NA(5)(b)F282] .
(2)If it appears to the appropriate regulator that the likely effect of the acquisition of control on the dfnUK authorised person, or on any of its activities, is uncertain, the appropriate regulator may—
(a)impose on the UK authorised person a requirement that could be imposed by that regulator under section 55L [F283 , 55M or 55NAF283] (as the case may be) on the giving of permission, or
(b)vary a requirement imposed by that regulator under that section on the dfnUK authorised person.
(3) “ The appropriate regulator ” means—
(a)in a case where the UK authorised person is a PRA-authorised person [F284 and the case does not relate to a requirement that is imposed (or that could be imposed) under section 55NAF284] , the FCA or the PRA;
(b)in any other case, the FCA.
(4)This section does not affect any duty of the appropriate regulator to consult or obtain the consent of the other regulator in connection with the imposition of the requirement.
(5)Any reference to a person having acquired control is to be read in accordance with Part 12.
55P Prohibitions and restrictions cross-notes
(1)This section applies if—
(a)on a person being given a Part 4A permission, either regulator imposes an assets requirement on that person,
(b)an assets requirement is imposed on an authorised person, or
(c)an assets requirement previously imposed on such a person is varied.
(2) A person on whom an assets requirement is imposed is referred to in this section as “ A ”.
(3) The “appropriate regulator” is the regulator which imposed the requirement.
(4) “ Assets requirement ” means a requirement under section 55L or 55M—
(a)prohibiting the disposal of, or other dealing with, any of A's assets (whether in the United Kingdom or elsewhere) or restricting such disposals or dealings, or
(b)that all or any of A's assets, or all or any assets belonging to consumers but held by A or to A's order, must be transferred to and held by a trustee approved by the appropriate regulator.
(5)If the appropriate regulator—
(a)imposes a requirement of the kind mentioned in subsection (4)(a), and
(b)gives notice of the requirement to any institution with whom A keeps an account,
the notice has the effects mentioned in subsection (6).
(6)Those effects are that—
(a)the institution does not act in breach of any contract with A if, having been instructed by A (or on A's behalf) to transfer any sum or otherwise make any payment out of A's account, it refuses to do so in the reasonably held belief that complying with the instruction would be incompatible with the requirement, and
(b)if the institution complies with such an instruction, it is liable to pay to the appropriate regulator an amount equal to the amount transferred from, or otherwise paid out of, A's account in contravention of the requirement.
(7)If the appropriate regulator imposes a requirement of the kind mentioned in subsection (4)(b), no assets held by a person as trustee in accordance with the requirement may, while the requirement is in force, be released or dealt with except with the consent of the appropriate regulator.
(8)If, while a requirement of the kind mentioned in subsection (4)(b) is in force, A creates a charge over any assets of A held in accordance with the requirement, the charge is (to the extent that it confers security over the assets) void against the liquidator and any of A's creditors.
(9) Assets held by a person as trustee (“T”) are to be taken to be held by T in accordance with any requirement mentioned in subsection (4)(b) only if—
(a)A has given T written notice that those assets are to be held by T in accordance with the requirement, or
(b)they are assets into which assets to which paragraph (a) applies have been transposed by T on the instructions of A.
(10)A person who contravenes subsection (7) is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(11) “ Charge ” includes a mortgage (or in Scotland a security over property).
(12)Subsections (7) and (9) do not affect any equitable interest or remedy in favour of a person who is a beneficiary of a trust as a result of a requirement of the kind mentioned in subsection (4)(b).
F28555PA. Assets requirements imposed on insurance undertakings or reinsurance undertakings
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F28655PB. Requirements relating to general meetings
(1)This section applies where—
(a)either regulator has imposed a general meeting requirement on an authorised person who is a bank, building society or investment firm,
(b)the authorised person has not complied with the general meeting requirement, and
(c)the appropriate regulator considers that the authorised person has infringed, or is likely in the near future to infringe—
(i)a relevant requirement within the meaning of section 204A; or
(ii)one or more of Articles 3 to 7, 14 to 17 or 24 to 26 of Regulation (EU) No 600/2014 of 15th May 2014 of the European Parliament and of the Council on Markets in Financial Instruments.
(2)A general meeting requirement is a requirement under section 55L or 55M that the authorised person call a general meeting of its shareholders or members.
(3)The appropriate regulator may call a general meeting of the shareholders or members of the authorised person.
(4)The appropriate regulator may propose business for consideration and decision at the general meeting.
(5)The meeting must be called in the same manner, as far as practicable, as that in which meetings are required to be called by the board of directors (or the equivalent management body) of the authorised person.
(6)For the purposes of this section—
“bank” has the meaning given in section 2 of the Banking Act 2009 ;
“building society” has the meaning given in the Building Societies Act 1986 ;
“investment firm” has the meaning given in [F287 Article 4(1)(2) of the capital requirements regulation F287] ;
“the appropriate regulator” means the regulator who imposed the general meeting requirement. F286]
Exercise of power in support of overseas regulator
55Q Exercise of power in support of overseas regulator cross-notes
(1)Either dfnUK regulator's own-initiative powers may be exercised in respect of an authorised person at the request of, or for the purpose of assisting, an overseas regulator of a prescribed kind.
F288 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)Subsection (1) does not affect any duty of one dfnUK regulator to consult or obtain the consent of the other dfnUK regulator in relation to the exercise of its own-initiative powers.
F289 (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)In deciding whether or not to [F290 exercise its own-initiative powers in response to a request, the UK regulatorF290] may take into account in particular—
(a)whether in the country or territory of the overseas regulator concerned, corresponding assistance would be given to a United Kingdom regulatory authority;
(b)whether the case concerns the breach of a law, or other requirement, which has no close parallel in the United Kingdom or involves the assertion of a jurisdiction not recognised by the United Kingdom;
(c)the seriousness of the case and its importance to persons in the United Kingdom;
(d)whether it is otherwise appropriate in the public interest to give the assistance sought.
(6)The dfnUK regulator may decide not to exercise its own-initiative powers, in response to a request, unless the overseas regulator concerned undertakes to make such contribution towards the cost of their exercise as the dfnUK regulator considers appropriate.
F291 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8) In [F292 subsections (5) and F292] (6) “ request ” means a request of a kind mentioned in subsection (1).
(9)In this section—
(a) “ UK regulator ” means the FCA or the PRA;
(b) “ overseas regulator ” means a regulator outside the United Kingdom;
(c) “ own-initiative powers ”, in relation to the FCA or the PRA, means its own-initiative variation power and its own-initiative requirement power.
Connected persons
55R Persons connected with an applicant cross-notes
(1)In considering—
(a)an application for a Part 4A permission,
(b)whether to vary or cancel a Part 4A permission,
[F293 (ba)an application for permission under section 55NA,
(bb)whether to vary or cancel permission under section 55NA,F293]
(c)whether to impose or vary a requirement under this Part, or
(d)whether to give any consent required by any provision of this Part,
the regulator concerned may have regard to any person appearing to it to be, or likely to be, in a relationship with the applicant or a person given permission which is relevant.
F294 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F294 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F294 (3A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F294 (3B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F295 (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F295 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F295 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F295 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F295 (8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F295 (9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional permissions
F29655S Duty of FCA or PRA to consider other permissions
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Persons whose interests are protected
55T Persons whose interests are protected cross-notes
For the purpose of any provision of this Part which refers to the FCA's operational objectives, [F297 the purpose for which the FCA must exercise its functions under Part 8B,F297] or the PRA's objectives in relation to the exercise of a power in relation to a particular person, it does not matter whether there is a relationship between that person and the persons whose interests will be protected by the exercise of the power.
Procedure
55U Applications under this Part cross-notes
(1)An application for a Part 4A permission must—
(a)contain a statement of the regulated activity or regulated activities which the applicant proposes to carry on and for which the applicant wishes to have permission, and
(b)give the address of a place in the United Kingdom for service on the applicant of any notice or other document which is required or authorised to be served on the applicant under this Act.
(2)An application for the variation of a Part 4A permission must contain a statement—
(a)of the desired variation, and
(b)of the regulated activity or regulated activities which the applicant proposes to carry on if the permission is varied.
(3)An application for the variation of a requirement imposed under section 55L or 55M or for the imposition of a new requirement must contain a statement of the desired variation or requirement.
[F298 (3A)An application for permission under section 55NA, or for the variation of permission under that section, must contain a statement of the desired permission or variation.F298]
(4)An application under this Part must—
(a)be made in such manner as the regulator to which it is to be made may direct, and
(b)contain, or be accompanied by, such other information as that regulator may reasonably require.
(5)At any time after the application is received and before it is determined, the appropriate regulator may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application or, as the case requires, to decide whether to give consent.
(6) In subsection (5), the “ appropriate regulator ” means—
(a)in a case where the application is made to the FCA, the FCA;
(b)in a case where the application is made to the PRA, the FCA or the PRA.
(7)Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.
(8)Each regulator may require an applicant to provide information which the applicant is required to provide to it under this section in such form, or to verify it in such a way, as the regulator may direct.
(9)The PRA must consult the FCA before—
(a)giving a direction under this section in relation to a class of applications, or
(b)imposing a requirement under this section in relation to a class of applications.
55V Determination of applications cross-notes
(1) An application under this Part must be determined by the regulator to which it is required to be made (“the appropriate regulator”) before the end of the period of 6 months beginning with the date on which it received the completed application.
(2)The appropriate regulator may determine an incomplete application if it considers it appropriate to do so; and it must in any event determine such an application within 12 months beginning with the date on which it received the application.
(3)Where the application cannot be determined by the appropriate regulator without the consent of the other regulator, the other regulator's decision must also be made within the period required by subsection (1) or (2).
(4)The applicant may withdraw the application, by giving the appropriate regulator written notice, at any time before the appropriate regulator determines it.
(5)If the appropriate regulator grants an application—
(a)for Part 4A permission,
(b)for the variation or cancellation of a Part 4A permission,
(c)for the variation or cancellation of a requirement imposed under section 55L or 55M, F299...
(d)for the imposition of a new requirement under either of those sections [F300 , or
(e)for permission under section 55NA or for the variation or cancellation of permission granted under that section,F300]
it must give the applicant written notice.
(6)The notice must state the date from which the permission, variation, cancellation or requirement has effect.
(7)A notice under this section which is given by the PRA and relates to the grant of an application for Part 4A permission or for the variation of a Part 4A permission must state that the FCA has given its consent to the grant of the application.
[F301 (8)In the case of an application for permission under this Part which—
(a)relates to the regulated activity of managing an AIF, and
(b)would if granted result in the applicant becoming a full-scope UKAIFM,
this section has effect subject to regulation 5 of the Alternative Investment Fund Managers Regulations 2013 and, accordingly, subsections (1) to (3) do not apply.F301]
[F302 (9)In the case of an application which—
(a)is for a Part 4A permission or a variation of a Part 4A permission, and
(b)relates only to the undertaking of insurance distribution activity,
subsection (1) has effect as if the reference to “6 months” were to “3 months”.
(10) In this section, “insurance distribution activity” has the meaning given in article 92 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 . F302]
55W Applications under this Part: communications between regulators
The PRA must as soon as practicable notify the FCA of the receipt or withdrawal of—
(a)an application for permission under section 55A,
(b)an application under section 55I, or
(c)an application under section 55M(5).
55X Determination of applications: warning notices and decision notices cross-notes
(1)If a regulator proposes—
(a)to give a Part 4A permission but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b),
(b)to give a Part 4A permission but to exercise its power under section 55L(1) or 55M(1) in connection with the application for permission,
(c)to vary a Part 4A permission on the application of an authorised person but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b),
(d)to vary a Part 4A permission but to exercise its power under section 55L(1) or 55M(1) in connection with the application for variation, F303...
(e)in the case of the FCA, to exercise its power under section 55L(1) in connection with an application to the PRA for a Part 4A permission or the variation of a Part 4A permission,
[F304 (f)to give permission under section 55NA but to exercise its power under subsection (4)(b) of that section, or
(g)to vary permission under section 55NA on the application of an authorised person but to exercise its power under subsection (4)(b) of that section,F304]
it must give the applicant a warning notice.
(2)If a regulator proposes to refuse an application made under this Part, it must F305... give the applicant a warning notice.
F306 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)If a regulator decides—
(a)to give a Part 4A permission but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b),
(b)to give a Part 4A permission but to exercise its power under section 55L(1) or 55M(1) in connection with the giving of the permission,
(c)to vary a Part 4A permission on the application of an authorised person but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b),
(d)to vary a Part 4A permission on the application of an authorised person but to exercise its power under section 55L(1) or 55M(1) in connection with the variation,
(e)in the case of the FCA, to exercise its power under section 55L(1) in connection with an application to the PRA for a Part 4A permission or the variation of a Part 4A permission, F307...
[F308 (ea)to give permission under section 55NA but to exercise its power under subsection (4)(b) of that section,
(eb)to vary permission under section 55NA on the application of an authorised person but to exercise its power under subsection (4)(b) of that section, orF308]
(f)to refuse an application under this Part,
it must give the applicant a decision notice.
[F309 (5)This section does not apply to applications to which section 55XA applies.F309]
[F31055XA Applications relating to administering a benchmark
(1)If the FCA decides—
(a)to give a Part 4A permission to carry on the regulated activity specified in article 63S of the RAO (administering a benchmark) but to exercise its power in section 55E(5)(a) or (b) in connection with the application for permission,
(b)to give a Part 4A permission to carry on the regulated activity specified in article 63S of the RAO (administering a benchmark) but to exercise its power in section 55L(1) in connection with the application for permission,
(c)to vary a Part 4A permission to include permission to carry on the regulated activity specified in article 63S of the RAO (administering a benchmark) on the application of an authorised person but to exercise its power in section 55E(5)(a) or (b) in connection with the application for variation,
(d)to vary a Part 4A permission to include permission to carry on the regulated activity specified in article 63S of the RAO (administering a benchmark) on the application of an authorised person but to exercise its power in section 55L(1) in connection with the application for variation,
(e)to refuse an application for a Part 4A permission to carry on the regulated activity specified in article 63S of the RAO (administering a benchmark), or
(f)to refuse an application for a variation of a Part 4A permission to include permission to carry on the regulated activity specified in article 63S of the RAO (administering a benchmark),
it must give the applicant a written notice.
(2)A written notice under subsection (1) must—
(a)give details of the decision made by the FCA,
(b)state the FCA's reasons for the decision,
(c)state whether the decision takes effect immediately or on such date as may be specified in the notice,
(d)inform the applicant that the applicant may either—
(i)request a review of the decision, and make written representations for the purpose of the review, within such period as may be specified in the notice, or
(ii)refer the matter to the Tribunal within such period as may be specified in the notice, and
(e)indicate the procedure on a reference to the Tribunal.
(3) If the applicant requests a review of the decision made by the FCA (“ the original decision ”), the FCA must consider any written representations made by the applicant and review the original decision.
(4) On a review under subsection (3) the FCA may make any decision (“the new decision”) the FCA could have made on the application.
(5)The FCA must give the applicant written notice of its decision on the review.
(6)If the new decision is to do any of the things mentioned in subsection (1)(a) to (f), the written notice under subsection (5) must—
(a)give details of the new decision made by the FCA,
(b)state the FCA's reasons for the new decision,
(c)inform the applicant that the applicant may, within such period as may be specified in the notice, refer the new decision to the Tribunal, and
(d)indicate the procedure on a reference to the Tribunal.
(8) In this section “ the RAO ” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 . F310]
55Y Exercise of own-initiative power: procedure cross-notes
(1) This section applies to an exercise of either regulator's own-initiative variation power or own-initiative requirement power in relation to an authorised person (“A”).
[F311 (1A) This section also applies to an exercise of the FCA’s power under subsection (5)(b) of section 55NA to vary of its own initiative a permission given under that section to an authorised person (“ A ”).
(1B)References in this section to a regulator’s own initiative variation power are to be taken as including the power mentioned in subsection (1A).F311]
(2)A variation of a permission or the imposition or variation of a requirement takes effect—
(a)immediately, if the notice given under subsection (4) states that that is the case,
(b)on such date as may be specified in the notice, or
(c)if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.
(3)A variation of a permission, or the imposition or variation of a requirement, may be expressed to take effect immediately (or on a specified date) only if the regulator concerned, having regard to the ground on which it is exercising its own-initiative variation power or own-initiative requirement power, reasonably considers that it is necessary for the variation, or the imposition or variation of the requirement, to take effect immediately (or on that date).
[F312 (4)If either regulator—
(a)proposes to vary a Part 4A permission or to impose or vary a requirement,
(b)varies a Part 4A permission, or imposes or varies a requirement, with immediate effect,
(c)proposes to vary a permission under section 55NA, or
(d)varies permission under section 55NA with immediate effect,
it must give A written notice.F312]
(5)The notice must—
(a)give details of the variation of the permission or the requirement or its variation,
(b)state the regulator's reasons for the variation of the permission or the imposition or variation of the requirement,
(c)inform A that A may make representations to the regulator within such period as may be specified in the notice (whether or not A has referred the matter to the Tribunal),
(d)inform A of when the variation of the permission or the imposition or variation of the requirement takes effect, and
(e)inform A of A's right to refer the matter to the Tribunal.
(6)The regulator may extend the period allowed under the notice for making representations.
(7)If, having considered any representations made by A, the regulator decides—
(a)to vary the permission, or impose or vary the requirement, in the way proposed, or
(b)if the permission has been varied or the requirement imposed or varied, not to rescind the variation of the permission or the imposition or variation of the requirement,
it must give A written notice.
(8)If, having considered any representations made by A, the regulator decides—
(a)not to vary the permission, or impose or vary the requirement, in the way proposed,
(b)to vary the permission or requirement in a different way, or impose a different requirement, or
(c)to rescind a variation or requirement which has effect,
it must give A written notice.
(9)A notice under subsection (7) must inform A of A's right to refer the matter to the Tribunal.
(10)A notice under subsection (8)(b) must comply with subsection (5).
(11)If a notice informs A of A's right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(12)For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
55Z Cancellation of Part 4A permission [F313or permission under section 55NAF313] : procedure cross-notes
(1)If a regulator proposes to cancel an authorised person's Part 4A permission [F314 or permission under section 55NAF314] otherwise than at the person's request, it must give the person a warning notice.
(2)If a regulator decides to cancel an authorised person's Part 4A permission [F315 or permission under section 55NAF315] otherwise than at the person's request, it must give the person a decision notice.
Notification
F31655Z1 Notification of ESMA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F31655Z2 Notification of EBA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F31655Z2A. Notification of the European bodies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
References to the Tribunal
case 55Z3 Right to refer matters to the Tribunal cross-notes
(1)An applicant who is aggrieved by the determination of an application made under this Part may refer the matter to the Tribunal.
(2)An authorised person who is aggrieved by the exercise by either regulator of its own-initiative variation power or its own-initiative requirement power may refer the matter to the Tribunal.
[F317 (2A)An authorised person who is aggrieved by the exercise by the FCA of its power under section 55NA(5)(b) may refer the matter to the Tribunal.F317]
[F318 (3)Where there is a review under section 55XA(3) of a determination within section 55XA(1), subsection (1) applies only in relation to the determination made on the review.F318]
Interpretation
55Z4 Interpretation of Part 4A cross-notes
In this Part—
“ own-initiative requirement power ”, in relation to the FCA or the PRA, is to be read in accordance with section 55L(4) or 55M(4);
“ own-initiative variation power ”, in relation to the FCA or the PRA, is to be read in accordance with section 55J(12). F221]
case Part V Performance of Regulated Activities cross-notes
Prohibition orders
notecase 56 Prohibition orders. cross-notesI5
[F319 (1)The FCA may make a prohibition order if it appears to it that an individual is not a fit and proper person to perform functions in relation to a regulated activity carried on by—
(a)an authorised person,
(b)a person who is an exempt person in relation to that activity, or
(c)a person to whom, as a result of Part 20, the general prohibition does not apply in relation to that activity.
(1A)The PRA may make a prohibition order if it appears to it that an individual is not a fit and proper person to perform functions in relation to a regulated activity carried on by—
(a)a PRA-authorised person, or
(b)a person who is an exempt person in relation to a PRA-regulated activity carried on by the person.F319]
(2) [F320 A “prohibition order” is an order F320] prohibiting the individual from performing a specified function, any function falling within a specified description or any function.
(3)A prohibition order may relate to—
(a)a specified regulated activity, any regulated activity falling within a specified description or all regulated activities;
[F321 (b)all persons falling within subsection (3A) or a particular paragraph of that subsection or all persons within a specified class of person falling within a particular paragraph of that subsection.F321]
[F322 (3A)A person falls within this subsection if the person is—
(a)an authorised person,
(b)an exempt person, or
(c)a person to whom, as a result of Part 20, the general prohibition does not apply in relation to a regulated activity.F322]
(4)An individual who performs or agrees to perform a function in breach of a prohibition order is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(5)In proceedings for an offence under subsection (4) it is a defence for the accused to show that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.
(6)[F323 A person falling within subsection (3A)F323] must take reasonable care to ensure that no function of his, in relation to the carrying on of a regulated activity, is performed by a person who is prohibited from performing that function by a prohibition order.
(7)[F324 The regulator that has made a prohibition orderF324] may, on the application of the individual named in [F325the orderF325] , vary or revoke it.
[F326 (7A)If—
(a)the FCA proposes to vary or revoke a prohibition order, and
(b)as a result of the proposed variation or revocation, an individual—
(i)will no longer be prohibited from performing a function of interest to the PRA, or
(ii)will be prohibited from performing such a function,
the FCA must consult the PRA before varying or revoking the order.
(7B)A function is of interest to the PRA if it is performed in relation to a regulated activity carried on by—
(a)a PRA-authorised person, or
(b)a person who is an exempt person in relation to a PRA-regulated activity carried on by the person.
(7C)The PRA must consult the FCA before varying or revoking a prohibition order.F326]
[F327 (7D)If—
(a)the FCA proposes to vary or revoke a prohibition order which makes provision in relation to a recognised body, and
(b)the FCA is not the appropriate regulator in relation to recognised bodies of that type,
the FCA must consult the appropriate regulator.
(7E)If the PRA proposes to vary or revoke a prohibition order which makes provision in relation to a recognised body, the PRA must consult the appropriate regulator in relation to recognised bodies of that type.F327]
F328 (8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F329 (9) “ Specified ” means specified in the prohibition order. F329]
[F329 (9)In this section—
“ the appropriate regulator ”, in relation to a recognised body, has the meaning given by section 285A;
“ recognised body ” has the meaning given by section 313;
“ specified ” means specified in the prohibition order. F329]
case 57 Prohibition orders: procedure and right to refer to Tribunal. cross-notesI6
(1)If [F330a regulatorF330] proposes to make a prohibition order it must give the individual concerned a warning notice.
(2)The warning notice must set out the terms of the prohibition.
(3)If [F331a regulatorF331] decides to make a prohibition order it must give the individual concerned a decision notice.
(4)The decision notice must—
(a)name the individual to whom the prohibition order applies;
(b)set out the terms of the order; and
(c)be given to the individual named in the order.
(5)A person against whom a decision to make a prohibition order is made may refer the matter to the Tribunal.
[F332 (6)If—
(a)the FCA proposes to make a prohibition order, and
(b)as a result of the proposed order, an individual will be prohibited from performing a function of interest to the PRA,
the FCA must consult the PRA before giving a warning notice under this section.
(7)A function is of interest to the PRA if it is performed in relation to a regulated activity carried on by—
(a)a PRA-authorised person, or
(b)a person who is an exempt person in relation to a PRA-regulated activity carried on by the person.
(8)The PRA must consult the FCA before giving a warning notice under this section.F332]
[F333 (9)If—
(a)the FCA proposes to make a prohibition order which makes provision in relation to a recognised body, and
(b)the FCA is not the appropriate regulator in relation to recognised bodies of that type,
the FCA must consult the appropriate regulator before giving a warning notice under this section.
(10)If the PRA proposes to make a prohibition order which makes provision in relation to a recognised body, the PRA must consult the appropriate regulator in relation to recognised bodies of that type before giving a warning notice under this section.
(11)In this section—
“ the appropriate regulator ”, in relation to a recognised body, has the meaning given by section 285A;
“ recognised body ” has the meaning given by section 313; F333]
58 Applications relating to prohibitions: procedure and right to refer to Tribunal. cross-notesI7
(1)This section applies to an application for the variation or revocation of a prohibition order.
(2)If the [F334appropriate regulatorF334] decides to grant the application, it must give the applicant written notice of its decision.
(3)If the [F334appropriate regulatorF334] proposes to refuse the application, it must give the applicant a warning notice.
(4)If the [F334appropriate regulatorF334] decides to refuse the application, it must give the applicant a decision notice.
(5)If the [F334appropriate regulatorF334] gives the applicant a decision notice, he may refer the matter to the Tribunal.
[F335 (6)The appropriate regulator” means the regulator to which the application is made.F335]
Approval
notecase 59 Approval for particular arrangements. cross-notesI8
(1) An authorised person (“ A ”) must take reasonable care to ensure that no person performs a controlled function under an arrangement entered into by A in relation to the carrying on by A of a regulated activity, unless [F336 that person is acting in accordance with an approval given by the appropriate regulator under this section. F336]
(2) An authorised person (“ A ”) must take reasonable care to ensure that no person performs a controlled function under an arrangement entered into by a contractor of A in relation to the carrying on by A of a regulated activity, unless [F337 that person is acting in accordance with an approval given by the appropriate regulator under this section. F337]
[F338 (3) “Controlled function”—
(a)in relation to the carrying on of a regulated activity by a PRA-authorised person, means a function of a description specified in rules made by the FCA or the PRA, and
(b)in relation to the carrying on of a regulated activity by any other authorised person, means a function of a description specified in rules made by the FCA.
(4) “The appropriate regulator”—
(a)in relation to a controlled function which is of a description specified in rules made by the FCA, means the FCA, and
(b)in relation to a controlled function which is of a description specified in rules made by the PRA, means the PRA with the consent of the FCA.
F339 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F340 (6)The PRA may specify a description of function under subsection (3)(a) only if, in relation to the carrying on of a regulated activity by a PRA-authorised person, it is satisfied that the function is a senior management function as defined in section 59ZA.F340]
[F341 (6A)If the FCA is satisfied that a function of a description specified in rules made by the FCA under subsection (3)(a) or (b) is a senior management function as defined in section 59ZA, the FCA must designate the function in the rules as a senior management function.F341]
F342 (6B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F342 (6C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F343 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F343 (7A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F343 (7B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F338]
[F344 (7C)A regulator may not exercise the power in subsection (3) so as to provide for a function to be a controlled function in relation to the carrying on of the regulated activity of managing an AIF by an AIFM which—
(a)is also an AIF;
(b)does not manage any AIF other than itself;
(c)is a body corporate; and
(d)is not a collective investment scheme.F344]
F345 (8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F346 (9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10) “Arrangement”—
(a)means any kind of arrangement for the performance of a function of A which is entered into by A or any contractor of his with another person; and
(b)includes, in particular, that other person’s appointment to an office, his becoming a partner or his employment (whether under a contract of service or otherwise).
F347 (11). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F34859ZA Senior management functions
(1)This section has effect for determining whether a function is for the purposes of section 59(6) or (6A) a senior management function.
(2) A function is a “ senior management function ”, in relation to the carrying on of a regulated activity by an authorised person, if—
(a)the function will require the person performing it to be responsible for managing one or more aspects of the authorised person's affairs, so far as relating to the activity, and
(b)those aspects involve, or might involve, a risk of serious consequences—
(i)for the authorised person, or
(ii)for business or other interests in the United Kingdom.
(3)In subsection (2)(a) the reference to managing one or more aspects of an authorised person's affairs includes a reference to taking decisions, or participating in the taking of decisions, about how one or more aspects of those affairs should be carried on.F348]
[F34959ZB Designated senior management functions
For the purposes of this Part the following are “designated senior management functions”—
(a)a function of a description specified in rules made by the FCA under section 59(3)(a) or (b) which is designated as a senior management function by the FCA under section 59(6A);
(b)a function of a description specified in rules made by the PRA under section 59(3)(a).F349]
[F35059A Specifying functions as controlled functions: supplementary
(1)The FCA must—
(a)keep under review the exercise of its power under section 59(3)(a) to specify any [F351 dfnsenior managementF351] function as a controlled function, and
(b)exercise that power in a way that it considers will minimise the likelihood that approvals fall to be given by both the FCA and the PRA in respect of the performance by a person of [F351 senior managementF351] functions in relation to the carrying on of a regulated activity by the same PRA-authorised person.
(2)The FCA and the PRA must each consult the other before exercising any power under section 59(3)(a).
(3)Any reference in this section to the exercise of a power includes its exercise by way of amendment or revocation of provision previously made in the exercise of the power.
[F352 (3A) “Senior management function” has the meaning given by section 59ZA. F352]
(4) “ Approval ” means an approval under section 59.
(5)Any expression which is used both in this section and section 59 has the same meaning in this section as in that section.
[F35359AB Specifying functions as controlled functions: transitional provision
(1)In relation to rules made by the FCA or the PRA under section 59, the power conferred by section 137T(c) to make transitional provision includes in particular power—
(a)to provide for anything done under this Part [F354 or Chapter 2A of Part 18F354] in relation to controlled functions of a particular description to be treated as having been done in relation to controlled functions of a different description;
(b)to provide for anything done under this Part [F354 or Chapter 2A of Part 18F354] (including any application or order made, any requirement imposed and any approval or notice given) to cease to have effect, to continue to have effect, or to continue to have effect with modifications, or subject to time limits or conditions;
(c)to provide for rules made by the regulator making the rules under section 59 to apply with modifications;
(d)to make saving provision.
(2)The Treasury may by regulations make whatever incidental, consequential, transitional, supplemental or saving provision the Treasury consider appropriate in connection with the making of rules by the FCA or the PRA under section 59.
(3)Regulations under subsection (2) may—
(a)confer functions on the FCA or the PRA (including the function of making rules);
(b)modify, exclude or apply (with or without modifications) any primary or subordinate legislation (including any provision of, or made under, this Act).F353]
59B Role of FCA in relation to PRA decisions
(1)The FCA may arrange with the PRA that in such cases as may be described in the arrangements the PRA may give approval under section 59 without obtaining the consent of the FCA.
(2)Arrangements under this section must be in writing, and must specify the date on which they come into force.
(3)The regulators must publish any arrangements under this section in such manner as they think fit.
(4)Section 59(4)(b) has effect subject to any arrangements in force under this section.F350]
notecase 60 Applications for approval. cross-notesI9
(1)An application for the [F355appropriate regulator'sF355] approval under section 59 may be made by the authorised person concerned.
(2)The application must—
(a)be made in such manner as the [F355appropriate regulatorF355] may direct; and
(b)contain, or be accompanied by, such information as the [F355appropriate regulatorF355] may reasonably require.
[F356 (2A)If—
(a)the application is for the approval of a person to perform a designated senior management function, F357...
F358 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
the appropriate regulator must require the application to contain, or be accompanied by, a statement setting out the aspects of the affairs of the authorised person concerned which it is intended that the person will be responsible for managing in performing the function.
(2B) A statement provided under subsection (2A) is known as a “statement of responsibilities”.
F359 (2C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F356]
[F360 (3)At any time after the application is received and before it is determined, the appropriate regulator may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application or, as the case requires, to decide whether to give consent.F360]
(4)The [F355appropriate regulatorF355] may require an applicant to present information which he is required to give under this section in such form, or to verify it in such a way, as the [F355appropriate regulatorF355] may direct.
(5)Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.
(6) “ The authorised person concerned ” includes a person who has applied for permission under [F361 Part 4A F361] and will be the authorised person concerned if permission is given.
F362 (6A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F363 (7)The PRA must consult the FCA before—
(a)giving a direction under subsection (2)(a) in relation to a class of applicants, or
(b)imposing a requirement under subsection (2)(b) on a class of applicants.
(8)The PRA must as soon as practicable notify the FCA of the receipt or withdrawal of an application to the PRA, unless the case is one in which by virtue of arrangements under section 59B the consent of the FCA is not required.
(9) “The appropriate regulator”—
(a)in relation to a controlled function which is of a description specified in rules made by the FCA, means the FCA;
(b)in relation to a controlled function which is of a description specified in rules made by the PRA, means the PRA, and for the purposes of subsection (3) also includes the FCA in cases where the consent of the FCA is required.F363]
[F36460A Vetting of candidates by F365... authorised persons
(1) Before [F366 an F366] authorised person may make an application for a regulator's approval under section 59, the authorised person must be satisfied that the person in respect of whom the application is made (“the candidate”) is a fit and proper person to perform the function to which the application relates.
(2)In deciding that question, the authorised person must have regard, in particular, to whether the candidate, or any person who may perform a function on the candidate's behalf—
(a)has obtained a qualification,
(b)has undergone, or is undergoing, training,
(c)possesses a level of competence, or
(d)has the personal characteristics,
required by general rules made by the regulator in relation to persons performing functions of the kind to which the application relates.
F367 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F364]
notecase 61 Determination of applications. cross-notesI10
[F368 (1)The regulator to which an application for approval is made under section 60 may grant the application only if—
(a) it is satisfied that the person in respect of whom the application is made (“the candidate”) is a fit and proper person to perform the function to which the application relates, or
(b) in a case where the application is for approval to perform a designated senior management function F369 ... [F370 (a “senior F370] management application”), it is satisfied that the condition in paragraph (a) will be met if the application is granted subject to one or more conditions (as to which, see subsection (2B)). F368]
(2)In [F371determining the applicationF371] , [F372the regulatorF372] may have regard (among other things) to whether the candidate, or any person who may perform a function on his behalf—
(a)has obtained a qualification,
(b)F373has undergone, or is undergoing, training, ...
(c)possesses a level of competence, [F374or
(d)has the personal characteristics,F374]
required by general rules[F375 made by that regulatorF375] in relation to persons performing functions of the kind to which the application relates.
[F376 (2A)Subsections (1) and (2) apply in relation to the giving by the FCA of any required consent as they apply in relation to the grant of the application.F376]
[F377 (2B)The regulator to which a F378... senior management application is made under section 60 may in particular—
(a)grant the application subject to any conditions that the regulator considers appropriate, and
(b)grant the application so as to give approval only for a limited period.
(2C)A regulator may exercise the power under paragraph (a) or (b) of subsection (2B) only if—
(a)where the regulator is the FCA, it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives, and
(b)where the regulator is the PRA, it appears to the PRA that it is desirable to do so in order to advance any of its objectives.
(2D)Consent given by the FCA for the granting of the application may be conditional on the manner in which the PRA exercises its power under subsection (2B).F377]
(3)[F379 The regulator to which an application is made under section 60 must, before the end of the period for consideration, determineF379] whether—
(a)to grant the application; or
(b)to give a warning notice under section 62(2).
[F380 (3ZA)In the case of a F381... senior management application, the reference in subsection (3)(a) to granting the application is a reference to granting it without imposing conditions or limiting the period for which the approval has effect.F380]
[F382 (3A)The period for consideration”—
(a)in any case where the application under section 60 is made by a person applying for permission under Part 4A (see section 60(6)), means whichever ends last of—
(i)the period within which the application for that permission must be determined under section 55V(1) or (2), and
(ii)the period of 3 months beginning with the date on which the regulator receives the application under section 60, and
(b)in any other case, means the period of 3 months beginning with the date on which the regulator receives the application under section 60.F382]
(4)If [F383a regulatorF383] imposes a requirement under section 60(3), the period for consideration stops running on the day on which the requirement is imposed but starts running again—
(a)on the day on which the required information is received by [F383a regulatorF383] ; or
(b)if the information is not provided on a single day, on the last of the days on which it is received by [F383a regulatorF383] .
(5)A person who makes an application under section 60 may withdraw his application by giving written notice to the [F384regulator to which the application was madeF384] at any time before the [F385regulatorF385] determines it, but only with the consent of—
(a)the candidate; and
(b)the person by whom the candidate is to be retained to perform the function concerned, if not the applicant.
F386 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F386 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62 Applications for approval: procedure and right to refer to Tribunal. cross-notesI11
(1) [F387 If the regulator to which an application is made under section 60 (“an application”) decides to grant the application, it F387] must give written notice of its decision to each of the interested parties.
(2)If [F388the regulator to which an application is madeF388] proposes to refuse [F389the applicationF389][F390 , or to grant the application subject to conditions or for a limited period (or both)F390] , it must give a warning notice to each of the interested parties.
(3)If [F388the regulator to which an application is madeF388] decides to refuse [F389the applicationF389][F391 , or to grant the application subject to conditions or for a limited period (or both)F391] , it must give a decision notice to each of the interested parties.
(4)If [F388the regulator to which an application is madeF388] decides to refuse [F389the applicationF389][F392 , or to grant the application subject to conditions or for a limited period (or both)F392] , each of the interested parties may refer the matter to the Tribunal.
(5) “The interested parties”, in relation to an application, are—
(a)the applicant;
(b) the person in respect of whom the application is made (“ A ”); and
(c)the person by whom A’s services are to be retained, if not the applicant.
[F39362A Changes in responsibilities of senior managers cross-notes
(1)This section applies where—
(a)an authorised person has made an application to the appropriate regulator for approval under section 59 for a person to perform a designated senior management function,
(b)the application contained, or was accompanied by, a statement of responsibilities under section 60(2A), and
(c)the application has been granted.
(2)If, since the granting of the application, there has been any significant change in the aspects of the authorised person's affairs which the person is responsible for managing in performing the function, the authorised person must provide the appropriate regulator with a revised statement of responsibilities.
(3)The appropriate regulator may require the authorised person—
(a)to provide information which the person is required to give under this section in such form as the appropriate regulator may direct, or
(b)to verify such information in such a way as the appropriate regulator may direct.
(4)In this section—
“ the appropriate regulator ” has the same meaning as in section 60 [F394 , except that the reference in section 60(9)(b) to subsection (3) is to be treated as a reference to subsection (2) of this section F394] ;
F395 ...F393]
notecase 63 Withdrawal of approval. cross-notesI12
[F396 (1)The FCA may withdraw an approval under section 59 given by the FCA or the PRA in relation to the performance by a person of a function if the FCA considers that the person is not a fit and proper person to perform the function.
(1A) The PRA may withdraw an approval under section 59 in relation to the performance by a person (“A”) of a function if—
(a)the PRA gave the approval, or the FCA gave the approval and the function is a [F397 relevant senior management functionF397] performed in relation to the carrying on by a PRA-authorised person of a regulated activity, and
(b)the PRA considers that A is not a fit and proper person to perform the function.
[F398 (1B) In subsection (1A) “ relevant senior management function ” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA) . F398]
(1C)Before one regulator withdraws an approval given by the other regulator, it must consult the other regulator.F396]
(2)When considering whether to withdraw [F399an approval, the FCA or the PRA may take into account any matter which could be taken into account inF399] considering an application made under section 60 in respect of the performance of the function to which the approval relates [F400(on the assumption, if it is not the case, that the application was one falling to be considered by it)F400] .
[F401 (2A)At least once a year each F402... authorised person must, in relation to every person in relation to whom an approval has been given on the application of the authorised person—
(a)consider whether there are any grounds on which a regulator could withdraw the approval under this section, and
(b)if the authorised person is of the opinion that there are such grounds, notify the regulator of those grounds.
F403 ...F401]
(3)If [F404a regulatorF404] proposes to withdraw [F405an approvalF405] , it must give each of the interested parties a warning notice.
(4)If [F404a regulatorF404] decides to withdraw [F405an approvalF405] , it must give each of the interested parties a decision notice.
(5)If [F404a regulatorF404] decides to withdraw [F405an approvalF405] , each of the interested parties may refer the matter to the Tribunal.
(6) “The interested parties”, in relation to an approval, are—
(a) the person on whose application it was given (“ A ”);
(b) the person in respect of whom it was given (“ B ”); and
(c)the person by whom B’s services are retained, if not A.
[F40663ZA Variation of senior manager's approval at request of F407... authorised person
(1)Where an [F408 approval under section 59 has effectF408] subject to conditions, the authorised person concerned may apply to the appropriate regulator to vary the approval by—
(a)varying a condition,
(b)removing a condition, or
(c)imposing a new condition.
[F409 (1A)Where an approval under section 59 has effect for a limited period, the authorised person concerned may apply to the appropriate regulator to vary the approval by—
(a)varying the period for which the approval is to have effect, or
(b)removing the limit on the period for which the approval is to have effect.F409]
(2) “The appropriate regulator”—
(a)in the case of an application for variation of an approval in a way described in subsection (1)(a) or (b), means
[F410 (i)F410] whichever of the FCA or the PRA imposed the condition concerned [F411 , or
(ii)if the condition has been varied before (under this section or section 63ZB), whichever of the FCA or the PRA last varied itF411] ;
(b)in the case of an application for variation of an approval in the way described in subsection (1)(c), means the regulator who gave the approval.
[F412 (c)in the case of an application for variation of an approval in a way described in subsection (1A), means—
(i)whichever of the FCA or the PRA imposed the limit on the period for which the approval has effect, or
(ii)if the limit has been varied before (under this section or section 63ZB), whichever of the FCA or the PRA last varied it.F412]
(3)The PRA must consult the FCA before determining an application under this section, unless the application relates to the variation or removal of a condition [F413 , or a limit on the period for which an approval has effect, which was imposed (or last varied)F413] by the PRA in exercise of its power under section 63ZB.
(4)The regulator to which an application is made under this section must, before the end of the period for consideration, determine whether—
(a)to grant the application; or
(b)to give a warning notice under section 62(2).
(5) “ The period for consideration ” means the period of 3 months beginning with the date on which the regulator receives the application.
(6)The FCA may refuse an application under this section if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.
(7)The PRA may refuse an application under this section if it appears to the PRA that it is desirable to do so in order to advance any of its objectives.
[F414 (7A)An application may not be made under this section for the variation or removal of a condition, or a limit on the period for which an approval has effect, where the condition or limit has effect by virtue of section 66.F414]
(8)The following provisions apply to an application made under this section for variation of an approval as they apply to an application for approval made under section 60—
section 60(2) to (8),
section 61(4) and (5),
section 62 [F415 , but as if in subsections (2), (3) and (4) the words “, or to grant the application subject to conditions or for a limited period (or both)” were omitted F415] .
63ZB Variation of senior manager's approval on initiative of regulator
(1)The FCA may vary an approval under section 59 given by the FCA or the PRA for the performance of a designated senior management function in relation to the carrying on of a regulated activity by [F416 anF416] authorised person if the FCA considers that it is desirable to do so in order to advance one or more of its operational objectives.
(2)The PRA may vary an approval under section 59 for the performance of a designated senior management function in relation to the carrying on of a regulated activity by [F417 anF417] authorised person if—
(a)either—
(i)the PRA gave the approval, or
(ii)the FCA gave the approval and the F418... authorised person is a PRA-authorised person, and
(b)the PRA considers that it is desirable to do so in order to advance any of its objectives.
(3)A regulator may vary an approval by—
(a)imposing a condition,
(b)varying a condition,
(c)removing a condition, F419...
(d)[F420 where the approval has effect for an unlimited period,F420] limiting the period for which the approval is to have effect [F421 , or
(e)where the approval has effect for a limited period, varying that period or removing the limit on the period for which the approval is to have effectF421] .
(4)Before one regulator varies an approval given by the other regulator, it must consult the other regulator.
[F422 (4A)Before one regulator varies an approval which was last varied by the other regulator, it must consult the other regulator.F422]
F423 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F423 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63ZC Exercise of power under section 63ZB: procedure
(1)This section applies to an exercise, by either regulator, of the power to vary an approval under section 63ZB.
(2)A variation takes effect—
(a)immediately, if the notice given under subsection (4) states that that is the case,
(b)on such date as is specified in the notice, or
(c)if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.
(3)A variation may be expressed to take effect immediately (or on a specified date) only if the regulator concerned, having regard to the ground on which it is exercising the power to vary, reasonably considers that it is necessary for the variation to take effect immediately (or on that date).
(4)If either regulator proposes to vary an approval or varies an approval with immediate effect, it must give each of the interested parties written notice.
(5)The notice must—
(a)give details of the variation,
(b)state the regulator's reasons for the variation,
(c)inform the interested parties that each of them may make representations to the regulator within such period as may be specified in the notice (whether or not any of the interested parties has referred the matter to the Tribunal),
(d)inform the interested parties of when the variation takes effect, and
(e)inform the interested parties of the right of each of them to refer the matter to the Tribunal.
(6) “ The interested parties ”, in relation to an approval, are—
(a) the person on whose application it was given (“A”),
(b) the person in respect of whom it was given (“B”), and
(c)the person by whom B's services are retained, if not A.
(7)The regulator giving the notice may extend the period allowed under the notice for making representations.
(8)If having considered the representations made by the interested parties, the regulator decides—
(a)to vary the approval, or
(b)if the variation has taken effect, not to rescind it,
it must give each of the interested parties written notice.
(9)If having considered the representations made by the interested parties, the regulator decides—
(a)not to vary the approval,
(b)to vary the approval in a different way, or
(c)if the variation has taken effect, to rescind it,
it must give each of the interested parties written notice.
(10)A notice under subsection (8) must inform the interested parties of the right of each of them to refer the matter to the Tribunal.
(11)A notice under subsection (9)(b) must comply with subsection (5).
(12)If a notice informs the interested parties of the right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(13)For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
(14) “ Approval ” means an approval under section 59. F406]
[F42463ZD Statement of policy relating to conditional approval and variation
(1)Each regulator must prepare and issue a statement of its policy with respect to—
(a)its giving of approval under section 59 subject to conditions or for a limited period only, and
(b)its variation under section 63ZA or 63ZB of an approval given under section 59.
(2)A regulator may at any time alter or replace a statement issued by it under this section.
(3)If a statement issued under this section is altered or replaced by a regulator, the regulator must issue the altered or replacement statement.
(4)A statement issued under this section must be published by the regulator concerned in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(5)A regulator may charge a reasonable fee for providing a person with a copy of a statement published under this section.
(6)A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.
63ZE Statement of policy: procedure
(1) Before issuing a statement of policy under section 63ZD, a regulator (“the issuing regulator”) must—
(a)consult the other regulator, and
(b)publish a draft of the proposed statement in the way appearing to the issuing regulator to be best calculated to bring it to the attention of the public.
(2)The duty of the FCA to consult the PRA under subsection (1)(a) applies only in so far as the statement of policy applies to persons whose approval under section 59 relates to the performance of a function designated by the FCA as a senior management function under section 59(6A) in relation to the carrying on by PRA-authorised persons of regulated activities.
(3)The draft must be accompanied by notice that representations about the proposal may be made to the issuing regulator within a specified time.
(4)Before issuing the proposed statement, the issuing regulator must have regard to any representations made to it in accordance with subsection (3).
(5)If the issuing regulator issues the proposed statement it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (3), and
(b)its response to them.
(6)If the statement differs from the draft published under subsection (1) in a way which is in the opinion of the issuing regulator significant, the issuing regulator—
(a)must before issuing it carry out any consultation required by subsection (1)(a), and
(b)must (in addition to complying with subsection (5)) publish details of the difference.
(7)The issuing regulator may charge a reasonable fee for providing a person with a draft published under subsection (1)(b).
(8)This section also applies to a proposal to alter or replace a statement.F424]
[F425Performance of controlled functions without approval
case 63A Power to impose penalties cross-notes
(1)If the [F426 appropriate regulatorF426] is satisfied that—
(a) a person (“P”) has at any time performed a controlled function without approval, and
(b)at that time P knew, or could reasonably be expected to have known, that P was performing a controlled function without approval,
it may impose a penalty on P of such amount as it considers appropriate.
(2)For the purposes of this section P performs a controlled function without approval at any time if at that time—
(a) P performs a controlled function under an arrangement entered into by an authorised person (“A”), or by a contractor of A, in relation to the carrying on by A of a regulated activity; and
[F427 (b)P, when performing the function, is not acting in accordance with an approval given under section 59.F427]
(3)The [F426 appropriate regulatorF426] may not impose a penalty under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the person concerned under section 63B(1).
(4) “ The limitation period ” means the [F428 relevant period F428] beginning with the first day on which the [F426 appropriate regulator F426] knew that the person concerned had performed a controlled function without approval.
(5)For this purpose the [F426 appropriate regulatorF426] is to be treated as knowing that a person has performed a controlled function without approval if it has information from which that can reasonably be inferred.
[F429 (5A)The appropriate regulator”—
(a)in relation to a controlled function which is of a description specified in rules made by the FCA, means the FCA, and
(b)in relation to a controlled function which is of a description specified in rules made by the PRA, means the PRA.F429]
[F430 (5B)The relevant period” is—
(a)in relation to the performance of a controlled function without approval before the day on which this subsection comes into force, the period of 3 years, and
(b)in relation to the performance of a controlled function without approval on or after that day, the period of 6 years.F430]
(6)Any [F431 otherF431] expression which is used both in this section and section 59 has the same meaning in this section as in that section.
63B Procedure and right to refer to Tribunal cross-notes
(1)If [F432 a regulatorF432] proposes to impose a penalty on a person under section 63A, it must give the person a warning notice.
(2)A warning notice must state the amount of the penalty.
(3)If [F432 a regulatorF432] decides to impose a penalty on a person under section 63A, it must give the person a decision notice.
(4)A decision notice must state the amount of the penalty.
(5)If [F432 a regulatorF432] decides to impose a penalty on a person under section 63A, the person may refer the matter to the Tribunal.
63C Statement of policy cross-notes
(1)[F433 Each regulatorF433] must prepare and issue a statement of its policy with respect to—
(a)the imposition of penalties under section 63A; and
(b)the amount of penalties under that section.
(2)[F434 Each regulator'sF434] policy in determining whether a penalty should be imposed, and what the amount of a penalty should be, must include having regard to—
(a)the conduct of the person on whom the penalty is to be imposed;
(b)the extent to which the person could reasonably be expected to have known that a controlled function was performed without approval;
(c)the length of the period during which the person performed a controlled function without approval; and
(d)whether the person on whom the penalty is to be imposed is an individual.
(3)[F435 Each regulator'sF435] policy in determining whether a penalty should be imposed on a person must also include having regard to the appropriateness of taking action against the person instead of, or in addition to, taking action against an authorised person.
(4)A statement issued under this section must include an indication of the circumstances in which [F436 the regulator that has issued the statementF436] would expect to be satisfied that a person could reasonably be expected to have known that the person was performing a controlled function without approval.
(5)[F437 A regulatorF437] may at any time alter or replace a statement issued [F438 by itF438] under this section.
(6)If a statement issued under this section is altered or [F439 replaced by a regulator, the regulatorF439] must issue the altered or replaced statement.
(7)[F440 A regulatorF440] must, without delay, give the Treasury a copy of any statement which it publishes under this section.
(8)A statement issued under this section [F441 by a regulatorF441] must be published by the [F442 regulatorF442] in the way appearing to the [F442 regulatorF442] to be best calculated to bring it to the attention of the public.
(9)The [F443 regulatorF443] may charge a reasonable fee for providing a person with a copy of the statement.
(10)In exercising, or deciding whether to exercise, its power under section 63A in the case of any particular person, [F444 a regulatorF444] must have regard to any statement of policy published [F445 by itF445] under this section and in force at a time when the person concerned performed a controlled function without approval.
63D Statement of policy: procedure cross-notes
(1)Before [F446 a regulator issuesF446] a statement under section 63C, the [F447 regulatorF447] must publish a draft of the proposed statement in the way appearing to the [F447 regulatorF447] to be best calculated to bring it to the attention of the public.
(2)The draft must be accompanied by notice that representations about the proposal may be made to the [F448 regulatorF448] within a specified time.
(3)Before issuing the proposed statement, the [F449 regulatorF449] must have regard to any representations made to it in accordance with subsection (2).
(4)If the [F450 regulatorF450] issues the proposed statement it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2); and
(b)its response to them.
(5)If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the [F451 regulatorF451] , significant, the [F451 regulatorF451] must (in addition to complying with subsection (4)) publish details of the difference.
(6)[F452 A regulatorF452] may charge a reasonable fee for providing a person with a copy of a draft published [F453 by itF453] under subsection (1).
(7)This section also applies to a proposal to alter or replace a statement.F425]
[F454Certification of employees
63E Certification of employees by F455... authorised persons
(1) [F456 An F456] authorised person (“A”) must take reasonable care to ensure that no employee of A performs a specified function under an arrangement entered into by A in relation to the carrying on by A of a regulated activity, unless the employee has a valid certificate issued by A under section 63F.
(2) “Specified function”—
(a)in relation to the carrying on of a regulated activity by a PRA-authorised person, means a function of a description specified in rules made by the FCA or the PRA, and
(b)in relation to the carrying on of a regulated activity by any other authorised person, means a function of a description specified in rules made by the FCA.
(3)The FCA may specify a description of function under subsection (2)(a) or (b) only if, in relation to the carrying on of a regulated activity by [F457 anF457] authorised person of a particular description—
(a)the function is not a controlled function in relation to the carrying on of that activity by [F457 anF457] authorised person of that description, but
(b)the FCA is satisfied that the function is nevertheless a significant-harm function.
(4)The PRA may specify a description of function under subsection (2)(a) only if, in relation to the carrying on of a regulated activity by a F458... PRA-authorised person of a particular description—
(a)the function is not a controlled function in relation to the carrying on of that activity by a F458... PRA-authorised person of that description, but
(b)the PRA is satisfied that the function is nevertheless a significant-harm function.
(5) A function is a “ significant-harm function ”, in relation to the carrying on of a regulated activity by an authorised person, if—
(a)the function will require the person performing it to be involved in one or more aspects of the authorised person's affairs, so far as relating to the activity, and
(b)those aspects involve, or might involve, a risk of significant harm to the authorised person or any of its customers.
(6)Each regulator must—
(a)keep under review the exercise of its power under subsection (2) to specify any significant-harm function as a specified function, and
(b)exercise that power in a way that it considers will minimise the risk of employees of F459... authorised persons performing significant-harm functions which they are not fit and proper persons to perform.
F460 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8)In this section—
“ controlled function ” has the meaning given by section 59(3);
[F461 “customer”—
(a)in relation to an authorised person, means a person who is using, or who is or may be contemplating using, any of the services provided by the authorised person; and
(b)in relation to an authorised person carrying on a regulated claims management activity, also means (so far as not included in paragraph (a)) a person who has or may have a claim within the meaning of section 419A in respect of which the authorised person is carrying on a regulated claims management activity.F461]
F462 ...
(9) In this section any reference to an employee of a person (“A”) includes a reference to a person who—
(a)personally provides, or is under an obligation personally to provide, services to A under an arrangement made between A and the person providing the services or another person, and
(b)is subject to (or to the right of) supervision, direction or control by A as to the manner in which those services are provided.
F463 (10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63F Issuing of certificates
(1)[F464 AnF464] authorised person may issue a certificate to a person under this section only if the authorised person is satisfied that the person is a fit and proper person to perform the function to which the certificate relates.
(2)In deciding whether the person is a fit and proper person to perform the function, the F465... authorised person must have regard, in particular, to whether the person—
(a)has obtained a qualification,
(b)has undergone, or is undergoing, training,
(c)possesses a level of competence, or
(d)has the personal characteristics,
required by general rules made by the appropriate regulator in relation to employees performing functions of that kind.
(3) In subsection (2) “ the appropriate regulator ” means—
(a)in relation to employees of PRA-authorised persons, the FCA or the PRA, and
(b)in relation to employees of any other authorised person, the FCA.
(4)A certificate issued by [F466 anF466] authorised person to a person under this section must—
(a)state that the authorised person is satisfied that the person is a fit and proper person to perform the function to which the certificate relates, and
(b)set out the aspects of the affairs of the authorised person in which the person will be involved in performing the function.
(5)A certificate issued under this section is valid for a period of 12 months beginning with the day on which it is issued.
(6)If, after having considered whether a person is a fit and proper person to perform a specified function, [F467 anF467] authorised person decides not to issue a certificate to the person under this section, the authorised person must give the person a notice in writing stating—
(a)what steps (if any) the authorised person proposes to take in relation to the person as a result of the decision, and
(b)the reasons for proposing to take those steps.
(7)[F468 AnF468] authorised person must maintain a record of every employee who has a valid certificate issued by it under this section.
(8)Expressions used in this section and in section 63E have the same meaning in this section as they have in that section.F454]
F469 ...
notecase F46964 Conduct: statements and codes.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase F46965 Statements and codes: procedure.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F470Conduct of approved persons and others
case 64A Rules of conduct
(1)If it appears to the FCA to be necessary or expedient for the purpose of advancing one or more of its operational objectives, the FCA may make rules about the conduct of the following persons—
(a)persons in relation to whom either regulator has given its approval under section 59;
(b)persons who are employees of [F471 authorised personsF471] .
[F472 (c)persons who are directors of authorised persons.F472]
(2)If it appears to the PRA to be necessary or expedient for the purpose of advancing any of its objectives, the PRA may make rules about the conduct of the following persons—
(a)persons in relation to whom it has given its approval under section 59;
(b)persons in relation to whom the FCA has given its approval under section 59 in respect of the performance by them of a relevant senior management function in relation to the carrying on by a PRA-authorised person of a regulated activity;
(c)persons who are employees of F473... PRA-authorised persons.
[F474 (d)persons who are directors of PRA-authorised persons.F474]
(3)In subsection (2)—
F475 ...
“ relevant senior management function ” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA) .
(4)Rules made under this section must relate to the conduct of persons in relation to the performance by them of qualifying functions.
(5) In subsection (4) “ qualifying function ”, in relation to a person, means a function relating to the carrying on of activities (whether or not regulated activities) by—
(a)in the case of an approved person, the person on whose application approval was given, F476...
[F477 (ab)in the case of a person who is a director of an authorised person but is not an approved person, that authorised person, andF477]
(b)in any other case, the person's employer.
(6) In this section any reference to an employee of a person (“P”) includes a reference to a person who—
(a)personally provides, or is under an obligation personally to provide, services to P under an arrangement made between P and the person providing the services or another person, and
(b)is subject to (or to the right of) supervision, direction or control by P as to the manner in which those services are provided,
and “employer” is to be read accordingly.
[F478 (7) In this section “ director ”, in relation to an authorised person, means a member of the board of directors, or if there is no such board, the equivalent body responsible for the management of the authorised person concerned. F478]
64B Rules of conduct: responsibilities of F479... authorised persons
(1) This section applies where a regulator makes rules under section 64A (“conduct rules”).
(2)Every F480... authorised person must—
(a)notify all relevant persons of the conduct rules that apply in relation to them, and
(b)take all reasonable steps to secure that those persons understand how those rules apply in relation to them.
(3)The steps which [F481 anF481] authorised person must take to comply with subsection (2)(b) include, in particular, the provision of suitable training.
(4) In this section “ relevant person ”, in relation to an authorised person, means—
(a)any person in relation to whom an approval is given under section 59 on the application of the authorised person, F482...
(b)any employee of the authorised person [F483 , and
(c)any person who is a director of the authorised personF483] .
F484 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) In this section “ employee ”, in relation to an authorised person, has the same meaning as in section 64A.
[F485 (6A) In this section “ director ”, in relation to an authorised person, has the same meaning as in section 64A. F485]
F486 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F470]
[F48764C Requirement for F488... authorised persons to notify regulator of disciplinary action
(1)If—
(a)[F489 anF489] authorised person takes disciplinary action in relation to a relevant person, and
(b)the reason, or one of the reasons, for taking that action is a reason specified in rules made by the appropriate regulator for the purposes of this section,
the F490... authorised person must notify that regulator of that fact.
(2) “ Disciplinary action ”, in relation to a person, means any of the following—
(a)the issuing of a formal written warning;
(b)the suspension or dismissal of the person;
(c)the reduction or recovery of any of the person's remuneration.
(3) “ The appropriate regulator ” means—
(a)in relation to F491... PRA-authorised persons, the FCA or the PRA;
(b)in relation to any other F492... authorised persons, the FCA.
(4) “ Relevant person ” has the same meaning as in section 64B.
F493 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F487]
notecase 66 Disciplinary powers. cross-notes
(1)[F494 A regulatorF494] may take action against a person under this section [F495(whether or not it has given its approval in relation to the person)F495] if—
(a)it appears to the [F496regulatorF496] that he is guilty of misconduct; and
(b)the [F497regulatorF497] is satisfied that it is appropriate in all the circumstances to take action against him.
[F498 (1A)For provision about when a person is guilty of misconduct for the purposes of action by a regulator—
(a)see section 66A, in the case of action by the FCA, and
(b)see section 66B, in the case of action by the PRA.F498]
F499 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F500 (2A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)If the [F501regulatorF501] is entitled to take action under this section against a person, [F502it may do one or more of the following—F502] —
(a)impose a penalty on him of such amount as it considers appropriate;
[F503 (aa)suspend, for such period as it considers appropriate, any approval of the performance by him of any function to which the approval relates;
[F504 (ab)impose, for such period as it considers appropriate, any conditions in relation to any such approval which it considers appropriate;
(ac)limit the period for which any such approval is to have effect;F504]
(b)publish a statement of his misconduct.
[F505 (3A)The period for which a suspension or [F506 conditionF506] is to have effect may not exceed two years.
(3B)A suspension [F507 , condition or limitationF507] may have effect in relation to part of a function.
(3C)A [F508 conditionF508] may, in particular, be imposed so as to require any person to take, or refrain from taking, specified action.
(3D)[F509 The regulator taking action under this sectionF509] may—
(a)withdraw a suspension [F510 , condition or limitationF510] ; F511...
(b)vary a suspension or [F512 conditionF512] so as to reduce the period for which it has effect or otherwise to limit its effect.
[F513 (c)vary a limitation so as to increase the period for which the approval is to have effect.F513,F505]]
(4)[F514 A regulatorF514] may not take action under this section after the end of the [F515 relevant periodF515] beginning with the first day on which [F516 the regulatorF516] knew of the misconduct, unless proceedings in respect of it against the person concerned were begun before the end of that period.
(5)For the purposes of subsection (4)—
(a)[F517 a regulatorF517] is to be treated as knowing of misconduct if it has information from which the misconduct can reasonably be inferred; and
(b)proceedings against a person in respect of misconduct are to be treated as begun when a warning notice is given to him under section 67(1).
[F518 (5ZA) “The relevant period” is—
(a)in relation to misconduct which occurs before the day on which this subsection comes into force, the period of 3 years, and
(b)in relation to misconduct which occurs on or after that day, the period of 6 years.F518]
[F519 (5A) “Approval” means an approval given under section 59. F519]
F520 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F521 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F522 (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 [F523 conditionF523] imposed under subsection (3)(ab) is 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.F522,F503]]
case [F52466A Misconduct: action by the FCA cross-notes
(1)For the purposes of action by the FCA under section 66, a person is guilty of misconduct if any of conditions A to C is met in relation to the person.
(2)Condition A is that—
(a)the person has at any time failed to comply with rules made by the FCA under section 64A, and
(b)at that time the person was—
(i)an approved person, F525...
(ii)an employee of [F526 anF526] authorised person [F527 , or
(iii)a director of an authorised personF527] .
(3)Condition B is that—
(a)the person has at any time been knowingly concerned in a contravention of a relevant requirement by an authorised person, and
(b)at that time the person was—
(i)an approved person in relation to the authorised person, F528...
(ii)F529... an employee of the authorised person [F530 , or
(iii)a director of the authorised personF530] .
(4) In this section “ relevant requirement ” means a requirement—
(a)imposed by or under this Act, F531...
[F532 (aa)imposed by the Alternative Investment Fund Managers Regulations 2013 F533...;F532]
[F534 (ab)imposed by the Undertakings for Collective Investment in Transferable Securities Regulations 2011, F535...F534]
[F536 (ac)imposed by or under the Securitisation Regulations 2024, orF536]
(b)imposed by any [F537 qualifying provisionF537] specified, or of a description specified, for the purposes of this subsection by the Treasury by order.
(5)Condition C is that—
(a)the person has at any time been a senior manager in relation to [F538 anF538] authorised person,
(b)there has at that time been (or continued to be) a contravention of a relevant requirement by the authorised person, F539...
(c)the senior manager was at that time responsible for the management of any of the authorised person's activities in relation to which the contravention occurred [F540 , and
(d)the senior manager did not take such steps as a person in the senior manager's position could reasonably be expected to take to avoid the contravention occurring (or continuing).F540]
F541 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)For the purposes of subsection (5)—
“ senior manager ”, in relation to [F542 an F542] authorised person, means a person who has approval under section 59 to perform a designated senior management function in relation to the carrying on by the authorised person of a regulated activity;
F543 ...
(8)In this section—
“approved person”—
(a)means a person in relation to whom an approval is given under section 59, and
(b)in relation to an authorised person, means a person in relation to whom such approval is given on the application of the authorised person;
[F544 “ director ”, in relation to an authorised person, has the same meaning as in section 64A; F544]
“ employee ”, in relation to a person, has the same meaning as in section 64A.
F545 (9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66B Misconduct: action by the PRA cross-notes
(1)For the purposes of action by the PRA under section 66, a person is guilty of misconduct if any of conditions A to C is met in relation to the person.
(2)Condition A is that—
(a)the person has at any time failed to comply with rules made by the PRA under section 64A, and
(b)at that time the person was—
(i)an approved person, F546...
(ii)an employee of a F547... PRA-authorised person [F548 , or
(iii)a director of a PRA-authorised personF548] .
(3)Condition B is that—
(a)the person has at any time been knowingly concerned in a contravention of a relevant requirement by a PRA-authorised person, and
(b)at that time the person was—
(i)an approved person in respect of the performance of a relevant senior management function in relation to the carrying on by the PRA-authorised person of a regulated activity, F549...
[F550 (ii)an employee of the PRA-authorised personF550] [F551 , or
(iii)a director of the PRA-authorised personF551] .
(4) In this section “ relevant requirement ” means a requirement—
(a)imposed by or under this Act, F552...
[F553 (aa)imposed by or under the Securitisation Regulations 2024, orF553]
(b)imposed by any [F554 qualifying provisionF554] specified, or of a description specified, for the purposes of this subsection by the Treasury by order.
(5)Condition C is that—
(a)the person has at any time been a senior manager in relation to a F555... PRA-authorised person,
(b)there has at that time been (or continued to be) a contravention of a relevant requirement by the authorised person, F556...
(c)the senior manager was at that time responsible for the management of any of the authorised person's activities in relation to which the contravention occurred [F557 , and
(d)the senior manager did not take such steps as a person in the senior manager's position could reasonably be expected to take to avoid the contravention occurring (or continuing).F557]
F558 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)For the purposes of subsection (5)—
“ senior manager ”, in relation to a F559 ... PRA-authorised person, means a person who has approval under section 59 to perform a designated senior management function in relation to the carrying on by the authorised person of a regulated activity;
F560 ...
(8)In this section—
“approved person”—
(a)means a person in relation to whom—
(i)the PRA has given its approval under section 59, or
(ii)the FCA has given its approval under section 59 in respect of the performance by the person of a relevant senior management function in relation to the carrying on by a PRA-authorised person of a regulated activity, and
(b)in relation to an authorised person, means a person in relation to whom approval under section 59 is given on the application of the authorised person;
[F561 “ director ”, in relation to an authorised person, has the same meaning as in section 64A; F561]
“ employee ”, in relation to a person, has the same meaning as in section 64A;
F562 ...
“ relevant senior management function ” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA) .
F563 (9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F524]
case 67 Disciplinary measures: procedure and right to refer to Tribunal. cross-notes
(1)If [F564a regulatorF564] proposes to take action against a person under section 66, it must give him a warning notice [F565; and if it proposes to take action under subsection (3)(aa) [F566 , (ab) or (ac)F566] of that section, it must also give each of the other interested parties a warning notice.F565]
(2)A warning notice about a proposal to impose a penalty must state the amount of the penalty.
[F567 (2A)A warning notice about a proposal—
(a)to suspend an approval, or
(b)to impose a [F568 conditionF568] in relation to the performance of a function,
must state the period for which the suspension or [F568 conditionF568] is to have effect.F567]
[F569 (2B)A warning notice about a proposal to limit the period for which an approval is to have effect must state the length of that period.F569]
(3)A warning notice about a proposal to publish a statement must set out the terms of the statement.
(4)If [F570a regulatorF570] decides to take action against a person under section 66, it must give him a decision notice [F571; and if it decides to take action under subsection (3)(aa) [F572 , (ab) or (ac)F572] of that section, it must also give each of the other interested parties a decision notice.F571]
(5)A decision notice about the imposition of a penalty must state the amount of the penalty.
[F573 (5A)A decision notice about—
(a)the suspension of an approval, or
(b)the imposition of a [F574 conditionF574] in relation to the performance of a function,
must state the period for which the suspension or [F574 conditionF574] is to have effect.F573]
[F575 (5B)A decision notice about limiting the period for which an approval is to have effect must state the length of that period.F575]
(6)A decision notice about the publication of a statement must set out the terms of the statement.
(7)If [F576a regulatorF576] decides to take action against a person under section 66, he may refer the matter to the Tribunal[F577 ; and if [F578 the regulatorF578] decides to take action under section 66(3)(aa) [F579 , (ab) or (ac)F579] , each of the other interested parties may also refer the matter to the Tribunal.F577]
[F580 (8)Approval” means an approval given under section 59.
(9) “ Other interested parties ”, in relation to [F581 a person (“A”) in relation to whom approval has been given, F581] 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.
F582 ...F580]
68 Publication. cross-notes
After a statement under section 66 is published, [F583the regulator publishing itF583] must send a copy of it to the person concerned and to any person to whom a copy of the decision notice was given.
notecase 69 Statement of policy. cross-notes
(1)[F584 Each regulator mustF584] prepare and issue a statement of its policy with respect to—
[F585 (a)the imposition of penalties, suspensions[F586 , conditions or limitationsF586] under section 66;
(b)the amount of penalties under that section; F587...
(c)the period for which suspensions or [F588 conditionsF588] under that section are to have effect.F585][F589 ; and
(d)the period for which approvals under section 59 are to have effect as a result of a limitation under section 66.F589]
(2)[F590 A regulator'sF590] policy in determining what the amount of a penalty should be [F591, or what the period for which a suspension or restriction is to have effect should be,F591] must include having regard to—
(a)the seriousness of the misconduct in question in relation to the nature of the principle or requirement concerned;
(b)the extent to which that misconduct was deliberate or reckless; and
(c)whether [F592the person against whom action is to be takenF592] is an individual.
(3)[F593 A regulatorF593] may at any time alter or replace a statement issued [F594by itF594] under this section.
(4)If a statement issued under this section is altered or [F595replaced by a regulator, the regulatorF595] must issue the altered or replacement statement.
(5)[F596 A regulatorF596] must, without delay, give the Treasury a copy of any statement which it publishes under this section.
(6)A statement issued under this section [F597by a regulatorF597] must be published by [F598the regulatorF598] in the way appearing to [F598the regulatorF598] to be best calculated to bring it to the attention of the public.
(7)The [F599regulatorF599] may charge a reasonable fee for providing a person with a copy of the statement.
(8)In exercising, or deciding whether to exercise, its power under section 66 in the case of any particular misconduct, [F600a regulatorF600] must have regard to any statement of policy published [F601by itF601] under this section and in force at the time when the misconduct in question occurred.
notecase 70 Statements of policy: procedure. cross-notes
(1)Before [F602a regulator issuesF602] a statement under section 69, the [F603regulatorF603] must publish a draft of the proposed statement in the way appearing to the [F603regulatorF603] to be best calculated to bring it to the attention of the public.
(2)The draft must be accompanied by notice that representations about the proposal may be made to the [F604regulatorF604] within a specified time.
(3)Before issuing the proposed statement, the [F605regulatorF605] must have regard to any representations made to it in accordance with subsection (2).
(4)If the [F606regulatorF606] issues the proposed statement it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2); and
(b)its response to them.
(5)If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the [F607regulatorF607] , significant, the [F607regulatorF607] must (in addition to complying with subsection (4)) publish details of the difference.
(6)[F608 A regulatorF608] may charge a reasonable fee for providing a person with a copy of a draft published [F609by itF609] under subsection (1).
(7)This section also applies to a proposal to alter or replace a statement.
Breach of statutory duty
notecase 71 Actions for damages. I13
(1)A contravention of section 56(6) or 59(1) or (2) is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.
SI (2)In prescribed cases, a contravention of that kind which would be actionable at the suit of a private person is actionable at the suit of a person who is not a private person, subject to the defences and other incidents applying to actions for breach of statutory duty.
SI (3) “ Private person ” has such meaning as may be prescribed.
[F610 “Relevant authorised person” F610]
F61171A Meaning of “relevant authorised person”
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F612Removal of directors and senior executives and appointment of temporary manager
71B. Removal of directors and senior executives
(1)If the appropriate regulator is satisfied that the conditions in section 71D(1) and (2) are met in relation to a relevant firm, the appropriate regulator may require the firm to remove—
(a)any person who is a director of the firm;
(b)any person who is a senior executive of the firm.
(2)If the appropriate regulator imposes a requirement under subsection (1), the regulator may also require the relevant firm—
(a)to replace a director or senior executive who has been removed, and
(b)to take any step needed to give effect to the replacement, including, where necessary, calling a general meeting of the firm’s shareholders or members.
[F613 (3)If the appropriate regulator is satisfied that the condition in section 71D(4A) is met in relation to a person who is a director of an institution, of a financial holding company or of a mixed financial holding company, the appropriate regulator may require that institution, financial holding company or mixed financial holding company to remove that person from the board of directors.F613]
71C. Temporary manager
(1)If the appropriate regulator is satisfied—
(a)in the case of a relevant firm, that the conditions in section 71D(1), (2) and (4) are met in relation to that firm, or
(b)in the case of a parent undertaking which is not a relevant firm, that the conditions in section 71D(1) and (4) are met in relation to that parent undertaking,
the appropriate regulator may appoint a person to act (or one or more persons to act jointly) as a temporary manager of that firm or that parent undertaking.
(2)Where the appropriate regulator makes an appointment under subsection (1) in relation to a parent undertaking which is not a relevant firm, the regulator may also require the undertaking to remove—
(a)all of its directors;
(b)all of its senior executives.
(3)A temporary manager may be appointed under subsection (1)—
(a)to replace the directors of a relevant firm or a parent undertaking where they have been removed in compliance with a requirement imposed under section 71B or subsection (2), or
(b)to work with the directors of a relevant firm or a parent undertaking.
(4)A temporary manager has the functions specified in the instrument of appointment (see section 71F).
(5)The functions which may be specified include (amongst other things)—
(a)ascertaining the financial position of the relevant firm or the parent undertaking;
(b)managing the business or part of the business of the relevant firm or the parent undertaking in order to preserve or restore the financial position of the firm or the parent undertaking;
(c)taking measures to restore the prudent management of the relevant firm or the parent undertaking;
(d)any function of the directors.
(6)The temporary manager may, with the consent of the appropriate regulator—
(a)require the directors to call a general meeting of the shareholders or members of the relevant firm or the parent undertaking, or
(b)in the case where all of the directors have been removed in compliance with a requirement imposed under section 71B or subsection (2), call a general meeting of the shareholders or members of the relevant firm or the parent undertaking.
(7)The temporary manager may propose business for consideration at the general meeting.
(8)If the temporary manager is being appointed to work with the directors, the appropriate regulator—
(a)may require the directors not to exercise specified functions during the period of appointment;
(b)may require the directors to consult the temporary manager, or obtain the consent of the temporary manager, before taking specified decisions or specified action.
“Specified” means specified in the requirement.
71D. Sections 71B and 71C: conditions
(1)The condition in this subsection is met in relation to a relevant firm or a parent undertaking if—
(a)there is a deterioration in the financial situation of the relevant firm or the parent undertaking which is a significant deterioration, or
(b)there is a serious infringement by the relevant firm or the parent undertaking of—
(i)a relevant requirement, or
(ii)its memorandum or articles of association or other constituent instrument.
(2) The condition in this subsection is met in relation to a relevant firm if it is not reasonably likely that the deterioration would be reversed or the infringement would be brought to an end by [F614 any measure defined as a “relevant measure” by article 107 of the Bank Recovery and Resolution (No. 2) Order 2014 (S.I. 2014/3348) F614] which could be taken by the appropriate regulator under the provisions listed in subsection (3).
(3)The provisions mentioned in subsection (2) are—
(a)section 55J (variation or cancellation on initiative of regulator),
(b)section 55L (imposition of requirements by FCA),
(c)section 55M (imposition of requirements by PRA),
(d)section 55PB (requirements relating to general meetings),
(e)section 56 (prohibition orders),
(f)section 63 (withdrawal of approval),
(g)section 63ZA (variation of senior manager’s approval at request of authorised person),
(h)section 63ZB (variation of senior manager’s approval on initiative of regulator),
(i)section 63A (power to impose penalties),
(j)section 66 (disciplinary powers),
(k)Part 12A (powers exercisable in relation to parent undertakings), or
(l)Part 14 (disciplinary measures).
(4)The condition in this subsection is met if the following action would not be sufficient to reverse the deterioration or bring the infringement to an end—
(a)in the case of a relevant firm, the imposition of one or more requirements under section 71B (removal and replacement of directors and senior executives); or
(b)in the case of a parent undertaking which is not a relevant firm, the exercise of any of the appropriate regulator’s powers under Part 12A.
[F615 (4A)The condition in this subsection is met in relation to a director of an institution, of a financial holding company or of a mixed financial holding company, if the director—
(a)is no longer of sufficiently good repute to perform their duties,
(b)no longer possesses sufficient knowledge, skills, experience, honesty, integrity or independence of mind to perform their duties, or
(c)is no longer able to commit sufficient time to perform their duties.F615]
(5)For the purposes of this section—
(a) “relevant requirement” has the meaning given in section 204A;
(b)a deterioration in the financial situation of the relevant firm or the parent undertaking is significant if—
(i)in the case of a relevant firm, or a parent undertaking which is an authorised person, it no longer satisfies, or is likely to fail to satisfy, the threshold conditions relating to its financial resources which apply to it under Schedule 6;
(ii)in the case of a parent undertaking which is not an authorised person, the deterioration threatens the viability of the parent undertaking.
71E. Temporary manager: further provisions in relation to the appointment
(1)Before appointing a person to act as a temporary manager, the appropriate regulator must be satisfied that the person—
(a)has the qualifications, ability and knowledge to carry out the functions to be given to the temporary manager, and
(b)would not be subject to any conflict of interest as a result of the appointment.
(2)A person may not be appointed to act as a temporary manager for a period longer than one year, but is eligible for re-appointment (or further re-appointment) if subsection 71C(1) continues to apply in relation to the relevant firm or parent undertaking.
(3)The appropriate regulator may vary the terms of the appointment of a temporary manager, or remove the temporary manager, at any time.
(4)A temporary manager is not liable for damages in respect of anything done in good faith for the purposes of or in connection with the functions of the appointment (subject to section 8 of the Human Rights Act 1998).
71F. Temporary manager: instrument of appointment
(1)The power in section 71C(1) is to be exercised by an instrument of appointment.
(2)The instrument of appointment must—
(a)specify the functions of the temporary manager,
(b)specify the date on which the appointment of the temporary manager has effect,
(c)specify the period for which the temporary manager is appointed, and
(d)make provision for the resignation and replacement of the person who is appointed as the temporary manager.
(3)The instrument of appointment may—
(a)require the temporary manager to consult the appropriate regulator or other specified person before exercising specified functions,
(b)specify particular matters on which the appropriate regulator or other specified person must be consulted, and
(c)provide that the temporary manager is not to exercise specified functions without the consent of the appropriate regulator or other specified person.
(4)The instrument of appointment may require the temporary manager to make reports to the appropriate regulator, at specified times or intervals, on—
(a)the financial position of the relevant firm or the parent undertaking,
(b)the actions taken by the temporary manager during the course of the temporary manager’s appointment,
(c)any other specified matters.
(5) In subsections (3) and (4), “specified” means specified in the instrument of appointment.
(6)The instrument of appointment may provide for the payment of remuneration and allowances to a temporary manager.
(7)Provision under subsection (6) may provide that the amounts are—
(a)to be paid by the appropriate regulator, or
(b)to be determined by the appropriate regulator and paid by the relevant firm or the parent undertaking.
(8)If a temporary manager—
(a)is appointed to replace the directors of the relevant firm or the parent undertaking, or
(b)is appointed to work with the directors of the relevant firm or the parent undertaking and has the power to represent that firm or parent undertaking,
the appropriate regulator must publish the instrument of appointment on its website.
71G. Right to refer matters to the Tribunal
(1)A relevant firm which is aggrieved by—
(a)the imposition of a requirement on that firm under section 71B, or
(b)the appointment, or the terms of the appointment, of a person to act as a temporary manager of that firm under section 71C(1),
may refer the matter to the Tribunal.
[F616 (1A)An institution, financial holding company or mixed financial holding company which is aggrieved by the imposition of a requirement on that institution or holding company under section 71B(3) may refer the matter to the Tribunal.F616]
(2)A parent undertaking which is aggrieved by—
(a)the imposition of a requirement on that parent undertaking under section 71C(2), or
(b)the appointment, or the terms of the appointment, of a person to act as a temporary manager of that parent undertaking under section 71C(1),
may refer the matter to the Tribunal.
(3)A director (or a former director) of a relevant firm or a parent undertaking who is aggrieved by the imposition of a requirement on that director under section 71C(8) may refer the matter to the Tribunal.
(4)A director or senior executive (or a former director or senior executive) of a relevant firm or a parent undertaking who is aggrieved by the imposition of a requirement on that firm or parent undertaking under section [F617 71B(1) or (2)F617] or 71C(2) may refer the matter to the Tribunal.
[F618 (5)A director (or former director) of an institution, a financial holding company or a mixed financial holding company who is aggrieved by the imposition of a requirement on that institution or holding company under section 71B(3) may refer the matter to the Tribunal.F618]
71H. Removal of directors and senior executives and appointment of temporary manager: procedure
(1)A requirement under section 71B or 71C(2) or (8) or the appointment of a temporary manager under section 71C(1) may be expressed to take effect immediately or on a specified date only if the appropriate regulator, having regard to the grounds for imposing the requirement or making the appointment, reasonably considers that it is necessary for the requirement or the appointment to take effect immediately or on that date.
(2)If either regulator proposes to impose a requirement on a relevant firm [F619 , institution, financial holding company or mixed financial holding companyF619] under section 71B or a parent undertaking under section 71C(2), or imposes such a requirement with immediate effect, it must give written notice—
(a)to that firm [F620 , institution, holding companyF620] or parent undertaking, and
(b) to each of the directors or senior executives to whom the requirement relates (“the interested parties”).
(3)If either regulator—
(a)proposes to appoint a person to act as a temporary manager under section 71C or to vary the terms on which such a person is appointed, or
(b)makes such an appointment or variation with immediate effect,
the regulator must give written notice to the relevant firm or the parent undertaking concerned.
(4)If either regulator proposes to impose a requirement on the directors under section 71C(8), or imposes such a requirement with immediate effect, the regulator must give written notice to each director.
(5)A notice given under subsection (2) must—
(a)give details of the requirement,
(b)identify each of the directors or senior executives to whom the requirement relates,
(c)give the regulator’s reasons for imposing the requirement—
(i)in the case of a notice given to the relevant firm [F621 , the financial holding company, the mixed financial holding companyF621] or the parent undertaking, in relation to each interested party;
(ii)in the case of a notice given to an interested party, in relation to that interested party,
(d)inform the relevant firm [F622 , the financial holding company, the mixed financial holding companyF622] or the parent undertaking and the interested parties that each of them may make representations to the regulator within such period as may be specified in the notice (whether or not the matter has been referred to the Tribunal),
(e)state when the requirement takes effect, and
(f)inform the relevant firm [F623 , the financial holding company, the mixed financial holding companyF623] or the parent undertaking and each of the interested parties of their right to refer the matter to the Tribunal.
(6)A notice given under subsection (3) must—
(a)state when the appointment or variation takes effect, and be accompanied by the instrument, or revised instrument, of appointment,
(b)give the regulator’s reasons for making the appointment or variation,
(c)inform the relevant firm or the parent undertaking that it may make representations to the regulator within such period as may be specified in the notice (whether or not the matter has been referred to the Tribunal), and
(d)inform the relevant firm or the parent undertaking of its right to refer the matter to the Tribunal.
(7)A notice given under subsection (4) must—
(a)give details of the requirement,
(b)give the regulator’s reasons for imposing the requirement,
(c)state when the requirement takes effect,
(d)inform the director that the director may make representations to the regulator within such period as may be specified in the notice (whether or not the matter has been referred to the Tribunal), and
(e)inform the director of the director’s right to refer the matter to the Tribunal.
(8)The regulator may extend the period allowed by the notice given under subsection (2), (3) or (4) for making representations.
(9) If, having considered any representations made by a person to whom notice (the “original notice”) has been given under subsection (2), (3) or (4), the regulator decides—
(a)to impose the requirement, make the appointment or vary the terms of an appointment in accordance with the original notice, or
(b)not to rescind the imposition of any such requirement or the making of any such appointment or variation which has already taken effect,
the regulator must give written notice to each person to whom the original notice was given.
(10)A notice under subsection (9) must inform the person to whom it is given of the right of that person to refer the matter to the Tribunal and give an indication of the procedure on such a reference.
(11) If, having considered any representations made by a person to whom notice (the “original notice”) has been given under subsection (2), (3) or (4), the regulator decides—
(a)to impose a requirement, make an appointment or a vary the terms of an appointment in a way that is different from the requirement, appointment or variation described in the original notice,
(b)not to impose the requirement, make the appointment or vary the terms of an appointment in accordance with the original notice, or
(c)to rescind the imposition of any such requirement, or the making of any such appointment or variation that has already taken effect,
the regulator must give written notice to each person to whom the original notice was given.
(12)A notice under subsection (11)(a) about the imposition of a requirement under section 71B or 71C(2) must comply with subsection (5).
(13)A notice under subsection (11)(a) about the appointment of a person as a temporary manager or the variation of the terms of the appointment of a person as a temporary manager must comply with subsection (6).
(14)A notice under subsection (11)(a) about the imposition of a requirement under section 71C(8) must comply with subsection (7).
(15) In this section, any reference to “appointment” includes “re-appointment”.
71I. Sections 71B to 71H: interpretation
(1) For the purposes of sections 71B to 71H “relevant firm” means—
(a)a bank as defined in section 2 of the Banking Act 2009,
(b)a building society as defined in section 119 of the Building Societies Act 1986, or
(c)an investment firm as defined in [F624 Article 4(1)(2) of the capital requirements regulationF624] .
(2) For the purposes of sections 71C to 71H, “parent undertaking” means an institution, financial holding company or mixed financial holding company which—
(a)is incorporated in, or formed under the law of, any part of the United Kingdom,
(b)is [F625 a UK parentF625] , and
(c)either—
(i)has a subsidiary which is an institution, or
(ii)holds a participation (within the meaning given by Article 4.1(35) of the capital requirements regulation) in an institution.
(3)For the purposes of subsection (2), an institution, financial holding company or mixed financial holding company is [F626 a UK parentF626] if it is not itself the subsidiary of an institution, financial holding company or mixed financial holding company set up in [F627 the United KingdomF627] .
(4)In [F628 sections 71B to 71H and this sectionF628] —
“institution” means a credit institution or an investment firm as defined in [F629 article 2(1) of the Bank Recovery and Resolution (No. 2) Order 2014 F629] ;
“financial holding company” and “mixed financial holding company” have the meanings given in Article 4.1(20) and 4.1(21) of the capital requirements regulation.
(5)For the purposes of sections 71B to 71H—
“appropriate regulator” means—
(a)in relation to a PRA-authorised person, the PRA,
(b)in relation to any other authorised person, the FCA,
(c)in relation to a parent undertaking that is not an authorised person—
(i)the PRA, where the PRA is the consolidating supervisor in relation to that undertaking;
(ii)the FCA, where the FCA is the consolidating supervisor in relation to that undertaking;
(d)[F630 in relation to a financial holding company or mixed financial holding company which is not a parent undertaking—
(i)the PRA, where the holding company is approved by the PRA under Part 12B;
(ii)the FCA in all other cases;F630]
“consolidating supervisor” means the competent authority responsible for the exercise of supervision on the basis of the consolidated situation (within the meaning of Article 4.1(47) of the capital requirements regulation) of an institution which is [F631 a UK parent F631] ;
“director” includes, in relation to an undertaking which has no board of directors, a member of the equivalent management body responsible for the management of the undertaking concerned;
F632 ...
“senior executive”, in relation to a relevant firm or a parent undertaking, means a person who—
(a)exercises executive functions within that firm or that undertaking; and
(b)is responsible, and directly accountable to the directors, for the day to day management of that firm or that undertaking.F612]
[F633PART 5A Designated activities
[F634CHAPTER 1 GENERAL PROVISIONSF634]
SI 71K Designated activities
(1)The Treasury may by regulations provide for an activity of a specified description to be a designated activity for the purposes of this Act.
(2)Regulations under this section are referred to in this Act as designated activity regulations.
(3)Designated activity regulations may provide for an activity to be a designated activity only if the activity relates or is connected to—
(a)the financial markets or exchanges of the United Kingdom, or
(b)financial instruments, financial products or financial investments that are (or are proposed to be) issued or sold to, or by, persons in the United Kingdom.
(4)The description of an activity as a designated activity may be framed by reference to—
(a)the way in which the activity is carried on, or
(b)the description of persons who carry on the activity.
(5)Schedule 6B contains examples of activities that may be specified as designated activities.
(6)Nothing in Schedule 6B limits the powers conferred by subsection (1).
(7)The financial instruments, financial products and financial investments mentioned in subsection (3)(b) may include cryptoassets.
SI 71L Restrictions on carrying on of designated activities
(1)A person must not carry on a designated activity if, or to the extent that, designated activity regulations prohibit the carrying on of that activity.
(2)A person carrying on a designated activity that is not prohibited by virtue of subsection (1) must comply with—
(a)designated activity rules relating to that activity, and
(b)any other requirements imposed in relation to that activity by designated activity regulations.
(3)For the purposes of this Act designated activity rules are rules made under section 71N.
SI 71M Designated activity regulations: general
(1)Designated activity regulations may make provision generally in relation to the carrying on of designated activities.
(2)The following are examples of provision that may be made by designated activity regulations—
(a)provision about cases in which the restrictions imposed by section 71L are to apply to persons carrying on a designated activity outside the United Kingdom;
(b)provision supplementing, or in connection with, any requirements relating to a designated activity under designated activity rules.
SI (3)Designated activity regulations may—
(a)provide for exemptions (including exemptions that are subject to specified conditions);
SI (b)confer powers on the Treasury or the FCA.
71N Designated activities: rules
(1)The FCA may make rules relating to designated activities.
SI (2)The power under subsection (1) is only exercisable in so far as designated activity regulations provide for the FCA to make rules—
(a)relating to the designated activity, or
(b)relating to specified matters relating to designated activities.
(3)The FCA may by notice suspend any rules made under subsection (1) for such period as it considers appropriate.
(4)Rules under subsection (1) may include provision enabling requirements imposed by the rules to be dispensed with, or modified, in such cases or circumstances as may be determined by the FCA under the rules (subject to subsection (5)).
SI (5)The powers under subsections (3) and (4) are only exercisable in such circumstances as may be specified in designated activity regulations.
(6)Before suspending any rules in accordance with subsection (3), the FCA must consult the PRA.
(7)A notice under subsection (3) must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of persons likely to be affected by it.
(8) The reference in section 137T(a) (supplementary powers) to “ authorised persons ” includes, in relation to rules made under this section, a reference to any persons to whom the rules under this section apply.
71O Designated activities: directions
(1)The FCA may by directions impose such requirements on a person, or such description of persons, relating to the carrying on of designated activities as the FCA considers appropriate.
SI (2)The power under subsection (1) is only exercisable in so far as designated activity regulations provide for the FCA to make directions relating to the designated activity.
(3)A requirement may, in particular, be imposed so as to require the person concerned—
(a)to take specified action, or
(b)to refrain from taking specified action.
(4)A requirement may extend to activities which are not designated activities.
(5)A direction under this section—
(a)may specify the way in which, and the time by which, a thing is to be done;
(b)may be varied;
(c)may be expressed to have effect during a specified period or until revoked.
(6)The FCA may at any time revoke a direction under this section by notice.
(7)The revocation of a direction does not affect the validity of anything previously done in accordance with it.
(8)A direction or notice under this section must be given in writing to the person or persons to whom it applies.
(9)But if in the circumstances the FCA considers it appropriate, the FCA may, in addition to, or instead of, proceeding under subsection (8), publish the direction or notice in the way appearing to the FCA to be best calculated to bring it to the attention of persons likely to be affected by it.
SI (10)Designated activity regulations may make provision for the exercise of the power under subsection (1) to be subject to such conditions as may be specified in the regulations.
SI (11)Provision under subsection (10) may (among other things) require, where the exercise of the power relates to a PRA-authorised person, consultation with the PRA.
(12)The imposition of a requirement that expires at the end of a specified period does not affect the FCA’s power to impose a new requirement.
SI 71P Designated activities: liability
(1)Designated activity regulations may make provision about liability and compensation in connection with this Part.
(2)A contravention of a requirement under designated activity regulations or designated activity rules—
(a)does not, except as provided by designated activity regulations under section 71Q or by regulations under section 71R, make a person guilty of an offence;
(b)does not, except as provided by designated activity regulations—
(i)make any transaction void or unenforceable, or
(ii)give rise to any action for breach of statutory duty.
(3)Designated activity regulations may in particular—
(a)in cases where the regulations make provision for liability, make provision excluding civil liability (whether generally or to such extent as may be specified),
(b)make provision for liability to be determined in accordance with designated activity rules,
(c)make provision so that a person being subject to a liability includes another person being entitled as against that person to rescind or repudiate an agreement, and
(d)make provision for the purposes of subsection (1) by applying provisions of this Act with or without modifications.
SI 71Q Designated activities: enforcement
(1)Designated activity regulations may make provision about enforcement in connection with this Part.
(2)Provision about enforcement includes (among other things) provision—
(a)requiring the supply of information;
(b)about investigations (including the making of reports);
(c)conferring powers of entry;
(d)conferring powers of inspection, search and seizure;
(e)conferring powers of censure;
(f)imposing monetary penalties;
(g)about appeals;
(h)conferring functions (including functions involving the exercise of a discretion) on a person.
(3)Designated activity regulations may in particular make provision for the purposes of subsection (1) by applying provisions of this Act with or without modifications, including any criminal offences created by this Act (and modifications made by virtue of this subsection may widen the scope of any such offences).
(4)The power under this section includes power to amend or repeal provisions of this Act.
SI 71R Designated activities and rules: connected amendments
(1)The Treasury may by regulations make such modifications to provision made by or under this Act or any other enactment as the Treasury consider appropriate for purposes of, or connected with, any designated activity regulations or designated activity rules.
(2)The power under subsection (1) may in particular be exercised for the purpose of removing or varying any requirement imposed by or under this Act so far as applying to the carrying on of any designated activity.
(3)The power under subsection (1) includes power to modify any criminal offence created by this Act (including by widening the scope of any such offence).
(4)In this section—
“enactment” includes—
(a)an enactment comprised in subordinate legislation (within the meaning given by section 21 of the Interpretation Act 1978),
(b)an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,
(c)an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and
(d)an enactment comprised in, or in an instrument made under, Northern Ireland legislation;
“modify” includes amend, repeal or revoke.
71S Designated activities regulations: Parliamentary control
(1)This section applies to regulations which contain provision made under section 71K which provides for an activity of a specified description to be a designated activity.
(2)A statutory instrument containing regulations to which this section applies, other than regulations to which subsection (3) applies, may not be made unless a draft of the instrument has been laid before Parliament and approved by a resolution of each House.
(3)This subsection applies to regulations which contain a statement made by the Treasury that they are of the opinion that, by reason of urgency, it is necessary to make the regulations without a draft of the statutory instrument containing the regulations being laid and approved under subsection (2).
(4)Where subsection (3) applies to regulations, a statutory instrument containing the regulations must be laid before Parliament after being made.
(5)Regulations contained in a statutory instrument laid before Parliament under subsection (4) cease to have effect at the end of the period of 28 days beginning with the day on which the instrument is made unless, during that period, the instrument is approved by a resolution of each House of Parliament.
(6)In calculating the period of 28 days, no account is to be taken of any whole days that fall within a period during which—
(a)Parliament is dissolved or prorogued, or
(b)either House of Parliament is adjourned for more than four days.
(7)If regulations cease to have effect as a result of subsection (5), that does not—
(a)affect the validity of anything previously done under the regulations, or
(b)prevent the making of new regulations.
[F635CHAPTER 2 PROVISIONS RELATING TO PARTICULAR DESIGNATED ACTIVITIES
“Relevant designated activity” and “relevant Part 5A requirement”
71T Meaning of “relevant designated activity” and “relevant Part 5A requirement”
(1) In this Act “ relevant designated activity ” means an activity that is a designated activity as a result of a provision specified in Part 1 of Schedule 6C.
(2) In this Act “ relevant Part 5A requirement ” means, in relation to a provision of this Act listed in the first column of the Table in Part 2 of Schedule 6C, a requirement that—
(a)is imposed by virtue of any of the designated activity regulations specified in the corresponding entry in the second column, and
(b)is of any of the descriptions specified in the corresponding entry in the third column.
Procedure relating to relevant Part 5A directions
71U Meaning of “relevant Part 5A direction” for purposes of this Chapter
For the purposes of this Chapter a “relevant Part 5A direction” is a direction given under section 71O by virtue of designated activity regulations that are specified in the first column of the Table in Part 3 of Schedule 6C, other than a direction (if any) of a description specified in the corresponding entry in the second column.
71V Procedure for giving, varying or revoking relevant Part 5A direction cross-notes
(1) If the FCA proposes to give a relevant Part 5A direction, or gives such a direction with immediate effect, the FCA must give written notice to the person concerned (“ P ”).
(2)A relevant Part 5A direction takes effect—
(a)immediately, if the notice under subsection (1) states that that is the case,
(b)on such other date as may be specified in the notice, or
(c)if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.
(3)A relevant Part 5A direction may be expressed to take effect immediately, or on a specified date, only if the FCA, having regard to the ground on which it is exercising the power to give the direction, considers that it is necessary for the direction to take effect immediately, or on that date.
(4)The notice under subsection (1) must—
(a)give details of the direction,
(b)state the FCA’s reasons for the direction and for its determination as to when the direction takes effect,
(c)inform P that P may make representations to the FCA within such period as may be specified in the notice (whether or not P has referred the matter to the Tribunal), and
(d)inform P of P’s right to refer the matter to the Tribunal.
(5)The FCA may extend the period allowed under the notice for making representations.
(6)If, having considered any representations made by P, the FCA decides—
(a)to give the direction proposed, or
(b)if the direction has been given, not to revoke the direction,
it must give P written notice.
(7)If, having considered any representations made by P, the FCA decides—
(a)not to give the direction proposed,
(b)to give a different direction, or
(c)to revoke a direction which has effect,
it must give P written notice.
(8)A notice under subsection (6) must inform P of P’s right to refer the matter to the Tribunal.
(9)A notice under subsection (7)(b) must comply with subsection (4).
(10)If a notice informs P of P’s right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(11)This section applies to the variation of a direction—
(a)on the FCA’s own initiative, or
(b)in response to, but otherwise than in accordance with, an application under section 71W,
as it applies to the giving of a direction.
(12)If the FCA decides on its own initiative to revoke a direction, it must give written notice to the person concerned.
(13)For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
71W Application for variation or revocation of relevant Part 5A direction cross-notes
(1)A person to whom a relevant Part 5A direction has been given may apply to the FCA for the variation or revocation of the direction.
(2)An application for the variation of a direction must contain a statement of the desired variation.
(3)An application under this section must—
(a)be made in such manner as the FCA may direct, and
(b)contain, or be accompanied by, such information as the FCA may reasonably require.
(4)At any time after the application is received and before it is determined, the FCA may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application.
(5)Different directions under subsection (3)(a) may be given, and different requirements under subsection (3)(b) or (4) imposed, in relation to different applications or categories of application.
(6)The FCA may require an applicant to provide information which the applicant is required to provide to it under this section in such form, or to verify it in such a way, as the FCA may direct.
(7)The applicant may withdraw the application, by giving the FCA written notice, at any time before the FCA determines it.
71X Determination of application under section 71W cross-notes
(1) This section applies in relation to an application under section 71W for the variation or revocation of a direction, and in this section the applicant is referred to as “ A ”.
(2)If the FCA grants the application, it must give A written notice stating the date from which the variation or revocation has effect.
(3)If the FCA proposes to refuse to revoke or vary the direction, it must give A written notice.
(4)A notice under subsection (3) must—
(a)state the FCA’s reasons for the refusal,
(b)inform A that A may make representations to the FCA within such period as may be specified in the notice (whether or not A has referred the matter to the Tribunal), and
(c)inform A of A’s right to refer the matter to the Tribunal.
(5)The FCA may extend the period allowed for making representations.
(6)If, having considered any representations made by A, the FCA decides to refuse to vary or revoke the direction, it must give A written notice.
(7)A notice under subsection (6) must inform A of A’s right to refer the matter to the Tribunal.
(8)If a notice informs A of A’s right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
71Y Relevant Part 5A direction: right to refer to Tribunal cross-notes
A person who is aggrieved by the exercise by the FCA of its powers in relation to a relevant Part 5A direction given to that person may refer the matter to the Tribunal.F635,F633]]
case Part VI Official Listing cross-notes
F636 ...
note F63672 The competent authority.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F63773 General duty of the competent authority.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F638RulesF638]
case [F63973A Part 6 Rules
(1) The [F640 FCA F640] may make rules (“Part 6 rules”) for the purposes of this Part.
(2) Provisions of Part 6 rules expressed to relate to the official list are referred to in this Part as “ listing rules ”.
F641 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F642 (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F642 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F643 (6)Transparency rules and corporate governance rules are not listing rules F644... F645..., but are Part 6 rules.F643,F639]]
The official list
notecase 74 The official list. cross-notesI14
(1)The [F640FCAF640] must maintain the official list.
(2)The [F640FCAF640] may admit to the official list such securities and other things as it considers appropriate.
(3)But—
(a)nothing may be admitted to the official list except in accordance with this Part; and
(b)the Treasury may by order provide that anything which falls within a description or category specified in the order may not be admitted to the official list.
(4)F646. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)In the following provisions of this Part—
F647 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“ listing ” means being included in the official list in accordance with this Part.
Listing
note 75 Applications for listing. cross-notesI15
(1)Admission to the official list may be granted only on an application made to the [F640FCAF640] in such manner as may be required by listing rules.
(2)No application for listing may be entertained by the [F640FCAF640] unless it is made by, or with the consent of, the issuer of the securities concerned.
SI (3)No application for listing may be entertained by the [F640FCAF640] in respect of securities which are to be issued by a body of a prescribed kind.
(4)The [F640FCAF640] may not grant an application for listing unless it is satisfied that—
(a)the requirements of listing rules (so far as they apply to the application), and
(b)any other requirements imposed by [F640the FCAF640] in relation to the application,
are complied with.
(5)An application for listing may be refused if, for a reason relating to the issuer, the [F640FCAF640] considers that granting it would be detrimental to the interests of investors.
(6)An application for listing securities which are already [F648listed in a country or territory outside the United KingdomF648] may be refused if the issuer has failed to comply with any obligations to which he is subject as a result of that listing.
76 Decision on application. cross-notes
(1)The [F640FCAF640] must notify the applicant of its decision on an application for listing—
(a)before the end of the period of six months beginning with the date on which the application is received; or
(b)if within that period [F640the FCAF640] has required the applicant to provide further information in connection with the application, before the end of the period of six months beginning with the date on which that information is provided.
(2)If the [F640FCAF640] fails to comply with subsection (1), it is to be taken to have decided to refuse the application.
(3)If the [F640FCAF640] decides to grant an application for listing, it must give the applicant written notice.
(4)If the [F640FCAF640] proposes to refuse an application for listing, it must give the applicant a warning notice.
(5)If the [F640FCAF640] decides to refuse an application for listing, it must give the applicant a decision notice.
(6)If the [F640FCAF640] decides to refuse an application for listing, the applicant may refer the matter to the Tribunal.
(7)If securities are admitted to the official list, their admission may not be called in question on the ground that any requirement or condition for their admission has not been complied with.
notecase 77 Discontinuance and suspension of listing. cross-notesI16
(1)The [F640FCAF640] may, in accordance with listing rules, discontinue the listing of any securities if satisfied that there are special circumstances which preclude normal regular dealings in them.
(2)The [F640FCAF640] may, in accordance with listing rules, suspend the listing of any securities.
[F649 (2A)The [F640 FCAF640] may discontinue under subsection (1) or suspend under subsection (2) the listing of any securities on its own initiative or on the application of the issuer of those securities.F649]
(3)If securities are suspended under subsection (2) they are to be treated, for the purposes of [F650section 96 and paragraph 23(6) of Schedule 1ZAF650] , as still being listed.
[F651 (3A)If securities have been suspended by the Bank of England under section 19, 39B or 48L of the Banking Act 2009 [F652 or paragraph 44 or 65 of Schedule 11 to the Financial Services and Markets Act 2023F652] , the FCA may, following consultation with the Bank of England, cancel the suspension.F651]
(4)This section applies to securities whenever they were admitted to the official list.
(5)If the [F640FCAF640] discontinues or suspends the listing of any securities, [F653on its own initiative,F653] the issuer may refer the matter to the Tribunal.
notecase 78 Discontinuance or suspension: procedure.
(1)A discontinuance or suspension[F654 by the [F640 FCAF640] on its own initiativeF654] takes effect—
(a)immediately, if the notice under subsection (2) states that that is the case;
(b)in any other case, on such date as may be specified in that notice.
(2)If [F655on its own initiativeF655] the [F640FCAF640] —
(a)proposes to discontinue or suspend the listing of securities, or
(b)discontinues or suspends the listing of securities with immediate effect,
it must give the issuer of the securities written notice.
(3)The notice must—
(a)give details of the discontinuance or suspension;
(b)state the [F640FCA'sF640] reasons for the discontinuance or suspension and for choosing the date on which it took effect or takes effect;
(c)inform the issuer of the securities that he may make representations to the [F640FCAF640] within such period as may be specified in the notice (whether or not he has referred the matter to the Tribunal);
(d)inform him of the date on which the discontinuance or suspension took effect or will take effect; and
(e)inform him of his right to refer the matter to the Tribunal.
(4)The [F640FCAF640] may extend the period within which representations may be made to it.
(5)If, having considered any representations made by the issuer of the securities, the [F640FCAF640] decides—
(a)to discontinue or suspend the listing of the securities, or
(b)if the discontinuance or suspension has taken effect, not to cancel it,
the [F640FCAF640] must give the issuer of the securities written notice.
(6)A notice given under subsection (5) must inform the issuer of the securities of his right to refer the matter to the Tribunal.
(7)If a notice informs a person of his right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(8)If the [F640FCAF640] decides—
(a)not to discontinue or suspend the listing of the securities, or
(b)if the discontinuance or suspension has taken effect, to cancel it,
the [F640FCAF640] must give the issuer of the securities written notice.
(9)The effect of cancelling a discontinuance is that the securities concerned are to be readmitted, without more, to the official list.
[F656 (10)If—
(a)the FCA has suspended the listing of securities on its own initiative, or securities have been suspended by the Bank of England under section 19, 39B or 48L of the Banking Act 2009, [F657 or paragraph 44 or 65 of Schedule 11 to the Financial Services and Markets Act 2023F657] and
(b)the FCA proposes to refuse an application by the issuer of the securities for the cancellation of the suspension,
the FCA must give the issuer a warning notice.F656]
(11)The [F640FCAF640] must, having considered any representations made in response to the warning notice—
(a)if it decides to refuse the application, give the issuer of the securities a decision notice;
(b)if it grants the application, give him written notice of its decision.
(12)If the [F640FCAF640] decides to refuse an application for the cancellation of the suspension of listed securities, the applicant may refer the matter to the Tribunal.
(13) “ Discontinuance ” means a discontinuance of listing under section 77(1).
(14) “ Suspension ” means a suspension of listing under section 77(2) [F658 and in subsections (10) and (12), includes a suspension of listing under section 19, 39B or 48L of the Banking Act 2009 [F659 or paragraph 44 or 65 of Schedule 11 to the Financial Services and Markets Act 2023 F659,F658]] .
[F66078A Discontinuance or suspension at the request of the issuer: procedure
(1)A discontinuance or suspension by the [F640 FCAF640] on the application of the issuer of the securities takes effect—
[F661 (a)immediately, if the notification under subsection (2) so provides;
(b)in any other case, on such date as may be provided for in that notification.F661]
(2)If the [F640 FCAF640] discontinues or suspends the listing of securities on the application of the issuer of the securities it must [F662 notify the issuer (whether in writing or otherwise)F662] .
[F663 (3)The notification must—
(a)notify the issuer of the date on which the discontinuance or suspension took effect or will take effect, and
(b)notify the issuer of such other matters (if any) as are specified in listing rules.F663]
(4)If the [F640 FCAF640] proposes to refuse an application by the issuer of the securities for the discontinuance or suspension of the listing of the securities, it must give him a warning notice.
(5)The [F640 FCAF640] must, having considered any representations made in response to the warning notice, if it decides to refuse the application, give the issuer of the securities a decision notice.
(6)If the [F640 FCAF640] decides to refuse an application by the issuer of the securities for the discontinuance or suspension of the listing of the securities, the issuer may refer the matter to the Tribunal.
(7)If the [F640 FCAF640] has suspended the listing of securities on the application of the issuer of the securities and proposes to refuse an application by the issuer for the cancellation of the suspension, it must give him a warning notice.
(8)The [F640 FCAF640] must, having considered any representations made in response to the warning notice—
(a)if it decides to refuse the application for the cancellation of the suspension, give the issuer of the securities a decision notice;
(b)if it grants the application, give him written notice of its decision.
(9)If the [F640 FCAF640] decides to refuse an application for the cancellation of the suspension of listed securities, the applicant may refer the matter to the Tribunal.
(10) “ Discontinuance ” means a discontinuance of listing under section 77(1).
(11) “ Suspension ” means a suspension of listing under section 77(2). F660]
Listing particulars
notecase 79 Listing particulars and other documents. cross-notesI17
(1)F664Listing rules may provide that securities ... of a kind specified in the rules may not be admitted to the official list unless—
(a)listing particulars have been submitted to, and approved by, the [F640FCAF640] and published; or
(b)in such cases as may be specified by listing rules, such document (other than listing particulars or a prospectus of a kind required by listing rules) as may be so specified has been published.
(2) “ Listing particulars ” means a document in such form and containing such information as may be specified in listing rules.
SI (3)For the purposes of this Part, the persons responsible for listing particulars are to be determined in accordance with regulations made by the Treasury.
[F665 (3A)Listing rules made under subsection (1) may not specify securities of a kind for which [F666 a prospectus is required as a result of rules made by virtue of the Public Offers and Admissions to Trading Regulations 2024F666] .F665]
(4)Nothing in this section affects the [F640FCA'sF640] general power to make listing rules.
notecase 80 General duty of disclosure in listing particulars.
(1)Listing particulars submitted to the [F640FCAF640] under section 79 must contain all such information as investors and their professional advisers would reasonably require, and reasonably expect to find there, for the purpose of making an informed assessment of—
(a)the assets and liabilities, financial position, profits and losses, and prospects of the issuer of the securities; and
(b)the rights attaching to the securities.
(2)That information is required in addition to any information required by—
(a)listing rules, or
(b)the [F640FCAF640] ,
as a condition of the admission of the securities to the official list.
(3)Subsection (1) applies only to information—
(a)within the knowledge of any person responsible for the listing particulars; or
(b)which it would be reasonable for him to obtain by making enquiries.
(4)In determining what information subsection (1) requires to be included in listing particulars, regard must be had (in particular) to—
(a)the nature of the securities and their issuer;
(b)the nature of the persons likely to consider acquiring them;
(c)the fact that certain matters may reasonably be expected to be within the knowledge of professional advisers of a kind which persons likely to acquire the securities may reasonably be expected to consult; and
(d)any information available to investors or their professional advisers as a result of requirements imposed on the issuer of the securities by a recognised investment exchange, by listing rules or by or under any other enactment.
notecase 81 Supplementary listing particulars. cross-notesI18
(1)If at any time after the preparation of listing particulars which have been submitted to the [F640FCAF640] under section 79 and before the commencement of dealings in the securities concerned following their admission to the official list—
(a)there is a significant change affecting any matter contained in those particulars the inclusion of which was required by—
(i)section 80,
(ii)listing rules, or
(iii)the [F640FCAF640] , or
(b)a significant new matter arises, the inclusion of information in respect of which would have been so required if it had arisen when the particulars were prepared,
the issuer must, in accordance with listing rules, submit supplementary listing particulars of the change or new matter to the [F640FCAF640] , for its approval and, if they are approved, publish them.
(2) “ Significant ” means significant for the purpose of making an informed assessment of the kind mentioned in section 80(1).
(3)If the issuer of the securities is not aware of the change or new matter in question, he is not under a duty to comply with subsection (1) unless he is notified of the change or new matter by a person responsible for the listing particulars.
(4)But it is the duty of any person responsible for those particulars who is aware of such a change or new matter to give notice of it to the issuer.
(5)Subsection (1) applies also as respects matters contained in any supplementary listing particulars previously published under this section in respect of the securities in question.
note 82 Exemptions from disclosure. I19
(1)The [F640FCAF640] may authorise the omission from listing particulars of any information, the inclusion of which would otherwise be required by section 80 or 81, on the ground—
(a)that its disclosure would be contrary to the public interest;
(b)that its disclosure would be seriously detrimental to the issuer; or
(c)in the case of securities of a kind specified in listing rules, that its disclosure is unnecessary for persons of the kind who may be expected normally to buy or deal in securities of that kind.
(2)But—
(a)no authority may be granted under subsection (1)(b) in respect of essential information; and
(b)no authority granted under subsection (1)(b) extends to any such information.
(3)The Secretary of State or the Treasury may issue a certificate to the effect that the disclosure of any information (including information that would otherwise have to be included in listing particulars for which they are themselves responsible) would be contrary to the public interest.
(4)The [F640FCAF640] is entitled to act on any such certificate in exercising its powers under subsection (1)(a).
(5)This section does not affect any powers of the [F640FCAF640] under listing rules made as a result of section 101(2).
(6) “ Essential information ” means information which a person considering acquiring securities of the kind in question would be likely to need in order not to be misled about any facts which it is essential for him to know in order to make an informed assessment.
(7) “ Listing particulars ” includes supplementary listing particulars.
note F64083 Registration of listing particulars.
F667 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[[F668,F669Contravention of prohibition relating to public offer of securitiesF669]
note F67084 Matters which may be dealt with by prospectus rules
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase [F67185 [F672Contravention of prohibition relating to public offer of securitiesF672] cross-notes
F673 (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F673 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)A person who contravenes [F674 regulation 12 of the Public Offers and Admissions to Trading Regulations 2024 (prohibition of public offers of relevant securities)F674] is guilty of an offence and liable—
(a)on summary conviction, to imprisonment for a term not exceeding 3 months or a fine not exceeding the statutory maximum or both;
(b)on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine or both.
(4)A contravention of [F675 regulation 12 of the Public Offers and Admissions to Trading Regulations 2024F675] is actionable, at the suit of a person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.
F676 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F676 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F676 (6A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F676 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F677 (8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F671]
F67986 Exempt offers to the public [F678and admissions to tradingF678]
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F67987 Election to have prospectus
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Approval of prospectus
case F67987A Criteria for approval of prospectus by [F680FCAF680]
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F67987B Exemptions from disclosure
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F67987C Consideration of application for approval
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F67987D Procedure for decision [F681to refuse anF681] application for approval
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer of application for approval of a prospectus
F68387E Transfer by [F682FCAF682] of application for approval
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F68587F Transfer to [F684FCAF684] of application for approval
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F686Final termsF686]
F68787FA. Final terms
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F68887FB. Communication of final terms by FCA
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplementary prospectus
case F67987G Supplementary prospectus
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Passporting
F68987H Prospectus approved in another EEA State
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F69087I Provision of information to host Member State
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transferable securities: powers of [F691FCAF691]
F67987J Requirements imposed as condition of approval
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F67987JA. Power to suspend scrutiny of prospectus
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F67987JB. Power to refuse approval of a prospectus
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F67987K Power to suspend [F692, restrictF692] or prohibit offer to the public
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F67987L Power to suspend [F693, restrictF693] or prohibit admission to trading on a regulated market
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F67987LA. Power of FCA to suspend or prohibit trading on a trading facility
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F67987M Public censure of issuer
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F67987N Right to refer matters to the Tribunal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F67987O [F694Procedure under sections 87JA, 87K, 87L and 87LAF694]
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F69587P Exercise of powers at request of competent authority of another EEA State
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rights of investors
F69687Q Right of investor to withdraw
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Registered investors
F69787R Register of investors
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F668]
Sponsors
note 88 Sponsors. I20
(1)Listing rules may require a person to make arrangements with a sponsor for the performance by the sponsor of such services in relation to him as may be specified in the rules.
(2) “ Sponsor ” means a person approved by the [F698 FCA F698] for the purposes of the rules.
(3)Listing rules made by virtue of subsection (1) may—
(a)provide for the [F698FCAF698] to maintain a list of sponsors;
(b)specify services which must be performed by a sponsor;
(c)impose requirements on a sponsor in relation to the provision of services or specified services;
(d)specify the circumstances in which a person is qualified for being approved as a sponsor.
[F699 (e)provide for limitations or other restrictions to be imposed on the services to which an approval relates (whether or not the approval has already been granted);
(f)provide for the approval of a sponsor to be suspended on the application of the sponsor.F699]
(4)If the [F698FCAF698] proposes—
(a)to refuse a person’s application [F700under sponsor rulesF700] ,
[F701 (aa)to impose limitations or other restrictions on the services to which a person's approval relates,F701] or
(b)to cancel a person’s approval as a sponsor[F702 otherwise than at his requestF702] ,
it must give him a warning notice.
(5)If, after considering any representations made in response to the warning notice, the [F698FCAF698] decides—
(a)to grant the application [F703under sponsor rulesF703] ,
[F704 (aa)not to impose limitations or other restrictions on the services to which a person's approval relates,F704] or
(b)not to cancel the approval,
it must give the person concerned, and any person to whom a copy of the warning notice was given, written notice of its decision.
(6)If, after considering any representations made in response to the warning notice, the [F698FCAF698] decides—
(a)to refuse to grant the application [F705under sponsor rulesF705] ,
[F706 (aa)to impose limitations or other restrictions on the services to which a person's approval relates,F706] or
(b)to cancel the approval,
it must give the person concerned a decision notice.
(7)A person to whom a decision notice is given under this section may refer the matter to the Tribunal.
[F707 (8)In this section any reference to an application under sponsor rules means—
(a)an application for approval as a sponsor,
(b)an application for the suspension of an approval as a sponsor,
(c)an application for the withdrawal of the suspension of an approval as a sponsor, or
(d)an application for the withdrawal or variation of a limitation or other restriction on the services to which a sponsor's approval relates.F707]
notecase F70889 Public censure of sponsor.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F70888A Disciplinary powers: contravention of s.88(3)(c) or (e) cross-notes
(1)The FCA may take action against a sponsor under this section if it considers that the sponsor has contravened a requirement or restriction imposed on the sponsor by rules made as a result of section 88(3)(c) or (e).
(2)If the FCA is entitled to take action under this section against a sponsor, it may do one or more of the following—
(a)impose a penalty on the sponsor of such amount as it considers appropriate;
(b)suspend, for such period as it considers appropriate, the sponsor's approval;
(c)impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the performance of services to which the sponsor's approval relates as it considers appropriate;
(d)publish a statement to the effect that the sponsor has contravened a requirement or restriction imposed on the sponsor by rules made as a result of section 88(3)(c) or (e).
(3)The period for which a suspension or restriction is to have effect may not exceed 12 months.
(4)A suspension may relate only to the performance in specified circumstances of a service to which the approval relates.
(5)A restriction may, in particular, be imposed so as to require the sponsor to take, or refrain from taking, specified action.
(6)The FCA may—
(a)withdraw a suspension or restriction; or
(b)vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.
(7)The FCA may not take action against a sponsor under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the sponsor under section 88B(1).
(8) “ The limitation period ” means the period of 3 years beginning with the first day on which the FCA knew that the sponsor had contravened the requirement or restriction.
(9)For this purpose the FCA is to be treated as knowing that a sponsor has contravened a requirement or restriction if it has information from which that can reasonably be inferred.
88B Action under s.88A: procedure and right to refer to Tribunal
(1)If the FCA proposes to take action against a sponsor under section 88A, it must give the sponsor a warning notice.
(2)A warning notice about a proposal to impose a penalty must state the amount of the penalty.
(3)A warning notice about a proposal—
(a)to suspend an approval, or
(b)to impose a restriction in relation to the performance of a service,
must state the period for which the suspension or restriction is to have effect.
(4)A warning notice about a proposal to publish a statement must set out the terms of the statement.
(5)If the FCA decides to take action against a sponsor under section 88A, it must give the sponsor a decision notice.
(6)A decision notice about the imposition of a penalty must state the amount of the penalty.
(7)A decision notice about—
(a)the suspension of an approval, or
(b)the imposition of a restriction in relation to the performance of a service,
must state the period for which the suspension or restriction is to have effect.
(8)A decision notice about the publication of a statement must set out the terms of the statement.
(9)If the FCA decides to take action against a sponsor under section 88A, the sponsor may refer the matter to the Tribunal.
88C Action under s.88A: statement of policy
(1)The FCA must prepare and issue a statement of its policy with respect to—
(a)the imposition of penalties, suspensions or restrictions under section 88A,
(b)the amount of penalties under that section, and
(c)the period for which suspensions or restrictions under that section are to have effect.
(2)The FCA's policy in determining what the amount of a penalty should be, or what the period for which a suspension or restriction is to have effect should be, must include having regard to—
(a)the seriousness of the contravention in question in relation to the nature of the requirement concerned,
(b)the extent to which that contravention was deliberate or reckless, and
(c)whether the sponsor concerned is an individual.
(3)The FCA may at any time alter or replace a statement issued under this section.
(4)If a statement issued under this section is altered or replaced, the FCA must issue the altered or replacement statement.
(5)In exercising, or deciding whether to exercise, its power under section 88A in the case of any particular contravention, the FCA must have regard to any statement of policy published under this section and in force at a time when the contravention in question occurred.
(6)A statement issued under this section must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
(7)The FCA may charge a reasonable fee for providing a person with a copy of the statement.
(8)The FCA must, without delay, give the Treasury a copy of any statement which it publishes under this section.
88D Statement of policy under s.88C: procedure
(1)Before issuing a statement under section 88C, the FCA must publish a draft of the proposed statement in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
(2)The draft must be accompanied by notice that representations about the proposal may be made to the FCA within a specified time.
(3)Before issuing the proposed statement, the FCA must have regard to any representations made to it in accordance with subsection (2).
(4)If the FCA issues the proposed statement it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2), and
(b)its response to them.
(5)If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the FCA, significant, the FCA must (in addition to complying with subsection (4)) publish details of the difference.
(6)The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
(7)This section also applies to a proposal to alter or replace a statement.
88E Powers exercisable to advance operational objectives
(1)The FCA may take action against a sponsor under this section if it considers that it is desirable to do so in order to advance one or more of its operational objectives.
(2)If the FCA is entitled to take action under this section against a sponsor, it may—
(a)suspend, for such period as it considers appropriate, the sponsor's approval, or
(b)impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the performance of services to which the sponsor's approval relates as it considers appropriate.
(3)A suspension may relate only to the performance in specified circumstances of a service to which the approval relates.
(4)A restriction may, in particular, be imposed so as to require the sponsor to take, or refrain from taking, specified action.
(5)The FCA may—
(a)withdraw a suspension or restriction, or
(b)vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.
(6)A person against whom the FCA takes action under this section may refer the matter to the Tribunal.
88F Action under s.88E: procedure
(1)Action against a sponsor under section 88E takes effect—
(a)immediately, if the notice given under subsection (3) so provides, or
(b)on such later date as may be specified in the notice.
(2)If the FCA—
(a)proposes to take action against a sponsor under that section, or
(b)takes action against a sponsor under that section with immediate effect,
it must give the sponsor written notice.
(3)The notice must—
(a)give details of the action,
(b)state the FCA's reasons for taking the action and for its determination as to when the action takes effect,
(c)inform the sponsor that the sponsor may make representations to the FCA within such period as may be specified in the notice (whether or not the matter has been referred to the Tribunal),
(d)inform the sponsor of when the action takes effect,
(e)inform the sponsor of the right to refer the matter to the Tribunal, and
(f)give an indication of the procedure on such a reference.
(4)The FCA may extend the period allowed under the notice for making representations.
(5)If the FCA decides—
(a)to take the action in the way proposed, or
(b)if the action has taken effect, not to rescind it,
the FCA must give the sponsor written notice.
(6)If the FCA decides—
(a)not to take the action in the way proposed,
(b)to take action under section 88E that differs from the action originally proposed, or
(c)to rescind action which has taken effect,
the FCA must give the sponsor written notice.
(7)A notice under subsection (5) must—
(a)inform the sponsor of the right to refer the matter to the Tribunal, and
(b)give an indication of the procedure on such a reference.
(8)A notice under subsection (6)(b) must comply with subsection (3).F708]
[F709Transparency obligations
89A Transparency rules
[F710 (1)The FCA may make rules—
(a)imposing requirements in relation to the disclosure of periodic or ongoing information about issuers whose securities are admitted to trading on a regulated market, and
(b)dealing with matters arising out of or relating to such requirements.F710]
(2)The rules may include provision for dealing with any matters [F711 dealt with in the transparency obligations directive or with any matters that, when the United Kingdom was a member State, would have been mattersF711] arising out of or related to any provision of the transparency obligations directive.
(3)The [F712 FCAF712] may also make rules—
(a)for the purpose of ensuring that voteholder information in respect of voting shares traded on a dfnUK market other than a regulated market is made public or notified to the [F712 FCAF712] ;
F713 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)Rules under this section may, in particular, make provision—
(a)specifying how the proportion of—
(i)the total voting rights in respect of shares in an issuer, or
(ii)the total voting rights in respect of a particular class of shares in an issuer,
held by a person is to be determined;
(b) specifying the circumstances in which, for the purposes of any determination of the voting rights held by a person (“P”) in respect of voting shares in an issuer, any voting rights held F714 ... by another person in respect of voting shares in the issuer are to be regarded as held by P;
(c)specifying the nature of the information which must be included in any notification;
(d)about the form of any notification;
(e)requiring any notification to be given within a specified period;
(f)specifying the manner in which any information is to be made public and the period within which it must be made public;
(g)specifying circumstances in which any of the requirements imposed by rules under this section does not apply.
[F715 (4A)The provision that may be made by virtue of subsection (4)(g) includes (but is not limited to) provision, in the case of an issuer whose registered office is situated in a country or territory outside the United Kingdom, allowing exemption from specified provisions of rules under this section if—
(a)the law of that country or territory is considered by the FCA to lay down equivalent requirements, or
(b)the issuer complies with the requirements of the law of a country or territory that the FCA considers as equivalent.F715]
(5) Rules under this section are referred to in this Part as “ transparency rules ”.
(6)Nothing in sections 89B to 89G affects the generality of the power to make rules under this section.
89B Provision of voteholder information
(1)Transparency rules may make provision for voteholder information in respect of voting shares to be notified, in circumstances specified in the rules—
(a)to the issuer, or
(b)to the public,
or to both.
(2)Transparency rules may make provision for voteholder information notified to the issuer to be notified at the same time to the [F712 FCAF712] .
(3) In this Part “voteholder information” in respect of voting shares means information relating to the proportion of voting rights held by a person in respect of the shares.
(4)Transparency rules may require notification of voteholder information relating to a [F716 person in accordance with the following provisionsF716] .
(5)Transparency rules F717... may require notification of voteholder information relating to a person only where there is a notifiable change in the proportion of—
(a)the total voting rights in respect of shares in the issuer, or
(b)the total voting rights in respect of a particular class of share in the issuer,
held by the person.
(6) For this purpose there is a “notifiable change” in the proportion of voting rights held by a person when the proportion changes—
(a)from being a proportion less than a designated proportion to a proportion equal to or greater than that designated proportion,
(b)from being a proportion equal to a designated proportion to a proportion greater or less than that designated proportion, or
(c)from being a proportion greater than a designated proportion to a proportion equal to or less than that designated proportion.
(7) In subsection (6) “ designated ” means designated by the rules.
89C Provision of information by issuers of transferable securities
(1)Transparency rules may make provision requiring the issuer of transferable securities, in circumstances specified in the rules—
(a)to make public information to which this section applies, or
(b)to notify to the [F712 FCAF712] information to which this section applies,
or to do both.
(2)In the case of every issuer, this section applies to—
[F718 (a)an annual financial report which complies with subsection (5) and with such other requirements as may be specified;
(aa)in the case of an issuer which is—
(i)a mining or quarrying undertaking, or
(ii)a logging undertaking,
reports complying with specified requirements on payments to governments;F718] [F719 andF719]
(b)information relating to the rights attached to the transferable securities, including information about the terms and conditions of those securities which could indirectly affect those rights; F720...
F721 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)In the case of an issuer of debt securities, this section also applies to [F722 a half-yearly financial report which covers the first 6 months of the financial year and complies with subsection (6) and with such other requirements as may be specifiedF722] .
(4)In the case of an issuer of shares, this section also applies to—
(a)[F723 a half-yearly financial report which covers the first 6 months of the financial year and complies with subsection (6) and with such other requirements as may be specifiedF723] ;
F724 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c)voteholder information—
(i)notified to the issuer, or
(ii)relating to the proportion of voting rights held by the issuer in respect of shares in the issuer;
(d)information relating to the issuer's capital; and
(e)information relating to the total number of voting rights in respect of shares or shares of a particular class.
[F725 (5)An issuer's annual financial report must include—
(a)audited financial statements complying with specified requirements,
(b)a management report complying with specified requirements, and
(c)statements which—
(i)relate to the financial statements and the management report,
(ii)are made by the persons responsible within the issuer, and
(iii)comply with specified requirements.
(6)An issuer's half-yearly financial report must include—
(a)a condensed set of financial statements complying with specified requirements,
(b)an interim management report complying with specified requirements, and
(c)statements which—
(i)relate to the condensed set of financial statements and the interim management report,
(ii)are made by the persons responsible within the issuer, and
(iii)comply with specified requirements.
(7) In subsection (2)(aa), “ mining or quarrying undertaking ”, “ logging undertaking ”, “ payment ” and “ government ” have the same meanings as in the Reports on Payments to Governments Regulations 2014 .
(8) In this section “ specified ” means specified in, or referred to in, transparency rules. F725]
89D Notification of voting rights held by issuer
(1)Transparency rules may require notification of voteholder information relating to the proportion of voting rights held by an issuer in respect of voting shares in [F726 the issuer in accordance with the following provisionsF726] .
(2)Transparency rules F727... may require notification of voteholder information relating to the proportion of voting rights held by an issuer in respect of voting shares in the issuer only where there is a notifiable change in the proportion of—
(a)the total voting rights in respect of shares in the issuer, or
(b)the total voting rights in respect of a particular class of share in the issuer,
held by the issuer.
(3) For this purpose there is a “notifiable change” in the proportion of voting rights held by a person when the proportion changes—
(a)from being a proportion less than a designated proportion to a proportion equal to or greater than that designated proportion,
(b)from being a proportion equal to a designated proportion to a proportion greater or less than that designated proportion, or
(c)from being a proportion greater than a designated proportion to a proportion equal to or less than that designated proportion.
(4) In subsection (3) “ designated ” means designated by the rules.
F72889E Notification of proposed amendment of issuer's constitution
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
89F Transparency rules: interpretation etc
(1)For the purposes of sections 89A to 89G—
(a)the voting rights in respect of any voting shares are the voting rights attached to those shares, [F729 andF729]
(b)a person is to be regarded as holding the voting rights in respect of the shares—
(i)if, by virtue of those shares, he is a shareholder within the meaning of Article 2.1(e) of the transparency obligations directive;
(ii)if, and to the extent that, he is entitled to acquire, dispose of or exercise those voting rights in one or more of the cases mentioned in Article 10(a) to (h) of the transparency obligations directive;
[F730 (iii)if he holds, directly or indirectly, a financial instrument which satisfies the conditions set out in Article 13(1)(a) or (b) of the transparency obligations directiveF730] F731...
F732 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F733 (1A)The FCA must establish, publish and periodically update an indicative list of financial instruments that are subject to notification requirements by virtue of subsection (1)(b)(iii), taking into account developments on financial markets.
(1B)Publication of the indicative list is to be in such manner as the FCA considers appropriate.F733]
F734 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)For the purposes of sections 89A to 89G two or more persons may, at the same time, each be regarded as holding the same voting rights.
(4)In those sections—
F735 ...
F735 ...
“ UK market ” means a market that is situated or operating in the United Kingdom;
“ voting shares ” means shares of an issuer to which voting rights are attached.
89G Transparency rules: other supplementary provisions
(1)Transparency rules may impose the same obligations on a person who has applied for the admission of transferable securities to trading on a regulated market without the issuer's consent as they impose on an issuer of transferable securities.
(2)Transparency rules that require a person to make information public may include provision authorising the [F712 FCAF712] to make the information public in the event that the person fails to do so.
(3)The [F712 FCAF712] may make public any information notified to [F712 the FCAF712] in accordance with transparency rules.
(4)Transparency rules may make provision by reference to any provision of any rules made by the Panel on Takeovers and Mergers under Part 28 of the Companies Act 2006.
(5)Sections 89A to 89F and this section are without prejudice to any other power conferred by this Part to make Part 6 rules.F709]
[F736Power of [F712FCAF712] to call for information
89H [F712FCA'sF712] power to call for information
(1)The [F712 FCAF712] may by notice in writing given to a person to whom this section applies require him—
(a)to provide specified information or information of a specified description, or
(b)to produce specified documents or documents of a specified description.
(2)This section applies to—
(a)an issuer in respect of whom transparency rules have effect;
(b)a voteholder;
(c)an auditor of—
(i)an issuer to whom this section applies, or
(ii)a voteholder;
(d)a person who controls a voteholder;
(e)a person controlled by a voteholder;
(f)a director or other similar officer of an issuer to whom this section applies;
(g)a director or other similar officer of a voteholder or, where the affairs of a voteholder are managed by its members, a member of the voteholder.
(3)This section applies only to information and documents reasonably required in connection with the exercise by the [F712 FCAF712] of functions conferred on it by or under sections 89A to 89G (transparency rules).
(4)Information or documents required under this section must be provided or produced—
(a)before the end of such reasonable period as may be specified, and
(b)at such place as may be specified.
(5)If a person claims a lien on a document, its production under this section does not affect the lien.
89I Requirements in connection with call for information
(1)The [F712 FCAF712] may require any information provided under section 89H to be provided in such form as it may reasonably require.
(2)The [F712 FCAF712] may require—
(a)any information provided, whether in a document or otherwise, to be verified in such manner as it may reasonably require;
(b)any document produced to be authenticated in such manner as it may reasonably require.
(3)If a document is produced in response to a requirement imposed under section 89H, the [F712 FCAF712] may—
(a)take copies of or extracts from the document; or
(b)require the person producing the document, or any relevant person, to provide an explanation of the document.
(4) In subsection (3)(b) “ relevant person ”, in relation to a person who is required to produce a document, means a person who—
(a)has been or is a director or controller of that person;
(b)has been or is an auditor of that person;
(c)has been or is an actuary, accountant or lawyer appointed or instructed by that person; or
(d)has been or is an employee of that person.
(5)If a person who is required under section 89H to produce a document fails to do so, the [F712 FCAF712] may require him to state, to the best of his knowledge and belief, where the document is.
89J Power to call for information: supplementary provisions
(1)The [F712 FCAF712] may require an issuer to make public any information provided to [F712 the FCAF712] under section 89H.
(2)If the issuer fails to comply with a requirement under subsection (1), the [F712 FCAF712] may, after seeking representations from the issuer, make the information public.
(3)In sections 89H and 89I (power of [F712 FCAF712] to call for information)—
“control” and “controlled” have the meaning given by subsection (4) below;
“ specified ” means specified in the notice;
“ voteholder ” means a person who—
(a)holds voting rights in respect of any voting shares for the purposes of sections 89A to 89G (transparency rules), F737...
(b)F737 ...
(4) For the purposes of those sections a person (“A”) controls another person (“B”) if—
(a)A holds a majority of the voting rights in B,
(b)A is a member of B and has the right to appoint or remove a majority of the members of the board of directors (or, if there is no such board, the equivalent management body) of B,
(c)A is a member of B and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in B, or
(d)A has the right to exercise, or actually exercises, dominant influence or control over B.
(5)For the purposes of subsection (4)(b)—
(a)any rights of a person controlled by A, and
(b)any rights of a person acting on behalf of A or a person controlled by A,
are treated as held by A.F736]
[F738Powers exercisable in case of infringement of transparency obligation
89K Public censure of issuer
(1)If the [F712 FCAF712] finds that an issuer of securities admitted to trading on a regulated market is failing or has failed to comply with an applicable transparency obligation, it may publish a statement to that effect.
(2)If the [F712 FCAF712] proposes to publish a statement, it must give the issuer a warning notice setting out the terms of the proposed statement.
(3)If, after considering any representations made in response to the warning notice, the [F712 FCAF712] decides to make the proposed statement, it must give the issuer a decision notice setting out the terms of the statement.
(4)A notice under this section must inform the issuer of his right to refer the matter to the Tribunal (see section 89N) and give an indication of the procedure on such a reference.
(5) In this section “ transparency obligation ” means an obligation [F739 under qualifying transparency legislation F739] .
[F740 (5A) In this Part “ qualifying transparency legislation ” means—
(a)transparency rules,
(b)any EU regulation, originally made under the transparency obligations directive, that is [F741 assimilated directF741] legislation,
(c)regulations made by the Treasury under regulation 71 of the Official Listing of Securities, Prospectus and Transparency (Amendment etc.) (EU Exit) Regulations 2019 for a purpose specified in paragraphs 10 to 20 of Schedule 2 to those Regulations, or
(d)technical standards made by the FCA under regulation 72 of those Regulations for a purpose specified in paragraphs 31 to 35 of that Schedule.F740]
F742 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
89L Power to suspend or prohibit trading of securities
(1)This section applies to securities admitted to trading on a regulated market.
(2)If the [F712 FCAF712] has reasonable grounds for suspecting that an applicable transparency obligation has been infringed by an issuer, it may—
(a)suspend trading in the securities for a period not exceeding 10 days,
(b)prohibit trading in the securities, or
(c)make a request to the operator of the market on which the issuer's securities are traded—
(i)to suspend trading in the securities for a period not exceeding 10 days, or
(ii)to prohibit trading in the securities.
(3)If the [F712 FCAF712] has reasonable grounds for suspecting that [F743 an applicable transparency obligationF743] has been infringed by a voteholder of an issuer, it may—
(a)prohibit trading in the securities, or
(b)make a request to the operator of the market on which the issuer's securities are traded to prohibit trading in the securities.
(4)If the [F712 FCAF712] finds that an applicable transparency obligation has been infringed, it may require the market operator to prohibit trading in the securities.
(5) In this section “ transparency obligation ” means an obligation [F744 under qualifying transparency legislation F744] .
F745 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
89M Procedure under section 89L
(1)A requirement under section 89L takes effect—
(a)immediately, if the notice under subsection (2) states that that is the case;
(b)in any other case, on such date as may be specified in the notice.
(2)If the [F712 FCAF712] —
(a)proposes to exercise the powers in section 89L in relation to a person, or
(b)exercises any of those powers in relation to a person with immediate effect,
it must give that person written notice.
(3)The notice must—
(a)give details of the [F712 FCA'sF712] action or proposed action;
(b)state the [F712 FCA'sF712] reasons for taking the action in question and choosing the date on which it took effect or takes effect;
(c)inform the recipient that he may make representations to the [F712 FCAF712] within such period as may be specified by the notice (whether or not he had referred the matter to the Tribunal);
(d)inform him of the date on which the action took effect or takes effect;
(e)inform him of his right to refer the matter to the Tribunal (see section 89N) and give an indication of the procedure on such a reference.
(4)The [F712 FCAF712] may extend the period within which representations may be made to it.
(5)If, having considered any representations made to it, the [F712 FCAF712] decides to maintain, vary or revoke its earlier decision, it must give written notice to that effect to the person mentioned in subsection (2).
F71289N Right to refer matters to the Tribunal
A person—
(a)to whom a decision notice is given under section 89K (public censure), or
(b)to whom a notice is given under section 89M (procedure in connection with suspension or prohibition of trading),
may refer the matter to the Tribunal.F738]
[F74689NA. Voting rights suspension orders
(1)The court may, on the application of the FCA and in accordance with this section, make a voting rights suspension order in respect of a person who is a voteholder in relation to shares in a particular company which are admitted to trading on a regulated market and identified in the application.
(2)A voting rights suspension order is an order which suspends the person’s exercise of voting rights attaching to the shares to which the order relates.
(3)The court may make a voting rights suspension order in respect of a person only if it is satisfied—
(a)that the person has contravened one or more relevant transparency provisions in respect of any of the shares identified in the application or any other shares in the same company which are admitted to trading on a regulated market, and
(b)that the contravention is serious enough to make it appropriate to make the order.
(4)For the purposes of subsection (3)(b), the court may, in particular, have regard to—
(a)whether the contravention was deliberate or repeated;
(b)the time taken for the contravention to be remedied;
(c)whether the voteholder ignored warnings or requests for compliance from the FCA;
(d)the size of the holding of shares to which the contravention relates;
(e)any impact of the contravention on the integrity of the dfnUK financial system;
(f)the effect of the contravention on any company merger or takeover.
(5)A voting rights suspension order may be made in relation to some or all of the shares to which the application relates.
(6)A voting rights suspension order may be made for a specified period or an indefinite period.
(7)A voting rights suspension order takes effect—
(a)on the date specified in the order, or
(b)if no date is specified, at the time it is made.
(8)Where a voting rights suspension order has been made, the FCA, the person to whom it applies or the company which issued the shares to which it relates, may apply to the court for—
(a)a variation of the order so as to alter the period for which it has effect or the shares in relation to which it has effect, or
(b)the discharge of the order.
(9)The FCA must consult the PRA before making an application to the court under this section in relation to—
(a)a person who is a PRA-authorised person, or
(b)shares issued by a PRA-authorised person.
(10)The jurisdiction conferred by this section is exercisable—
(a)in England and Wales and Northern Ireland, by the High Court, and
(b)in Scotland, by the Court of Session.
(11)In this section—
“relevant transparency provision” means—
(a)a provision of the transparency rules which [F747 implementedF747] Article 9, 10, 12, 13 or 13a of the transparency obligations directive, F748...
(b)[F749 a provision, originally made under any of those Articles, that is [F750 assimilated directF750] legislation,
(c)a provision of regulations made by the Treasury under regulation 71 of the Official Listing of Securities, Prospectus and Transparency (Amendment etc.) (EU Exit) Regulations 2019 for a purpose specified in paragraphs 13 to 16 of Schedule 2 to those Regulations, or
(d)a provision of technical standards made by the FCA under regulation 72 of those Regulations for a purpose specified in paragraphs 32 to 35 of that Schedule.F749]
“voteholder” has the meaning given by section 89J(3). F746]
[F751Corporate governance
89O Corporate governance rules
[F752 (1) The FCA may make rules (“ corporate governance rules ”) relating to the corporate governance of issuers who have requested or approved admission of their securities to trading on a regulated market. F752]
(2) “ Corporate governance ”, in relation to an issuer, includes—
(a)the nature, constitution or functions of the organs of the issuer;
(b)the manner in which organs of the issuer conduct themselves;
(c)the requirements imposed on organs of the issuer;
(d)the relationship between the different organs of the issuer;
(e)the relationship between the organs of the issuer and the members of the issuer or holders of the issuer's securities.
F753 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F754 (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)This section is without prejudice to any other power conferred by this Part to make Part 6 rules.F751]
[F755Primary information providers
89P Primary information providers
(1)Part 6 rules may require issuers of financial instruments to use primary information providers for the purpose of giving information of a specified description to a market of a specified description.
(2) “ Primary information provider ” means a person approved by the FCA for the purposes of this section.
(3) “ Specified ” means specified in the Part 6 rules.
(4)Part 6 rules made by virtue of subsection (1) may—
(a)provide for the FCA to maintain a list of providers;
(b)impose requirements on a provider in relation to the giving of information or of information of a specified description;
(c)specify the circumstances in which a person is qualified for being approved as a provider;
(d)provide for limitations or other restrictions to be imposed on the giving of information to which an approval relates (whether or not the approval has already been granted);
(e)provide for the approval of a provider to be suspended on the application of the provider.
(5)If the FCA proposes—
(a)to refuse a person's application under information provider rules,
(b)to impose limitations or other restrictions on the giving of information to which a person's approval relates, or
(c)to cancel a person's approval as a provider otherwise than at the person's request,
it must give the person a warning notice.
(6)If the FCA decides—
(a)to grant the application under information provider rules,
(b)not to impose limitations or other restrictions on the giving of information to which a person's approval relates, or
(c)not to cancel the approval,
it must give the person concerned written notice of its decision.
(7)If the FCA decides—
(a)to refuse to grant the application under information provider rules,
(b)to impose limitations or other restrictions on the giving of information to which a person's approval relates, or
(c)to cancel the approval,
it must give the person concerned a decision notice.
(8)A person to whom a decision notice is given under this section may refer the matter to the Tribunal.
(9)In this section any reference to an application under information provider rules means—
(a)an application for approval as a provider,
(b)an application for the suspension of an approval as a provider,
(c)an application for the withdrawal of the suspension of an approval as a provider, or
(d)an application for the withdrawal or variation of a limitation or other restriction on the giving of information to which a provider's approval relates.
89Q Disciplinary powers: contravention of s.89P(4)(b) or (d)
(1)The FCA may take action against a provider under this section if it considers that the provider has contravened a requirement or restriction imposed on the provider by rules made as a result of section 89P(4)(b) or (d).
(2)If the FCA is entitled to take action under this section against a provider, it may do one or more of the following—
(a)impose a penalty on the provider of such amount as it considers appropriate;
(b)suspend, for such period as it considers appropriate, the provider's approval;
(c)impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the giving by the provider of information as it considers appropriate;
(d)publish a statement to the effect that the provider has contravened a requirement or restriction imposed on the provider by rules made as a result of section 89P(4)(b) or (d).
(3)The period for which a suspension or restriction is to have effect may not exceed 12 months.
(4)A suspension may relate only to the giving of information in specified circumstances.
(5)A restriction may, in particular, be imposed so as to require the provider to take, or refrain from taking, specified action.
(6)The FCA may—
(a)withdraw a suspension or restriction, or
(b)vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.
(7)The FCA may not take action against a provider under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the provider under section 89R(1).
(8) “ The limitation period ” means the period of 3 years beginning with the first day on which the FCA knew that the provider had contravened the requirement or restriction.
(9)For this purpose the FCA is to be treated as knowing that a provider has contravened a requirement or restriction if it has information from which that can reasonably be inferred.
89R Action under s.89Q: procedure and right to refer to Tribunal
(1)If the FCA proposes to take action against a provider under section 89Q, it must give the provider a warning notice.
(2)A warning notice about a proposal to impose a penalty must state the amount of the penalty.
(3)A warning notice about a proposal—
(a)to suspend an approval, or
(b)to impose a restriction in relation to the giving of information,
must state the period for which the suspension or restriction is to have effect.
(4)A warning notice about a proposal to publish a statement must set out the terms of the statement.
(5)If the FCA decides to take action against a provider under section 89Q, it must give the provider a decision notice.
(6)A decision notice about the imposition of a penalty must state the amount of the penalty.
(7)A decision notice about—
(a)the suspension of an approval, or
(b)the imposition of a restriction in relation to the giving of information,
must state the period for which the suspension or restriction is to have effect.
(8)A decision notice about the publication of a statement must set out the terms of the statement.
(9)If the FCA decides to take action against a provider under section 89Q, the provider may refer the matter to the Tribunal.
89S Action under s.89Q: statement of policy
(1)The FCA must prepare and issue a statement of its policy with respect to—
(a)the imposition of penalties, suspensions or restrictions under section 89Q,
(b)the amount of penalties under that section,
(c)the period for which suspensions or restrictions under that section are to have effect, and
(d)the matters in relation to which suspensions or restrictions under that section are to have effect.
(2)The FCA's policy in determining what the amount of a penalty should be, or what the period for which a suspension or restriction is to have effect should be, must include having regard to—
(a)the seriousness of the contravention in question in relation to the nature of the requirement concerned,
(b)the extent to which that contravention was deliberate or reckless, and
(c)whether the provider concerned is an individual.
(3)The FCA may at any time alter or replace a statement issued under this section.
(4)If a statement issued under this section is altered or replaced, the FCA must issue the altered or replacement statement.
(5)In exercising, or deciding whether to exercise, its power under section 89Q in the case of any particular contravention, the FCA must have regard to any statement of policy published under this section and in force at a time when the contravention in question occurred.
(6)A statement issued under this section must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
(7)The FCA may charge a reasonable fee for providing a person with a copy of the statement.
(8)The FCA must, without delay, give the Treasury a copy of any statement which it publishes under this section.
89T Statement of policy under s.89S: procedure
(1)Before issuing a statement under section 89S, the FCA must publish a draft of the proposed statement in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
(2)The draft must be accompanied by notice that representations about the proposal may be made to the FCA within a specified time.
(3)Before issuing the proposed statement, the FCA must have regard to any representations made to it in accordance with subsection (2).
(4)If the FCA issues the proposed statement it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2); and
(b)its response to them.
(5)If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the FCA, significant, the FCA must (in addition to complying with subsection (4)) publish details of the difference.
(6)The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
(7)This section also applies to a proposal to alter or replace a statement.
89U Powers exercisable to advance operational objectives
(1)The FCA may take action against a provider under this section if it considers that it is desirable to do so in order to advance one or more of its operational objectives.
(2)If the FCA is entitled to take action under this section against a provider, it may—
(a)suspend, for such period as it considers appropriate, the provider's approval, or
(b)impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the giving by the provider of information as it considers appropriate.
(3)A suspension may relate only to the giving of information in specified circumstances.
(4)A restriction may, in particular, be imposed so as to require the provider to take, or refrain from taking, specified action.
(5)The FCA may—
(a)withdraw a suspension or restriction, or
(b)vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.
(6)A person against whom the FCA takes action under this section may refer the matter to the Tribunal.
89V Action under s.89U: procedure
(1)Action against a provider under section 89U takes effect—
(a)immediately, if the notice given under subsection (2) so provides, or
(b)on such later date as may be specified in the notice.
(2)If the FCA—
(a)proposes to take action against a provider under that section, or
(b)takes action against a provider under that section with immediate effect,
it must give the provider written notice.
(3)The notice must—
(a)give details of the action,
(b)state the FCA's reasons for taking the action and for its determination as to when the action takes effect,
(c)inform the provider that the provider may make representations to the FCA within such period as may be specified in the notice (whether or not the matter has been referred to the Tribunal),
(d)inform the provider of when the action takes effect,
(e)inform the provider of the right to refer the matter to the Tribunal, and
(f)give an indication of the procedure on such a reference.
(4)The FCA may extend the period allowed under the notice for making representations.
(5)If the FCA decides—
(a)to take the action in the way proposed, or
(b)if the action has taken effect, not to rescind it,
the FCA must give the provider written notice.
(6)If the FCA decides—
(a)not to take the action in the way proposed,
(b)to take action under section 89U that differs from the action originally proposed, or
(c)to rescind action which has taken effect,
the FCA must give the provider written notice.
(7)A notice under subsection (5) must—
(a)inform the provider of the right to refer the matter to the Tribunal, and
(b)give an indication of the procedure on such a reference.
(8)A notice under subsection (6)(b) must comply with subsection (3).F755]
[F75689W. Storage of regulated information
(1)The FCA must ensure that there is at least one mechanism for the central storage of regulated information F757....
[F758 (1A)The mechanism must comply with minimum quality standards of security, certainty as to the information source, time recording and easy access by end users (see provision made under regulation 71 of the Official Listing of Securities, Prospectus and Transparency (Amendment etc.) (EU Exit) Regulations 2019 for the purpose specified in paragraph 19(b) of Schedule 2 to those Regulations).
(1B)The mechanism must be aligned with the procedure for filing the regulated information with the FCA.F758]
[F759 (2) In this section “ regulated information ” means information which an issuer, or a person who has applied for the admission of securities to trading on a regulated market without the issuer's consent, is required to disclose under—
(a)listing rules,
(b)qualifying transparency legislation, or
(c)Articles 17 to 19 of the market abuse regulation.F759,F756]]
[F760Compensation for false or misleading statements etcF760]
notecase 90 [F761Compensation for statements in listing particulars F762...F761] cross-notes
(1)Any person responsible for listing particulars is liable to pay compensation to a person who has—
(a)acquired securities to which the particulars apply; and
(b)suffered loss in respect of them as a result of—
(i)any untrue or misleading statement in the particulars; or
(ii)the omission from the particulars of any matter required to be included by section 80 or 81.
(2)Subsection (1) is subject to exemptions provided by Schedule 10.
(3)If listing particulars are required to include information about the absence of a particular matter, the omission from the particulars of that information is to be treated as a statement in the listing particulars that there is no such matter.
(4)Any person who fails to comply with section 81 is liable to pay compensation to any person who has—
(a)acquired securities of the kind in question; and
(b)suffered loss in respect of them as a result of the failure.
(5)Subsection (4) is subject to exemptions provided by Schedule 10.
(6)This section does not affect any liability which may be incurred apart from this section.
(7)References in this section to the acquisition by a person of securities include references to his contracting to acquire them or any interest in them.
(8)No person shall, by reason of being a promoter of a company or otherwise, incur any liability for failing to disclose information which he would not be required to disclose in listing particulars in respect of a company’s securities—
(a)if he were responsible for those particulars; or
(b)if he is responsible for them, which he is entitled to omit by virtue of section 82.
(9)The reference in subsection (8) to a person incurring liability includes a reference to any other person being entitled as against that person to be granted any civil remedy or to rescind or repudiate an agreement.
(10) “ Listing particulars ”, in subsection (1) and Schedule 10, includes supplementary listing particulars.
F763 (11). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F763 (11A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F763 (12). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F76490ZA Liability for key investor information
(1)A person is not to be subject to civil liability solely on the basis of the key investor information produced in relation to a collective investment scheme or a sub-fund of such a scheme in accordance with rules or other provisions [F765 originally made in implementation ofF765] Chapter IX of the dfnUCITS directive, or of any translation of that information, unless the key investor information is misleading, inaccurate or inconsistent with the relevant parts of the prospectus published for that collective investment scheme or sub-fund in accordance with rules made by [F712 the FCAF712] under section 248 [F766 or 261JF766] of this Act.
(2)In this section, a reference to a sub-fund of a collective investment scheme is a reference to a part of the property of the collective investment scheme which forms a separate pool where—
(a)the collective investment scheme provides arrangements for separate pooling of the contributions of the participants and the profits and income out of which payments are made to them; and
(b)the participants are entitled to exchange rights in one pool for rights in another.F764]
case [[F767,F76890A Liability of issuers in connection with published information
Schedule 10A makes provision about the liability of issuers of securities to pay compensation to persons who have suffered loss as a result of—
(a)a misleading statement or dishonest omission in certain published information relating to the securities, or
(b)a dishonest delay in publishing such information.F768]
SI 90B Power to make further provision about liability for published information
(1)The Treasury may by regulations make provision about the liability of issuers of securities traded on a regulated market, and other persons, in respect of information published to holders of securities, to the market or to the public generally.
(2)Regulations under this section may amend any primary or subordinate legislation, including any provision of, or made under, this Act.F767]
Penalties
notecase 91 [F769Penalties for breach of Part 6 rulesF769] cross-notes
[[F770,F771 (1)If the [F712 FCAF712] considers that—
(a)an issuer of listed securities, or
(b)an applicant for listing,
has contravened any provision of listing rules, it may impose on him a penalty of such amount as it considers appropriate.
F772 (1ZA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F771]
F773 (1A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F774 (1B)If the [F712 FCAF712] considers—
(a)that a person has contravened—
(i)a provision of [F775 qualifying transparency legislationF775] , or
(ii)a provision of corporate governance rules, or
(b)that a person on whom a requirement has been imposed under section 89L (power to suspend or prohibit trading of securities in case of infringement of applicable transparency obligation), has contravened that requirement,
it may impose on the person a penalty of such amount as it considers appropriate.F774]
(2) If, in the case of a contravention [F776 by a person F776] referred to in subsection [F777 (1), F778 ... F779 ... or [F780 (1B)(a)(ii) or (b) F780,F777]] [F781 (“P”) F781] , the [F712 FCA F712] considers that [F782 another person F782] who was at the material time a director of [F783 P F783] was knowingly concerned in the contravention, it may impose upon him a penalty of such amount as it considers appropriate. F770]
[F784 (2A)If—
(a)a person has contravened a provision mentioned in subsection (1B)(a)(i), and
(b) the FCA considers that another person (“A”), who was at the material time a relevant officer of the person, was knowingly concerned in the contravention,
the FCA may impose upon A a penalty of such amount as it considers appropriate.
(2B) In subsection (2A) “relevant officer” of a person means—
(a)a director or other similar officer of the person, or
(b)if the affairs of the person are managed by its members, a member of the person.F784]
(3)If the [F712FCAF712] is entitled to impose a penalty on a person under this section in respect of a particular matter it may, instead of imposing a penalty on him in respect of that matter, publish a statement censuring him.
(4)Nothing in this section prevents the [F712FCAF712] from taking any other steps which it has power to take under this Part.
(5)A penalty under this section is payable to the [F712FCAF712] .
(6)The [F712FCAF712] may not take action against a person under this section after the end of the period of [F7853 yearsF785] beginning with the first day on which it knew of the contravention unless proceedings against that person, in respect of the contravention, were begun before the end of that period.
(7)For the purposes of subsection (6)—
(a)the [F712FCAF712] is to be treated as knowing of a contravention if it has information from which the contravention can reasonably be inferred; and
(b)proceedings against a person in respect of a contravention are to be treated as begun when a warning notice is given to him under section 92.
case 92 Procedure. cross-notes
(1)If the [F712FCAF712] proposes to take action against a person under section 91, it must give him a warning notice.
(2)A warning notice about a proposal to impose a penalty must state the amount of the proposed penalty.
(3)A warning notice about a proposal to publish a statement must set out the terms of the proposed statement.
(4)If the [F712FCAF712] decides to take action against a person under section 91, it must give him a decision notice.
(5)A decision notice about the imposition of a penalty must state the amount of the penalty.
(6)A decision notice about the publication of a statement must set out the terms of the statement.
(7)If the [F712FCAF712] decides to take action against a person under section 91, he may refer the matter to the Tribunal.
case 93 Statement of policy.
(1) The [F712 FCA F712] must prepare and issue a statement (“ its policy statement ”) of its policy with respect to—
(a)the imposition of penalties under section 91; and
(b)the amount of penalties under that section.
(2)The [F712FCA'sF712] policy in determining what the amount of a penalty should be must include having regard to—
(a)the seriousness of the contravention in question in relation to the nature of the requirement contravened;
(b)the extent to which that contravention was deliberate or reckless; and
(c)whether the person on whom the penalty is to be imposed is an individual.
(3)The [F712FCAF712] may at any time alter or replace its policy statement.
(4)If its policy statement is altered or replaced, the [F712FCAF712] must issue the altered or replacement statement.
(5)In exercising, or deciding whether to exercise, its power under section 91 in the case of any particular contravention, the [F712FCAF712] must have regard to any policy statement published under this section and in force at the time when the contravention in question occurred.
(6)The [F712FCAF712] must publish a statement issued under this section in the way appearing to the [F712FCAF712] to be best calculated to bring it to the attention of the public.
(7)The [F712FCAF712] may charge a reasonable fee for providing a person with a copy of the statement.
(8)The [F712FCAF712] must, without delay, give the Treasury a copy of any policy statement which it publishes under this section.
case 94 Statements of policy: procedure.
(1)Before issuing a statement under section 93, the [F712FCAF712] must publish a draft of the proposed statement in the way appearing to the [F712FCAF712] to be best calculated to bring it to the attention of the public.
(2)The draft must be accompanied by notice that representations about the proposal may be made to the [F712FCAF712] within a specified time.
(3)Before issuing the proposed statement, the [F712FCAF712] must have regard to any representations made to it in accordance with subsection (2).
(4)If the [F712FCAF712] issues the proposed statement it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2); and
(b)its response to them.
(5)If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the [F712FCAF712] , significant, the [F712FCAF712] must (in addition to complying with subsection (4)) publish details of the difference.
(6)The [F712FCAF712] may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
(7)This section also applies to a proposal to alter or replace a statement.
Competition
note F78695 Competition scrutiny.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous
notecase 96 Obligations of issuers of listed securities. cross-notes
(1)Listing rules may—
(a)specify requirements to be complied with by issuers of listed securities; and
(b)make provision with respect to the action that may be taken by the [F712FCAF712] in the event of non-compliance.
(2)If the rules require an issuer to publish information, they may include provision authorising the [F712FCAF712] to publish it in the event of his failure to do so.
(3)This section applies whenever the listed securities were admitted to the official list.
F787 96A Disclosure of information requirements
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
case F78796B [F788Disclosure rules: persons responsible for complianceF788]
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F78796C Suspension of trading
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note 97 Appointment by [F712FCAF712] of persons to carry out investigations.
(1)Subsection (2) applies if it appears to the [F712FCAF712] that there are circumstances suggesting that—
[F789 (a)there may have been a contravention of—
(i)a provision of this Part or of Part 6 rules, F790... [F791 orF791]
[F792 (ii)any other provision of qualifying transparency legislation, F793...F792]
F794 (iii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)a person who was at the material time a director of a person mentioned in section 91(1), F795... F796... [F797 or section 91(1B) (ignoring paragraph (a)(i) of that provision),F797] has been knowingly concerned in a contravention by that person of—
(i)a provision of this Part or of Part 6 rules, F798... [F799 orF799]
[F800 (ii)any other provision of qualifying transparency legislation, F801...F800]
F802 (iii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F789]
[F803 (ba)a person who was at the material time a relevant officer of a person mentioned in section 91(1B) (ignoring paragraphs (a)(ii) and (b) of that provision) has been knowingly concerned in a contravention [F804 by that person of qualifying transparency legislation;F804]
F805 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F806 (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)The [F712 FCAF712] may appoint one or more competent persons to conduct an investigation on its behalf.
(3)Part XI applies to an investigation under subsection (2) as if—
(a)the investigator were appointed under section 167(1);
(b)references to the investigating authority in relation to him were to the [F712 FCAF712] ;
F807 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d)references to an authorised person were references to the person under investigation.
[F808 (4) In this section “relevant officer” has the meaning given by section 91(2B). F808,F803]]
F80997A. Reporting of infringements
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F81098 Advertisements etc. in connection with listing applications.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F81199 Fees.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase F812100 Penalties.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F813100A Exercise of powers where UK is host member state
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
case 101 Listing rules: general provisions.
F814 (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)[F815 Part 6 rulesF815] may authorise the [F816FCAF816] to dispense with or modify the application of the rules in particular cases and by reference to any circumstances.
F817 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F817 (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F817 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F817 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F817 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F817 (8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F818102 Exemption from liability in damages.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F819Interpretative provisions
102A Meaning of “securities” etc.
(1)This section applies for the purposes of this Part.
(2) “ Securities ” means (except in section 74(2) and the expression “transferable securities”) anything which has been, or may be, admitted to the official list.
(3) “ Transferable securities ” means anything which is a transferable security for the purposes of [F820 the markets in financial instruments [F821 regulation F821,F820]] , other than money-market instruments for the purposes of that [F821 regulation F821] which have a maturity of less than 12 months.
[F822 (3A) “ Debt securities ” means bonds or other forms of transferable securitised debts, with the exception of—
(a)transferable securities which are equivalent to shares, and
(b)transferable securities which, if converted or if the rights conferred by them are exercised, give rise to a right to acquire—
(i)shares, or
(ii)transferable securities equivalent to shares.F822]
[F823 (4) “Financial instrument” [F824 means those instruments specified in Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 F824] . F823]
[F825 (5) “ Non-equity transferable securities ” means all transferable securities that are not equity securities; and for this purpose the following are “equity securities”—
(a)shares,
(b)other transferable securities which are equivalent to shares, and
(c)transferable securities which—
(i)are within neither of paragraphs (a) and (b),
(ii)give the right to acquire securities within paragraph (a) or (b) if converted or if the rights conferred by them are exercised, and
(iii)are issued by the issuer of the underlying shares or by an entity belonging to the group of that issuer.F825]
(6) “ Issuer ”—
F826 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F827 (aa)in relation to transparency rules, means a F828... person whose securities are admitted to trading on a regulated market or whose voting shares are admitted to trading on a UK market other than a regulated market, and in the case of depository receipts [F829 admitted to trading on a regulated market, the issuer is the issuer of the securities represented by the depository receipt, whether or not those securities are admitted to trading on a regulated marketF829] ;F827]
(b)in relation to anything else which is or may be admitted to the official list, has such meaning as may be prescribed by the Treasury, and
(c)in any other case, means a person who issues financial instruments.
F830102B Meaning of “offer of transferable securities to the public” etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F831102C Meaning of “ home State ” in relation to transferable securities
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
X1 103 Interpretation of this Part cross-notes
SI (1)In this Part, save where the context otherwise requires—
F832 ...
F832 ...
“ listed securities ” means anything which has been admitted to the official list;
“ listing ” has the meaning given in section 74(5);
“ listing particulars ” has the meaning given in section 79(2);
“ listing rules ” has the meaning given in section 73A;
“ market operator ” means a person who manages or operates the business of a regulated market;
F833 ...
“ the official list ” means the list maintained by the [F834 FCA F834] as that list has effect for the time being;
“ Part 6 rules ” has the meaning given in section 73A;
F835 ...
F833 ...
F833 ...
[F836 “ qualifying transparency legislation ” has the meaning given in section 89K(5A); F836]
[F837 “ regulated market ” (except in section 102B and Schedule 10A) means a UK regulated market, as defined in Article 2(1)(13A) of the markets in financial instruments regulation; F837]
F833 ...
[F838 “ the transparency obligations directive ” means Directive 2004/109/ EC of the European Parliament and of the Council relating to the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market [F839 as amended by Directive 2010/73/ EU of the European Parliament and of the Council of 24 November 2010 and by Directive 2010/78/ EU of the European Parliament and of the Council of 24 November 2010 F839] [F840 and by Directive 2013/50/ EU of the European Parliament and of the Council of 22 October 2013 F840] ; F838]
[F841 “ transparency rules ” has the meaning given by section 89A(5);
“ voteholder information ” has the meaning given by section 89B(3); F841]
[F842 “ working day ” means any day other that a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday under the Banking and Financial Dealings Act 1971 (c. 80) in any part of the United Kingdom. F842]
F843 (1A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F844 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F844 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F819]
case Part VII Control of Business Transfers cross-notes
case [F845103A Meaning of “the appropriate regulator”
(1) In this Part “ the appropriate regulator ” means—
(a)in relation to [F846 a ring-fencing transfer scheme or a scheme (other than a ring-fencing transfer scheme)F846] in respect of which [F847 the transferor concernedF847] is a PRA-authorised person, the PRA;
(b)in any other case, the FCA.
(2) In this Part, “ [F847 the transferor concerned F847] ”—
(a)in the case of an insurance business transfer scheme, is to be read in accordance with section 105(2);
(b)in the case of a banking business transfer scheme, is to be read in accordance with section 106(2);
(c)in the case of a reclaim fund business transfer scheme, means the reclaim fund to whose business the scheme relates.
[F848 (d)in the case of a ring-fencing transfer scheme, means the body to whose business the scheme relates.F848,F845]]
notecase 104 Control of business transfers. cross-notesI21
F849 No insurance business transfer scheme ... is to have effect unless an order has been made in relation to it under section 111(1).
notecase 105 Insurance business transfer schemes. cross-notes
(1)A scheme is an insurance business transfer scheme if it—
(a)satisfies [F850the conditionF850] set out in subsection (2);
(b)results in the business transferred being carried on from an establishment of the transferee in [F851the United Kingdom or GibraltarF851] ; and
(c)is not an excluded scheme.
[F852 (2) The condition is that the whole or part of the business carried on in the United Kingdom by an authorised person who has permission to effect or carry out contracts of insurance (“the transferor concerned”) is to be transferred to another body (“ the transferee ”). F852]
(3)A scheme is an excluded scheme for the purposes of this section if it falls within any of the following cases:
Case 1
Where [F847the transferor concernedF847] is a friendly society.
F853 Case 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Case 3
Where—
(a)[F847 the transferor concernedF847] is a UK authorised person;
(b)F855the business to be transferred under the scheme is carried on in one or more countries or territories [F854outside the United KingdomF854] and does not include policies of insurance . . . against risks arising in [F856the United KingdomF856] ; and
(c)the scheme has been approved by a court in a country or territory [F857outside the United KingdomF857] or by the authority responsible for the supervision of that business in a country or territory in which it is carried on.
Case 4
Where [F858—
(a)the business to be transferred under the scheme is the whole of the business of [F847 the transferor concernedF847] ;F858]
(b)all the policyholders are controllers of the firm or of firms within the same group as the firm which is the transferee, and,
[F859 (c)F859] all of the policyholders who will be affected by the transfer have consented to it.
[F860 CASE 5
Where—
(a)the business of [F847 the transferor concernedF847] consists solely of the effecting or carrying out of contracts of reinsurance;
(b)the business to be transferred is the whole or part of that business;
(c)the scheme does not fall within Case 4;
(d)all of the policyholders who will be affected by the transfer have consented to it; and
(e)a certificate has been obtained under paragraph 2 of Schedule 12 in relation to the proposed transfer.F860]
[F861 Case 6
Where the scheme is effected under Part 7A (unilateral changes to pension schemes).F861]
(4)F862The parties to a scheme which falls within Case ... [F8633, 4 or 5F863] may apply to the court for an order sanctioning the scheme as if it were an insurance business transfer scheme.
[F864 (5)If the scheme involves a compromise or arrangement falling within Part 27 of the Companies Act 2006 (mergers and divisions of public companies), the provisions of that Part (and [F865 Part 26 or 26A of that Act, as the case may beF865] ) apply accordingly but this does not affect the operation of this Part in relation to the scheme.F864]
(8) “ UK authorised person ” means a body which is an authorised person and which—
(a)is incorporated in the United Kingdom; or
(b)is an unincorporated association formed under the law of any part of the United Kingdom.
(9) “ Establishment ” means, in relation to a person, his head office or a branch of his.
notecase 106 Banking business transfer schemes.
(1)A scheme is a banking business transfer scheme if it—
(a)satisfies one of the conditions set out in subsection (2);
(b)is one under which the whole or part of the business to be transferred includes the accepting of deposits; and
(c)is not an excluded scheme [F866or a ring-fencing transfer schemeF866] .
(2)The conditions are that—
(a) the whole or part of the business carried on by a UK authorised person who has permission to accept deposits (“ [F847 the transferor concerned F847] ”) is to be transferred to another body (“ the transferee ”);
(b) the whole or part of the business carried on in the United Kingdom by an authorised person who is not a UK authorised person but who has permission to accept deposits (“ [F847 the transferor concerned F847] ”) is to be transferred to another body which will carry it on in the United Kingdom (“ the transferee ”).
(3)A scheme is an excluded scheme for the purposes of this section if—
(a)[F847 the transferor concernedF847] is a building society or a credit union; or
[F867 (b)the scheme is a compromise or arrangement to which Part 27 of the Companies Act 2006 (mergers and divisions of public companies) applies.F867]
(4)For the purposes of subsection (2)(a) it is immaterial whether or not the business to be transferred is carried on in the United Kingdom.
(5) “ UK authorised person ” has the same meaning as in section 105.
(6) M1 “ Building society ” has the meaning given in the Building Societies Act 1986 .
(7) “ Credit union ” means a credit union within the meaning of—
(a)M2the Credit Unions Act 1979;
(b)M3the Credit Unions (Northern Ireland) Order 1985.
[F868106A Reclaim fund business transfer scheme
(1)A scheme is a reclaim fund business transfer scheme if, under the scheme, the whole or part of the business carried on by a reclaim fund is to be transferred to one or more other reclaim funds.
(2) “ Reclaim fund ” has the meaning given by section 5(1) of the Dormant Bank and Building Society Accounts Act 2008 . F868]
case [F869106B Ring-fencing transfer scheme
(1)A scheme is a ring-fencing transfer scheme if it—
(a)is one under which the whole or part of the business carried on—
(i)by a dfnUK authorised person, or
(ii)by a qualifying body,
is to be transferred to another body (“ the transferee ”),
(b)is to be made for one or more of the purposes mentioned in subsection (3), and
(c)is not an excluded scheme or an insurance business transfer scheme.
(2) “ Qualifying body ” means a body which—
(a)is incorporated in the United Kingdom,
(b)is a member of the group of a dfnUK authorised person, and
(c)is not itself an authorised person.
(3)The purposes are—
(a)enabling a UK authorised person to carry on core activities as a ring-fenced body in compliance with the ring-fencing provisions;
(b)enabling the transferee to carry on core activities as a ring-fenced body in compliance with the ring-fencing provisions;
(c)making provision in connection with the implementation of proposals that would involve a body corporate whose group includes the body corporate to whose business the scheme relates becoming a ring-fenced body while one or more other members of its group are not ring-fenced bodies;
(d)making provision in connection with the implementation of proposals that would involve a body corporate whose group includes the transferee becoming a ring-fenced body while one or more other members of the transferee's group are not ring-fenced bodies.
(4)A scheme is an excluded scheme for the purposes of this section if—
(a)the body to whose business the scheme relates is a building society or credit union, or
(b)the scheme is a compromise or arrangement to which Part 27 of the Companies Act 2006 (mergers and divisions of public companies) applies.
(5)For the purposes of subsection (1)(a) it is immaterial whether or not the business to be transferred is carried on in the United Kingdom.
(6) “ UK authorised person ” has the same meaning as in section 105.
(7) “ Building society ” and “ credit union ” have the same meanings as in section 106.
(8) “ The ring-fencing provisions ” means ring-fencing rules and the duty imposed as a result of section 142G. F869]
notecase 107 Application for order sanctioning transfer scheme. cross-notes
(1)An application may be made to the court for an order sanctioning an insurance business transfer scheme [F870, a banking business transfer scheme [F871 , a reclaim fund business transfer scheme or a ring-fencing transfer schemeF871,F870]] .
(2)An application may be made by—
(a)[F847 the transferor concernedF847] ;
(b)the transferee; or
(c)both.
[F872 (2A)An application relating to a ring-fencing transfer scheme may be made only with the consent of the PRA.
(2B)In deciding whether to give consent, the PRA must have regard to the scheme report prepared under section 109A in relation to the ring-fencing transfer scheme.F872]
(3)The application must be made—
(a)if [F847the transferor concernedF847] and the transferee are registered or have their head offices in the same jurisdiction, to the court in that jurisdiction;
(b)if [F847the transferor concernedF847] and the transferee are registered or have their head offices in different jurisdictions, to the court in either jurisdiction;
(c)if the transferee is not registered in the United Kingdom and does not have his head office there, to the court which has jurisdiction in relation to [F847the transferor concernedF847] .
(4) “ Court ” means—
(a)the High Court; or
(b)in Scotland, the Court of Session.
notecaseSI 108 Requirements on applicants. cross-notesI22
(1)The Treasury may by regulations impose requirements on applicants under section 107.
(2)The court may not determine an application under that section if the applicant has failed to comply with a prescribed requirement.
(3)The regulations may, in particular, include provision—
(a)as to the persons to whom, and periods within which, notice of an application must be given;
(b)enabling the court to waive a requirement of the regulations in prescribed circumstances.
notecase 109 [F873Scheme reports: insurance business transfer schemesF873] cross-notes
(1) An application under section 107 in respect of an insurance business transfer scheme must be accompanied by a report on the terms of the scheme (“ a scheme report ”).
(2)A scheme report may be made only by a person—
(a)appearing to the [F874appropriate regulatorF874] to have the skills necessary to enable him to make a proper report; and
(b)nominated or approved for the purpose by the [F874appropriate regulatorF874] .
(3)A scheme report must be made in a form approved by the [F874appropriate regulatorF874] .
[F875 (4)Where the appropriate regulator is the PRA, it must consult the FCA before—
(a)nominating or approving a person under subsection (2)(b), or
(b)approving a form under subsection (3).
(5)Subsection (6) applies where the appropriate regulator is the FCA and either—
(a)the transferee is a PRA-authorised person, or
(b)[F847 the transferor concernedF847] or the transferee has as a member of its immediate group a PRA-authorised person.
(6)The FCA must consult the PRA before—
(a)nominating or approving a person under subsection (2)(b), or
(b)approving a form under subsection (3).F875]
case [F876109A Scheme reports: ring-fencing transfer schemes
(1) An application under section 106B in respect of a ring-fencing transfer scheme must be accompanied by a report on the terms of the scheme (a “scheme report”).
(2)A scheme report may be made only by a person—
(a)appearing to the PRA to have the skills necessary to enable the person to make a proper report, and
(b)nominated or approved for the purpose by the PRA.
(3)A scheme report must be made in a form approved by the PRA.
(4)A scheme report must state—
(a)whether persons other than the transferor concerned are likely to be adversely affected by the scheme, and
(b)if so, whether the adverse effect is likely to be greater than is reasonably necessary in order to achieve whichever of the purposes mentioned in section 106B(3) is relevant.
(5)The PRA must consult the FCA before—
(a)nominating or approving a person under subsection (2)(b), or
(b)approving a form under subsection (3).F876]
notecase 110 Right to participate in proceedings. cross-notes
[F877 (1)F877] On an application under section 107 [F878relating to an insurance business transfer scheme, a banking business transfer scheme or a reclaim fund business transfer schemeF878] , the following are also entitled to be heard—
[F879 (a)the FCA,
(aa)in the case of a scheme falling within subsection (2), the PRA, andF879]
(b)any person (including an employee of [F847the transferor concernedF847] or of the transferee) who alleges that he would be adversely affected by the carrying out of the scheme.
[F880 (2)A scheme falls within this subsection if—
(a)[F847 the transferor concernedF847] or the transferee is a PRA-authorised person, or
(b)[F847 the transferor concernedF847] or the transferee has as a member of its immediate group a PRA-authorised person.F880]
[F881 (3)Subsections (4) and (5) apply where an application under section 107 relates to a ring-fencing transfer scheme.
(4)The following are also entitled to be heard—
(a)the PRA,
(b)where the transferee is an authorised person, the FCA, and
(c) any person (“P”) (including an employee of the transferor concerned or of the transferee) who alleges that P would be adversely affected by the carrying out of the scheme.
(5)P is not entitled to be heard by virtue of subsection (4)(c) unless before the hearing P has—
(a)filed (in Scotland, lodged) with the court a written statement of the representations that P wishes the court to consider, and
(b)served copies of the statement on the PRA and the transferor concerned.F881]
case 111 Sanction of the court for business transfer schemes. cross-notesI23
(1)This section sets out the conditions which must be satisfied before the court may make an order under this section sanctioning an insurance business transfer scheme [F882a banking business transfer scheme [F883 , a reclaim fund business transfer scheme or a ring-fencing transfer schemeF883,F882]] .
(2)The court must be satisfied that—
(a)[F884 in the case of an insurance business transfer scheme or a banking business transfer scheme,F884] the appropriate [F885certificate hasF885] been obtained (as to which see Parts I and II of Schedule 12);
[F886 (aa)in the case of a reclaim fund business transfer scheme, the appropriate certificate has been obtained (as to which see Part 2A of that Schedule);F886]
[F887 (ab)in the case of a ring-fencing transfer scheme, the appropriate certificates have been obtained (as to which see Part 2B of that Schedule);F887]
(b)the transferee has the authorisation required (if any) to enable the business, or part, which is to be transferred to be carried on in the place to which it is to be transferred (or will have it before the scheme takes effect).
(3)The court must consider that, in all the circumstances of the case, it is appropriate to sanction the scheme.
notecase 112 Effect of order sanctioning business transfer scheme. cross-notes
(1)If the court makes an order under section 111(1), it may by that or any subsequent order make such provision (if any) as it thinks fit—
(a)for the transfer to the transferee of the whole or any part of the undertaking concerned and of any property or liabilities of [F847the transferor concernedF847] ;
(b)for the allotment or appropriation by the transferee of any shares, debentures, policies or other similar interests in the transferee which under the scheme are to be allotted or appropriated to or for any other person;
(c)for the continuation by (or against) the transferee of any pending legal proceedings by (or against) [F847the transferor concernedF847] ;
(d)with respect to such incidental, consequential and supplementary matters as are, in its opinion, necessary to secure that the scheme is fully and effectively carried out.
(2)An order under subsection (1)(a) may—
(a)transfer property or liabilities whether or not [F847the transferor concernedF847] otherwise has the capacity to effect the transfer in question;
(b)make provision in relation to property which was held by [F847the transferor concernedF847] as trustee;
(c)make provision as to future or contingent rights or liabilities of [F847the transferor concernedF847] , including provision as to the construction of instruments (including wills) under which such rights or liabilities may arise;
(d)make provision as to the consequences of the transfer in relation to any [F888occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004)F888] operated by or on behalf of [F847the transferor concernedF847] .
[F889 (2A)Subsection (2)(a) is to be taken to include power to make provision in an order—
(a)for the transfer of property or liabilities which would not otherwise be capable of being transferred or assigned;
(b)for a transfer of property or liabilities to take effect as if there were—
(i)no such requirement to obtain a person's consent or concurrence, and
(ii)no such contravention, liability or interference with any interest or right,
as there would otherwise be (in the case of a transfer apart from this section) by reason of any provision falling within subsection (2B).
(2B)A provision falls within this subsection to the extent that it has effect (whether under an enactment or agreement or otherwise) in relation to the terms on which [F847 the transferor concernedF847] is entitled to the property or subject to the liabilities in question.
(2C)Nothing in subsection (2A) or (2B) is to be read as limiting the scope of subsection (1).F889]
(3)If an order under subsection (1) makes provision for the transfer of property or liabilities—
(a)the property is transferred to and vests in, and
(b)the liabilities are transferred to and become liabilities of,
the transferee as a result of the order.
(4)But if any property or liability included in the order is governed by the law of any country or territory outside the United Kingdom, the order may require [F847the transferor concernedF847] , if the transferee so requires, to take all necessary steps for securing that the transfer to the transferee of the property or liability is fully effective under the law of that country or territory.
(5)Property transferred as the result of an order under subsection (1) may, if the court so directs, vest in the transferee free from any charge which is (as a result of the scheme) to cease to have effect.
(6)An order under subsection (1) which makes provision for the transfer of property is to be treated as an instrument of transfer for the purposes of [F890section 770(1) of the Companies Act 2006F890] and any other enactment requiring the delivery of an instrument of transfer for the registration of property.
(7)F891. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8)If the court makes an order under section 111(1) in relation to an insurance business transfer scheme, it may by that or any subsequent order make such provision (if any) as it thinks fit—
(a)for dealing with the interests of any person who, within such time and in such manner as the court may direct, objects to the scheme;
(b)for the dissolution, without winding up, of [F847the transferor concernedF847] ;
(c)for the reduction, on such terms and subject to such conditions (if any) as it thinks fit, of the benefits payable under—
(i)any description of policy, or
(ii)policies generally,
entered into by [F847the transferor concernedF847] and transferred as a result of the scheme.
F892 (9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10)The transferee must, if an insurance or banking business transfer scheme [F893or ring-fencing transfer schemeF893] is sanctioned by the court, deposit two office copies of the order made under subsection (1) with the [F894appropriate regulatorF894] within 10 days of the making of the order.
(11)But the [F895appropriate regulatorF895] may extend that period.
(12) “ Property ” includes property, rights and powers of any description.
(13) “ Liabilities ” includes duties.
(14) “ Shares ” and “ debentures ” have the same meaning as in [F896 the Companies Acts (see sections 540 and 738 of the Companies Act 2006 ). F896]
(15) “ Charge ” includes a mortgage (or, in Scotland, a security over property).
[F897112ZA Duty of regulator to provide copy of order
(1)Where the PRA receives under section 112(10) a copy of an order it must, without delay, give a copy of it to the FCA.
(2)Where the FCA receives under section 112(10) a copy of an order it must, without delay, give a copy of it to the PRA if the order relates to a scheme in respect of which—
(a)the transferee is a PRA-authorised person, or
(b)[F847 the transferor concernedF847] or the transferee has as a member of its immediate group a PRA-authorised person.F897]
case [F898112A Rights to terminate etc.
(1)Subsection (2) applies where (apart from that subsection) a person would be entitled, in consequence of anything done or likely to be done by or under this Part in connection with an insurance business transfer scheme [F899 , a banking business transfer scheme or a ring-fencing transfer schemeF899] —
(a)to terminate, modify, acquire or claim an interest or right; or
(b)to treat an interest or right as terminated or modified.
(2)The entitlement—
(a)is not enforceable in relation to that interest or right until after an order has been made under section 112(1) in relation to the scheme; and
(b)is then enforceable in relation to that interest or right only insofar as the order contains provision to that effect.
(3)Nothing in subsection (1) or (2) is to be read as limiting the scope of section 112(1).F898]
note 113 Appointment of actuary in relation to reduction of benefits. cross-notes
(1)This section applies if an order has been made under section 111(1).
(2)The court making the order may, on the application of [F900either regulatorF900] , appoint an independent actuary—
(a)to investigate the business transferred under the scheme; and
(b)to report to the [F901regulator which made the applicationF901] on any reduction in the benefits payable under policies entered into by [F847the transferor concernedF847] that, in the opinion of the actuary, ought to be made.
[F902 (3)An application under subsection (2) may be made by the PRA only if—
(a)[F847 the transferor concernedF847] or the transferee is a PRA-authorised person, or
(b)[F847 the transferor concernedF847] or the transferee has as a member of its immediate group a PRA-authorised person.F902]
note F903114 Rights of certain policyholders.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F904114A Notice of transfer of reinsurance contracts
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business transfers outside the United Kingdom
note 115 Certificates for purposes of insurance business transfers overseas.
Part III of Schedule 12 makes provision about certificates which the [F905appropriate regulatorF905] may issue in relation to insurance business transfers taking place outside the United Kingdom.
note F906116 Effect of insurance business transfers authorised in other EEA States.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Modifications
notecase 117 Power to modify this Part.
The Treasury may by regulations—
(a)provide for prescribed provisions of this Part to have effect in relation to prescribed cases with such modifications as may be prescribed;
SI (b)make such amendments to any provision of this Part as they consider appropriate for the more effective operation of that or any other provision of this Part.
[F907Part 7A Unilateral changes to pension schemes
117A Pension schemes to which this Part applies
(1)This Part applies to a pension scheme—
(a)that is FCA-regulated, and
(b)in relation to which any of the following conditions is met.
(2)The conditions are—
(a)that the scheme is an auto-enrolment scheme;
(b)that the scheme is a workplace personal pension scheme that is not an auto-enrolment scheme;
(c)that the scheme is a pension scheme of a prescribed description.
(3) For the purposes of subsection (2)(a) and (b) a pension scheme is an “auto-enrolment scheme” if any individual is or at any time was an active member of the scheme in consequence of arrangements under section 3 (2) , 5 (2) or 7 (3) of the Pensions Act 2008 or section 3(2), 5(2) or 7(3) of the Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13 (N.I.)) (arrangements for jobholder to become active member of automatic enrolment scheme).
(4) In subsection (3) “ active member ” means an active member within the meaning of Part 1 of the Pensions Act 2008 (see section 99 of that Act ) or Part 1 of the Pensions (No. 2) Act (Northern Ireland) 2008 (c. 13 (N.I.)) (see section 78 of that Act ).
(5) For the purposes of subsection (2)(b) a pension scheme is a “workplace personal pension scheme” if—
(a)the scheme is a personal pension scheme,
(b)direct payment arrangements exist, or have at any time existed, in relation to the scheme, and
(c)contributions have been paid under the arrangements in respect of, or on behalf of, two or more employees.
(6) In subsection (5) “ direct payment arrangements ” means direct payment arrangements within the meaning of section 111A of the Pension Schemes Act 1993 or section 107A of the Pension Schemes (Northern Ireland) Act 1993 .
117B Unilateral changes
(1)The provider of a pension scheme to which this Part applies may—
(a)amend the terms of the scheme as regards a description of pension pot held by the scheme,
(b)change the investments comprised in a description of pension pot held by the scheme,
(c)transfer a description of pension pot held by the scheme to a different pension scheme operated by the same provider, or
(d)transfer a description of pension pot held by the scheme to a pension scheme operated by a different provider.
(2)A change or transfer within subsection (1)(b) to (d) may be effected notwithstanding that it breaches a term of the pension scheme (such as a requirement for consent); and any such breach is to be disregarded for all purposes.
(3)Subsection (1) is subject to—
(a)subsection (5), sections 117D to 117F and any regulations under section 117H(1)(c), and
(b)any other provision of legislation (including any rule) which restricts or otherwise affects the provider’s power to do anything within subsection (1).
(4)In subsection (1)(c) and (d), a reference to a pension scheme to which a description of pension pot may be transferred includes a pension scheme to which this Part does not apply.
(5)A transfer to a pension scheme operated by a different provider may not be effected under subsection (1)(d) without the consent of that provider.
(6)A reference in this Part to the terms of a pension scheme is to the terms of any instrument or agreement—
(a)in which the scheme is comprised, or
(b)to which the provider of the scheme and any member are parties in connection with the scheme.
(7) In this Part, “ unilateral change ” means an amendment, change or transfer within any of paragraphs (a) to (d) of subsection (1).
117C Effect of transfer of pension pot on membership of scheme etc
(1) This section applies where a pension pot is transferred under section 117B(1)(c) or (d) to a different pension scheme (“ the receiving scheme ”).
(2)The individual—
(a)becomes a member of the receiving scheme in relation to the pot, and
(b)in a case in which there is more than one arrangement under the receiving scheme, becomes, in relation to the pot, a member of the arrangement specified in the unilateral change notice under section 117F(3)(b),
and acquires the rights, and becomes subject to the obligations, of membership.
(3)Where being a member of the receiving scheme in relation to the pot, or of the arrangement under the receiving scheme under which the pot is to be held, entails being a party to a contract with the provider of the receiving scheme, a contract is treated as entered into between the individual and the provider—
(a)at the time at which the pension pot is transferred to the receiving scheme, and
(b)on the terms communicated to the individual in the unilateral change notice under section 117F(3)(c).
117D Best interests test
(1)The provider of a pension scheme to which this Part applies may effect a unilateral change under section 117B(1) only if—
(a)the provider concludes, before doing so, that the best interests test is met in relation to the unilateral change, and
(b)it is reasonable for the provider to have reached that conclusion at that time.
(2) “ The best interests test ”, in relation to a unilateral change, is that it is reasonably likely that effecting it will achieve—
(a)a better outcome for the directly affected members of the scheme (taken as a whole), and
(b)no worse an outcome for the other members of the scheme (taken as a whole),
than the relevant alternative action or, where there is more than one alternative action, each of them.
(3) For the purposes of this Part, the members of a pension scheme who are “directly affected” by a unilateral change are the members for whom the scheme holds pension pots of the description in question.
(4) The following are “ relevant alternative actions ” for the purposes of subsection (2) in relation to a unilateral change—
(a)not effecting the unilateral change, and
(b)where the unilateral change is an internal change, each other internal change that could be made in accordance with this Part in relation to pension pots of the description in question.
(5) In subsection (4) “ internal change ” means a unilateral change that results in a description of pension pot held by the scheme being held—
(a)subject to a different arrangement under the same scheme, or
(b)subject to a particular arrangement under a different pension scheme operated by the same provider (including where there is only one arrangement under that scheme).
(6)The FCA must make general rules specifying considerations or information that must be taken into account in determining whether the best interests test is met.
117E Certification by independent person
(1)The provider of a pension scheme to which this Part applies may effect a unilateral change under section 117B(1) only if, before effecting it—
(a)the provider has appointed a person to review the proposed unilateral change, and
(b)the person appointed has given the provider a certificate under this section in relation to the proposed unilateral change.
(2)The person appointed must—
(a)be independent of the provider, and
(b)have such expertise as is specified in general rules made by the FCA.
(3)The certificate must certify that, in the opinion of the independent person—
(a)the pension scheme is a pension scheme to which this Part applies,
(b)the proposed unilateral change is within section 117B(1)(a) to (d),
(c)section 117B(1) is not disapplied in relation to the proposed unilateral change by regulations under section 117H(1)(a),
(d)any conditions prescribed under section 117H(1)(c) are met,
(e)the best interests test is met in relation to the proposed unilateral change, and
(f)the provider has complied with such other requirements as may be specified in general rules made by the FCA.
(4)The FCA must make general rules about appointments and certification under this section, including provision—
(a)for determining for the purposes of this section whether a person is independent of the provider of a pension scheme;
(b)specifying terms on which an appointment under this section must be made;
(c)about the form of a certificate and when it must be given.
(5) In this Part “ the independent person ”, in relation to a proposed unilateral change, means the person appointed under subsection (1)(a) to review it.
117F Unilateral change notice
(1)The provider of a pension scheme to which this Part applies may effect a unilateral change under section 117B(1) only after—
(a)the provider has sent a unilateral change notice to each of the required recipients, and
(b)the required notice period has expired.
(2) “ A unilateral change notice ” means a notice that includes such information relating to the unilateral change as is specified in general rules made by the FCA.
(3)General rules made pursuant to subsection (2) must, in the case of a unilateral change under section 117B(1)(c) or (d), require the unilateral change notice to—
(a) specify the pension scheme (“ the receiving scheme ”) to which it is proposed the pensions pots in question are to be transferred,
(b)specify, in a case in which there is more than one arrangement under the receiving scheme, the arrangement subject to which it is proposed the pots be held after the transfer, and
(c)where membership of the receiving scheme, or of an arrangement specified under paragraph (b), entails being a party to a contract with the provider of the receiving scheme, set out, or otherwise communicate, the terms of such a contract.
(4) “ The required recipients ” means—
(a)the members of the scheme directly affected by the change, and
(b)such other persons as may be specified in general rules made by the FCA.
(5)A unilateral change notice must be in such form, and be sent by such means, as is specified in general rules made by the FCA.
(6) In subsection (1) “ the required notice period ” means such period as is specified in general rules made by the FCA.
117G Further duties to make FCA general rules
(1)The FCA must make general rules—
(a)about the fees that may or may not be charged by the provider of a pension scheme in relation to unilateral changes effected under section 117B(1);
(b)imposing requirements on the provider of a pension scheme who proposes to effect, or effects, a unilateral change under section 117B(1) to provide information to the independent person;
(c)imposing requirements on the provider of a pension scheme who proposes to effect, or effects, a unilateral change under section 117B(1), as to the records they must keep and retain for the purposes of this Part.
(2)The rules made by virtue of subsection (1) must apply in relation to pension schemes established before, as well as those established after, those rules (or this section) came into force.
117H Treasury regulations
(1)The Treasury may by regulations—
(a)provide that section 117B(1) does not apply in relation to unilateral changes of a description specified in the regulations;
(b)amend section 117D (best interests test);
(c)prescribe further conditions (in addition to those in sections 117D to 117F) that must be met in relation to a unilateral change for it to be permitted under section 117B(1);
(d)require the FCA to make general rules in compliance with section 117E(4)(b) that require the inclusion, in the terms of an appointment under that section, of a term providing that members of the pension scheme may in their own right enforce the terms of appointment under section 1 of the Contracts (Rights of Third Parties) Act 1999;
(e)disapply any legislation, or require the FCA to disapply any general rule, so far as it restricts or otherwise affects the power in section 117B(1);
(f)make provision consequential on this Part.
(2)The Treasury must by regulations require the FCA to include provision of a description specified in the regulations in general rules made in compliance with section 117E(4)(a) (how to determine whether a person is independent), alongside any other provision included in such general rules.
(3)Regulations under subsection (2) must in particular require the FCA to include in such general rules provision designed to ensure that the independent person does not have a conflict of interest.
(4)The power to make regulations under subsection (1) is capable of being exercised so as to amend or repeal any provision of primary legislation.
117I Interpretation of Part
(1)In this Part—
“ the best interests test ” has the meaning given by section 117D(2);
“ directly affected ”, in relation to a unilateral change, has the meaning given by section 117D(3);
“ FCA-regulated ”, in relation to a pension scheme, has the meaning given by subsection (2);
“ the independent person ”, in relation to a proposed unilateral change, has the meaning given by section 117E(5);
“ money purchase benefits ” means money purchase benefits within the meaning of the Pension Schemes Act 1993 (see section 181(1) of that Act ) or the Pension Schemes (Northern Ireland) Act 1993 (see section 176(1) of that Act );
“ pension pot ” has the meaning given by subsection (3);
“ pension scheme ” has the meaning given by section 1(5) of the Pension Schemes Act 1993 ;
“ personal pension scheme ” means a personal pension scheme within the meaning of the Pension Schemes Act 1993 (see section 1(1) of that Act ) or the Pension Schemes (Northern Ireland) Act 1993 (see section 1(1) of that Act );
“ provider ”—
(a)in relation to an FCA-regulated pension scheme, means the person referred to in subsection (2)(b);
(b)in relation to any other pension scheme, means the trustees or managers of the scheme;
“ terms ” , in relation to a pension scheme, has the meaning given by section 117B(6);
“ transfer ”, in relation to a pension pot, includes a transfer of an amount representing its value;
“ trustees or managers ”, in relation to a pension scheme, means—
(a)in the case of a scheme established under a trust, the trustees of the scheme, and
(b)in any other case, the persons responsible for the management of the scheme;
“ unilateral change ” has the meaning given by section 117B(7);
“ unilateral change notice ” has the meaning given by section 117F(2).
(2) A pension scheme is “FCA-regulated” if the operation of the scheme—
(a)is a regulated activity, and
(b)is carried on in the United Kingdom by an authorised person.
(3) “ Pension pot ” means sums or assets held for the purpose of providing money purchase benefits to or in respect of a member of a pension scheme; and—
(a)a reference to the pension scheme that holds a pension pot is to that pension scheme;
(b)a reference to the individual for whom a pension pot is held is to that member.F907]
Part VIII [F908Provisions relating to market abuseF908] cross-notes
F909...
notecase F909118 Market abuse.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
case F909118A Supplementary provision about certain behaviour
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F909118B Insiders
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
case F909118C Inside information
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F909...
notecase F909119 The code.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F909120 Provisions included in the [F910FCA'sF910] code by reference to the City Code.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
case F909121 Codes: procedure.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase F909122 Effect of the code.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F911Powers to require information and supplemental provisions
122A. Power to require information from issuers
(1)The FCA may require an issuer, a person discharging managerial responsibilities or a person closely associated with a person discharging managerial responsibilities to provide—
(a)any information the FCA reasonably requires for the purpose of protecting—
(i)the interests of users of financial markets and exchanges in the United Kingdom; or
(ii)the orderly operation of financial markets and exchanges in the United Kingdom; or
(b)any information or explanation the FCA reasonably requires to verify whether Article 17 (public disclosure of inside information) or Article 19 (managers’ transactions) of the market abuse regulation is being, or has been, complied with.
(2)Information required under this section must be provided—
(a)before the end of such reasonable period as may be specified by the FCA; and
(b)at such place as may be specified by the FCA.
(3)The FCA may require any information provided under this section to be provided in such form as it may reasonably require.
(4)The FCA may require any information provided, whether in a document or otherwise, to be verified in such manner as it may reasonably require.
(5)In this section—
“person closely associated” has the meaning given in Article 3.1(26) of the market abuse regulation (see section 131AC (meaning of “persons closely associated” in the market abuse regulation)); and
“person discharging managerial responsibilities” has the meaning given in Article 3.1(25) of the market abuse regulation.
(6) For the meaning of “issuer” in this Part, see section 131AB.
122B. General power to require information
(1)The FCA may, by notice in writing, require a person—
(a)to provide specified information or information of a specified description; or
(b)to produce specified documents or documents of a specified description.
(2)This section applies only to information and documents that the FCA reasonably requires for the purpose of the exercise by it of functions under the market abuse regulation or [F912 under supplementary market abuse legislationF912] .
(3)Information or documents required under this section must be provided or produced—
(a)before the end of such reasonable period as may be specified; and
(b)at such place as may be specified.
(4)The FCA may require any information provided under this section to be provided in such form as it may reasonably require.
(5)The FCA may require—
(a)any information provided, whether in a document or otherwise, to be verified in such manner as it may reasonably require; or
(b)any document produced to be authenticated in such manner as it may reasonably require.
[F913 (6)The FCA may exercise its powers under this section at the request of an overseas regulator where the regulator makes the request in the exercise of its relevant functions.
(6A)In subsection (6)—
“ overseas regulator ” means—
(a)the competent authority of an EEA State for the purposes of the market abuse regulation, as that regulation has effect in the European Union (the “ EU version of the market abuse regulation ”); or
(b)an authority of any other country or territory outside the United Kingdom which exercises functions corresponding to those of a competent authority under the EU version of the market abuse regulation;
“ relevant functions ” means—
(a)in relation to the competent authority of an EEA State, its functions under—
(i)the EU version of the market abuse regulation; or
(ii)a directly applicable EU regulation made under the EU version of the market abuse regulation;
(b)in relation to an authority of any other country or territory outside the United Kingdom, its functions corresponding to the functions referred to in paragraph (a);F913]
(8) In this section “specified” means specified in the notice.
122C. Power to require information: supplementary
(1)If a document is produced in response to a requirement imposed under section 122B, the FCA may—
(a)take copies of, or extracts from, the document; or
(b)require the person producing the document, or any relevant person, to provide an explanation of the document.
(2) In subsection (1)(b) “relevant person”, in relation to a person who is required to produce a document, means a person who—
(a)has been, is, or is proposed to be, a director or controller of that person;
(b)has been or is an auditor of that person;
(c)has been or is an actuary, accountant or lawyer appointed or instructed by that person; or
(d)has been or is an employee of that person.
(3)If a person who is required under section 122B to produce a document fails to do so, the FCA may require the person to state, to the best of the person’s knowledge and belief, where the document is.
(4)A lawyer may be required under section 122B to provide the name and address of the lawyer’s client.
(5) A person (“P”) may not be required under section 122A or 122B to disclose information or produce a document in respect of which P owes an obligation of confidence by virtue of carrying on the business of banking unless condition A, B or C is met.
(6)Condition A is met if the FCA suspects that P or a member of P’s group—
(a)has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation; or
(b)has contravened, or been knowingly concerned in the contravention of—
(i)a provision of the market abuse regulation other than Article 14 or 15 of that regulation; or
(ii)a provision of a supplementary EU regulation.
(7)Condition B is met if the FCA suspects that the person to whom the obligation of confidence is owed or a member of that person’s group—
(a)has contravened Article 14 or Article 15 of the market abuse regulation; or
(b)has contravened, or been knowingly concerned in the contravention of—
(i)a provision of the market abuse regulation other than Article 14 or 15 of that regulation; or
(ii)a provision of a supplementary EU regulation.
(8)Condition C is met if the person to whom the obligation of confidence is owed consents to the disclosure or production.
(9)If a person claims a lien on a document, its production under section 122B does not affect the lien.
122D. Entry of premises under warrant
(1)A justice of the peace may issue a warrant under this section if satisfied on information on oath given by or on behalf of the FCA that there are reasonable grounds for believing that the conditions in subsection (2) are met.
(2)The conditions are—
(a)that a person on whom a requirement has been imposed under section 122B or 122C has failed (wholly or in part) to comply with it; and
(b)that on the premises specified in the warrant—
(i)there are documents which have been required; or
(ii)there is information which has been required.
(3)A warrant under this section shall authorise a constable—
(a)to enter the premises specified in the warrant;
(b) to search the premises and take possession of any documents or information appearing to be documents or information of a kind in respect of which a warrant under this section was issued (“the relevant kind”) or to take, in relation to any such documents or information, any other steps which may appear to be necessary for preserving them or preventing interference with them;
(c)to take copies of, or extracts from, any documents or information appearing to be of the relevant kind;
(d)to require any person on the premises to provide an explanation of any document or information appearing to be of the relevant kind or to state where it may be found; and
(e)to use such force as may be reasonably necessary.
(4)A warrant under this section may be executed by any constable.
(5)The warrant may authorise persons to accompany any constable who is executing it.
(6)The powers in subsection (3) may be exercised by a person authorised by the warrant to accompany a constable; but that person may exercise those powers only in the company of, and under the supervision of, a constable.
(7)In England and Wales, sections 15(5) to (8) and 16(3) to (12) of the Police and Criminal Evidence Act 1984 (execution of search warrants and safeguards) apply to warrants issued under this section.
(8)In Northern Ireland, Articles 17(5) to (8) and 18(3) to (12) of the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/1341 (N.I. 12)) apply to warrants issued under this section.
(9)In the application of this section to Scotland—
(a)for the reference to a justice of the peace substitute a reference to a justice of the peace or a sheriff; and
(b)for the references to information on oath substitute references to evidence on oath.
(10)The FCA may give information under subsection (1) or under section 176(1) at the request of an [F914 dfnoverseasF914] regulator where the regulator makes the request in the exercise of its [F915 relevant functionsF915] .
[F916 (10A) In subsection (10), “overseas regulator” and “relevant functions” have the meaning given in section 122B(6A). F916]
F917 (11). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
122E. Retention of documents taken under section 122D
(1) Any document of which possession is taken under section 122D (“a seized document”) may be retained so long as it is necessary to retain it (rather than copies of it) in the circumstances.
(2)A person claiming to be the owner of a seized document may apply to a magistrates’ court or (in Scotland) the sheriff for an order for the delivery of the document to the person appearing to the court or sheriff to be the owner.
(3)If, on an application under subsection (2), the court or (in Scotland) the sheriff cannot ascertain who is the owner of the seized document the court or sheriff (as the case may be) may make such order as the court or sheriff thinks fit.
(4)An order under subsection (2) or (3) does not affect the right of any person to take legal proceedings against any person in possession of a seized document for the recovery of the document.
(5)Any right to bring proceedings (as described in subsection (4)) may only be exercised within 6 months of the date of the order made under subsection (2) or (3).
122F. Offences
(1) If a person (“A”) fails to comply with a requirement imposed on A under section 122B or 122C the FCA may certify that fact in writing to the court.
(2)If the court is satisfied that A failed without reasonable excuse to comply with the requirement, it may deal with A (and where A is a body corporate, any director or other officer) as if A (or as the case may be the director or officer) were in contempt.
(3) A person (“B”) who, in purported compliance with a requirement imposed on B under section 122B or 122C—
(a)provides information which B knows to be false or misleading in a material particular; or
(b)recklessly provides information which is false or misleading in a material particular;
is guilty of an offence.
(4)A person guilty of an offence under subsection (3) is liable—
(a)on summary conviction—
(i)in England and Wales, to imprisonment for a term not exceeding three months or a fine, or both;
(ii)in Scotland, to imprisonment for a term not exceeding three months or a fine not exceeding the statutory maximum, or both;
(iii)in Northern Ireland, to imprisonment for a term not exceeding three months or a fine not exceeding the statutory maximum, or both;
(b)on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.
(5)Any person who intentionally obstructs the exercise of any rights conferred by a warrant under section 122D is guilty of an offence and liable on summary conviction—
(a)in England and Wales, to imprisonment for a term not exceeding three months or a fine, or both;
(b)in Scotland, to imprisonment for a term not exceeding three months or a fine not exceeding level 5 on the standard scale, or both;
(c)in Northern Ireland, to imprisonment for a term not exceeding three months or a fine not exceeding level 5 on the standard scale, or both.
(6)In this section—
(a) “court” means—
(i)the High Court;
(ii)in Scotland, the Court of Session;
(b) “officer”, in relation to a limited liability partnership, means a member of the partnership.
Other administrative powers
122G. Publication of information and corrective statements by issuers
(1)If condition A or B is met, the FCA may require an issuer [F918 or emission allowance market participantF918] to publish—
(a)specified information; or
(b)a specified statement.
(2)Condition A is met if the FCA considers that the publication of the information or statement is necessary for the purpose of protecting—
(a)the interests of users of financial markets and exchanges in the United Kingdom; or
(b)the orderly operation of financial markets and exchanges in the United Kingdom.
(3)Condition B is met if—
(a)the information or statement corrects false or misleading information made public, or a false or misleading impression given to the public, by that person; and
(b)the FCA considers that the publication of the information is necessary for the purpose of the exercise by it of functions under the market abuse regulation or [F919 under supplementary market abuse legislationF919] .
(4)Information or statements required to be published under this section must be published—
(a)before the end of such reasonable period as may be specified; and
(b)by any method as may be specified.
(5)If a person fails to comply with a requirement to publish information or a statement under this section, the FCA may publish the information or statement.
(6)But before doing so, the FCA must give that person an opportunity to make representations to it regarding its decision to publish the information or statement under subsection (5).
[F920 (7)In this section—
“emission allowance market participant” has the same meaning as in Article [F921 3.1.20 F921] (definitions) of the market abuse regulation; and
“specified” means specified by the FCA. F920]
(8) For the meaning of “issuer”, see section 131AB.
122H. Publication of corrective statements generally
(1)If condition A or B is met, the FCA may, by notice in writing, require a person to publish—
(a)specified information; or
(b)a specified statement
correcting false or misleading information made public, or a false or misleading impression given to the public, by that person.
(2)Condition A is met if the FCA considers that the publication of the information or statement is necessary for the purpose of protecting—
(a)the interests of users of financial markets and exchanges in the United Kingdom; or
(b)the orderly operation of financial markets and exchanges in the United Kingdom.
(3)Condition B is met if the FCA considers that the publication of the information or statement is necessary for the purpose of the exercise by it of functions under the market abuse regulation or [F922 under supplementary market abuse legislationF922] .
(4)Information or statements required to be published under this section must be published—
(a)before the end of such reasonable period as may be specified; and
(b)by any method as may be specified.
(5)If a person fails to comply with a requirement to publish information or a statement under this section the FCA may publish the information or statement.
(6)But before doing so, the FCA must give that person an opportunity to make representations to it regarding its decision to publish the information or statement under subsection (5).
(7) In this section “specified” means specified in the notice.
[F923122HA Publication of corrective statements relating to benchmarks
(1)If condition A or B is met, the FCA may, by notice in writing, require a person to publish—
(a)specified information, or
(b)a specified statement,
correcting false or misleading information made public, or a false or misleading impression given to the public, by that person.
(2)Condition A is met if the FCA considers that the publication of the information or statement is necessary for the purpose of protecting the interests of users of regulated benchmarks.
(3)Condition B is met if the FCA considers that the publication of the information or statement is necessary for the purpose of the exercise by it of its functions under Article 41(1)(j) of the EU Benchmarks Regulation 2016.
(4)Information or statements required to be published under this section must be published—
(a)before the end of such reasonable period as may be specified; and
(b)by any such method as may be specified.
(5)If a person fails to comply with a requirement to publish information or a statement under this section the FCA may publish the information or statement.
(6)But before doing so, the FCA must give that person an opportunity to make representations to it regarding its decision to publish the information or statement under subsection (5).
(7)In this section—
“ specified ” means specified in the notice, and
“ regulated benchmark ” means a regulated benchmark as defined in section 425A(7). F923]
122I. Power to suspend trading in financial instruments
(1)The FCA may suspend trading of a financial instrument where it considers it necessary for the purpose of the exercise by it of functions under the market abuse regulation or [F924 under supplementary market abuse legislationF924] .
(2)If the FCA does so the issuer of the financial instrument may refer the matter to the Tribunal.
[F925 (2A)But subsection (2) does not apply if the financial instrument is an emission allowance.F925]
(3)The FCA may—
(a)cancel a suspension under subsection (1); and
(b)impose such conditions for the cancellation to take effect as it considers appropriate.
(4)The provisions relating to suspension of listing of securities in section 78 (discontinuance or suspension: procedure) apply to a suspension of trading in a financial instrument [F926 other than an emission allowanceF926] under subsection (1) and for the purposes of this section—
(a)the references in section 78 to listing are to be read as references to trading; and
(b)the references in section 78 to securities are to be read as references to financial instruments.
[F927 (4A)A suspension of trading in a financial instrument that is an emission allowance takes effect—
(a)immediately, if the FCA states that is the case; or
(b)on such later date as the FCA specify.F927]
(5) For the meaning of “issuer” in this Part, see section 131AB. F911]
[F928122IA. Power to suspend auctioning of auctioned products on a recognised auction platform
(1)The FCA may suspend the auctioning of a relevant auctioned product at an auction conducted by a recognised auction platform where it considers it necessary for the purpose of the exercise by it of functions under the market abuse regulation or [F929 any supplementary market abuse legislationF929] .
(2)If the FCA does so the recognised auction platform may refer the matter to the Tribunal.
(3)A suspension by the FCA takes place—
(a)immediately, if the FCA specify this is the case, or
(b)on such later date as the FCA specify.
(4)The FCA may—
(a)cancel a suspension under subsection (1), and
(b)impose such conditions for the cancellation to take effect as it considers appropriate.
(5)The provisions relating to the suspension and removal of financial instruments from trading set out in—
(a)section 313B(2) to (4) (suspension or removal of financial instruments from trading: procedure), and
(b)sections 313BA (procedure following consideration of representations) to 313BC (decisions on applications for revocation by institutions),
apply, with the modifications set out in subsection (6), to a suspension of the auctioning of a relevant auctioned product at an auction conducted by a recognised auction platform.
(6)The modifications referred to in subsection (5) are—
(a)references to a requirement imposed on an institution under section 313A are to be read as references to the suspension of the auctioning of the relevant auctioned product;
(b)references to an institution are to be read as references to the recognised auction platform;
(c)in section 313B, the omission of—
(i)subsection (2)(a)(ii);
(ii) in subsection (3A)(d), the words “or the issuer of the financial instrument in question” and “or the issuer”;
(iii)in subsection (3A)(f), the words “or the issuer of the financial instrument in question;
(d)the omission of section 313BA(5)(b) and (8);
(e)the omission of section 313BB(6)(b); and
(f)the omission of section 313BC(3)(b) and (6)(b).
(7) In this section “relevant auctioned product” means an auctioned product [F930 , within the meaning of regulation 4 of the Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021 F930] . F928]
[F931Administrative sanctionsF931]
notecase [F931123 Power to impose penalties or issue censure
(1)The FCA may exercise its power under subsection (2) if it is satisfied that—
(a)a person has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation;
(b)a person has contravened, or been knowingly concerned in the contravention of—
(i)a provision of the market abuse regulation other than Article 14 or 15 of that regulation; or
(ii)a provision of [F932 any supplementary market abuse legislationF932] ; or
(c)a person other than an authorised person has contravened any requirement—
(i)imposed on that person under section 122A, 122B, 122C, 122G, 122H, [F933 122HA,F933] 122I, [F934 122IA,F934] 123A or 123B; or
(ii)relating to the market abuse regulation or [F935 any supplementary market abuse legislationF935] imposed on that person under Part 11.
(2)The FCA’s power under this subsection is a power to impose a penalty of such amount as it considers appropriate on the person.
(3)The FCA may, instead of imposing a penalty on a person, publish a statement censuring the person.F931]
[F931123A. Power to prohibit individuals from managing or dealing
(1)The FCA may exercise its power under subsection (2) if it is satisfied that an individual—
(a)has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation;
(b)has contravened, or been knowingly concerned in the contravention of—
(i)a provision of the market abuse regulation other than Article 14 or 15 of that regulation; or
(ii)a provision of [F936 any supplementary market abuse legislationF936] ; or
(c)has contravened a requirement imposed on that individual under this section or section 122A, 122B, 122C, 122G, 122H, [F937 122HA,F937] 122I [F938 , 122IAF938] or 123B.
(2)The FCA’s power under this subsection is a power to impose [F939 one or moreF939] of the following—
(a)a temporary prohibition on the individual holding an office or position involving responsibility for taking decisions about the management of an investment firm;
(b)a temporary prohibition on the individual acquiring or disposing of financial instruments, whether on his or her own account or the account of a third party and whether directly or indirectly.
[F940 (c)a temporary prohibition on the individual making a bid, on his or her own account or the account of a third party, directly or indirectly, at an auction conducted by a recognised auction platform.F940]
(3)If the FCA is satisfied that an individual has contravened Article 14 or 15 of the market abuse regulation the FCA may impose a permanent prohibition on the individual holding an office or position involving responsibility for taking decisions about the management of an investment firm.
(4)A prohibition imposed under subsection (2) may be expressed to expire at the end of such period as the FCA may specify, but the imposition of a prohibition that expires at the end of a specified period does not affect the FCA’s power to impose a new prohibition under subsection (2).
(5)A prohibition imposed under subsection (2)(a) or (3) may be expressed to prohibit an individual holding an office or position involving responsibility for taking decisions about the management of—
(a)a named investment firm;
(b)an investment firm of a specified description; or
(c)any investment firm.
(6)An investment firm must take reasonable care to ensure that no individual who is subject to a prohibition under subsection (2)(a) or (3) on the holding of an office or position involving responsibility for taking decisions about the management of the firm holds such an office or position.
(7)The FCA may vary or revoke a prohibition imposed under this section.
[F941 (8) For the meaning of “recognised auction platform” in this Part, see section 131AB. F941]
123B. Suspending permission to carry on regulated activities etc
(1)The FCA may exercise its power under subsection (2) if it is satisfied that an authorised person—
(a)has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation;
(b)has contravened, or been knowingly concerned in the contravention of—
(i)a provision of the market abuse regulation other than Article 14 and 15 of that regulation;
(ii)a provision of [F942 any supplementary market abuse legislationF942] ; or
(c)has contravened a requirement imposed on that person under this section or section 122A, 122B, 122C, 122G, 122H, [F943 122HA,F943] 122I [F944 , 122IAF944] or 123A.
(2)The FCA’s power under this subsection is a power to do either or both of the following —
(a)to suspend, for such period as it considers appropriate, any permission which the person has to carry on a regulated activity;
(b)to impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the carrying on of a regulated activity by the person as it considers appropriate.
(3) In subsection (2) “permission” means any permission that the authorised person has, whether given (or treated as given) by the FCA or the PRA or conferred by any provision of this Act.
(4)The period for which a suspension or restriction is to have effect may not exceed 12 months.
(5)A suspension may relate only to the carrying on of an activity in specified circumstances.
(6)A restriction may, in particular, be imposed so as to require the person concerned to take, or refrain from taking, specified action.
(7)The FCA may—
(a)withdraw a suspension or restriction; or
(b)vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.
(8)The power under this section may (but need not) be exercised so as to have effect in relation to all the regulated activities that the person concerned carries on.
123C. Exercise of administrative sanctions
Any one or more of the powers under sections 123, 123A and 123B may be exercised in relation to the same contravention.F931]
Statement of policy
note 124 Statement of policy.
[F945 (1)The FCA must prepare and issue a statement of its policy with respect to the type and level of administrative sanctions it may impose on a relevant person.
(2)The FCA’s policy in determining the type and level of administrative sanctions to be imposed must take into account all relevant circumstances including, where appropriate, the matters referred to in Article 31(1) of the market abuse regulation [F946 or Article 43(1) of the EU Benchmarks Regulation 2016F946] .F945]
F947 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)The [F948FCAF948] may at any time alter or replace a statement issued under this section.
(5)If a statement issued under this section is altered or replaced, the [F948FCAF948] must issue the altered or replacement statement.
[F949 (6)When imposing, or deciding whether to impose, an administrative sanction on a relevant person the FCA must have regard to any statement published under this section in force at the time of the contravention.F949]
(7)A statement issued under this section must be published by the [F948FCAF948] in the way appearing to the [F948FCAF948] to be best calculated to bring it to the attention of the public.
(8)The [F948FCAF948] may charge a reasonable fee for providing a person with a copy of a statement published under this section.
(9)The [F948FCAF948] must, without delay, give the Treasury a copy of any statement which it publishes under this section.
[F950 (10)In this section—
“administrative sanction” means—
(a)a penalty or statement of censure imposed or published under section 123;
(b)a prohibition imposed under section 123A; or
(c)a suspension or restriction imposed under section 123B; and
“relevant person” means a person—
(a)who has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation;
(b)who has contravened, or been knowingly concerned in the contravention of—
(i)a provision of the market abuse regulation other than Article 14 or 15 of that regulation; or
(ii)a provision of [F951 any supplementary market abuse legislationF951] ; or
(c)who has contravened—
(i)any requirement imposed on the person under section 122A, 122B, 122C, 122G, 122H, [F952 122HA,F952] 122I, [F953 122IA,F953] 123A or 123B; or
(ii)in the case of a person other than an authorised person, any requirement relating to the market abuse regulation or [F951 any supplementary market abuse legislationF951] imposed on the person under Part 11.F950]
125 Statement of policy: procedure.
(1)Before issuing a statement of policy under section 124, the [F948FCAF948] must publish a draft of the proposed statement in the way appearing to the [F948FCAF948] to be best calculated to bring it to the attention of the public.
(2)The draft must be accompanied by notice that representations about the proposal may be made to the [F948FCAF948] within a specified time.
(3)Before issuing the proposed statement, the [F948FCAF948] must have regard to any representations made to it in accordance with subsection (2).
(4)If the [F948FCAF948] issues the proposed statement it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2); and
(b)its response to them.
(5)If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the [F948FCAF948] , significant, the [F948FCAF948] must (in addition to complying with subsection (4)) publish details of the difference.
(6)The [F948FCAF948] may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
(7)This section also applies to a proposal to alter or replace a statement.
Procedure
case 126 Warning notices.
[F954 (1)If the FCA proposes—
(a)to impose a penalty on a person under section 123(2);
(b)to publish a statement censuring a person under section 123(3);
(c)to impose a temporary prohibition on an individual under section 123A(2)(a);
(d)to impose a temporary prohibition on an individual under section 123A(2)(b);
(e)to impose a permanent prohibition on an individual under section 123A(3); or
(f)to impose a suspension or restriction in relation to a person under section 123B;
it must give the person a warning notice.F954]
(2)A warning notice about a proposal to impose a penalty [F955under section 123F955] must state the amount of the proposed penalty.
(3)A warning notice about a proposal to publish a statement [F956under section 123F956] must set out the terms of the proposed statement.
[F957 (4)A warning notice about a proposal to impose a prohibition under section 123A must set out the terms of the proposed prohibition.
(5)A warning notice about a proposal to impose a suspension or restriction under section 123B must state the period for which the suspension or restriction is to have effect.F957]
case 127 Decision notices and right to refer to Tribunal.
[F958 (1)If the FCA decides—
(a)to impose a penalty on a person under section 123(2);
(b)to publish a statement censuring a person under section 123(3);
(c)to impose a temporary prohibition on an individual under section 123A(2)(a);
(d)to impose a temporary prohibition on an individual under section 123A(2)(b);
(e)to impose a permanent prohibition on an individual under section 123A(3);
(f)to impose a suspension or restriction in relation to a person under section 123B;
it must give the person a decision notice.F958]
(2)A decision notice about the imposition of a penalty [F959under section 123F959] must state the amount of the penalty.
(3)A decision notice about the publication of a statement [F960under section 123F960] must set out the terms of the statement.
[F961 (3A)A decision notice about the imposition of a prohibition under section 123A must set out the terms of the prohibition.
(3B)A decision notice about the imposition of a suspension or restriction under section 123B must state the period for which the suspension or restriction is to have effect.F961]
[F962 (4)If the FCA decides—
(a)to impose a penalty on a person under section 123(2);
(b)to publish a statement censuring a person under section 123(3);
(c)to impose a prohibition on an individual under section 123A; or
(d)to impose a suspension or restriction in relation to a person under section 123B;
that person may refer the matter to the Tribunal.F962]
[F963127A. Consultation with the PRA in relation to administrative sanctions
(1)The FCA must consult the PRA before giving a warning notice under section 126(1)(a), (b), (d) or (f) or a decision notice under section 127(1)(a), (b), (d) or (f) in relation to a person who—
(a)is a PRA-authorised person; or
(b)is a member of a PRA-authorised person’s immediate group.
(2)The FCA must consult the PRA before giving a warning notice under section 126(1)(c) or (e) or a decision notice under section 127(1)(c) or (e) if as a result of the prohibition in question an individual would be prohibited from holding an office or position involving responsibility for taking decisions about the management of a PRA-authorised investment firm.
(3)The FCA must consult the PRA before varying or revoking a prohibition under section 123A(2)(a) or (3) if as a result of the proposed variation or revocation an individual would no longer be prohibited from holding an office or position involving responsibility for taking decisions about the management of a PRA-authorised investment firm.
(4) In this section “PRA-authorised investment firm” means an investment firm which is a PRA-authorised person and carries on a regulated activity. F963]
Miscellaneous
note 128 Suspension of investigations.
(1)If the [F948FCAF948] considers it desirable or expedient because of the exercise or possible exercise of a [F964relevant powerF964] , it may direct a recognised investment exchange[F965 , recognised clearing house or recognised CSDF965] —
(a)to terminate, suspend or limit the scope of any inquiry which the exchange [F966, clearing house or central securities depositoryF966] is conducting under its rules; or
(b)not to conduct an inquiry which the exchange [F967, clearing house or central securities depositoryF967] proposes to conduct under its rules.
(2)A direction under this section—
(a)must be given to the exchange [F968, clearing house or central securities depositoryF968] concerned by notice in writing; and
(b)M4is enforceable, on the application of the [F948FCAF948] , by injunction or, in Scotland, by an order under section 45 of the Court of Session Act 1988.
[F969 (3) In this section “relevant power” means the FCA’s power—
(a)to impose a penalty or publish a statement of censure under section 123;
(b)to impose a prohibition under section 123A;
(c)to impose a suspension or restriction under section 123B;
(d)to appoint a person to conduct an investigation under section 168 in a case falling within subsection (2)(d) of that section; or
(e)to appoint a person to conduct an investigation under section 169 (investigation etc in support of an overseas regulator) in a case falling within subsection (2A) of that section.F969]
notecase [F970129 Power of court to impose administrative sanctions in cases of market abuse
(1)The FCA may, on an application to the court under [F971 Part 25 which relates to the market abuse regulationF971] , request the court to consider whether it is appropriate to impose one or more of the following on the person to whom the application relates—
(a)a penalty;
(b)if the person concerned is an individual, a temporary prohibition or a permanent prohibition; or
(c)a suspension or restriction.
(2)The court may, if it considers it appropriate, make an order which does one or more of the following—
(a)requires the person concerned to pay to the FCA a penalty of such amount as the court considers appropriate;
(b)if the person concerned is an individual, imposes a temporary prohibition or a permanent prohibition on that individual; or
(c)imposes a suspension or restriction on the person concerned.
(3)But the court may impose a permanent prohibition only where it is satisfied the person concerned has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation.
(4)Section 123A(4) to (6) apply to a prohibition imposed by an order made under subsection (2) as they do to a prohibition under section 123A, but with—
(a)references to a prohibition under section 123A having effect as references to a prohibition under this section; and
(b)references to the FCA having effect as references to the court which makes the order under this section.
(5)Section 123B(4) to (6) and (8) apply to a suspension or restriction imposed by an order under subsection (2) as they do to a suspension or restriction imposed under section 123B.
(6)The court may—
(a)vary or revoke a prohibition imposed under this section;
(b)withdraw a suspension or restriction imposed under this section; or
(c)vary a suspension or a restriction imposed under this section so as to reduce the period for which it has effect or otherwise to limit its effect.
(7)In this section—
F972 ...
“permanent prohibition” means a permanent prohibition on an individual holding an office or position involving responsibility for taking decisions about the management of an investment firm;
“suspension or restriction” means—
(a)a suspension of any permission which a person has to carry on a regulated activity for such period as the court considers appropriate; or
(b)such limitations or other restrictions as the court considers appropriate in relation to the carrying on of a regulated activity by a person for such period as the court considers appropriate;
“temporary prohibition” means a temporary prohibition on an individual—
(a)holding an office or position involving responsibility for taking decisions about the management of an investment firm; F973...
(b)acquiring or disposing of financial instruments, whether on his or her own account or the account of a third party and whether directly or indirectly [F974 ; or
(c)making a bid, on his or her own account or the account of a third party, directly or indirectly, at an auction conducted by a recognised auction platform.F974]
[F975 (8) For the meaning of “recognised auction platform” in this Part, see section 131AB. F975]
[F976 (9)An application under Part 25 relates to the market abuse regulation if—
(a)it is made under section 380 or 382 and the relevant requirement for the purposes of that section is a requirement imposed by the market abuse regulation or [F977 by supplementary market abuse legislationF977] ; or
(b)it is made under section 381 or 383.F976,F970]]
notecase 130 Guidance.
[F978 (1)The Treasury may from time to time issue written guidance for the purpose of helping relevant authorities to determine the action to be taken in cases where—
(a)it appears a person has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation; and
(b)in so doing the person appears to have committed an offence under Part 7 of the Financial Services Act 2012 or Part 5 of the Criminal Justice Act 1993 (insider dealing).F978]
(2)The Treasury must obtain the consent of the Attorney General and the Secretary of State before issuing any guidance under this section.
(3) In this section “relevant authorities”—
(a)in relation to England and Wales, means the Secretary of State, the [F948FCAF948] , the Director of the Serious Fraud Office and the Director of Public Prosecutions;
(b)in relation to Northern Ireland, means the Secretary of State, the [F948FCAF948] , the Director of the Serious Fraud Office and the Director of Public Prosecutions for Northern Ireland.
(4)Subsections (1) to (3) do not apply to Scotland.
(5)In relation to Scotland, the Lord Advocate may from time to time, after consultation with the Treasury, issue written guidance for the purpose of helping the [F948FCAF948] to determine the action to be taken in cases [F979mentioned in subsection (1)F979] .
case F980130A Interpretation and supplementary provision
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131 Effect on transactions.
The imposition of a penalty under this Part does not make any transaction void or unenforceable.
[F981131A Protected Disclosures
(1)A disclosure which satisfies the following three conditions is not to be taken to breach any restriction on the disclosure of information (however imposed).
(2)The first condition is that the information or other matter—
(a)causes the person making the disclosure ( the discloser) to know or suspect, or
[F982 (b)gives him reasonable grounds for knowing or suspecting that another person has engaged in market abuseF982]
[F983 that another person has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulationF983] .
(3)The second condition is that the information or other matter disclosed came to the discloser in the course of his trade, profession, business or employment.
(4)The third condition is that the disclosure is made F984... to a nominated officer as soon as is practicable after the information or other matter comes to the discloser.
(5)A disclosure to a nominated officer is a disclosure which is made to a person nominated by the discloser's employer to receive disclosures under this section, and is made in the course of the discloser's employment and in accordance with the procedure established by the employer for the purpose.
(6)For the purposes of this section, references to a person's employer include any body, association or organisation (including a voluntary organisation) in connection with whose activities the person exercises a function (whether or not for gain or reward) and references to employment must be construed accordingly.F981]
[F985131AA. Reporting of infringements
(1)This section applies to employers who—
(a)provide regulated financial services;
(b)carry on regulated activities in reliance on the exemption in section 327; or
(c)are recognised bodies F986... or third country central counterparties.
(2)Employers must have in place appropriate internal procedures for their employees to report contraventions of the market abuse regulation or any supplementary [F987 market abuse legislationF987] .
(3)In this section—
“employee” and “employer” have the meaning given in section 230 of the Employment Rights Act 1996 ;
“recognised body” has the meaning given in section 313;
“regulated financial services” has the meaning given in section 1H.
131AB. Interpretation
[F988 (1)F988] In this Part—
F989 ...
[F990 “emission allowance” [F991 means emission allowance as described in paragraph 11 of Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 F991] ; F990]
[[F992,F993 “ financial instrument ” means any instrument specified in Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order , read with Part 2 of that Schedule; F993,F992]]
[F992 “ financial instrument ” means any of the following—
(a)an instrument specified in Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, read with Part 2 of that Schedule;
(b)a “ qualifying cryptoasset ” as defined by article 88F of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ;
(c)a “ related instrument ” as defined by regulation 17(1) of the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 ; F992]
[F994 “issuer” has the meaning given in Article 3.1(21) of the market abuse regulation; and F994]
[F994 “ issuer ” means—
(a)an issuer defined by Article 3.1(21) of the market abuse regulation, or
(b)a “ relevant person ” as defined by regulation 17(4) of the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 ; and F994]
[F990 “recognised auction platform” has the meaning given in regulation 1(3) of the Recognised Auction Platform Regulations 2011 ( S.I. 2011/2699 ); F990]
F995 ...
[F996 (2)The following are supplementary market abuse legislation for the purposes of this Part—
(a)an EU regulation, originally made under the market abuse regulation, which is [F997 assimilated directF997] legislation; [F998 andF998]
(b)subordinate legislation (within the meaning of the Interpretation Act 1978) made under the market abuse regulation on or after IP completion [F999 day.F999] [F999 day; andF999]
[F1000 (c)Chapter 2 of Part 2 of the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026.F1000,F996]]
131AC. Meaning of “persons closely associated” in the market abuse regulation
(1) In Article 3.1(26)(a) (definitions) of the market abuse regulation “partner considered to be equivalent to a spouse” includes a civil partner.
(2) In Article 3.1(26)(b) of the market abuse regulation “dependent child” means a child who—
(a)is under the age of 18 years;
(b)is unmarried; and
(c)does not have a civil partner.
(3) In this section “child” includes a stepchild.
131AD. Individual liability in respect of legal persons under Articles 8 and 12 of the market abuse regulation
(1)An individual participates in a decision by a body corporate for the purposes of Article 8.5 (insider dealing) or Article 12.4 (market manipulation) of the market abuse regulation where—
(a)the individual was an officer of the body corporate when the decision was made; and
(b)the FCA are satisfied that the individual was knowingly concerned in the decision.
(2) In this section “officer”, in relation to a body corporate, means–
(a)a director, member of the committee of management, chief executive, manager, secretary or other similar officer of the body, or a person purporting to act in any such capacity; or
(b)an individual who is a controller of the body.
131AE. Liability for contraventions of Article 14 or 15 of the market abuse regulation
For the purposes of any enactment a person contravenes Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) whether the contravention is by that person alone or by that person and one or more other persons jointly or in concert.F985]
F1001Part 8A Short selling
Short selling rules
F1001 131B Short selling rules
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1001 131C Short selling rules: definitions etc
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1001 131D Short selling rules: procedure in urgent cases
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Power to require information
F1001131E Power to require information
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1001131F Power to require information: supplementary
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1001[F1002131FA. Investigations in support of [F1003overseasF1003] regulator
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1001131FB. Entry of premises under warrant
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1001131FC. Retention of documents taken under section 131FB
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Breach of short selling [F1004regulationF1004] etc
F1001131G Power to impose penalty or issue censure
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1001131H Procedure and right to refer to Tribunal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1001131I Duty on publication of statement
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1001131J Imposition of penalties under section 131G: statement of policy
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1001131K Statement of policy: procedure
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1001131L. Offences
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F1002]
[F1005PART 8B Cash access services
Introductory
131M Overview
This Part—
(a)requires the Treasury to publish a statement of policy concerning cash deposit and withdrawal services,
(b)enables the Treasury to designate persons involved in the provision of such services, and
(c)gives the FCA functions in relation to designated persons.
131N Cash access services and coordination arrangements
(1) This section defines “cash”, “cash access service”, “free cash access service” and “ cash access coordination arrangements ” for the purposes of this Part.
(2) “ Cash ” means—
(a)banknotes issued by the Bank of England, or an authorised bank in its capacity as an issuer of banknotes in Scotland or Northern Ireland (see Part 6 of the Banking Act 2009), or
(b)coins made by the Mint, within the meaning of the Coinage Act 1971 (see section 11 of that Act).
(3) A “cash access service” is—
(a) a service which enables cash to be placed on a relevant current account (a “cash deposit service”), or
(b) a service which enables cash to be withdrawn from a relevant current account (a “cash withdrawal service”).
(4) A “free cash access service” is a cash access service that is—
(a)a free of charge service which enables cash to be placed on a relevant personal current account, or
(b)a free of charge service which enables cash to be withdrawn from a relevant personal current account.
(5) “Cash access coordination arrangements” are arrangements—
(a)which are designed to coordinate the provision of cash access services by two or more providers of such services, but
(b)which do not directly provide cash access services to any person.
(6)In relation to cash access coordination arrangements—
(a) a reference to the “ operator ” of such arrangements is to any person with responsibility under the arrangements for managing or operating them;
(b)a reference to the operation of such arrangements includes their management.
(7) In this section, “ relevant current account ” has the meaning given by section 131O .
131O Current accounts and relevant current account providers
(1) This section defines “current account”, “relevant current account”, “relevant personal current account” and “ relevant current account provider ” for the purposes of this Part.
(2) “ Current account ” means an account by means of which one or more named persons are able to—
(a)place cash,
(b)withdraw cash, and
(c)execute and receive payment transactions to and from third parties, including the execution of credit transfers.
(3) For the purposes of subsection (2) (c) , “ payment transaction ” means an act initiated by the payer or payee, or on behalf of the payer, of placing, transferring or withdrawing funds, irrespective of any underlying obligations between the payer and payee.
(4) A “ relevant personal current account ” means a relevant current account held by one or more individuals for purposes outside any business, trade, craft or profession of that individual or those individuals.
(5) “ Relevant current account provider ” means a person—
(a)who has a Part 4A permission to accept deposits, and
(b) who provides current accounts in reliance on that permission (“relevant current accounts”).
(6)But the following are not relevant current account providers—
(a)credit unions, within the meaning given by section 31(1) of the Credit Unions Act 1979 or Article 2(2) of the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205)(N.I.12);
(b)a society that is registered within the meaning of the Friendly Societies Act 1974 (see section 111(1) of that Act) or incorporated under the Friendly Societies Act 1992.
(7)The Treasury may by regulations—
(a)amend a definition in this section;
(b)amend any other provision of this Part in consequence of provision made under paragraph (a).
Cash access policy statement
131P Cash access policy statement
(1)The Treasury must prepare a cash access policy statement.
(2) A “cash access policy statement” is a statement of the policies of His Majesty’s Government concerning cash access services in the United Kingdom, or a part of the United Kingdom.
(3)The reference to cash access services in subsection (2) includes free cash access services.
(4)Policies may be stated in relation to, among other things—
(a)cash deposit services and cash withdrawal services;
(b)services provided in relation to current accounts of different descriptions;
(c)services provided in predominantly urban areas and services provided in predominantly rural areas.
(5)In preparing a cash access policy statement, the Treasury must—
(a)consult the FCA, and
(b)have regard to any report provided under section 131Q.
(6)The Treasury must publish a cash access policy statement in such manner as they consider appropriate.
(7)The Treasury—
(a)must keep the cash access policy statement under review;
(b)may prepare a revised statement (and subsections (5) and (6) apply in relation to any revised statement).
131Q Provision of reports to assist the Treasury
(1)The FCA must, on a request from the Treasury, prepare and send to the Treasury a report on a matter specified in the request.
(2)The Treasury may only make a request under this section for a report that they reasonably require in connection with—
(a)the preparation of a cash access policy statement (see section 131P), or
(b)a decision whether or not to designate a person for the purposes of this Part (see section 131R).
(3)A request for a report under this section—
(a)must be made in writing, and
(b)may require the FCA to send the report to the Treasury within such reasonable period as may be specified in the request (or such other period as may be agreed).
(4)Nothing in section 348, or in regulations made under section 349, is to be taken as preventing or restricting the ability of the FCA to disclose information to the Treasury for the purposes of this section.
(5)Subsection (4) does not apply in relation to information provided to the FCA by a regulatory authority outside the United Kingdom.
Designation
131R Designation
(1)The Treasury may designate a person for the purposes of this Part if the person is—
(a)a relevant current account provider, or
(b)an operator of cash access coordination arrangements, and at least one of the participants in the arrangements is a relevant current account provider designated under this section.
(2) A person is designated by giving the person (the “designated person”) a notice in accordance with this Part (a “designation notice”).
(3)A designation notice must specify whether the person is designated in relation to—
(a)the United Kingdom,
(b)Great Britain only, or
(c)Northern Ireland only.
(4)A designation notice given to the operator of cash access coordination arrangements must specify the arrangements in as much detail as is reasonably practicable.
(5)Before giving a designation notice to a person the Treasury must—
(a)consult the FCA,
(b)notify the person, and
(c)consider any representations made.
(6)A designated person must—
(a)comply with rules made by the FCA under section 131V;
(b)comply with directions given by the FCA to the designated person under section 131W.
131S Designation criteria
(1)The Treasury may designate a person for the purposes of this Part, in relation to the United Kingdom, Great Britain only, or Northern Ireland only (as the case may be), only if satisfied that doing so is likely to further the purpose mentioned in section 131U(1).
(2)In considering whether to designate a relevant current account provider, the Treasury must have regard to—
(a)the distribution of cash access services operated by the provider in the United Kingdom, Great Britain or Northern Ireland (as the case may be);
(b)the distribution in the United Kingdom, Great Britain or Northern Ireland (as the case may be) of persons holding current accounts provided by the provider;
(c)the provider’s share of the current account market in the United Kingdom, Great Britain or Northern Ireland (as the case may be);
(d)the total value of the deposits held in current accounts provided by the provider in the United Kingdom, Great Britain or Northern Ireland (as the case may be).
(3)If a relevant current account provider is part of a group which includes one or more other relevant current account providers, references in subsection (2) to the provider are to be read as references to—
(a)the provider, and
(b)each of those other relevant current account providers.
(4) For the purposes of subsection (3) , section 421 (meaning of “ group ”) applies with the omission of subsection (1)(g) of that section.
131T Cancellation or variation of a designation notice
(1)If a designation notice has been given to a person the Treasury may, by further notice, cancel the designation notice.
(2)If a designation notice has been given to a person (including a designation notice as varied by a notice under this subsection), the Treasury may by further notice, vary the earlier notice.
(3)If a further notice under subsection (2) would designate a person in relation to a part of the United Kingdom in relation to which the person was not designated by the earlier notice, sections 131R(3) and (5) and 131S apply in relation to the further notice.
Supervision of designated persons
131U Purpose for which FCA must exercise functions under this Part
(1)The FCA must exercise its functions under this Part for the purpose of seeking to ensure reasonable provision of cash access services in the United Kingdom, or a part of the United Kingdom.
(2)In this section references to cash access services include references to free cash access services.
(3) “Reasonable provision” of cash access services is provision of such nature and extent as the FCA may determine, having regard to—
(a)the cash access policy statement currently in effect (see section 131P), and
(b)such other matters as it considers appropriate.
(4)In making a determination for the purposes of subsection (3) the FCA must, in particular, have regard to any local deficiencies in provision of cash access services—
(a)which the FCA is aware of, and
(b)the impacts of which the FCA considers to be significant.
(5)A local deficiency in provision of cash access services is a circumstance which limits the ability of persons in any locality in a part of the United Kingdom to—
(a)withdraw cash from a relevant current account, or
(b)place cash on a relevant current account.
(6)In determining whether there are local deficiencies in the provision of cash access services, and the significance of the impacts of such deficiencies, the FCA must have regard to—
(a)the cash access policy statement currently in effect, and
(b)such other matters as it considers appropriate.
(7)Those other matters may include (but are not limited to)—
(a)the number of persons likely to be affected by the deficiency;
(b)the characteristics of the persons likely to be affected by the deficiency;
(c)the likely impact on the persons likely to be affected.
131V FCA rules
(1)The FCA may make such rules applying to designated persons as appear to the FCA to be necessary or expedient for the purpose mentioned in section 131U(1).
(2)Rules under this section must not require a designated person to do (or refrain from doing) any thing in relation to a part of the United Kingdom in relation to which the person is not designated.
(3)Section 137T (general supplementary powers for rules made by a regulator) applies in relation to rules made by the FCA under this section as if, in paragraph (a), the reference to descriptions of authorised persons, activity or investment were to descriptions of designated persons and activities carried on by such persons.
(4)Section 138A (modification or waiver of rules) applies in relation to rules made by the FCA under this section as if subsection (4)(b) were omitted.
(5)Section 138I (consultation by FCA before making rules) applies to rules under this section as if, in subsection (2)(d), the reference to the FCA’s duties under section 1B(1) and (5)(a) were to the purpose for which the FCA must exercise its functions under this Part.
131W Power to direct designated persons
(1)The FCA may give a direction under this section to a designated person if it considers that it is desirable to give the direction for the purpose mentioned in section 131U(1).
(2)A direction under this section must not require a designated person to do (or refrain from doing) any thing in relation to a part of the United Kingdom in relation to which the person is not designated.
(3)A direction under this section may require the person to—
(a)take specified action;
(b)refrain from taking specified action;
(c)review, or take remedial action in respect of, past conduct.
(4)A requirement imposed by a direction under this section may be expressed to expire at the end of a specified period, but the imposition of a requirement that expires at the end of a specified period does not affect the power to give a further direction imposing a new requirement.
(5)A direction under this section—
(a)may be revoked by the FCA by written notice to the person to whom it is given, and
(b)ceases to be in force if the person to whom it is given ceases to be a designated person.
131X Procedure for directions
(1)If the FCA proposes to give a direction under section 131W, or gives such a direction with immediate effect, it must give written notice to the designated person to whom the direction is given (or to be given).
(2)A direction under section 131W takes effect—
(a)immediately, if the notice under subsection (1) states that is the case,
(b)on such other date as may be specified in the notice, or
(c)if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.
(3)A direction under section 131W may be expressed to take effect immediately (or on a specified date) only if the FCA reasonably considers that it is necessary for the direction to take effect immediately (or on that date).
(4)The notice under subsection (1) must—
(a)give details of the direction;
(b)state the FCA’s reasons for the direction and for its determination as to when the direction takes effect;
(c)inform the designated person that the person may make representations to the FCA within such period as may be specified in the notice (whether or not the person has referred the matter to the Tribunal);
(d)inform the designated person of the person’s right to refer the matter to the Tribunal.
(5)The FCA may extend the period allowed under the notice for making representations.
(6)The FCA must give the designated person written notice if, having considered any representations made by the person, it decides—
(a)to give the direction proposed;
(b)if the direction has been given, not to revoke the direction.
(7)The FCA must give the designated person written notice if, having considered any representations made by the person, it decides—
(a)not to give the direction proposed;
(b)to give a different direction;
(c)to revoke a direction.
(8)A notice given under subsection (6) must inform the notified person of the person’s right to refer the matter to the Tribunal.
(9)A notice under subsection (7)(b) must comply with subsection (4).
(10)If a notice informs the designated person of the person’s right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(11)For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
131Y Information gathering and investigations
(1)For the purposes of this Part, Part 11 (information gathering and investigations) applies in accordance with this section.
(2)Sections 165A to 165C, 169 and 169A do not apply.
(3)Any reference to an authorised person includes a person designated for the purposes of this Part (whether or not the person is an authorised person).
(4)In addition—
(a)references to an authorised person in sections 165 and 176(3A)(a) include a person mentioned in subsection (5) (whether or not the person is an authorised person);
(b)sections 175 to 177 apply in relation to section 165 as modified in accordance with paragraph (a).
(5)The persons are—
(a)a relevant current account provider who is not a designated person for the purposes of this Part;
(b)an operator of cash access coordination arrangements who is not a designated person for the purposes of this Part;
(c)the operator of, or an infrastructure provider in relation to, a payment system, who is not a designated person for the purposes of this Part;
(d)a person (other than a person mentioned in paragraph (a), (b) or (c)) who provides cash access services and is not a designated person for the purposes of this Part;
(e)a person who provides a relevant service to a person mentioned in paragraph (a), (b), (c) or (d) and is not a designated person for the purposes of this Part.
(6) In subsection (5)(c) , “payment system”, and “operator” and “ infrastructure provider ” in relation to a payment system, have the same meanings as in Part 5 of the Financial Services (Banking Reform) Act 2013 (see section 110 of that Act ).
(7) For the purposes of subsection (5)(e) , a “relevant service” is a service provided in connection with the provision of cash access services.
(8) In relation to a person who is not an authorised person but is treated as such for the purposes of this Part (by virtue of subsection (3) or (4) ), any reference to “either regulator” is to the FCA only.
131Z Disciplinary measures
For the purposes of enforcing a requirement imposed by or under this Part, Part 14 (disciplinary measures) applies as if—
(a)any reference to an authorised person includes a person designated for the purposes of this Part (whether or not that person is an authorised person), and
(b)section 206A (suspending permission to carry on regulated activities etc) were omitted.
131Z1 Costs of supervision
Rules made under paragraph 23 of Schedule 1ZA, in connection with the carrying out of any of the FCA’s functions under this Part, must not provide for the payment of fees to the FCA by any person other than a designated person who is a relevant current account provider.
131Z2 Exclusion and modification of other FCA duties
(1)Where the FCA is discharging a function under this Part, section 1B (FCA’s general duties) applies as if—
(a)in subsection (1)(b), the reference to one or more of the FCA’s operational objectives were to the purpose mentioned in section 131U(1);
(b)subsections (4) and (4A) (promoting effective competition in the interests of consumers and advancing competitiveness and growth) do not apply.
(2)In discharging its functions under this Part, the regulatory principles in section 3B(1) have effect as if, in paragraph (g), the reference to the FCA’s objectives included the purpose mentioned in section 131U(1).
(3)Section 395 applies in relation to a decision of the FCA made in connection with a function under this Part as if, in subsection (3)(a), the reference to the FCA’s operational objectives included the purpose mentioned in section 131U(1).F1005]
case Part IX Hearings and Appeals cross-notes
note 132 The Financial Services and Markets Tribunal.
F1006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase [F1007133 Proceedings before Tribunal: general provision cross-notes
(1)This section applies in the case of a reference or appeal to the Tribunal (whether made under this or any other Act) in respect of—
(a)a decision of [F1008 the FCA or the PRAF1008] ;
(b)a decision of the Bank of England; or
(c)a decision of a person relating to the assessment of any compensation or consideration under the M5Banking (Special Provisions) Act 2008 [F1009 , the Banking Act 2009 or the Financial Services and Markets Act 2023F1009] .
[F1010 (1A)For the purposes of this section, in the case of a reference to the Tribunal under section 290(4A) (which relates to an application by a central securities depository under section 288A), the failure by the Bank of England to make a decision is treated as a decision to refuse the application (and accordingly is treated as falling within subsection (1)(b)).F1010]
(2)In this section—
“ relevant decision ” means a decision mentioned in subsection (1)(a), (b) or (c); and
“ the decision-maker ”, in relation to a relevant decision, means the person who made the relevant decision.
SI (3)Tribunal Procedure Rules may make provision for the suspension of a relevant decision which has taken effect, pending determination of the reference or appeal.
(4)The Tribunal may consider any evidence relating to the subject-matter of the reference or appeal, whether or not it was available to the decision-maker at the material time.
[F1011 (5)In the case of a disciplinary reference or a reference under section 393(11), the Tribunal—
(a)must determine what (if any) is the appropriate action for the decision-maker to take in relation to the matter; and
(b)on determining the reference, must remit the matter to the decision-maker with such directions (if any) as the Tribunal considers appropriate for giving effect to its determination.
[F1012 (5A)In the case of a reference under paragraph 7 of Schedule 6A, the Tribunal—
(a)must determine what (if any) is the appropriate action that must be taken in relation to the matter, and
(b)on determining the reference, must give such directions (if any) to such persons as the Tribunal considers appropriate for giving effect to its determination.F1012]
(6)In any other case, the Tribunal must determine the reference or appeal by either—
(a)dismissing it; or
(b)remitting the matter to the decision-maker with a direction to reconsider and reach a decision in accordance with the findings of the Tribunal.
(6A)The findings mentioned in subsection (6)(b) are limited to findings as to—
(a)issues of fact or law;
(b)the matters to be, or not to be, taken into account in making the decision; and
(c)the procedural or other steps to be taken in connection with the making of the decision.F1011]
(7)The decision-maker must act in accordance with the determination of, and any direction given by, the Tribunal.
[F1013 (7A) A reference is a “ disciplinary reference ” for the purposes of this section if it is in respect of any of the following decisions—
(a)a decision to impose a penalty under section 63A;
(b)a decision to take action under section 66;
(c)a decision to take action under section 87M;
(d)a decision to take action under section 88A;
(e)a decision to take action under section 89K;
(f)a decision to take action under section 89Q;
(g)a decision to take action under section 91;
[F1014 (h)a decision to impose a penalty or publish a statement of censure under section 123, impose a prohibition under section 123A or impose a suspension or restriction under section 123B;F1014]
F1015 (i). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1016 (ia)a decision to take action under section 142S;F1016]
[F1017 (ib)a decision to take action under section 143W;F1017]
(j)a decision to take action under section 192K;
(k)a decision to publish a statement under section 205, impose a penalty under section 206 or suspend a permission or impose a restriction under section 206A;
[F1018 (ka)a decision to impose a prohibition or restriction under section 206B or to refuse an application under subsection (4) of that section;F1018]
(l)a decision to take action under section 249 [F1019 or 261KF1019] ;
[F1020 (la)a decision to impose a penalty under section 309U;
(lb)a decision to take action under section 309Z2;F1020]
(m)a decision to publish a statement under section 312E [F1021 or 312FAF1021] or impose a penalty under section 312F [F1021 or 312FAF1021] ;
(n)a decision to take action under section 345 or 345A.
[F1022 (o)a decision to take action under section 83ZR of the Banking Act 2009.F1022,F1013]]
(8)An order of the Tribunal may be enforced—
(a)[F1023 in England and Wales, as if it were an order of the county court or, in Northern Ireland,F1023] as if it were an order of a county court; or
(b)in Scotland, as if it were an order of the Court of Session.F1007]
case [F1024133A Proceedings before Tribunal: decision and supervisory notices, etc. cross-notes
(1)In determining [F1025 in accordance with section 133(5)F1025] a reference made (whether under this or any other Act) as a result of a decision notice [F1026 given by a body, the Tribunal may not direct the body to take action which it wouldF1026] not, as a result of section 388(2), have had power to take when giving the notice.
F1027 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1028 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)[F1029 The action specified in a decision notice must not be taken—F1029]
(a)during the period within which the matter to which the notice relates may be referred to the Tribunal (whether under this or any other Act); and
(b)if the matter is so referred, until the reference, and any appeal against the Tribunal's determination, has been finally disposed of.
(5)The Tribunal may, on determining a reference (whether made under this or any other Act) in respect of a decision of [F1030 the FCA or the PRAF1030] , make recommendations as to [F1031 itsF1031] regulating provisions or its procedures.
133B Offences cross-notes
(1)This section applies in the case of proceedings before the Tribunal in respect of—
(a)a decision of [F1032 the FCA or the PRAF1032] ;
(b)a decision of the Bank of England; or
(c)a decision of a person relating to the assessment of any compensation or consideration under the M6Banking (Special Provisions) Act 2008 [F1033 , the Banking Act 2009 or the Financial Services and Markets Act 2023F1033] .
(2)A person is guilty of an offence if that person, without reasonable excuse—
(a)refuses or fails—
(i)to attend following the issue of a summons by the Tribunal; or
(ii)to give evidence; or
(b)alters, suppresses, conceals or destroys, or refuses to produce a document which he may be required to produce for the purposes of proceedings before the Tribunal.
(3)A person guilty of an offence under subsection (2)(a) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(4)A person guilty of an offence under subsection (2)(b) is liable—
(a)on summary conviction, to a fine not exceeding the statutory maximum;
(b)on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both.F1024]
Legal assistance before the Tribunal
noteSI 134 Legal assistance scheme.
(1)The Lord Chancellor may by regulations establish a scheme governing the provision of legal assistance in connection with proceedings before the Tribunal.
(2)If the Lord Chancellor establishes a scheme under subsection (1), it must provide that a person is eligible for assistance only if—
(a)he falls within subsection (3); and
(b)he fulfils such other criteria (if any) as may be prescribed as a result of section 135(1)(d).
(3)A person falls within this subsection if he is an individual who has referred a matter to the Tribunal under section 127(4).
(4) In this Part of this Act “ the legal assistance scheme ” means any scheme in force under subsection (1).
noteSI 135 Provisions of the legal assistance scheme.
(1)The legal assistance scheme may, in particular, make provision as to—
(a)the kinds of legal assistance that may be provided;
(b)the persons by whom legal assistance may be provided;
(c)the manner in which applications for legal assistance are to be made;
(d)the criteria on which eligibility for legal assistance is to be determined;
(e)the persons or bodies by whom applications are to be determined;
(f)appeals against refusals of applications;
(g)the revocation or variation of decisions;
(h)its administration and the enforcement of its provisions.
(2)Legal assistance under the legal assistance scheme may be provided subject to conditions or restrictions, including conditions as to the making of contributions by the person to whom it is provided.
note 136 Funding of the legal assistance scheme. I24
(1)The [F1034FCAF1034] must pay to the Lord Chancellor such sums at such times as he may, from time to time, determine in respect of the anticipated or actual cost of legal assistance provided in connection with proceedings before the Tribunal under the legal assistance scheme.
(2)In order to enable it to pay any sum which it is obliged to pay under subsection (1), the [F1034FCAF1034] must make rules requiring the payment to it by authorised persons or any class of authorised person of specified amounts or amounts calculated in a specified way.
(3)Sums received by the Lord Chancellor under subsection (1) must be paid into the Consolidated Fund.
(4)The Lord Chancellor must, out of money provided by Parliament fund the cost of legal assistance provided in connection with proceedings before the Tribunal under the legal assistance scheme.
(5)Subsection (6) applies if, as respects a period determined by the Lord Chancellor, the amount paid to him under subsection (1) as respects that period exceeds the amount he has expended in that period under subsection (4).
(6)The Lord Chancellor must—
(a)repay, out of money provided by Parliament, the excess to the [F1035FCAF1035] ; or
(b)take the excess into account on the next occasion on which he makes a determination under subsection (1).
(7)The [F1036FCAF1036] must make provision for any sum repaid to it under subsection (6)(a)—
(a)to be distributed among—
(i)the authorised persons on whom a levy was imposed in the period in question as a result of rules made under subsection (2); or
(ii)such of those persons as it may determine;
(b)to be applied in order to reduce any amounts which those persons, or such of them as it may determine, are or will be liable to pay to the [F1036FCAF1036] , whether under rules made under subsection (2) or otherwise; or
(c)to be partly so distributed and partly so applied.
(8)If the [F1037FCAF1037] considers that it is not practicable to deal with any part of a sum repaid to it under subsection (6)(a) in accordance with provision made by it as a result of subsection (7), it may, with the consent the Lord Chancellor, apply or dispose of that part of that sum in such manner as it considers appropriate.
(9) “ Specified ” means specified in the rules.
F1038 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase 137 Appeal on a point of law.
F1039 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1040PART 9A Rules and Guidance cross-notes
CHAPTER 1 Rule-making powers
General rule-making powers of the FCA and the PRA
case 137A The FCA's general rules cross-notes
(1)The FCA may make such rules applying to authorised persons—
(a)with respect to the carrying on by them of regulated activities, or
(b)with respect to the carrying on by them of activities which are not regulated activities,
as appear to the FCA to be necessary or expedient for the purpose of advancing one or more of its operational objectives.
(2)Rules made under this section are referred to in this Act as the FCA's general rules.
(3)The FCA's general rules may make provision applying to authorised persons even though there is no relationship between the authorised persons to whom the rules will apply and the persons whose interests will be protected by the rules.
(4)The FCA's general rules may contain requirements which take into account, in the case of an authorised person who is a member of a group, any activity of another member of the group.
F1041 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1042 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1042 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1043137AA The FCA's general rules: Gibraltar
(1)The FCA's general rules may not make provision prohibiting a Gibraltar-based person from carrying on, or holding itself out as carrying on, an activity which it has a Schedule 2A permission to carry on in the United Kingdom.
(2)Subsection (1) does not apply to rules described in section 137C, 137D or 137FD.
(3)The Treasury may by regulations impose other limitations on what provision applying to Gibraltar-based persons with a Schedule 2A permission to carry on a regulated activity may be made in the FCA's general rules, but may not impose limitations relating to rules described in section 137C, 137D or 137FD.
(4)Before making regulations under subsection (3), the Treasury must consult the FCA.F1043]
case 137B FCA general rules: clients' money, right to rescind etc. cross-notes
(1) Rules relating to the handling of money held by an authorised person in specified circumstances (“clients' money”) may—
(a)make provision which results in that clients' money being held on trust in accordance with the rules,
(b)treat 2 or more accounts as a single account for specified purposes (which may include the distribution of money held in the accounts),
(c)authorise the retention by the authorised person of interest accruing on the clients' money, and
(d)make provision as to the distribution of such interest which is not to be retained by the authorised person.
(2)An institution with which an account is kept in pursuance of rules relating to the handling of clients' money does not incur any liability as constructive trustee if the money is wrongfully paid from the account, unless the institution permits the payment—
(a)with knowledge that it is wrongful, or
(b)having deliberately failed to make enquiries in circumstances in which a reasonable and honest person would have done so.
(3)Rules may—
(a)confer rights on persons to rescind agreements with, or withdraw offers to, authorised persons within a specified period, and
(b)make provision, in respect of authorised persons and persons exercising those rights, for the restitution of property and the making or recovery of payments where those rights are exercised.
(4) “ Rules ” means general rules of the FCA.
(5) “ Specified ” means specified in the rules.
137C FCA general rules: cost of credit and duration of credit agreements
(1)The power of the FCA to make general rules includes power to make rules prohibiting authorised persons from—
(a)entering into a regulated credit agreement that provides for—
(i)the payment by the borrower of charges of a specified description, or
(ii)the payment by the borrower over the duration of the agreement of charges that, taken with the charges paid under one or more other agreements which are treated by the rules as being connected with it, exceed, or are capable of exceeding, a specified amount;
(b)imposing charges of a specified description or exceeding a specified amount on a person who is the borrower under a regulated credit agreement;
(c)entering into a regulated credit agreement that—
(i)is capable of remaining in force after the end of a specified period,
(ii)when taken with one or more other regulated credit agreements which are treated by the rules as being connected with it, would be capable of remaining in force after the end of a specified period, or
(iii)is treated by the rules as being connected with a number of previous regulated credit agreements that exceeds a specified maximum;
(d)exercising the rights of the lender under a regulated credit agreement (as a person for the time being entitled to exercise them) in a way that enables the agreement to remain in force after the end of a specified period or enables the imposition on the borrower of charges within paragraph (a)(i) or (ii).
[F1044 (1A)The FCA must make rules by virtue of subsection (1)(a)(ii) and (b) in relation to one or more specified descriptions of regulated credit agreement appearing to the FCA to involve the provision of high-cost short-term credit, with a view to securing an appropriate degree of protection for borrowers against excessive charges.
(1B)Before the FCA publishes a draft of any rules to be made by virtue of subsection (1)(a)(ii) or (b), it must consult the Treasury.F1044]
(2) “ Charges ” means charges payable, by way of interest or otherwise, in connection with the provision of credit under the regulated credit agreement, whether or not the agreement itself makes provision for them and whether or not the person to whom they are payable is a party to the regulated credit agreement or an authorised person.
(3) “ The borrower ” includes—
(a)any person providing a guarantee or indemnity under the regulated credit agreement, and
(b)a person to whom the rights and duties of the borrower under the regulated credit agreement or a person falling within paragraph (a) have passed by assignment or operation of law.
(4)In relation to an agreement entered into or obligation imposed in contravention of the rules, the rules may—
(a)provide for the agreement or obligation to be unenforceable against any person or specified person;
(b)provide for the recovery of any money or other property paid or transferred under the agreement or other obligation by any person or specified person;
(c)provide for the payment of compensation for any loss sustained by any person or specified person as a result of paying or transferring any money or other property under the agreement or obligation.
(5)The provision that may be made as a result of subsection (4) includes provision corresponding to that made by section 30 (enforceability of agreements resulting from unlawful communications).
(6) A credit agreement is a contract of the kind mentioned in paragraph 23 of Schedule 2, other than one under which the obligation of the borrower to repay is secured on land: and a credit agreement is a “regulated credit agreement” if any of the following is a regulated activity—
(a)entering into or administering the agreement;
(b)exercising or being able to exercise the rights of the lender under the agreement.
(7)In this section—
(a) “ specified amount ” means an amount specified in or determined in accordance with the rules;
(b) “ specified period ” means a period of a duration specified in or determined in accordance with the rules;
(c) “ specified person ” means a person of a description specified in the rules;
(d) subject to that, “ specified ” means specified in the rules.
case 137D FCA general rules: product intervention cross-notes
(1) The power of the FCA to make general rules includes power to make such rules (“product intervention rules”) prohibiting authorised persons from doing anything mentioned in subsection (2) as appear to it to be necessary or expedient for the purpose of advancing—
(a)the consumer protection objective or the competition objective, or
SI (b)if the Treasury by order provide for this paragraph to apply, the integrity objective.
(2)Those prohibited things are—
(a)entering into specified agreements with any person or specified person;
(b)entering into specified agreements with any person or specified person unless requirements specified in the rules have been satisfied;
(c)doing anything that would or might result in the entering into of specified agreements by persons or specified persons, or the holding by them of a beneficial or other kind of economic interest in specified agreements;
(d)doing anything within paragraph (c) unless requirements specified in the rules have been satisfied.
(3) “ Specified agreements ” means agreements of a description specified in general rules made by the FCA.
(4) “ Specified persons ” means persons of a description specified in general rules made by the FCA.
(5)It is of no relevance—
(a)whether the entering into of a specified agreement itself constitutes the carrying on of a regulated activity, or
(b)whether, in a case within subsection (2)(c) or (d), the specified agreements are with the authorised persons concerned or anyone else.
(6)The requirements that may be specified under subsection (2)(b) or (d) include in particular—
(a)requirements as to the terms and conditions that are to be, or are not to be, included in specified or other agreements, and
(b)requirements limiting invitations or inducements to enter into specified or other agreements to those made to specified persons.
(7)In relation to contraventions of product intervention rules, the rules may—
(a)provide for a relevant agreement or obligation to be unenforceable against any person or specified person;
(b)provide for the recovery of any money or other property paid or transferred under a relevant agreement or obligation by any person or specified person;
(c)provide for the payment of compensation for any loss sustained by any person or specified person as a result of paying or transferring any money or other property under a relevant agreement or obligation.
(8) “ A relevant agreement or obligation ” means—
(a)a specified agreement;
(b)an agreement entered into in contravention of any rule made as a result of subsection (2)(c) or (d);
(c)an obligation to which a person is subject as a result of exercising a right conferred by an agreement within paragraph (a) or (b) of this subsection.
(9)The provision that may be made as a result of subsection (7) includes provision corresponding to that made by section 30 (enforceability of agreements resulting from unlawful communications).
(10)In this section—
(a)any reference to entering into an agreement includes inviting or inducing persons to enter into an agreement, and
(b)any reference to an agreement includes an arrangement.
137E Orders under s.137D(1)(b)
(1)No order may be made under section 137D(1)(b) unless—
(a)a draft of the order has been laid before Parliament and approved by a resolution of each House, or
(b)subsection (3) applies.
(2)Subsection (3) applies if an order under section 137D(1)(b) contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without a draft being so laid and approved.
(3)Where this subsection applies the order—
(a)must be laid before Parliament after being made, and
(b)ceases to have effect at the end of the relevant period unless before the end of that period the order is approved by a resolution of each House of Parliament (but without that affecting anything done under the order or the power to make a new order).
(4) The “relevant period” is a period of 28 days beginning with the day on which the order is made.
(5)In calculating the relevant period no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.
137F Rules requiring participation in benchmark
(1)The power of the FCA to make general rules includes power to make rules requiring authorised persons to take specified steps in connection with the setting by a specified person of a specified benchmark.
(2)The rules may in particular—
(a)require authorised persons to whom the rules apply to provide information of a specified kind, or expressions of opinion as to specified matters, to persons determined in accordance with the rules;
(b)make provision about the form in which and the time by which any information or expression of opinion is to be provided;
(c)make provision by reference to any code or other document published by the person responsible for the setting of the benchmark or by any other person determined in accordance with the rules, as the code or other document has effect from time to time.
(3)Rules making provision of the kind mentioned in subsection (2)(c) may provide that the code or other document is to be capable of affecting obligations imposed by the rules only if specified requirements are met in relation to it.
(4)In this section—
[F1045 “ benchmark ” means a benchmark within the meaning of section 22 F1046 ... (6A); F1045]
“ specified ” means specified in or determined in accordance with the rules.
[F1047137FA FCA general rules: disclosure of information about pension scheme transaction costs etc
(1)The FCA must make general rules requiring information about some or all of the transaction costs of a relevant scheme to be given to some or all of the persons mentioned in subsection (2).
(2)Those persons are—
(a)members of the scheme,
(b)spouses or civil partners of members, and
(c)persons within the application of the scheme and qualifying or prospectively qualifying for its benefits.
(3)The FCA must make general rules requiring the publication of information about—
(a)some or all of the transaction costs of a relevant scheme, and
(b)some or all of the [F1048 otherF1048] administration charges imposed on members of a relevant scheme.
(4)Rules made by virtue of subsection (3) may require other relevant information to be published along with information about transaction costs or [F1049 otherF1049] administration charges in relation to a scheme.
(5) “ Other relevant information ” means other information which would or may assist in making comparisons between those costs or charges and costs or charges in relation to other schemes.
(6)Before the FCA publishes a draft of any rules to be made by virtue of this section, it must consult—
(a)the Secretary of State, and
(b)the Treasury.
(7)In determining what provision to include in the rules, the FCA must have regard to any regulations about the disclosure or publication of transaction costs or [F1050 otherF1050] administration charges that are for the time being in force under section 113 of the Pension Schemes Act 1993.
(8)In this section—
“ administration charge ” has the meaning given by paragraph 1(5) of Schedule 18 to the Pensions Act 2014 ;
“ money purchase scheme ” has the meaning given by section 181(1) of the Pension Schemes Act 1993 ;
“ personal pension scheme ” has the meaning given by section 1 of the Pension Schemes Act 1993 ;
“ relevant scheme ” means a money purchase scheme that is—
(a)a personal pension scheme where direct payment arrangements (within the meaning of section 111A of the Pension Schemes Act 1993) exist in respect of one or more members of the scheme who are workers, or
(b)a personal pension scheme which is or has been registered under section 2 of the Welfare Reform and Pensions Act 1999 (stakeholder pension schemes);
“ worker ” means a person—
(a)who is a worker for the purposes of Part 1 of the Pensions Act 2008, or
(b)to whom a provision of Part 1 of that Act applies as if the person were a worker because of a provision of Chapter 8 of that Part;
but for the purposes of paragraph (b), ignore section 92 of that Act.F1047]
[F1051137FAA FCA general rules: pensions dashboards
(1)The FCA must make general rules imposing requirements on specified authorised persons with respect to—
(a)providing pensions information by means of—
(i)a qualifying pensions dashboard service;
(ii)the pensions dashboard service provided by the Money and Pensions Service;
(b)facilitating the provision of pensions information by means of—
(i)a qualifying pensions dashboard service;
(ii)the pensions dashboard service provided by the Money and Pensions Service.
(2) In this section “ pensions information ” means, in relation to a personal or stakeholder pension scheme, information of a description specified in rules made by virtue of subsection (1), which may include in particular—
(a)information relating to—
(i)the constitution of the scheme,
(ii)the administration and finances of the scheme,
(iii)the rights and obligations that arise or may arise under the scheme,
(iv)the pensions and other benefits an entitlement to which would be likely to accrue to a member, or be capable of being secured by a member, in respect of the rights that may arise under the scheme, and
(v)other matters relevant to personal or stakeholder pension schemes in general or to personal or stakeholder pension schemes of a description to which the scheme belongs;
(b)information as regards the position of an individual in relation to the scheme.
(3)Rules made by virtue of subsection (1) may, in particular, impose requirements about—
(a)the persons to whom pensions information must be provided;
(b)the circumstances in which pensions information must be provided;
(c)the steps to be taken before pensions information may be provided;
(d)the manner and form in which pensions information must be provided;
(e)the time within which pensions information must be provided;
(f)the way in which pensions information must be held.
(4)Rules made by virtue of subsection (1) may require specified authorised persons to comply with standards, specifications or technical requirements published from time to time by—
(a)the Secretary of State,
(b)the Money and Pensions Service, or
(c)a person specified or of a description specified in the rules.
(5)Rules made by virtue of subsection (1) may include provision under which a determination may fall to be made by—
(a)the Secretary of State,
(b)the Money and Pensions Service, or
(c)a person specified or of a description specified in the rules.
(6)Rules made by virtue of subsection (1) may require specified authorised persons to provide information specified in the rules about their carrying out of requirements specified in the rules to—
(a)the FCA,
(b)the Money and Pensions Service, or
(c)a person specified or of a description specified in the rules.
(7)Rules made by virtue of subsection (1) may require specified authorised persons to have regard, in complying with requirements specified in the rules, to guidance issued from time to time by a person specified or of a description specified in the rules.
(8)In determining what provision to include in the rules, the FCA must have regard to any regulations that are for the time being in force under—
(a)section 238D of the Pensions Act 2004, or
(b)Article 215D of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)).
137FAB Pensions dashboards: further provision
(1)General rules made by virtue of section 137FAA(1) may make provision about—
(a)how pensions information is to be provided, including provision about the use of intermediaries;
(b)the involvement of specified authorised persons in the arrangements for dealing with requests for information about pensions.
(2)The provision made by virtue of subsection (1) may, in particular, require—
(a)the use of electronic communications;
(b)the use of facilities or services specified or of a description specified in the rules;
(c)the provision of assistance in connection with the establishment, maintenance or management of such facilities or services;
(d)participation in, or compliance with, arrangements for establishing, maintaining or managing such facilities or services.
(3)The facilities and services for which provision may be made by virtue of subsection (2)(b) may include facilities or services with functions relating to—
(a)the transmission of information,
(b)verifying the identity of a person,
(c)identifying the occupational or personal pension scheme or schemes (as defined in section 1 of the Pension Schemes Act 1993 or the Pension Schemes (Northern Ireland) Act 1993) under which pensions are payable to or in respect of a particular individual,
(d)authenticating information transmitted by means of electronic communications, or
(e)ensuring the security of information transmitted by means of electronic communications.
(4)Rules made by virtue of subsection (2)(b) may impose requirements as regards a facility or service, including requirements about—
(a)compliance with standards, specifications or technical requirements published from time to time by—
(i)the Secretary of State,
(ii)the Money and Pensions Service, or
(iii)a person specified or of a description specified in the rules;
(b)the provider of the facility or service being a person approved from time to time by—
(i)the Secretary of State,
(ii)the Money and Pensions Service, or
(iii)a person specified or of a description specified in the rules.
(5)Rules made by virtue of subsection (2)(d) may, in particular, require specified authorised persons—
(a)to cooperate with the Money and Pensions Service or a person specified or of a description specified in the rules;
(b)to coordinate activities with the Money and Pensions Service or a person specified or of a description specified in the rules.
(6)Except as provided by subsection (7), general rules made by virtue of section 137FAA(1) may provide for the processing of personal data in accordance with the rules not to be in breach of—
(a)any obligation of confidence owed by the person processing the personal data, or
(b)any other restriction on the processing of personal data (however imposed).
(7)General rules made by virtue of section 137FAA(1) are not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but in determining whether particular processing of data would do so, take into account the power conferred or duty imposed by the provision of the rules in question).
137FAC Sections 137FAA and 137FAB: supplementary
(1)Before the FCA publishes a draft of any general rules to be made by virtue of section 137FAA, it must consult—
(a)the Secretary of State, and
(b)the Treasury.
(2)Section 137FAA is not to be treated as requiring the FCA to make general rules by virtue of section 137FAA that come into force before regulations made under section 238D of the Pensions Act 2004 come into force.
(3)Section 137FAA is not to be treated as requiring the FCA to exercise the power to make general rules by virtue of section 137FAA in relation to every case to which the power extends.
(4)A reference in sections 137FAA and 137FAB to the Money and Pensions Service includes a reference to a person with whom arrangements are made under section 5(1), (2) or (3) of the Financial Guidance and Claims Act 2018.
(5)In sections 137FAA and 137FAB—
“ the data protection legislation ” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act );
“ pensions dashboard service ” means—
(a)a pensions dashboard service within the meaning of section 238A of the Pensions Act 2004, or
(b)a pensions dashboard service within the meaning of Article 215A of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1));
“ personal data ” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act );
“ personal pension scheme ” means a personal pension scheme within the meaning of an order under section 22 (except in section 137FAB(3) (c));
“ qualifying pensions dashboard service ” means a pensions dashboard service that satisfies—
(a)such requirements as may be prescribed by regulations under section 238A of the Pensions Act 2004, or
(b)such requirements as may be prescribed by regulations under Article 215A of the ;
“ specified authorised person ” means an authorised person of a description specified in general rules made by virtue of section 137FAA;
“ stakeholder pension scheme ” has the meaning given by—
(a)section 1 of the Welfare Reform and Pensions Act 1999, in relation to England and Wales and Scotland;
(b)Article 3 of the Welfare Reform and Pensions (Northern Ireland) Order 1999 (S.I. 1999/3147 (N.I. 11)), in relation to Northern Ireland.F1051]
[F1052137FB FCA general rules: disclosure of information about the availability of pensions guidance
(1)The FCA must make general rules requiring information about the availability of pensions guidance to be given by the trustees or managers of a relevant pension scheme to members of the scheme, and survivors of members of the scheme, with subsisting rights in respect of any flexible benefits.
[F1053 (1A)The FCA must also make general rules requiring the trustees or managers of a relevant pension scheme to take the steps mentioned in subsections (1B) and (1C) in relation to an application from a member or survivor—
(a)to transfer any rights accrued under the scheme, or
(b)to start receiving benefits provided by the scheme.
(1B)As part of the application process, the trustees or managers must ensure that—
(a)the member or survivor is referred to appropriate pensions guidance, and
(b)the member or survivor is provided with an explanation of the nature and purpose of such guidance.
(1C)Before proceeding with the application, the trustees or managers must ensure that the member or survivor has either received appropriate pensions guidance or has opted out of receiving such guidance.
(1D)The rules may—
(a)specify what constitutes appropriate pensions guidance;
(b)make further provision about how the trustees or managers must comply with the duties in subsections (1B) and (1C) (such as provision about methods of communication and time limits);
(c)make further provision about how, and to whom, a member or survivor may indicate that they have received or opted out of receiving appropriate pensions guidance for the purposes of subsection (1C);
(d)specify what the duties of the trustees or managers are in the situation where a member or survivor does not respond to a communication that is made for the purposes of complying with the duty in subsection (1C);
(e)provide for exceptions to the duties in subsections (1B) and (1C) in specified cases.F1053]
(2)Before the FCA publishes a draft of any rules to be made by virtue of [F1054 subsection (1)F1054] , it must consult—
(a)the Secretary of State, and
(b)the Treasury.
[F1055 (2A)Before the FCA publishes a draft of any rules to be made by virtue of subsection (1A), it must consult—
(a)the Secretary of State, and
(b)the Money and Pensions Service.F1055]
(3)In determining what provision to include in [F1056 rules to be made by virtue of subsection (1)F1056] , the FCA must have regard to any regulations that are for the time being in force under section 113 of the Pension Schemes Act 1993 concerning the giving of information about the availability of pensions guidance to members of pension schemes, and survivors of members of pension schemes, with subsisting rights in respect of any flexible benefits.
[F1057 (3A)In determining what provision to include in rules to be made by virtue of subsection (1A), the FCA must have regard to any regulations that are for the time being in force under section 113B of the Pension Schemes Act 1993 (occupational pension schemes: requirements to refer members to guidance etc).F1057]
(4)In this section—
“ flexible benefit ” has the meaning given by section 74 of the Pension Schemes Act 2015 ;
[F1058 “ pensions guidance ” means information or guidance provided by any person in pursuance of the requirements mentioned in section 4 of the Financial Guidance and Claims Act 2018 (information etc about flexible benefits under pension schemes); F1058]
“ relevant pension scheme ” means a pension scheme set up by a person with permission under this Act to establish—
(a)a personal pension scheme within the meaning of an order under section 22, or
(b)a stakeholder pension scheme within the meaning of such an order;
“ subsisting right ” has the meaning given by section 76 of the Pension Schemes Act 2015 ;
“ survivor ” has the meaning given by section 76 of the Pension Schemes Act 2015 . F1052]
[F1059137FBA FCA general rules: advice about transferring or otherwise dealing with annuity payments
(1)The FCA must make general rules requiring specified authorised persons to check that an individual—
(a)who has a right to payments under a relevant annuity, and
(b)if the Treasury make regulations under subsection (3), who is not an exempt person by virtue of those regulations,
has received appropriate advice before transferring or otherwise dealing with the right to those payments.
(2)The reference in subsection (1) to a right to payments under a relevant annuity does not include a contingent right to such payments.
(3)The Treasury may by regulations provide that an individual whose financial circumstances meet criteria specified in the regulations is an exempt person for the purposes of subsection (1)(b).
(4)Regulations made under subsection (3) may (amongst other things) specify criteria based on the proportion of the individual's financial resources that is represented by the payments under the relevant annuity or the value of that annuity.
(5)The rules made by virtue of subsection (1) may include provision—
(a)about what specified authorised persons must do to check that an individual has received appropriate advice for the purposes of those rules;
(b)about when the check must be carried out.
(6)For the purposes of this section—
(a) “ relevant annuity ” means an annuity specified (by type, value or otherwise) as a relevant annuity in regulations made by the Treasury;
(b) “ appropriate advice ” means advice specified (by reference to the person giving the advice or otherwise) as appropriate advice in regulations made by the Treasury;
(c) “ specified authorised person ” means an authorised person of a description specified in rules made by virtue of subsection (1).
(7)If regulations under subsection (3) or (6)(a) make provision about the value of an annuity, the regulations may also make provision about the basis on which the value of an annuity is to be calculated.F1059]
[F1060137FBB FCA general rules: early exit pension charges
(1)The FCA must make general rules prohibiting authorised persons from—
(a)imposing specified early exit charges on members of relevant pension schemes, and
(b)including in relevant pension schemes provision for the imposition of specified early exit charges on members of such schemes.
(2)The rules must be made with a view to securing, so far as is reasonably possible, an appropriate degree of protection for members of relevant pension schemes against early exit charges being a deterrent on taking, converting or transferring benefits under the schemes.
(3)The rules may specify early exit charges by reference to charges of a specified class or description, or by reference to charges which exceed a specified amount.
(4)The rules made by virtue of subsection (1)(a) must prohibit the imposition of the charges after those rules come into force, whether the relevant pension scheme was established before or after those rules (or this section) came into force.
(5)In relation to a charge which is imposed, or provision for the imposition of a charge which is included in a pension scheme, in contravention of the rules, the rules may (amongst other things)—
(a)provide for the obligation to pay the charge to be unenforceable or unenforceable to a specified extent;
(b)provide for the recovery of amounts paid in respect of the charge;
(c)provide for the payment of compensation for any losses incurred as a result of paying amounts in respect of the charge.
(6)Subject to subsection (8) an early exit charge, in relation to a member of a pension scheme, is a charge which—
(a)is imposed under the scheme when a member who has reached normal minimum pension age takes the action mentioned in subsection (7), but
(b)is only imposed, or only imposed to that extent, if the member takes that action before the member's expected retirement date.
(7)The action is the member taking benefits under the scheme, converting benefits under the scheme into different benefits or transferring benefits under the scheme to another pension scheme.
SI (8)The Treasury may by regulations specify matters that are not to be treated as early exit charges for the purposes of this section.
(9)For the purposes of this section—
“ charge ”, in relation to a member of a pension scheme, includes a reduction in the value of the member's benefits under the scheme;
“ expected retirement date ”, in relation to a member of a pension scheme, means the date determined by, or in accordance with, the scheme as the date on which the member's benefits under the scheme are expected to be taken;
“ normal minimum pension age ” has the same meaning as in section 279(1) of the Finance Act 2004 ;
“ relevant pension scheme ” has the same meaning as in section 137FB;
and a reference to benefits includes all or any part of those benefits.F1060]
[F1061137FBC FCA general rules: regulation of consolidator pension schemes
(1)The FCA may make general rules under which the provider of an FCA-regulated pension scheme is required to notify the FCA where it intends that the scheme should be a consolidator scheme, or an arrangement under the scheme should be a consolidator arrangement, for the purposes of Chapter 2 of Part 2 of the Pension Schemes Act 2026.
(2)If the FCA makes rules under subsection (1) it must—
(a)make general rules regulating pension schemes that have given (and not withdrawn) a notice of the kind mentioned in subsection (1), and
(b)publish and maintain a list of FCA-regulated pension schemes, and arrangements under such schemes, in accordance with subsections (3) and (4).
(3)The list must, subject to subsection (4), include each FCA-regulated pension scheme, and each arrangement under an FCA-regulated scheme, in relation to which the FCA has received a notice by virtue of subsection (1).
(4)The list must not include a scheme or arrangement if—
(a)the notice in relation to it has been withdrawn by the provider of the scheme, or
(b)the FCA has determined that it is unlikely that rules made under subsection (1) or (2)(a) will be complied with in relation to the scheme or arrangement within such period as the FCA considers reasonable.
(5)In determining what provision to include in rules under subsection (2)(a), the FCA must have regard to any provision contained in small pots regulations by virtue of section 29 of the Pension Schemes Act 2026 (authorisation of consolidator schemes etc by the Pensions Regulator).
(6)In this section—
“ FCA-regulated ”, in relation to a pension scheme, has the meaning given by subsection (7);
“ pension scheme ” has the meaning given by section 1(5) of the Pension Schemes Act 1993 ;
“ provider ”, in relation to an FCA-regulated pension scheme, means the person referred to in subsection (7)(b).
(7) A pension scheme is “FCA-regulated” if the operation of the scheme—
(a)is a regulated activity, and
(b)is carried on in the United Kingdom by an authorised person.F1061]
[F1062137FC FCA rules: disclosure of information about the availability of financial guidance
(1)The FCA must make general rules requiring specified authorised persons to provide information about the availability of financial guidance to the descriptions of persons specified in the rules.
(2)The rules may specify the circumstances in which the duty to provide the information applies.
(3)Before the FCA publishes a draft of any rules to be made by virtue of this section, it must consult—
(a)the Secretary of State,
(b)the Treasury, and
(c)the [F1063 Money and Pensions ServiceF1063] .
(4)In this section—
“ financial guidance ” means information, guidance or advice provided in pursuance of the [F1064 Money and Pensions Service’s F1064] pensions guidance, debt advice or money guidance function (see section 3 of the Financial Guidance and Claims Act 2018 );
“ specified authorised person ” means an authorised person of a description specified in rules made by virtue of this section. F1062]
[F1065137FD FCA general rules: charges for claims management services
(1)The power of the FCA to make general rules includes power to make rules prohibiting authorised persons from—
(a)entering into a specified regulated claims management agreement that provides for the payment by a person of charges which, taken with charges payable under an agreement treated by the rules as being connected with the regulated claims management agreement (if any), are specified charges, and
(b)imposing specified charges on a person in connection with the provision of a service which is, or which is provided in connection with, a specified regulated claims management activity.
(2)The FCA must make rules by virtue of subsection (1) in relation to all regulated claims management agreements, and all regulated claims management activities, which concern claims in relation to financial products or services.
(3)The rules must be made with a view to securing an appropriate degree of protection against excessive charges for the provision of a service which is, or which is provided in connection with, a regulated claims management activity.
(4)The rules may specify charges by reference to charges of a specified class or description, or by reference to charges which exceed, or are capable of exceeding, a specified amount.
(5)In relation to an agreement entered into, or charge imposed, in contravention of the rules, the rules may (amongst other things)—
(a)provide for the agreement, or obligation to pay the charge, to be unenforceable or unenforceable to a specified extent;
(b)provide for the recovery of amounts paid under the agreement or obligation;
(c)provide for the payment of compensation for any losses incurred as a result of paying amounts under the agreement or obligation.
(6)The provision that may be made under subsection (5) includes provision corresponding to that made by section 30 (enforceability of agreements resulting from unlawful communications).
(7)In this section—
(a) “ regulated claims management agreement ” means an agreement, the entering into or performing of which by either party is a regulated claims management activity, and
(b) “ specified ” means specified in the rules, but “ specified amount ” means an amount specified in or determined in accordance with the rules. F1065]
137G The PRA's general rules cross-notes
(1)The PRA may make such rules applying to PRA-authorised persons—
(a)with respect to the carrying on by them of regulated activities, or
(b)with respect to the carrying on by them of activities which are not regulated activities,
as appear to the PRA to be necessary or expedient for the purpose of advancing any of its objectives.
(2)Rules made under this section are referred to in this Act as the PRA's general rules.
(3)The PRA's general rules may make provision applying to PRA-authorised persons even though there is no relationship between the PRA-authorised persons to whom the rules will apply and the persons whose interests will be protected by the rules.
(4)The PRA's general rules may contain requirements which take into account, in the case of a PRA-authorised person who is a member of a group, any activity of another member of the group.
F1066 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1067 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1067 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1068137GA The PRA's general rules: Gibraltar
(1)The PRA's general rules may not make provision prohibiting a Gibraltar-based person from carrying on, or holding itself out as carrying on, an activity which it has a Schedule 2A permission to carry on in the United Kingdom.
(2)The Treasury may by regulations impose other limitations on what provision applying to Gibraltar-based persons with a Schedule 2A permission to carry on a regulated activity may be made in the PRA's general rules.
(3)Before making regulations under subsection (2), the Treasury must consult the PRA.F1068]
137H General rules about remuneration
(1)This section applies where either regulator exercises its power to make general rules so as to make rules prohibiting persons, or persons of a specified description, from being remunerated in a specified way.
(2)The rules may—
(a)provide that any provision of an agreement that contravenes such a prohibition is void, and
(b)provide for the recovery of any payment made, or other property transferred, in pursuance of a provision that is void by virtue of paragraph (a).
(3)A provision that, at the time the rules are made, is contained in an agreement made before that time may not be rendered void under subsection (2)(a) unless it is subsequently amended so as to contravene a prohibition referred to in that subsection.
137I Remuneration policies: Treasury direction to consider compliance
(1)This section applies where either regulator exercises its power to make general rules so as to make rules requiring authorised persons, or authorised persons of a description specified in the rules, to act in accordance with a remuneration policy.
(2) A “remuneration policy” is a policy about the remuneration by an authorised person of—
(a)officers,
(b)employees, or
(c)other persons,
of a description specified in the rules.
(3)The Treasury may direct the regulator to consider whether the remuneration policies of authorised persons specified in the direction (or of authorised persons of a description so specified) comply with requirements imposed by rules made by that regulator as to the contents of the policies.
(4)Before giving a direction under subsection (3), the Treasury must consult the regulator concerned.
(5)If the regulator considers that a remuneration policy of an authorised person fails to make provision which complies with the requirements mentioned in subsection (3), the regulator must take such steps as it considers appropriate to deal with the failure.
(6)The steps that the regulator may take include requiring the remuneration policy to be revised.
(7) “ Authorised person ”, in relation to the PRA, means PRA-authorised person.
137J Rules about recovery plans: duty to consult
(1)Before either regulator prepares a draft of any general rules that require [F1069 aF1069] relevant person (or [F1069 aF1069] relevant person of a specified description) to prepare a recovery plan, the regulator must consult [F1070 the TreasuryF1070] .
[F1071 (1A)The FCA must also consult the Bank of England.F1071]
[F1072 (2) “Relevant person” means—
(a)an dfninstitution authorised in the UK; or
(b)a qualifying parent undertaking within the meaning given by section 192B.
(3) A “recovery plan” is a document which provides for measures to be taken—
(a)by an dfninstitution authorised in the UK which is not part of a group, following a significant deterioration of the financial position of the institution, in order to restore its financial position; or
(b)in relation to a group, to achieve the stabilisation of the group as a whole, or of any institution within the group, where the group or institution is in a situation of financial stress, in order to address or remove the causes of the financial stress and restore the financial position of the group or institution.
(4) For the purposes of subsection (3)(a) the definition of “group” in section 421 applies with the omission of subsection (1)(e) and (f) of that section. F1072]
(6)In this section—
“ authorised person ”, in relation to the PRA, means PRA-authorised person;
[F1073 “ institution ” means—
(a)a credit institution, other than an entity mentioned in Article 2.5 of the capital requirements directive; or
(b)[F1074 a designated investment firm as defined in Article 4(1)(2AA) of the capital requirements regulation;F1074,F1073]]
“institution authorised in the UK ” means [F1075 an authorised person who is F1075] —
(a)a bank within the meaning given by section 2 of the Banking Act 2009;
(b)a building society within the meaning given in section 119 of the Building Societies Act 1986; or
(c)an investment firm within the meaning given by section 258A of the Banking Act 2009;
“ specified ” means specified in the rules.
137K [F1076Rules about resolution packs: duty to consultF1076]
(1)Before [F1077 either regulatorF1077] prepares a draft of any general rules that require [F1078 aF1078] relevant person (or [F1078 aF1078] relevant person of a specified description) to prepare a [F1079 resolution packF1079] , [F1080 the regulatorF1080] must consult [F1081 the TreasuryF1081] .
[F1082 (1A)The FCA must also consult the Bank of England.F1082]
[F1083 (2) “Relevant person” has the same meaning as in section 137J(2). F1083]
(3) A “ [F1084 resolution pack F1084] ” is a document containing information within subsection (4) or (5).
(4)Information is within this subsection if it relates to action to be taken in the event of—
(a)circumstances arising in which it is likely that the business (or any part of the business) of an authorised person will fail, or
(b)the failure of the business (or any part of the business) of an authorised person.
(5)Information is within this subsection if it would facilitate anything falling to be done by any person in consequence of that failure.
(6)An example of information within subsection (5) is information that, in the event of that failure, would facilitate—
(a)planning by the Treasury in relation to the possible exercise of any of its powers under Part 1 of the Banking Act 2009, or
(b)planning by the Bank of England in relation to the possible exercise of any of its powers under Part 1, 2 or 3 of that Act.
[F1085 (7) In this section “authorised person”, in relation to the PRA, means PRA-authorised person. F1085]
137L Interpretation of sections 137J and 137K
(1)This section has effect for the interpretation of sections 137J and 137K.
(2)References to the taking of action include the taking of action by—
(a)the authorised person,
(b)any other person in the same group as the authorised person, or
(c)a partnership of which the authorised person is a member.
(3) In subsection (2)(b) the definition of “group” in section 421 applies with the omission of subsection (1)(e) and (f) of that section.
(4)References to the business of an authorised person include the business of—
(a)any person in the same group as the authorised person, and
(b)a partnership of which the authorised person is a member.
(5) For the purposes of section 137K the cases in which the business (or any part of the business) of the authorised person (“A”) is to be regarded as having failed include those where—
(a)A enters insolvency,
(b)any of the stabilisation options in Part 1 of the Banking Act 2009 is achieved in relation to A, or
(c)A falls to be taken for the purposes of the compensation scheme to be unable, or likely to be unable, to satisfy claims against A.
(6) In subsection (5)(a) “ insolvency ” includes—
(a)bankruptcy,
(b)liquidation,
(c)bank insolvency,
(d)administration,
(e)bank administration,
(f)receivership,
(g)a composition between A and A's creditors, and
(h)a scheme of arrangement of A's affairs.
F1086137M Special provision relating to adequacy of resolution plans
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
137N Recovery plans and [F1087resolution packsF1087] : restriction on duty of confidence
(1) A contractual or other requirement imposed on a person (“P”) to keep information in confidence does not apply if—
(a)the information is or may be relevant to anything required to be done as a result of a requirement imposed by general rules made by either regulator to prepare a recovery plan or a [F1088 resolution packF1088] ,
(b)an authorised person or a skilled person requests or requires P to provide the information for the purpose of securing that those things are done, and
(c)the regulator in question has approved the making of the request or the imposition of the requirement before it is made or imposed.
(2)An authorised person [F1089 or a qualifying parent undertakingF1089] may provide information (whether received under subsection (1) or otherwise) that would otherwise be subject to a contractual or other requirement to keep it in confidence if it is provided for the purposes of anything required to be done as a result of a requirement imposed by general rules to prepare a recovery plan or a [F1088 resolution packF1088] .
(3)In this section, references to preparing a recovery plan or a [F1088 resolution packF1088] include—
(a)keeping [F1090 that plan or packF1090] up to date, and
(b)collecting specified information for the purposes of [F1091 that plan or packF1091] .
(4)In this section, references to a skilled person are to a person appointed in accordance with section 166A.
(5)In this section—
“ authorised person ”, in relation to rules of the PRA, means a PRA-authorised person;
[F1092 “qualifying parent undertaking” means—
(a)a qualifying parent undertaking within the meaning given by section 192B; F1093...
(b)F1093 ...F1092]
“ specified ” means specified in the rules.
Specific rule-making powers
137O Threshold condition code
(1)Either regulator may make rules supplementing any of the conditions for the time being set out in or specified under Schedule 6 that is expressed to be relevant to the discharge of that regulator's functions.
(2) Rules made under this section by a regulator are referred to as that regulator's “threshold condition code”.
(3)A threshold condition code may in particular—
(a)specify requirements which a person must satisfy in order to be regarded as satisfying a particular condition in relation to any regulated activities;
(b)specify matters which are, or may be, or are not, relevant in determining whether a person satisfies a particular condition in relation to any regulated activities.
(4)Except where a regulator's threshold condition code so provides, it is not to be regarded as limiting the matters that are, or may be, relevant in determining whether a person satisfies a particular condition in relation to any regulated activities.
(5)A threshold condition code cannot impose obligations that are enforceable against authorised persons otherwise than through the threshold conditions.
137P Control of information rules cross-notes
(1) Either regulator may make rules (“control of information rules”) about the disclosure and use of information held by an authorised person (“A”).
(2)Control of information rules may—
(a) require the withholding of information which A would otherwise be required to disclose to a person (“B”) for or with whom A does business in the course of carrying on any regulated or other activity;
(b)specify circumstances in which A may withhold information which A would otherwise be required to disclose to B;
(c)require A not to use for the benefit of B information—
(i)which is held by A, and
(ii)which A would otherwise be required to use for the benefit of B;
(d)specify circumstances in which A may decide not to use for the benefit of B information within paragraph (c).
137Q Price stabilising rules
(1) The FCA may make rules (“price stabilising rules”) as to—
(a)the circumstances and manner in which,
(b)the conditions subject to which, and
(c)the time when or the period during which,
action may be taken for the purpose of stabilising the price of investments of specified kinds.
(2)Price stabilising rules—
(a)are to be made so as to apply only to authorised persons;
[F1094 (aa)must not apply to transactions, orders, behaviour, actions or omissions to which the market abuse regulation applies;F1094]
(b)may make different provision in relation to different kinds of investment.
[F1095 (3)The FCA may make rules which, for the purposes of the relevant exemption provisions, treat a person who acts or engages in conduct in conformity with specified provisions as acting, or engaging in that conduct, in conformity with the relevant provisions of Article 5 (exemption for buy-back programmes and stabilisation) of the market abuse regulation.
(3A) “Specified provisions” means such provisions—
(a)corresponding to the relevant provisions of Article 5 of the market abuse regulation, and
(b)made by a body or authority outside the [F1096 United KingdomF1096] as may be specified in rules made by the FCA,
as may be specified in rules made by the FCA.F1095]
(4) “The relevant exemption provisions” are the following provisions of the Financial Services Act 2012 —
(a)[F1097 section 90(9)(d)F1097] ;
(b)[F1098 section 91(4)(c)F1098] .
[F1099 (5)In this section references to Article 5 of the market abuse regulation include—
(a)any technical standards originally adopted or made under that Article which are [F1100 assimilated directF1100] legislation, and
(b)any technical standards made under that Article by the FCA.F1099]
137R Financial promotion rules cross-notes
(1)The FCA may make rules applying to authorised persons about the communication by them, or their approval of the communication by others, of invitations or inducements—
(a)to engage in investment activity, [F1101 orF1101]
[F1102 (aa)to engage in claims management activity, orF1102]
(b)to participate in a collective investment scheme.
(2)Rules under this section may, in particular, make provision about the form and content of communications.
(3)Subsection (1) applies only to communications which—
(a)if made by a person other than an authorised person, without the approval of an authorised person, would contravene section 21(1), and
(b)may be made by an authorised person without contravening section 238(1).
(4)But subsection (3) does not prevent the FCA from making rules under subsection (1) in relation to a communication that would not contravene section 21(1) if made by a person other than an authorised person, without the approval of an authorised person, if the conditions set out in subsection (5) are satisfied.
(5)Those conditions are—
(a)that the communication would not contravene subsection (1) of section 21 because it is a communication to which that subsection does not apply as a result of an order under subsection (5) of that section,
(b)that the FCA considers that any of the [F1103 listed requirementsF1103] , apply to the communication, and
(c)that the FCA considers that the rules are necessary to secure that the communication satisfies such of the [F1104 listed requirementsF1104] as the FCA considers apply to the communication.
[F1105 (5A) In subsection (5) “ the listed requirements ” means—
(a)requirements under the law of any part of the United Kingdom that appear to the FCA to correspond to requirements of—
(i)Articles 24 (general principles and information to clients) and 25 (assessment of suitability and appropriateness and reporting to clients) of the markets in financial instruments directive,
(ii)Commission Delegated Directive (EU) 2017/593 of 7 April 2016, so far as adopted under those Articles,
(iii)Article 77 of the UCITS directive,
(iv)Articles 10 and 11 of the mortgages directive,
(v)Article 17 of the insurance distribution directive, or
(vi)Article 44a of the recovery and resolution directive (as defined in paragraph (c)), and
(b)requirements of any [F1106 assimilated directF1106] legislation originally made under Article 24(13) or 25(8) of the markets in financial instruments directive.
(c) In paragraph (a)(vi), “recovery and resolution directive” means Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms , as it had effect immediately before IP completion day. F1105]
(6) “ Engage in investment activity ” [F1107 has F1107] [F1107 and “engage in claims management activity” have F1107] the same meaning as in section 21.
(7)The Treasury may by order impose limitations on the power to make rules under this section.
137S Financial promotion rules: directions given by FCA cross-notes
(1)The FCA may give a direction under this section if—
(a)an authorised person has made, or proposes to make, a communication or has approved, or proposes to approve, another person's communication, and
(b)the FCA considers that there has been, or is likely to be, a contravention of financial promotion rules in respect of the communication or approval.
(2)A direction under this section may require the authorised person—
(a)to withdraw the communication or approval;
(b)to refrain from making the communication or giving the approval (whether or not it has previously been made or given);
(c)to publish details of the direction;
(d)to do anything else specified in the direction in relation to the communication or approval.
(3)A requirement in a direction under this section to refrain from making or approving a communication includes a requirement to refrain from making or approving another communication where—
(a)the other communication is in all material respects the same as, or substantially the same as, the communication to which the direction relates, and
(b)in all the circumstances a reasonable person would think that another direction would be given under this section in relation to the other communication.
(4)The requirements contained in a direction under this section have effect as follows—
(a)a requirement to publish details of the direction has effect at such time (if any) as the FCA gives a notice under subsection (8)(a);
(b)any other requirement takes effect immediately.
(5)If the FCA gives a direction under this section to an authorised person—
(a)it must give written notice to the authorised person, and
(b)if the direction relates to the approval by the authorised person of another person's communication, it must also give written notice to that other person.
(6)The notice must—
(a)give details of the direction,
(b)inform the person to whom the notice is given that the direction takes effect immediately,
(c)state the FCA's reasons for giving the direction, and
(d)inform the person to whom the notice is given that the person may make representations to the FCA within such period as may be specified in the notice (which may be extended by the FCA).
(7)The FCA may amend the direction if, having considered any representations made by a person to whom notice is given under subsection (5), it considers it appropriate to do so.
(8)If, having considered any such representations, the FCA decides not to revoke the direction—
(a)the FCA must give separate written notice to the persons mentioned in subsection (5)(a) or (b), and
(b)any such person may refer the matter to the Tribunal.
(9)A notice under subsection (8)(a) must—
(a)give details of the direction and of any amendment of it,
(b)state the FCA's reasons for deciding not to revoke the direction and, if relevant, for amending it,
(c)inform the person to whom the notice is given of the person's right to refer the matter to the Tribunal, and
(d)give an indication of the procedure on such a reference.
(10)If, having considered any representations made by a person to whom notice is given under subsection (5), the FCA decides to revoke the direction, it must give separate written notice to those persons.
(11)After the period for making representations in relation to a direction given under this section has ended, the FCA may publish such information about the direction as it considers appropriate (even if the direction is revoked).
(12)Nothing in this section requires a notice to be given to a person mentioned in subsection (5)(b) if the FCA considers it impracticable to do so.
[F1108137SA Rules to recover expenses relating to the [F1109Money and Pensions ServiceF1109]
(1)The Secretary of State may, from time to time, notify the FCA of the amount of—
(a)the expenses incurred, or expected to be incurred, by the Secretary of State under section 11 of the Financial Guidance and Claims Act 2018 (financial assistance from Secretary of State to [F1110 Money and Pensions ServiceF1110] ), and
(b)any other expenses incurred, or expected to be incurred, by the Secretary of State in connection with the operation of the [F1111 Money and Pensions ServiceF1111] ,
that the Secretary of State considers should be recovered under this section.
(2)Where the Secretary of State has notified the FCA of an amount of expenses under subsection (1), the FCA must make rules for imposing levies with a view to recovering—
(a)the amount notified, and
(b)expenses incurred by the FCA in connection with its functions under this section.
(3)The rules must require the payment to the FCA of specified sums, or sums calculated in a specified way, by—
(a)authorised persons, electronic money issuers or payment service providers, or
(b)any specified class of authorised person, electronic money issuer or payment service provider.
(4)Before the FCA publishes a draft of rules to be made under this section it must consult the Secretary of State.
(5)The rules may be made only with the consent of the Secretary of State.
(6)The Secretary of State may notify the FCA of matters that will be taken into account when deciding whether or not to give consent under subsection (5).
(7)The FCA must have regard to any matters notified under subsection (6) before publishing a draft of rules to be made under this section.
(8)The FCA must pay the Secretary of State the sums it receives under rules made under this section, apart from those paid to recover the expenses mentioned in subsection (2)(b) (which the FCA may keep).
(9)Subsection (10) applies where—
(a)the Secretary of State has notified the FCA under subsection (1) of an amount which included expenses expected to be incurred,
(b)the FCA has made rules to recover the amount, and paid sums received under the rules to the Secretary of State, but
(c)the expenses expected to be incurred were not in fact incurred.
(10)The Secretary of State need not arrange for the sums received under the rules to be paid back, but must, when next notifying an amount to the FCA under subsection (1), take into account the fact that the sums received included an amount representing expenses that were not in fact incurred.
(11)In this section—
“ electronic money issuer ” means a person who is an electronic money issuer for the purposes of the Electronic Money Regulations 2011 ( S.I. 2011/99) as a result of falling within any of paragraphs (a) to (e) and (h) to (j) of the definition in regulation 2(1);
“ payment service provider ” means a person who is a payment service provider for the purposes of the Payment Services Regulations 2017 ( S.I. 2017/752) as a result of falling within any of paragraphs (a) to (h) of the definition in regulation 2(1). F1108]
[F1112137SB Rules to recover debt advice expenses incurred by the devolved authorities
(1)The Treasury may, from time to time, notify the FCA of the amount of the expenses incurred, or expected to be incurred, by the devolved authorities in connection with the provision of information and advice on debt to members of the public in Scotland, Wales and Northern Ireland.
(2)Where the Treasury have notified the FCA of an amount of expenses under subsection (1), the FCA must make rules for imposing levies with a view to recovering—
(a)the amount notified, and
(b)expenses incurred by the FCA in connection with its functions under this section.
(3)The rules must require the payment to the FCA of specified sums, or sums calculated in a specified way, by—
(a)authorised persons, electronic money issuers or payment service providers, or
(b)any specified class of authorised person, electronic money issuer or payment service provider.
(4)Before the FCA publishes a draft of rules to be made under this section it must consult the Treasury.
(5)The rules may be made only with the consent of the Treasury.
(6)The Treasury may notify the FCA of matters that will be taken into account when deciding whether or not to give consent under subsection (5).
(7)The FCA must have regard to any matters notified under subsection (6) before publishing a draft of rules to be made under this section.
(8)The FCA must pay the Treasury the sums it receives under rules made under this section, apart from those paid to recover the expenses mentioned in subsection (2)(b) (which the FCA may keep).
(9)Subsection (10) applies where—
(a)the Treasury have notified the FCA under subsection (1) of an amount which included expenses expected to be incurred,
(b)the FCA has made rules to recover the amount, and paid sums received under the rules to the Treasury, but
(c)the expenses expected to be incurred were not in fact incurred.
(10)The Treasury need not arrange for the sums received under the rules to be paid back, but must, when next notifying an amount to the FCA under subsection (1), take into account the fact that the sums received included an amount representing expenses that were not in fact incurred.
(11)In this section—
the “ devolved authorities ” means—
(a)the Scottish Ministers,
(b)the Welsh Ministers, and
(c)the Department for Communities in Northern Ireland;
“ electronic money issuer ” and “ payment service provider ” have the same meanings as in section 137SA. F1112]
Supplementary powers
137T General supplementary powers cross-notes
Rules made by either regulator—
(a)may make different provision for different cases and may, in particular, make different provision in respect of different descriptions of authorised persons, activity or investment,
[F1113 (aa)may make provision for any reference in the rules to an enactment (including an enactment comprised in subordinate legislation) to be read as a reference to that enactment as it has effect from time to time,F1113]
(b)may make provision by reference to rules made by the other regulator, as those rules have effect from time to time, and
(c)may contain such incidental, supplemental, consequential and transitional provision as the regulator making the rule considers appropriate.
CHAPTER 2 Rules: modification, waiver, contravention and procedural provisions cross-notes
Modification or waiver of rules
case 138A Modification or waiver of rules cross-notes
(1)Either regulator may, on the application or with the consent of a person who is subject to rules made by that regulator, direct that all or any of those rules—
(a)are not to apply to that person, or
(b)are to apply to that person with such modifications as may be specified in the direction.
(2)Subsection (1) does not apply to—
[F1114 (za)rules made by either regulator under section 64A (rules of conduct);F1114]
(a)rules made by either regulator under section 137O (threshold condition code);
(b)rules made by the FCA under section 247 (trust scheme rules) [F1115 , section 248 (scheme particulars rules), section 261I (contractual scheme rules) or section 261J (contractual scheme particulars rules)F1115] ;
[F1116 (c)rules made by the FCA under section 309Z1 (rules of conduct).F1116]
(3)An application must be made in such manner as the regulator may direct.
(4)A regulator may not give a direction unless it is satisfied that—
(a)compliance by the person with the rules, or with the rules as unmodified, would be unduly burdensome or would not achieve the purpose for which the rules were made, and
(b)the direction would not adversely affect the advancement of any of the regulator's objectives.
(5) In subsection (4)(b) “ objectives ”, in relation to the FCA, means operational objectives.
(6)A direction may be given subject to conditions.
(7)The regulator may—
(a)revoke a direction, or
(b)vary it on the application, or with the consent, of the person to whom it relates.
(8) “ Direction ” means a direction under this section.
138B Publication of directions under section 138A cross-notes
(1)Subject to subsection (2), a direction must be published by the regulator concerned in the way appearing to the regulator to be best calculated for bringing it to the attention of—
(a)persons likely to be affected by it, and
(b)persons who are, in the opinion of the regulator, likely to make an application for a similar direction.
(2)Subsection (1) does not apply if the regulator is satisfied that it is inappropriate or unnecessary to publish the direction.
(3)In deciding whether it is satisfied as mentioned in subsection (2), the regulator must—
(a)consider whether the publication of the direction would be detrimental to the stability of the dfnUK financial system,
(b)take into account whether the direction relates to a rule contravention of which is actionable in accordance with section 138D,
(c)consider whether publication of the direction would prejudice, to an unreasonable degree, the commercial interests of the person concerned or any other member of the person's immediate group, and
(d)consider whether its publication would be contrary to an international obligation of the United Kingdom.
(4)The FCA must consult the PRA before publishing or deciding not to publish a direction which relates to—
(a)a PRA-authorised person, or
(b)an authorised person who has as a member of its immediate group a PRA-authorised person.
(5)For the purposes of paragraphs (c) and (d) of subsection (3), the regulator must consider whether it would be possible to publish the direction without either of the consequences mentioned in those paragraphs by publishing it without disclosing the identity of the person concerned.
(6) “ Direction ” means a direction under section 138A.
SI [F1117138BA Disapplication or modification of rules in individual cases cross-notes
(1)This section applies to rules made by a regulator if, or to the extent that, regulations made by the Treasury provide for it to apply.
(2)The regulator may, on the application or with the consent of a person who is subject to the rules, give the person a permission that enables the person—
(a)not to apply the rules, or
(b)to apply the rules with the modifications specified in the permission.
(3)Subsections (1) and (2) do not apply to—
(a)rules made by either regulator under section 64A (rules of conduct);
(b)rules made by either regulator under section 137O (threshold condition code);
(c)rules made by the FCA under section 247 (trust scheme rules), section 248 (scheme particular rules), section 261I (contractual scheme rules) or section 261J (contractual scheme particulars rules);
(d)rules made by the FCA under section 309Z(1) (rules of conduct).
(4)The regulator may—
(a)give permission under this section subject to conditions, and
(b)revoke or vary permission given under this section.
(5)Regulations under subsection (1) may make provision about procedural matters in relation to the giving of permission under this section.
(6)Provision under subsection (5) may (among other things) include provision about—
(a)the making of applications;
(b)the determination of applications (including matters to be taken into account in doing so);
(c)the giving and withdrawal of consent;
(d)requirements as to notification or publication of decisions of a regulator under this section;
(e)appeals in respect of decisions of a regulator under this section.
(7)Before making regulations under this section in relation to rules made by a regulator the Treasury must consult the regulator.F1117]
Contravention of rules
case 138C Evidential provisions cross-notes
(1)If a particular rule made by either regulator so provides, contravention of the rule does not give rise to any of the consequences provided for by other provisions of this Act.
(2)A rule made by a regulator which so provides must also provide—
(a)that contravention may be relied on as tending to establish contravention of such other rule made by that regulator as may be specified, or
(b)that compliance may be relied on as tending to establish compliance with such other rule made by that regulator as may be specified.
(3)A rule may include the provision mentioned in subsection (1) only if the regulator making the rule considers that it is appropriate for it also to include the provision required by subsection (2).
(4) In this section “ rule ” does not include a rule made under—
(a)section 137O (threshold condition code);
(b)section 192J (provision of information by parent undertakings).
case 138D Actions for damages cross-notes
(1)A rule made by the PRA may provide that contravention of the rule is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.
(2)A contravention by an authorised person of a rule made by the FCA is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.
(3)If rules made by the FCA so provide, subsection (2) does not apply to a contravention of a specified provision of the rules.
(4)In prescribed cases, a contravention of a rule which by virtue of subsection (1) or (2) would be actionable at the suit of a private person is actionable at the suit of a person who is not a private person, subject to the defences and other incidents applying to actions for breach of statutory duty.
(5) In subsections (1), (2) and (3) “ rule ” does not include—
[F1118 (za)rules under section 64A (rules of conduct);F1118]
[F1119 (zaa)rules under Part 5A;F1119]
(a)Part 6 rules;
(b)rules under section 137O (threshold condition code);
(c)rules under section 192J (provision of information by parent undertakings);
(d)a rule requiring an authorised person to have or maintain financial resources.
(6) “Private person” has such meaning as may be prescribed.
case 138E Limits on effect of contravening rules cross-notes
(1)A person is not guilty of an offence by reason of a contravention of a rule made by either regulator.
(2)No such contravention makes any transaction void or unenforceable.
(3)Subsection (2) does not apply in relation to—
(a)rules made by the FCA under section 137C, F1120...
(b)product intervention rules made by the FCA under section 137D F1122[F1121 ...
(c)rules made by the FCA under section 137FBBF1121] F1123[F1124 ...
(d)rules made by the FCA under section 137FDF1124] [F1125 ; orF1125]
[F1126 (e)designated activity rules imposing under paragraph (2) of regulation 32 of the Public Offers and Admissions to Trading Regulations 2024 (withdrawal rights in connection with public offers of securities) a duty in relation to which provision made under paragraph (4) of that regulation applies.F1126]
Procedural provisions
SI [F1127138EA Matters to consider when making rules cross-notes
(1)This section applies where either regulator proposes to make rules.
(2)The regulator must have regard to any specified matters that are relevant to the making of the rules in question.
SI (3) “ Specified ” means specified in regulations made by the Treasury for the purposes of this section.
(4)The specification of a matter for the purposes of this section may apply generally to the making of rules or be limited in whatever way the Treasury consider appropriate, including by reference to—
(a)the power under which the rules are made;
(b)the persons to whom the rules apply;
(c)the activities or subject-matter to which the rules relate.
(5)The requirement imposed by subsection (2) does not apply in respect of any rules if, or to the extent that, the rules are made for the purposes of—
(a)complying with a direction given by the Financial Policy Committee of the Bank of England under section 9H of the Bank of England Act 1998 (directions requiring macro-prudential measures), or
(b)acting in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of the FCA and PRA functions).
(6)The requirement to have regard to specified matters under this section when making rules is in addition to any other requirements to have regard to matters when making such rules imposed by another provision of this Act or by any other enactment.F1127]
138F Notification of rules cross-notes
[F1128 (1)F1128] If either regulator makes, alters or revokes any rules, that regulator must without delay give written notice [F1129 to the TreasuryF1129] .
[F1130 (1A)The FCA must also give written notice to the Bank of England.F1130]
[F1131 (2)Subsection [F1132 (1A)F1132] does not apply to rules made under or by virtue of section [F1133 137FAA,F1133] 137FB, [F1134 137FBA,F1134] [F1135 , 137FCF1135] [F1136 , 137SAF1136] [F1137 , 137SBF1137] F1138 ... [F1139 or 333TF1139] .F1131]
case 138G Rule-making instruments cross-notes
(1)Any power conferred on either regulator to make rules is exercisable in writing.
(2) An instrument by which rules are made by either regulator (“a rule-making instrument”) must specify the provision under which the rules are made.
(3)To the extent that a rule-making instrument does not comply with subsection (2), it is void.
(4)A rule-making instrument must be published by the regulator making the rule in the way appearing to that regulator to be best calculated to bring it to the attention of the public.
(5)The regulator making the rule may charge a reasonable fee for providing a person with a copy of a rule-making instrument.
(6)A person is not to be taken to have contravened any rule made by a regulator if the person shows that at the time of the alleged contravention the rule-making instrument concerned had not been made available in accordance with this section.
138H Verification of rules cross-notes
(1)The production of a printed copy of a rule-making instrument purporting to be made by a regulator—
(a)on which is endorsed a certificate signed by a member of staff of that regulator who is authorised by the regulator for that purpose, and
(b)which contains the required statements,
is evidence (or in Scotland sufficient evidence) of the facts stated in the certificate.
(2)The required statements are—
(a)that the instrument was made by the FCA or the PRA (as the case may be),
(b)that the copy is a true copy of the instrument, and
(c)that on a specified date the instrument was made available to the public in accordance with section 138G(4).
(3)A certificate purporting to be signed as mentioned in subsection (1) is to be taken to have been properly signed unless the contrary is shown.
(4)A person who wishes in any legal proceedings to rely on a rule-making instrument may require the regulator that made the rule to endorse a copy of the instrument with a certificate of the kind mentioned in subsection (1).
case 138I Consultation by the FCA cross-notes
(1)Before making any rules, the FCA must—
(a)consult the PRA, and
(b)after doing so, publish a draft of the proposed rules in the way appearing to the FCA to be best calculated to bring them to the attention of the public.
(2)The draft must be accompanied by—
(a)a cost benefit analysis,
(b)an explanation of the purpose of the proposed rules,
[F1140 (ba)an explanation of the ways in which having regard to specified matters under section 138EA(2) has affected the proposed rules,F1140]
(c)any statement prepared under section 138K(2),
(d)an explanation of the FCA's reasons for believing that making the proposed rules is compatible with its duties under section 1B(1) [F1141 , (4A)F1141] and (5)(a), and
(e)notice that representations about the proposals may be made to the FCA within a specified time.
(3)Before making the proposed rules, the FCA must have regard to any representations made to it in accordance with subsection (2)(e).
(4)If the FCA makes the proposed rules, it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2)(e), and
(b)its response to them.
[F1142 (4A)The FCA must include, in the account mentioned in subsection (4), a list of the respondents who made the representations, where those respondents have consented to the publication of their names.
(4B)The duty in subsection (4A) is not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but the duty is to be taken into account in determining whether particular processing of data would contravene that legislation).
(4C)For the purposes of this section, the exemption relating to functions conferred on the FCA mentioned in paragraph 11 of Schedule 2 to the Data Protection Act 2018 (exemption from application of listed GDPR provisions) does not apply.
(4D)Where representations are made to the FCA by a Committee of the House of Commons or the House of Lords or a Joint Committee of both Houses in accordance with subsection (2)(e), the FCA’s account mentioned in subsection (4) must also describe how the FCA has considered the representations made by that Committee in making the proposed rules.F1142]
(5)If the rules differ from the draft published under subsection (1)(b) in a way which is, in the opinion of the FCA, significant the FCA must publish—
(a)details of the difference (in addition to complying with subsection (4)) together with a cost benefit analysis, and
(b)any statement prepared under section 138K(4).
(6)The requirements to carry out a cost benefit analysis under this section do not apply in relation to rules made under—
(a)section 136(2);
[F1143 (aa)section 137FB;F1143]
[F1144 (ab)section 137FBA;F1144]
[F1145 (ac)section 137FC;F1145]
[F1146 (ad)section 137SA;F1146]
[F1147 (ae)section 137SB;F1147]
(b)subsection (1) of section 213 as a result of subsection (4) of that section;
(c)section 234;
F1148 (ca). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1149 (cb). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1150 (cc)section 333T;F1150]
(d)paragraph 23 of Schedule 1ZA;
F1151 (e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) “ Cost benefit analysis ” means—
(a)an analysis of the costs together with an analysis of the benefits that will arise—
(i)if the proposed rules are made, or
(ii)if subsection (5) applies, from the rules that have been made, and
(b)subject to subsection (8), an estimate of those costs and of those benefits.
(8)If, in the opinion of the FCA—
(a)the costs or benefits referred to in subsection (7) cannot reasonably be estimated, or
(b)it is not reasonably practicable to produce an estimate,
the cost benefit analysis need not estimate them, but must include a statement of the FCA's opinion and an explanation of it.
[F1152 (8A)The requirement to provide the explanation referred to in subsection (2)(ba) does not apply in relation to any rules if—
(a)the FCA considers that the delay involved in complying with that requirement would be prejudicial to the interests of consumers (as defined in section 425A) or other persons whose interests would be protected by the rules, or
(b)the rules change existing rules and the changes consist of, or include, changes which, in the FCA’s opinion, are not material.
(8B)Where an explanation is not provided by virtue of subsection (8A)(b), the draft of the rules must be accompanied by a statement of the FCA’s opinion.F1152]
(9)The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1)(b).
[F1153 (9A)This section does not apply to rules made by the FCA under section 271E.F1153]
(10)Subsection (1)(a) does not apply to [F1154 —
(a)rules made by the FCA under section 137FB, [F1155 137FBA,F1155] [F1156 , 137FCF1156] [F1157 , 137SAF1157] [F1158 , 137SBF1158] F1159 ... [F1160 or 333TF1160] , or
(b)F1154] rules made by the FCA in relation to recognised investment exchanges under Part 18.
(11)This section is subject to section 138L.
[F1161138IA FCA Cost Benefit Analysis Panel
(1) The FCA must establish and maintain a panel of persons (to be known as the “ FCA Cost Benefit Analysis Panel ”) to provide advice in relation to cost benefit analyses for the purposes of section 138I.
(2)Except as provided by subsection (3), the FCA must consult the FCA Cost Benefit Analysis Panel about the following matters—
(a)the preparation of a cost benefit analysis under section 138I(2)(a) or (5)(a);
(b)the preparation of its statement of policy under section 138IB.
(3)The requirement to consult under subsection (2)(a) does not apply in such cases as may be set out in the statement of policy maintained under section 138IB.
(4)Arrangements made by the FCA under subsection (1) for the establishment and maintenance of the FCA Cost Benefit Analysis Panel must include arrangements for the Panel to—
(a)keep under review how the FCA is performing generally in carrying out its duties under section 138I(2)(a) and (5)(a), and
(b)provide to the FCA whatever recommendations the Panel thinks appropriate as a result of such review.
(5)The FCA must appoint one of the members of the FCA Cost Benefit Analysis Panel to be the chair of the Panel.
(6)The Treasury’s approval is required for the appointment or dismissal of the chair.
(7)The FCA must appoint to the FCA Cost Benefit Analysis Panel such persons with knowledge or experience of the preparation of cost benefit analyses as it considers appropriate.
(8)The FCA must appoint to the FCA Cost Benefit Analysis Panel at least two individuals who are employed by persons authorised for the purposes of this Act by the FCA, with each one being employed by a different person.
(9)The FCA may appoint to the FCA Cost Benefit Analysis Panel such other persons as it considers appropriate.
(10)Subsections (7) to (9) are subject to section 1MA.
(11)The FCA must consider representations that are made to it by the FCA Cost Benefit Analysis Panel.
(12)The FCA must from time to time publish in such manner as it thinks fit responses to the representations.F1161]
[F1162138IB Statement of policy in relation to cost benefit analyses
(1)The FCA must prepare and publish a statement of policy in relation to the preparation of cost benefit analyses for the purposes of section 138I.
(2)The statement must provide information about—
(a)the methodology adopted in preparing cost benefit analyses;
(b)matters to which the FCA has regard in determining whether section 138I(8) applies;
(c)matters to which the FCA has regard in determining whether an exemption under section 138L applies in relation to the preparation of a cost benefit analysis;
(d)arrangements to ensure that representations in connection with a cost benefit analysis that are made in accordance with section 138I(2)(e) are considered;
(e)cases in which the requirement to consult the FCA Cost Benefit Analysis Panel in relation to the preparation of a cost benefit analysis does not apply;
(f)arrangements to ensure that any recommendations in connection with cost benefit analyses that are made following a review carried out under section 138IA(4) are considered.
(3)The statement may include whatever other information in relation to cost benefit analyses that the FCA considers appropriate.
(4)The FCA may alter or replace a statement published under this section.
(5)The FCA must publish a statement as altered or replaced under subsection (4).
(6)Publication under this section is to be made in such manner as the FCA considers best designed to bring the statement to the attention of the public.F1162]
138J Consultation by the PRA cross-notes
(1)Before making any rules, the PRA must—
(a)consult the FCA, and
(b)after doing so, publish a draft of the proposed rules in the way appearing to the PRA to be best calculated to bring them to the attention of the public.
(2)The draft must be accompanied by—
(a)a cost benefit analysis,
(b)an explanation of the purpose of the proposed rules,
[F1163 (ba)an explanation of the ways in which having regard to specified matters under section 138EA(2) has affected the proposed rules,F1163]
(c)any statement prepared under section 138K(2),
(d)an explanation of the PRA's reasons for believing that making the proposed rules is compatible with its duties under—
(i)section 2B(1) or, as the case requires, section 2C(1) or 2D(3), and
(ii)section 2H, and
(e)notice that representations about the proposals may be made to the PRA within a specified time.
(3)Before making the proposed rules, the PRA must have regard to any representations made to it in accordance with subsection (2)(e).
(4)If the PRA makes the proposed rules, it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2)(e), and
(b)its response to them.
[F1164 (4A)The PRA must include, in the account mentioned in subsection (4), a list of the respondents who made the representations, where those respondents have consented to the publication of their names.
(4B)The duty in subsection (4A) is not to be read as authorising or requiring such processing of personal data as would contravene the data protection legislation (but the duty is to be taken into account in determining whether particular processing of data would contravene that legislation).
(4C)For the purposes of this section, the exemption relating to functions conferred on the PRA mentioned in paragraph 9 of Schedule 2 to the Data Protection Act 2018 (exemption from application of listed GDPR provisions) does not apply.
(4D)Where representations are made to the PRA by a Committee of the House of Commons or the House of Lords or a Joint Committee of both Houses in accordance with subsection (2)(e), the PRA’s account mentioned in subsection (4) must also describe how the PRA has considered the representations made by that Committee in making the proposed rules.F1164]
(5)If the rules differ from the draft published under subsection (1)(b) in a way which is, in the opinion of the PRA, significant the PRA must publish—
(a)details of the difference (in addition to complying with subsection (4)) together with a cost benefit analysis, and
(b)any statement prepared under section 138K(4).
(6)The requirements to carry out a cost benefit analysis under this section do not apply in relation to rules made under—
(a)section 136(2);
(b)subsection (1) of section 213 as a result of subsection (4) of that section;
(c)section 234;
(d)paragraph 31 of Schedule 1ZB;
F1165 (e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) “ Cost benefit analysis ” means—
(a)an analysis of the costs together with an analysis of the benefits that will arise—
(i)if the proposed rules are made, or
(ii)if subsection (5) applies, from the rules that have been made, and
(b)subject to subsection (8), an estimate of those costs and of those benefits.
(8)If, in the opinion of the PRA—
(a)the costs or benefits referred to in subsection (7) cannot reasonably be estimated, or
(b)it is not reasonably practicable to produce an estimate,
the cost benefit analysis need not estimate them, but must include a statement of the PRA's opinion and an explanation of it.
[F1166 (8A)The requirement to provide the explanation referred to in subsection (2)(ba) does not apply in relation to any rules if—
(a)the PRA considers that the delay involved in complying with that requirement would—
(i)be prejudicial to the safety and soundness of PRA-authorised persons, or
(ii)in a case where section 2C applies, be prejudicial to securing the appropriate degree of protection for policyholders, or
(b)the rules change existing rules and the changes consist of, or include, changes which, in the PRA’s opinion, are not material.
(8B)Where an explanation is not provided by virtue of subsection (8A)(b), the draft of the rules must be accompanied by a statement of the PRA’s opinion.F1166]
(9)The PRA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1)(b).
(10)This section is subject to [F1167 sections 138L and 144E(3)F1167] .
F1168138JA PRA Cost Benefit Analysis Panel
(1) The PRA must establish and maintain a panel of persons (to be known as the “ PRA Cost Benefit Analysis Panel ”) to provide advice in relation to cost benefit analyses for the purposes of section 138J.
(2)Except as provided by subsection (3), the PRA must consult the PRA Cost Benefit Analysis Panel about the following matters—
(a)the preparation of a cost benefit analysis under section 138J(2)(a) or (5)(a);
(b)the preparation of its statement of policy under section 138JB.
(3)The requirement to consult under subsection (2)(a) does not apply in such cases as may be set out in the statement of policy maintained under section 138JB.
(4)Arrangements made by the PRA under subsection (1) for the establishment and maintenance of the PRA Cost Benefit Analysis Panel must include arrangements for the Panel to—
(a)keep under review how the PRA is performing generally in carrying out its duties under section 138J(2)(a) and (5)(a), and
(b)provide to the PRA whatever recommendations the Panel thinks appropriate as a result of such review.
(5)The PRA must appoint one of the members of the PRA Cost Benefit Analysis Panel to be the chair of the Panel.
(6)The Treasury’s approval is required for the appointment or dismissal of the chair.
(7)The PRA must appoint to the PRA Cost Benefit Analysis Panel such persons with knowledge or experience of the preparation of cost benefit analyses as it considers appropriate.
(8)The PRA must appoint to the PRA Cost Benefit Analysis Panel at least two individuals who are employed by PRA-authorised persons, with each one being employed by a different person.
(9)The PRA may appoint to the PRA Cost Benefit Analysis Panel such other persons as it considers appropriate.
(10)Subsections (7) to (9) are subject to section 2LA.
(11)The PRA must consider representations that are made to it by the PRA Cost Benefit Analysis Panel.
(12)The PRA must from time to time publish in such manner as it thinks fit responses to the representations.
(13)The reference in subsection (1) to section 138J includes a reference to that section as applied in relation to the Bank of England by paragraphs 10(1) and 10A of Schedule 17A.
[F1169138JB Statement of policy in relation to cost benefit analyses
(1)The PRA must prepare and publish a statement of policy in relation to the preparation of cost benefit analyses for the purposes of section 138J.
(2)The statement must provide information about—
(a)the methodology adopted in preparing cost benefit analyses;
(b)matters to which the PRA has regard in determining whether section 138J(8) applies;
(c)matters to which the PRA has regard in determining whether an exemption under section 138L applies in relation to the preparation of a cost benefit analysis;
(d)arrangements to ensure that representations in connection with a cost benefit analysis that are made in accordance with section 138J(2)(e) are considered;
(e)cases in which the requirement to consult the PRA Cost Benefit Analysis Panel in relation to the preparation of a cost benefit analysis does not apply;
(f)arrangements to ensure that any recommendations in connection with cost benefit analyses that are made following a review carried out under section 138JA(4) are considered.
(3)The statement may include whatever other information in relation to cost benefit analyses that the PRA considers appropriate.
(4)The PRA may alter or replace a statement published under this section.
(5)The PRA must publish a statement as altered or replaced under subsection (4).
(6)Publication under this section is to be made in such manner as the PRA considers best designed to bring the statement to the attention of the public.F1169]
138K Consultation: mutual societies cross-notes
(1) Subsection (2) applies where a regulator proposes to make a rule (“the proposed rule”) which would apply both to—
(a)authorised persons which are mutual societies, and
(b)other authorised persons.
(2)The regulator must prepare a statement setting out—
(a)its opinion whether or not the impact of the proposed rule on persons within subsection (1)(a) will be significantly different from its impact on persons within subsection (1)(b), and
(b)if so, details of the difference.
(3)Subsection (4) applies where a regulator makes a rule which—
(a)applies both to—
(i)authorised persons which are mutual societies, and
(ii)other authorised persons, and
(b)differs from the draft of the proposed rule published under section 138I(1)(b) or section 138J(1)(b) (as the case may be).
(4)The regulator must prepare a statement setting out—
(a)its opinion whether or not the impact of the rule is significantly different from the impact of the proposed rule on—
(i)the persons within subsection (3)(a)(i), and
(ii)those persons as compared with persons within subsection (3)(a)(ii), and
(b)if so, details of the difference.
(5) A “mutual society” is—
(a)a building society within the meaning of the Building Societies Act 1986;
(b)a friendly society within the meaning of the Friendly Societies Act 1992;
(c)a registered society within the meaning of [F1170 the Co-operative and Community Benefit Societies Act 2014F1170] ;
F1171 (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1171 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1172 (7)This section is subject to section 144E(3).F1172]
case 138L Consultation: general exemptions cross-notes
(1)Sections 138I(1)(b) and (2) to (5) and 138K do not apply in relation to rules made by the FCA if the FCA considers that the delay involved in complying with them would be prejudicial to the interests of consumers, as defined in section 425A.
(2)Sections 138J(1)(b) and (2) to (5) and 138K do not apply in relation to rules made by the PRA if the PRA considers that the delay involved in complying with them would—
(a)be prejudicial to the safety and soundness of PRA-authorised persons, or
(b)in a case where section 2C applies, be prejudicial to securing the appropriate degree of protection for policyholders.
(3)The provisions listed in subsection (4) do not apply if the regulator concerned considers that, making the appropriate comparison—
(a)there will be no increase in costs, or
(b)there will be an increase in costs but that increase will be of minimal significance.
(4)Those provisions are—
(a)subsections (2)(a) and (5)(a) of section 138I;
(b)subsections (2)(a) and (5)(a) of section 138J.
(5) The “ appropriate comparison ” means—
(a)in relation to section 138I(2)(a) or 138J(2)(a), a comparison between the overall position if the rules are made and the overall position if the rules are not made;
(b)in relation to section 138I(5)(a) or 138J(5)(a), a comparison between the overall position after the making of the rules and the overall position before they were made.
138M Consultation: exemptions for temporary product intervention rules cross-notes
(1)Sections 138I(1)(b) and (2) to (5) and 138K do not apply in relation to product intervention rules made by the FCA if it considers that it is necessary or expedient not to comply with them for the purpose of advancing—
(a)the consumer protection objective or the competition objective, or
(b)if an order under section 137D(1)(b) is in force, the integrity objective.
(2) Any rules made as a result of subsection (1) (“temporary product intervention rules”) are to cease to have effect at the end of the period specified in the rules.
(3)The longest period that may be specified is the period of 12 months beginning with the day on which the rules come into force.
(4)Nothing in subsection (2) prevents the FCA from revoking temporary product intervention rules before the end of the period mentioned there.
(5) If the FCA has made temporary product intervention rules (“the initial rules”), it may not make further temporary product intervention rules containing the same, or substantially the same, provision as that contained in the initial rules until the prohibited period has ended.
(6) “ The prohibited period ” means the period of 12 months beginning with the day on which the period mentioned in subsection (2) ends (whether or not the initial rules have been revoked before the end of the period mentioned there).
138N Temporary product intervention rules: statement of policy cross-notes
(1)The FCA must prepare and issue a statement of its policy with respect to the making of temporary product intervention rules.
(2)The FCA may at any time alter or replace a statement issued under this section.
(3)If a statement issued under this section is altered or replaced, the FCA must issue the altered or replacement statement.
(4)The FCA must, without delay, give the Treasury a copy of any statement which it publishes under this section.
(5)A statement issued under this section must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
(6)The FCA may charge a reasonable fee for providing a person with a copy of the statement.
138O Statement of policy under section 138N: procedure cross-notes
(1)Before issuing a statement under section 138N, the FCA must publish a draft of the proposed statement in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
(2)The draft must be accompanied by notice that representations about the proposal may be made to the FCA within a specified time.
(3)Before issuing the proposed statement, the FCA must have regard to any representations made to it in accordance with subsection (2).
(4)If the FCA issues the proposed statement it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2), and
(b)its response to them.
(5)If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the FCA, significant, the FCA must (in addition to complying with subsection (4)) publish details of the difference.
(6)The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
(7)This section also applies to a proposal to alter or replace a statement.
[F1173CHAPTER 2A Technical Standards
138P. Technical standards
(1) This Chapter applies where a power for the FCA, the PRA, the Bank of England, or any combination of them to make technical standards is substituted for the power of an EU entity to make dfnEU tertiary legislation (“the original EU power”) by regulations made under section 8 of the European Union (Withdrawal) Act 2018 .
(2)The power to make technical standards includes power to modify, amend or revoke—
(a)any technical standards made by the regulator under that power;
(b)any dfnEU tertiary legislation made by an EU entity under the original EU power which forms part of [F1174 assimilatedF1174] law.
(3)Where power to make a technical standard for the same purposes (as set out in the provision creating the power) and applying to the same persons or class of persons has been given to more than one regulator, no regulator may exercise the power without the consent of the other regulator or regulators.
(4)Before a regulator makes a technical standard in which another regulator has an interest, it must consult the other regulator.
(5)For the purposes of subsection (4)—
(a)the PRA has an interest in a technical standard which—
(i)applies to PRA-authorised persons or other persons connected to them, or
(ii)may affect the exercise of the PRA’s functions under or by virtue of this Act or under [F1175 assimilatedF1175] law;
(b)the FCA has an interest in all technical standards which a regulator or the Payment Systems Regulator has power to amend;
(c)the Bank of England has an interest in technical standards which—
(i)apply to central counterparties, to financial counterparties or non-financial counterparties within the meaning of the EMIR regulation or to central securities depositories, or
(ii)may affect the exercise of the Bank’s functions under or by virtue of this Act, the Banking Act 2009 or [F1176 assimilatedF1176] law.
(6)For the purposes of this Chapter—
(a) “ EU tertiary legislation” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018 ;
(b) “regulator” means the FCA, the PRA or the Bank of England;
(c)a person is connected with another person in the circumstances set out in section 165(11).
[F1177 (d) “the EMIR regulation” has the meaning given in section 313. F1177]
138Q. Standards instruments
(1) The power to make technical standards is to be exercised by the regulator by making an instrument under this section (a “standards instrument”).
(2)A standards instrument must specify the provision under which the instrument is being made.
(3)To the extent that a standards instrument does not comply with subsection (2), it is void.
(4)A standards instrument must be published by the regulator making the instrument in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(5)The Treasury must lay before Parliament a copy of each standards instrument made under this section.
(6)The regulator making the instrument may charge a reasonable fee for providing a person with a copy of a standards instrument.
138R. Treasury approval
(1)A standards instrument may be made only if it has been approved by the Treasury.
(2)The Treasury may refuse to approve a standards instrument if subsection (3) or (5) applies.
(3)This subsection applies if it appears to the Treasury that the instrument would—
(a)have implications for public funds (within the meaning of section 78(2) of the Banking Act 2009); or
(b)prejudice any current or proposed negotiations for an international agreement between the United Kingdom and one or more other countries, international organisations or institutions.
(4) For the purposes of subsection (3), “international organisations” includes the European Union.
(5)This subsection applies if it appears to the Treasury that they may direct the regulator not to make the standards instrument under section 410 (international obligations).
(6) The Treasury must notify the regulator in writing whether or not they approve a standards instrument within four weeks after the day on which that instrument is submitted to the Treasury for approval (“the relevant period”).
(7)Provision of a draft standards instrument to the Treasury for consultation does not amount to submission of the instrument for approval.
(8)If the Treasury do not approve the instrument, they must—
(a)set out in the notice given under subsection (6) the Treasury’s reasons for not approving the instrument;
(b)lay before Parliament—
(i)a copy of that notice;
(ii)a copy of any statement made by the regulator as to its reasons for wishing to make the instrument.
(9)If the Treasury do not give notice under subsection (6) before the end of the relevant period, the Treasury is deemed to have approved the standards instrument.
138S. Application of Chapters 1 and 2
(1)The sections listed in subsection (2) apply, subject to the modifications specified in that subsection, to—
(a)technical standards made by the FCA or the PRA as they apply to rules made by the FCA or the PRA;
(b)technical standards made by the Bank of England, as they apply to rules made by the Bank under this Act in accordance with paragraph 10(1), (3) and (4) of Schedule 17A to this Act.
(2)The sections referred to in subsection (1) are—
(a)section 137T (general supplementary powers), as if—
(i)the reference in paragraph (a) to authorised persons were a reference to persons,
(ii)the reference in paragraph (b) to rules included a reference to technical standards;
(b)section 138C (evidential provisions);
(c)section 138E (limit on effect of contravening rules);
(d)section 138F (notification of rules);
(e)section 138H (verification of rules), treating the reference in subsection (2)(c) to section 138G(4) of the Act as a reference to section 138Q(4);
(f)section 138I (consultation by the FCA), as if—
(i)subsection (1)(a) were omitted, and
(ii)references to making rules were references to submitting a standards instrument to the Treasury for approval;
(g)section 138J (consultation by the PRA), as if—
(i)subsection (1)(a) were omitted, and
(ii)references to making rules were references to submitting a standards instrument to the Treasury for approval;
(h)section 138K (consultation: mutual societies);
[F1178 (i)section 138L (consultation: general exemptions), as if—
(i) in subsection (1), for “425A” there were substituted “1G”;
(ii)references to making rules were references to submitting a standards instrument to the Treasury for approval.F1178,F1173]]
CHAPTER 3 Guidance
case 139A Power of the FCA to give guidance cross-notes
(1)The FCA may give guidance consisting of such information and advice as it considers appropriate—
(a)with respect to the operation of specified parts of this Act and of any rules made by the FCA;
(b)with respect to any other matter relating to functions of the FCA;
(c)with respect to any other matters about which it appears to the FCA to be desirable to give information or advice.
F1179 (1A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)The FCA may give financial or other assistance to persons giving information or advice of a kind which the FCA could give under this section.
(3)Subsection (5) applies where the FCA proposes to give guidance to FCA-regulated persons generally, or to a class of FCA-regulated persons, in relation to rules to which those persons are subject.
(4)Subsection (5) also applies in relation to guidance which the FCA proposes to give to persons generally, or to a class of person, in relation to its functions under the [F1180 Short Selling Regulations 2025F1180] [F1181 or the market abuse regulation [F1182 , any [F1183 assimilated directF1183] legislation originally made under the market abuse regulation or any subordinate legislation (within the meaning of the Interpretation Act 1978) made on or after IP completion day under the market abuse regulationF1182,F1181]] .
(5)Where this subsection applies, subsections (1), (2)(e) and (3) of section 138I (consultation) apply to the proposed guidance as they apply to proposed rules, unless the FCA considers that the delay in complying with those provisions would be prejudicial to the interests of consumers.
(6)The FCA may—
(a)publish its guidance,
(b)offer copies of its published guidance for sale at a reasonable price, and
(c)if it gives guidance in response to a request made by any person, make a reasonable charge for that guidance.
(7)In this Chapter, references to guidance given by the FCA include references to any recommendations made by the FCA to FCA-regulated persons generally, or to any class of FCA-regulated person.
(8) “ Consumers ” has the meaning given in section 1G.
(9) “ FCA-regulated person ” means—
(a)an authorised person, or
(b)any person who is otherwise subject to rules made by the FCA.
case 139B Notification of FCA guidance to the Treasury cross-notes
(1)On giving any general guidance, the FCA must give written notice to the Treasury without delay.
(2)If the FCA alters any of its guidance, it must give written notice to the Treasury without delay.
(3)The notice under subsection (2) must include details of the alteration.
(4)If the FCA revokes any of its general guidance, it must give written notice to the Treasury without delay.
(5) “ General guidance ” means guidance given by the FCA under section 139A which is—
(a)given to persons generally, to FCA-regulated persons generally or to a class of FCA-regulated person,
(b)intended to have continuing effect, and
(c)given in writing or other legible form.
(6) “ FCA-regulated person ” has the same meaning as in section 139A.
CHAPTER 4 Competition scrutiny cross-notes
140A Interpretation
(1)In this Chapter—
[F1184 “the CMA ” means the Competition and Markets Authority. F1184]
“ market in the United Kingdom ” includes—
(a)so far as it operates in the United Kingdom or a part of the United Kingdom, any market which operates there and in another country or territory or in a part of another country or territory, and
(b)any market which operates only in a part of the United Kingdom;
F1185 ...
“ practices ”, in relation to each regulator, means practices adopted by that regulator in the exercise of functions under this Act;
“ regulating provisions ” means—
(a)in relation to the FCA, any—
(i)rules of the FCA;
(ii)general guidance (as defined by section 139B(5) F1186...);
(iii)F1187 ...
(iv)F1188 ...
(v)F1189 ...
(vi)F1189 ...
(b)in relation to the PRA, any—
(i)rules of the PRA;
(ii)F1190 ...
(iii)F1190 ...
F1191 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)For the purposes of this Chapter, any reference to a feature of a market in the United Kingdom for goods or services is to be read as a reference to—
(a)the structure of the market concerned or any aspect of that structure,
(b)any conduct (whether or not in the market concerned) of one or more than one person who supplies or acquires goods or services in the market concerned, or
(c)any conduct relating to the market concerned of customers of any person who supplies or acquires goods or services.
(4) In subsection (3) “ conduct ” includes any failure to act (whether or not intentional) and any other unintentional conduct.
140B Advice about effect of regulating provision or practice
(1) In this Chapter, any reference to the giving of “section 140B advice” to a regulator is to be read in accordance with this section.
[F1192 (2) dfnThe CMA gives “section 140B advice” to a regulator if—
(a)it gives advice to the regulator under section 7 of the Enterprise Act 2002 (provision of competition advice to Ministers etc) and the advice states that in the opinion of dfnthe CMA one or more of the things mentioned in subsection (4) may cause, or contribute to, the effect mentioned in subsection (5), or might be expected to do so in the future;
(b)a report published by it under section 136 of the Enterprise Act 2002 (investigations and reports on market investigation reference) contains—
(i)a decision that one or more of the things mentioned in subsection (4) may cause, or contribute to, the effect mentioned in subsection (5), and
(ii)a recommendation that any action should be taken by that regulator.F1192]
F1193 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)Those things are—
(a)a regulating provision or practice of the regulator,
(b)two or more regulating provisions or practices (of that regulator or of both regulators) taken together,
(c)a particular combination of regulating provision or practices (of that regulator or of both regulators), or
(d)a feature, or combination of features, of a [F1194 one or more marketsF1194] in the United Kingdom that could be dealt with by regulating provision or practices (of that regulator or of both regulators).
(5)That effect is the prevention, restriction or distortion of competition in connection with the supply or acquisition of any goods or services in the United Kingdom or a part of the United Kingdom.
140C Consultation with regulator
Before giving section 140B advice, [F1195 the CMAF1195] must consult the regulator to which the advice is to be given.
SI 140D Investigation powers of [F1196CMAF1196]
[F1197 (1)F1197] Where dfnthe [F1198 CMAF1198] is deciding whether to exercise its power under section 7 of the Enterprise Act 2002 to give advice which, if given, would be section 140B advice, section 174 of that Act has effect as if—
[F1199 (a)for subsection (1) there were substituted—
“(1)For the purposes of this section, a permitted purpose is assisting the CMA in deciding whether to exercise its power under section 7 to give advice which for the purposes of Chapter 4 of Part 9A of the Financial Services and Markets Act 2000 would be section 140B advice.”, and
(b)subsection (9A) were omitted.F1199]
[F1200 (2)Where dfnthe CMA has exercised any of its powers under section 174 of the Enterprise Act 2002, as applied by subsection (1), section 174B of that Act has effect as if, after subsection (9), there were inserted—
“(10)Where the section 174 power is exercised for the purpose of assisting the CMA in deciding whether to exercise its power under section 7 to give advice which for the purposes of Chapter 4 of Part 9A of the Financial Services and Markets Act 2000 would be section 140B advice, the relevant day is the day when the CMA publishes that advice.”F1200]
[F1201140E. Publication by CMA of section 140B advice
Where the giving of advice under section 7 of the Enterprise Act 2002 to either regulator constitutes the giving of section 140B advice, the CMA must publish that advice in such manner as it thinks fit.F1201]
140F Duty of [F1202CMAF1202] to send report to regulator
(1)Where the publication of a report of dfnthe [F1203 CMAF1203] under section 142 of the Enterprise Act 2002 constitutes the giving of section 140B advice to either regulator, the [F1204 CMAF1204] must give a copy of the report to that regulator.
(2)The day on which the copy is given is the day on which the regulator is to be taken to receive the section 140B advice.
140G Duty of regulator to publish response
(1)A regulator must, within 90 days after the day on which it receives section 140B advice, publish a response stating how it proposes to deal with the advice and in particular—
(a)whether it has decided to take any action, or to take no action, in response to the advice,
(b)if it has decided to take action, what action it proposes to take, and
(c)its reasons for its proposals.
(2)Publication is to be in such manner as the regulator thinks fit.
140H Role of the Treasury
(1)This section applies where—
(a)[F1205 the CMAF1205] has given section 140B advice and the regulator has published a response under section 140G, and
(b)dfnthe [F1206 CMAF1206] remains of the opinion that one or more of the things mentioned in section 140B(4) may cause or contribute to, the effect mentioned in section 140B(5).
(2)dfnThe [F1207 CMAF1207] may refer the section 140B advice to the Treasury by sending the Treasury—
(a)a copy of the section 140B advice and of the response, and
(b)a request to consider the advice and the response.
(3)In referring the section 140B advice, the [F1207 CMAF1207] may give advice to the Treasury as to what action, if any, ought to be taken by the regulator.
(4)If section 140B advice is referred to them, the Treasury may give a direction to the regulator to which the advice was given requiring the regulator to take such action as may be specified in the direction.
(5)In considering whether to give a direction and, if so, what action to specify, the Treasury must have regard to—
(a)any advice dfnthe [F1208 CMAF1208] has given under subsection (3),
(b)any action which the section 140B advice suggests that the regulator should take, and
(c)the response of the regulator to the section 140B advice.
(6)The direction may not require the regulator to do anything that it has no power to do, but the existence of the direction is relevant to the exercise of any discretion conferred on the regulator.
(7)Before giving a direction under this section, the Treasury must consult the regulator to which it is to be given.
(8)If the Treasury give a direction under this section they must—
(a)publish in such manner as they think fit a statement giving details of the direction and of their reasons for giving it, and
(b)lay a copy of the statement before Parliament.
CHAPTER 5 Power to make consequential amendments
141A Power to make consequential amendments of references to rules etc. cross-notes
(1)This section applies if—
(a)a provision of primary or subordinate legislation (whenever passed or made) contains a reference (however expressed) to rules of either regulator or to guidance of the FCA,
(b)it appears to the Treasury or the Secretary of State that the reference requires amendment in consequence of the exercise by that regulator of its power under this Part to make, alter or revoke its rules or the exercise by the FCA of its power to make, alter or revoke its guidance.
SI (2)The Treasury or the Secretary of State may by order make such amendment of the legislation referred to in subsection (1)(a) as appears to them to be necessary or expedient in consequence of the exercise by the regulator of the power mentioned in subsection (1)(b).
(3)The power conferred by subsection (2) includes power—
(a)to replace a reference to the rules of one regulator with a reference to the rules of the other regulator or to the rules of both regulators;
(b)to replace a reference to the rules of both regulators with a reference to the rules of one regulator.
(4)In subsection (1)(a) “subordinate legislation” does not include rules of either regulator.
[F1209 (5)A regulator's power under Part 2 of the Powers Regulations to amend its rules is treated for the purposes of this section as a power under this Part; and for this purpose “the Powers Regulations” means the Financial Regulators' Powers (Technical Standards etc.) (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1115).F1209,F1040]]
[F1210141B Power to consequentially amend enactments
(1)The Treasury may by regulations make provision amending an enactment that is consequential on rules.
(2)In this section—
“enactment” includes—
(a)an enactment comprised in subordinate legislation,
(b)[F1211 assimilated directF1211] legislation,
(c)an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,
(d)an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and
(e)an enactment comprised in, or in an instrument made under, Northern Ireland legislation;
“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act) but does not include rules of either regulator.F1210]
case [F1212PART 9B Ring-fencing cross-notes
Introductory
case 142A “Ring-fenced body”
(1) In this Act “ ring-fenced body ” means a UK institution which carries on one or more core activities (see section 142B) in relation to which it has a Part 4A permission.
(2) But “ ring-fenced body ” does not include—
(a)a building society within the meaning of the Building Societies Act 1986, or
SI (b)a dfnUK institution of a class exempted by order made by the Treasury.
(3)An order under subsection (2)(b) may be made in relation to a class of dfnUK institution only if the Treasury are of the opinion that the exemption conferred by the order would not be likely to have a significant adverse effect on the continuity of the provision in the United Kingdom of core services.
(4)Subject to that, in deciding whether and, if so, how to exercise their powers under subsection (2)(b), the Treasury must have regard to the desirability of minimising any adverse effect that the ring-fencing provisions might be expected to have on competition in the market for services provided in the course of carrying on core activities, including any adverse effect on the ease with which new entrants can enter the market.
(5) In subsection (4) “ the ring-fencing provisions ” means ring-fencing rules and the duty imposed as a result of section 142G.
SI (6)An order under subsection (2)(b) may provide for the exemption to be subject to conditions.
(7) In this section “ UK institution ” means a body corporate incorporated in the United Kingdom.
case 142B Core activities
(1) References in this Act to a “core activity” are to be read in accordance with this section.
SI (2)The regulated activity of accepting deposits (whether carried on in the United Kingdom or elsewhere) is a core activity unless it is carried on in circumstances specified by the Treasury by order.
(3)An order under subsection (2) may be made only if the Treasury are of the opinion that it is not necessary for either of the following purposes that the regulated activity of accepting deposits should be a core activity when carried on in the specified circumstances.
(4)Those purposes are—
(a)to secure an appropriate degree of protection for the depositors concerned, or
(b)to protect the continuity of the provision in the United Kingdom of services provided in the course of carrying on the regulated activity of accepting deposits.
(5)The Treasury may by order provide for a regulated activity other than that of accepting deposits to be a core activity, either generally or when carried on in circumstances specified in the order.
(6)An order under subsection (5) may be made only if the Treasury are of the opinion—
(a)that an interruption of the provision of services provided in the United Kingdom in the carrying on of the regulated activity concerned could adversely affect the stability of the dfnUK financial system or of a significant part of that system, and
(b)that the continuity of the provision of those services can more effectively be protected by treating the activity as a core activity.
142C Core services
(1) References in this Act to “core services” are to be read in accordance with this section.
(2)The following are core services—
(a)facilities for the accepting of deposits or other payments into an account which is provided in the course of carrying on the core activity of accepting deposits;
(b)facilities for withdrawing money or making payments from such an account;
(c)overdraft facilities in connection with such an account.
(3)The Treasury may by order provide that any other specified services provided in the course of carrying on the core activity of accepting deposits are also core services.
(4)If an order under section 142B(5) provides for an activity other than that of accepting deposits to be a core activity, the Treasury must by order provide that specified services provided in the course of carrying on that activity are core services.
(5)The services specified by order under subsection (4) must be services in relation to which the Treasury are of the opinion mentioned in section 142B(6)(a).
caseSI 142D Excluded activities
(1) References in this Act to an “excluded activity” are to be read in accordance with this section.
SI (2)The regulated activity of dealing in investments as principal (whether carried on in the United Kingdom or elsewhere) is an excluded activity unless it is carried on in circumstances specified by the Treasury by order.
(3)An order under subsection (2) may be made only if the Treasury are of the opinion that allowing ring-fenced bodies to deal in investments as principal in the specified circumstances would not be likely to result in any significant adverse effect on the continuity of the provision in the United Kingdom of core services.
(4)The Treasury may by order provide for an activity other than the regulated activity of dealing in investments as principal to be an excluded activity, either generally or when carried on in circumstances specified in the order.
(5)An activity to which an order under subsection (4) relates—
(a)need not be a regulated activity, and
(b)may be an activity carried on in the United Kingdom or elsewhere.
(6)In deciding whether to make an order under subsection (4) in relation to any activity, the Treasury must—
(a)have regard to the risks to which a ring-fenced body would be exposed if it carried on the activity concerned, and
(b)consider whether the carrying on of that activity by a ring-fenced body would make it more likely that the failure of the body would have an adverse effect on the continuity of the provision in the United Kingdom of core services.
(7)An order under subsection (4) may be made only if the Treasury are of the opinion that the making of the order is necessary or expedient for the purpose of protecting the continuity of the provision in the United Kingdom of core services.
SI 142E Power of Treasury to impose prohibitions
SI (1)The Treasury may by order prohibit ring-fenced bodies from—
(a)entering into transactions of a specified kind or with persons falling within a specified class;
(b)establishing or maintaining a branch in a specified country or territory;
(c)holding in specified circumstances shares or voting power in companies of a specified description.
(2)In deciding whether to make an order under this section imposing a prohibition, the Treasury must—
(a)have regard to the risks to which a ring-fenced body would be exposed if it did the thing to which the prohibition relates, and
(b)consider whether the doing of that thing by a ring-fenced body would make it more likely that the failure of the body would have an adverse effect on the continuity of the provision in the United Kingdom of core services.
(3)An order under this section may be made only if the Treasury are of the opinion that the making of the order is necessary or expedient for the purpose of protecting the continuity of the provision in the United Kingdom of core services.
SI (4)An order under this section may in particular—
(a)provide for any prohibition to be subject to exemptions specified in the order;
(b)provide for any exemption to be subject to conditions specified in the order.
SI 142F Orders under section 142A, 142B, 142D or 142E
(1)An order made under section 142A, 142B, 142D or 142E may—
(a)authorise or require the making of rules by a regulator for the purposes of, or for purposes connected with, any provision of the order;
(b)authorise the making of other instruments by a regulator for the purposes of, or for purposes connected with, any provision of the order;
(c)refer to a publication issued by a regulator, another body in the United Kingdom or an international organisation, as the publication has effect from time to time.
(2)If the order confers powers on a regulator or authorises or requires the making of rules or other instruments by a regulator, the order may also—
(a)impose conditions on the exercise of any power conferred on the regulator;
(b)impose consultation requirements on the regulator;
(c)make the exercise of a power by the regulator subject to the consent of the Treasury.
Ring-fenced bodies not to carry on excluded activities or contravene prohibitions
case 142G Ring-fenced bodies not to carry on excluded activities or contravene prohibitions
(1)A ring-fenced body which—
(a)carries on an excluded activity or purports to do so, or
(b)contravenes any provision of an order under section 142E,
is to be taken to have contravened a requirement imposed on the body by the appropriate regulator under this Act.
(2)The contravention does not—
(a)make a person guilty of an offence;
(b)make a transaction void or unenforceable;
(c)(subject to subsection (3)) give rise to any right of action for breach of statutory duty.
(3)In such cases as the Treasury may specify by order, the contravention is actionable at the suit of a person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.
(4) In this section “ the appropriate regulator ” means—
(a)in relation to a ring-fenced body which is a PRA-authorised person, the PRA;
(b)in relation to any other ring-fenced body, the FCA.
Ring-fencing rules
142H Ring-fencing rules
(1)In the exercise of its power to make general rules, the appropriate regulator must in particular make rules—
(a)requiring a ring-fenced body to make arrangements to ensure the effective provision to the ring-fenced body of services and facilities that it requires in relation to the carrying on of a core activity, and
(b)making provision for the group ring-fencing purposes applying to ring-fenced bodies and to authorised persons who are members of a ring-fenced body's group.
(2)Section 142E(1)(c) does not affect the power of the appropriate regulator to make general rules imposing restrictions on the extent of the shares or voting power that a ring-fenced body may hold in another company, except where a restriction on the extent of the shares or voting power that the ring-fenced body may hold in the company is imposed by order under section 142E(1)(c).
(3) General rules that are required by this section or make provision falling within subsection (2) are in this Act referred to as “ ring-fencing rules ”.
(4) The “group ring-fencing purposes” are—
(a)ensuring as far as reasonably practicable that the carrying on of core activities by a ring-fenced body is not adversely affected by the acts or omissions of other members of its group;
(b)ensuring as far as reasonably practicable that in carrying on its business a ring-fenced body—
(i)is able to take decisions independently of other members of its group, and
(ii)does not depend on resources which are provided by a member of its group and which would cease to be available to the ring-fenced body in the event of the insolvency of the other member;
(c)ensuring as far as reasonably practicable that the ring-fenced body would be able to continue to carry on core activities in the event of the insolvency of one or more other members of its group.
(5)Ring-fencing rules made for the group ring-fencing purposes must include—
(a)provision restricting the power of a ring-fenced body to enter into contracts with other members of its group otherwise than on arm's length terms;
(b)provision restricting the payments that a ring-fenced body may make (by way of dividend or otherwise) to other members of its group;
(c)provision requiring the disclosure to the appropriate regulator of information relating to transactions between a ring-fenced body and other members of its group;
(d)provision requiring a ring-fenced body to ensure that its board of directors (or if there is no such board, the equivalent management body) includes to a specified extent—
(i)members who are treated by the rules as being independent of other members of the ring-fenced body's group,
(ii)members who are treated by the rules as being independent of the ring-fenced body itself, and
(iii)non-executive members;
(e)provision requiring a ring-fenced body to act in accordance with a remuneration policy meeting specified requirements;
(f)provision requiring a ring-fenced body to act in accordance with a human resources policy meeting specified requirements;
(g)provision requiring arrangements made by the ring-fenced body for the identification, monitoring and management of risk to meet specified requirements;
(h)such other provision as the appropriate regulator considers necessary or expedient for any of the purposes in subsection (4).
(6)The reference in subsection (5)(e) to a remuneration policy is a reference to a policy about the remuneration of officers, employees and other persons who (in each case) are of a specified description.
(7)The reference in subsection (5)(f) to a human resources policy is a reference to a policy about the appointment and management of officers, employees and other persons who (in each case) are of a specified description.
(8)In this section—
“ the appropriate regulator ” means—
(a)in relation to a PRA-authorised person, the PRA;
(b)in relation to any other authorised person, the FCA;
“ shares ” has the meaning given in section 422;
“ specified ” means specified in the rules;
“ voting power ” has the meaning given in section 422.
142I Powers of Treasury in relation to ring-fencing rules
(1)The Treasury may by order require the appropriate regulator, as defined in section 142H(8), to include (or not to include) in ring-fencing rules specified provision relating to—
(a)any of the matters mentioned in section 142H(5)(a) to (g), or
(b)any other specified matter.
(2)The power to make an order under this section is exercisable only if the Treasury consider it necessary or expedient to do so—
(a)for any of the group ring-fencing purposes as defined in section 142H(4), or
(b)otherwise for securing the independence of ring-fenced bodies from other members of their groups.
(3) “ Specified ” means specified in the order.
142J Review of ring-fencing rules etc
(1)The PRA must carry out reviews of its ring-fencing rules and of any rules made by it under section 192JA (rules applying to parent undertakings of ring-fenced bodies).
(2)The first review must be completed before the end of the period of 5 years beginning with the day on which the first ring-fencing rules come into force.
(3)Subsequent reviews must be completed before the end of the period of 5 years beginning with the day on which the previous review was completed.
(4)The PRA must give the Treasury a report of each review.
(5)The Treasury must lay a copy of the report before Parliament.
(6)The PRA must publish the report in such manner as it thinks fit.
(7)If (because any ring-fenced body is not a PRA-authorised person) section 142H has the effect of requiring the FCA to make ring-fencing rules, subsections (1) to (6) apply to the FCA as they apply to the PRA.
Group restructuring powers
142K Cases in which group restructuring powers become exercisable
(1)The appropriate regulator may exercise the group restructuring powers only if it is satisfied that one or more of Conditions A to D is met in relation to a ring-fenced body that is a member of a group.
(2)Condition A is that the carrying on of core activities by the ring-fenced body is being adversely affected by the acts or omissions of other members of its group.
(3)Condition B is that in carrying on its business the ring-fenced body—
(a)is unable to take decisions independently of other members of its group, or
(b)depends on resources which are provided by a member of its group and which would cease to be available in the event of the insolvency of the other member.
(4)Condition C is that in the event of the insolvency of one or more other members of its group the ring-fenced body would be unable to continue to carry on the core activities carried on by it.
(5)Condition D is that the ring-fenced body or another member of its group has engaged, or is engaged, in conduct which is having, or would apart from this section be likely to have, an adverse effect on the advancement by the appropriate regulator—
(a)in the case of the PRA, of the objective in section 2B(3)(c), or
(b)in the case of the FCA, of the continuity objective.
(6)The appropriate regulator may not exercise the group restructuring powers in relation to any person if—
(a)either regulator has previously exercised the group restructuring powers in relation to that person, and
(b)the decision notice in relation to the current exercise is given before the second anniversary of the day on which the decision notice in relation to the previous exercise was given.
(7) In this section and sections 142L to 142Q “ the appropriate regulator ” means—
(a)where the ring-fenced body is a PRA-authorised person, the PRA;
(b)where it is not, the FCA.
142L Group restructuring powers
(1) In this Part “ the group restructuring powers ” means one or more of the powers conferred by this section.
(2)Where the appropriate regulator is the PRA, the powers conferred by this section are as follows—
(a)in relation to the ring-fenced body, power to impose a requirement on the ring-fenced body requiring it to take any of the steps mentioned in subsection (5),
(b)in relation to any member of the ring-fenced body's group which is a PRA-authorised person, power to impose a requirement on the PRA-authorised person requiring it to take any of the steps mentioned in subsection (6),
(c)in relation to any member of the ring-fenced body's group which is an authorised person but not a PRA-authorised person, power to direct the FCA to impose a requirement on the authorised person requiring it to take any of the steps mentioned in subsection (6), and
(d)in relation to a qualifying parent undertaking, power to give a direction under this paragraph to the parent undertaking requiring it to take any of the steps mentioned in subsection (6).
(3)Where the appropriate regulator is the FCA, the powers conferred by this section are as follows—
(a)in relation to the ring-fenced body, power to impose a requirement on the ring-fenced body requiring it to take any of the steps mentioned in subsection (5),
(b)in relation to any member of the ring-fenced body's group which is an authorised person but not a PRA-authorised person, power to impose a requirement on the authorised person requiring it to take any of the steps mentioned in subsection (6),
(c)in relation to any member of the ring-fenced body's group which is a PRA-authorised person, power to direct the PRA to impose a requirement on the authorised person requiring it to take any of the steps mentioned in subsection (6), and
(d)in relation to a qualifying parent undertaking, power to give a direction under this paragraph to the parent undertaking requiring it to take any of the steps mentioned in subsection (6).
(4) A parent undertaking of a ring-fenced body by reference to which the group restructuring powers are exercisable is for the purposes of this Part a “qualifying parent undertaking” if—
(a)it is a body corporate which is incorporated in the United Kingdom and has a place of business in the United Kingdom, and
(b)it is not itself an authorised person.
(5)The steps that the ring-fenced body may be required to take are—
(a)to dispose of specified property or rights to an outside person;
(b)to apply to the court under Part 7 for an order sanctioning a ring-fencing transfer scheme relating to the transfer of the whole or part of the business of the ring-fenced body to an outside person;
(c)otherwise to make arrangements discharging the ring-fenced body from specified liabilities.
(6)The steps that another authorised person or a qualifying parent undertaking may be required to take are—
(a)to dispose of any shares in, or securities of, the ring-fenced body to an outside person;
(b)to dispose of any interest in any other body corporate that is a member of the ring-fenced body's group to an outside person;
(c)to dispose of other specified property or rights to an outside person;
(d)to apply to the court under Part 7 for an order sanctioning a ring-fencing transfer scheme relating to the transfer of the whole or part of the business of the authorised person or qualifying parent undertaking to an outside person.
(7) In subsections (5) and (6) “ outside person ” means a person who, after the implementation of the disposal or scheme in question, will not be a member of the group of the ring-fenced body by reference to which the powers are exercised (whether or not that body is to remain a ring-fenced body after the implementation of the disposal or scheme in question).
(8)It is immaterial whether a requirement to be imposed on an authorised person by the appropriate regulator, or by the other regulator at the direction of the appropriate regulator, is one that the regulator imposing it could impose under section 55L or 55M.
142M Procedure: preliminary notices
(1) If the appropriate regulator proposes to exercise the group restructuring powers in relation to any authorised person or qualifying parent undertaking (“ the person concerned ”), the regulator must give each of the relevant persons a notice (a “preliminary notice”).
(2)The preliminary notice must—
(a)state that it is a preliminary notice,
(b)state that the regulator proposes to exercise the group restructuring powers,
(c)state the action which the regulator proposes to take in the exercise of those powers,
(d)be in writing, and
(e)give reasons for the proposed action (which must include the regulator's reasons for being satisfied as to the matters mentioned in section 142K(1)).
(3)The appropriate regulator must give a copy of the preliminary notice to the Treasury.
(4)The preliminary notice must specify a reasonable period (which may not be less than 14 days) within which any of the relevant persons may make representations to the regulator.
(5)The relevant persons are—
(a)the person concerned,
(b)the ring-fenced body, if not the person concerned, and
(c)any other authorised person who will, in the opinion of the appropriate regulator, be significantly affected by the exercise of the group restructuring powers.
142N Procedure: warning notice and decision notice
(1)If the appropriate regulator has given a preliminary notice under section 142M, it must either—
(a)if, having considered any representations made by any of the relevant persons, it still proposes to exercise the group restructuring powers, give each of the relevant persons a warning notice during the warning notice period, or
(b)before the end of the warning notice period, give each of them a written notice stating that it has decided not to exercise the powers and give a copy of that notice to the Treasury.
(2) The “warning notice period” is the period—
(a)beginning 3 months after the end of the period specified under section 142M(4) as that within which any representations must be made, and
(b)ending 6 months after the end of that period.
(3)Before giving a warning notice under subsection (1)(a), the appropriate regulator must—
(a)give the Treasury a draft of the notice,
(b)provide the Treasury with any information that the Treasury may require in order to decide whether to give their consent, and
(c)obtain the consent of the Treasury.
(4)The action specified in the warning notice may be different from that specified in the preliminary notice if—
(a)the appropriate regulator considers that different action is appropriate as a result of any change in circumstances since the preliminary notice was given, or
(b)the person concerned consents to the change.
(5)The regulator must, in particular, have regard to anything that—
(a)has been done by the person concerned since the giving of the preliminary notice, and
(b)represents action that would have been required in pursuance of the proposals in that notice.
(6)If the regulator decides to exercise the group restructuring powers it must give each of the relevant persons a decision notice.
(7)The decision notice must specify the date or dates by which each of the following must be completed—
(a)any disposal of shares, securities or other property that is required by the notice;
(b)any transfer of liabilities for which the notice requires arrangements to be made.
(8)The giving of consent for the purpose of subsection (4)(b) does not affect any right to refer to the Tribunal the matter to which any decision notice resulting from the warning notice relates.
(9) “ The relevant persons ” has the same meaning as in section 142M.
142O References to Tribunal
(1)A notified person who is aggrieved by—
(a)the imposition by either regulator of a requirement as a result of section 142L(2)(a) or (b) or (3)(a) or (b),
(b)a requirement to be imposed as a result of the giving by one regulator to the other of a direction under section 142L(2)(c) or (3)(c), or
(c)the giving by either regulator of a direction under section 142L(2)(d) or (3)(d),
may refer the matter to the Tribunal.
(2) “ Notified person ” means a person to whom a decision notice under section 142N(6) was given or ought to have been given.
142P Subsequent variation of requirement or direction
(1)A regulator may at any time with the consent of the person concerned vary—
(a)a requirement imposed by it as a result of section 142L(2)(a) or (b) or (3)(a) or (b), or
(b)a direction given by it as a result of section 142L(2)(c) or (d) or (3)(c) or (d).
(2)The person concerned may at any time apply to the appropriate regulator for the variation of—
(a)a requirement imposed by it as a result of section 142L(2)(a) or (b) or (3)(a) or (b), or
(b)a direction given by it as a result of section 142L(2)(c) or (d) or (3)(c) or (d).
(3)Sections 55U, 55V, 55X and 55Z3 apply to an application under subsection (2) as they apply to an application for the variation of a requirement imposed by the appropriate regulator under section 55L or 55M.
142Q Consultation etc. between regulators
(1)Where a notice under section 142M or a warning notice or decision notice under section 142N relates to a requirement to be imposed in pursuance of a direction to be given as a result of section 142L(2)(c) or (3)(c), the appropriate regulator must—
(a)consult the other regulator before giving the notice, and
(b)give a copy of the notice to the other regulator.
(2)The appropriate regulator must consult the other regulator before varying under section 142P a direction given as a result of section 142L(2)(c) or (3)(c).
(3)Directions given by the FCA as a result of section 142L(3)(c) are subject to any directions given to the FCA under section 3I.
142R Relationship with regulators' powers under Parts 4A and 12A
(1)Subsection (2) applies in relation to—
(a)a ring-fenced body which is a member of a mixed group, and
(b)a parent undertaking of such a ring-fenced body.
(2)A regulator may not exercise its general powers in relation to the ring-fenced body or parent undertaking so as to achieve either of the results in subsection (3).
(3)Those results are—
(a)that no existing group member is a parent undertaking of the ring-fenced body;
(b)that the ring-fenced body is not a member of a mixed group.
(4) In subsection (3)(a) “ existing group member ” means a person who is a member of the ring-fenced body's group at the time when the requirement is imposed or the direction given.
(5)Except as provided by subsections (1) to (4), the provisions of sections 142K to 142Q do not limit the general powers of either regulator.
(6) For the purposes of this section, a regulator's “general powers” are its powers under the following provisions—
(a)section 55L or 55M (imposition of requirements in connection with Part 4A permission);
(b)section 192C (power to direct qualifying parent undertaking).
(7)For the purposes of this section, a ring-fenced body is a member of a mixed group if a member of the ring-fenced body's group carries on an excluded activity.
Failure of parent undertaking to comply with direction
142S Power to impose penalty or issue censure
(1) This section applies if a regulator is satisfied that a person who is or has been a qualifying parent undertaking (“P”) has contravened a requirement of a direction given to P by that regulator as a result of section 142L(2)(d) or (3)(d).
(2)The regulator may impose a penalty of such amount as it considers appropriate on—
(a)P, or
(b)any person who was knowingly concerned in the contravention.
(3)The regulator may, instead of imposing a penalty on a person, publish a statement censuring the person.
(4)The regulator may not take action against a person under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the person under section 142T.
(5) “ The limitation period ” means the period of 3 years beginning with the first day on which the regulator knew of the contravention.
(6)For this purpose a regulator is to be treated as knowing of a contravention if it has information from which the contravention can reasonably be inferred.
(7)The requirements that a regulator may be required to impose as a result of a direction under section 142L(2)(c) or (3)(c) include requirements that the regulator would not but for the direction have power to impose.
142T Procedure and right to refer to Tribunal
(1)If a regulator proposes to take action against a person under section 142S, it must give the person a warning notice.
(2)A warning notice about a proposal to impose a penalty must state the amount of the penalty.
(3)A warning notice about a proposal to publish a statement must set out the terms of the statement.
(4)If the regulator decides to take action against a person under section 142S, it must give the person a decision notice.
(5)A decision notice about the imposition of a penalty must state the amount of the penalty.
(6)A decision notice about the publication of a statement must set out the terms of the statement.
(7)If the regulator decides to take action against a person under section 142S, the person may refer the matter to the Tribunal.
142U Duty on publication of statement
After a statement under section 142S(3) is published, the regulator must send a copy of the statement to—
(a)the person in respect of whom it is made, and
(b)any person to whom a copy of the decision notice was given under section 393(4).
142V Imposition of penalties under section 142S: statement of policy
(1)Each regulator must prepare and issue a statement of policy with respect to—
(a)the imposition of penalties under section 142S, and
(b)the amount of penalties under that section.
(2)A regulator's policy in determining what the amount of a penalty should be must include having regard to—
(a)the seriousness of the contravention,
(b)the extent to which the contravention was deliberate or reckless, and
(c)whether the person on whom the penalty is to be imposed is an individual.
(3)A regulator may at any time alter or replace a statement issued under this section.
(4)If a statement issued under this section is altered or replaced, the regulator must issue the altered or replacement statement.
(5)In exercising, or deciding whether to exercise, a power under section 142S(2) in the case of any particular contravention, a regulator must have regard to any statement of policy published under this section and in force at a time when the contravention occurred.
(6)A statement under this section must be published by the regulator concerned in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(7)A regulator may charge a reasonable fee for providing a person with a copy of the statement published under this section.
(8)A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.
(9)Section 192I applies in relation to a statement under this section as it applies in relation to a statement under section 192H.
Pension liabilities
SI 142W Pension liabilities
(1)The Treasury may by regulations require a ring-fenced body to make arrangements for any one or more of the following purposes—
(a) ensuring that, except in prescribed cases, the ring-fenced body cannot become liable to meet, or contribute to the meeting of, pension liabilities which arise in connection with persons' service on or after a date specified in the regulations (“ the specified date ”) in any employment, other than service in an employment in respect of which the employer is a ring-fenced body;
(b)ensuring that, except in prescribed cases, the default of a person other than another ring-fenced body would not result in the ring-fenced body becoming liable to meet, or contribute to the meeting of, pension liabilities arising in connection with persons' service in any employment before the specified date;
(c)to the extent that it is not possible to ensure the result mentioned in paragraph (a) or (b), minimising any potential liability falling within paragraph (a) or (b).
(2)The regulations may make provision enabling the trustees or managers of a relevant pension scheme in respect of which the employer or one of the employers is a ring-fenced body—
(a)to transfer to another relevant pension scheme all or part of the pension liabilities arising in connection with persons' service before the specified date together with all or part of the assets of the scheme, or
(b)to divide the scheme into two or more sections in relation to which prescribed conditions are met.
(3)The regulations may make provision—
(a) enabling a ring-fenced body to apply to the court in a case where the ring-fenced body has been unable to reach agreement with another person (“P”) about the making of arrangements with P on commercial terms for one or more of the purposes in subsection (1), and
(b)enabling the court on such an application to order P to enter into arrangements with the ring-fenced body for those purposes on such terms as the court considers fair and reasonable in the circumstances.
(4)The regulations must provide that any terms specified by the court by virtue of provision made under subsection (3)—
(a)must be terms which, in the court's opinion, represent terms on which the arrangements might be entered into if they were being entered into for commercial reasons between willing parties dealing at arm's length, and
(b)may involve the payment of any sum by instalments.
(5)The regulations may make other provision—
(a)about the making by a ring-fenced body of arrangements for one or more of the purposes in subsection (1);
(b)about any transfer or division falling within subsection (2).
(6)The regulations may in particular—
(a)require a ring-fenced body to cease to participate in a relevant pension scheme unless the scheme is divided into two or more sections in relation to which prescribed conditions are met;
(b)provide that assets or liabilities of a relevant pension scheme may not be transferred under the arrangements to another occupational pension scheme unless the other scheme meets prescribed conditions;
(c)require ring-fenced bodies to establish new occupational pension schemes in prescribed circumstances;
(d)provide that any provision of a relevant pension scheme that might prevent the making of the arrangements, other than a provision requiring the consent of the trustees or managers of the scheme, is not to have effect in prescribed circumstances;
(e)make provision enabling the trustees or managers of a relevant pension scheme, with the consent of the employers in relation to the scheme, to modify the scheme by resolution for the purpose of enabling the arrangements to be made;
(f)require the trustees or managers of a relevant pension scheme or any employer in relation to a relevant pension scheme to give notice of prescribed matters to prescribed persons;
(g)make provision enabling the court, on an application made in accordance with the regulations by a ring-fenced body, if it appears to the court that the trustees or managers of a relevant pension scheme, or an employer in relation to such a scheme, have unreasonably refused their consent to any step that would enable the arrangements to be made, to order that the step may be taken without that consent;
(h)confer exemption from any provision of the regulations in prescribed cases;
(i)confer functions on the PRA;
(j)provide that a ring-fenced body which contravenes a prescribed requirement of the regulations is to be taken to have contravened a requirement imposed by the PRA under this Act;
(k)modify, exclude or apply (with or without modification) any primary or subordinate legislation.
(7)The Treasury may by regulations require an authorised person who will or may be a ring-fenced body or an authorised person who will or may be a member of a ring-fenced body's group to do all it can to obtain from the Pensions Regulator a clearance statement in relation to any arrangements to be made for the purpose of complying with—
(a)regulations under this section, or
(b)any provision made by or under this Part (other than this section) when the provision comes into force.
(8) A “clearance statement” is a statement issued by the Pensions Regulator under any of the following provisions—
(a)section 42 of the Pensions Act 2004 (clearance statements relating to contribution notice under section 38);
(b)section 46 of that Act (clearance statements relating to financial support directions);
(c)Article 38 of the Pensions (Northern Ireland) Order 2005 (clearance statements relating to contribution notices under article 34);
(d)Article 42 of that Order (clearance statements relating to financial support directions).
(9)In relation to a ring-fenced body that is not a PRA-authorised person, references in subsection (6) to the PRA are to be read as references to the FCA.
(10)Regulations under this section may not require ring-fenced bodies to achieve the results mentioned in subsection (1) before 1 January 2026, but this does not prevent the regulations requiring steps to be taken at any time after the regulations come into force.
142X Further interpretative provisions for section 142W
(1)The following provisions have effect for the interpretation of section 142W and this section.
(2) “ Relevant pension scheme ” means an occupational pension scheme that is not a money purchase scheme.
(3) “ Occupational pension scheme ” has the meaning given in section 1 of the Pension Schemes Act 1993 or section 1 of the Pension Schemes (Northern Ireland) Act 1993 and, in relation to such a scheme, “ member ” and “ trustees or managers ” have the same meaning as in Part 1 of the Pensions Act 1995 or Part 2 of the Pensions (Northern Ireland) Order 1995 .
(4) “ Money purchase scheme ” has the meaning given in section 181(1) of the Pension Schemes Act 1993 or section 176(1) of the Pension Schemes (Northern Ireland) Act 1993 .
(5) “ Employer ”, in relation to a relevant pension scheme, means—
(a)a person who is for the purposes of Part 1 of the Pensions Act 1995 or Part 2 of the Pensions (Northern Ireland) Order 1995 an employer in relation to the scheme, and
(b)any other person who has or may have any liability under the scheme.
(6) “ Employment ” has the meaning given in section 181(1) of the Pension Schemes Act 1993 or section 176(1) of the Pension Schemes (Northern Ireland) Act 1993 .
(7) “ Pension liabilities ” means liabilities attributable to or associated with the provision under a relevant pension scheme of pensions or other benefits.
(8) “ The court ” means—
(a)in relation to England and Wales or Northern Ireland, the High Court, and
(b)in relation to Scotland, the Court of Session.
Loss-absorbency requirements
142Y Power of Treasury in relation to loss-absorbency requirements
(1)The Treasury may by order make provision about the exercise by either regulator of its functions under this Act, so far as they are (apart from the order) capable of being exercised in relation to a relevant body so as to require the relevant body—
(a)to issue any debt instrument, or
(b)to ensure that any part of the relevant body's debt consists of debt owed by it in respect of debt instruments, or debt instruments of a particular kind.
(2) A “relevant body” is—
(a)a ring-fenced body,
(b)any other body corporate that has a Part 4A permission relating to the regulated activity of accepting deposits, or
(c)a body corporate that is a member of the group of a body falling within paragraph (a) or (b).
(3) “ Debt instrument ” means—
(a)a bond,
(b)any other instrument creating or acknowledging a debt, or
(c)an instrument giving rights to acquire a debt instrument.
(4)An order under this section may in particular—
(a)require the regulator to exercise its functions so as to require relevant bodies to do either or both of the things mentioned in subsection (1);
(b)limit the extent to which the regulator may require a relevant body's debt to consist of debt owed in respect of debt instruments or of debt instruments of a kind specified in the order;
(c)require the regulator—
(i)to make, or not to make, provision by reference to specified matters, or
(ii)to have regard, or not to have regard, to specified matters;
(d)require the regulator to consult, or obtain the consent of, the Treasury before making rules of a specified description or exercising any other specified function;
(e)impose on the regulator in connection with the exercise of a specified function procedural requirements which would not otherwise apply to the exercise of the function;
(f)refer to a publication issued by a regulator, another body in the United Kingdom or an international organisation, as the publication has effect from time to time.
(5) “ Specified ” means specified in the order.
General
142Z Affirmative procedure in relation to certain orders under Part 9B
(1)This section applies to an order containing provision made under any of the following provisions of this Part—
(a)section 142A(2)(b);
(b)section 142B(2) or (5);
(c)section 142C;
(d)section 142D(2) or (4);
(e)section 142E;
(f)section 142I;
(g)section 142Y.
(2)No order to which this section applies may be made unless—
(a)a draft of the order has been laid before Parliament and approved by a resolution of each House, or
(b)subsection (4) applies.
(3)Subsection (4) applies if an order under 142D(4) or 142E contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without a draft being so laid and approved.
(4)Where this subsection applies the order—
(a)must be laid before Parliament after being made, and
(b)ceases to have effect at the end of the relevant period unless before the end of that period the order is approved by a resolution of each House of Parliament (but without that affecting anything done under the order or the power to make a new order).
(5) The “relevant period” is a period of 28 days beginning with the day on which the order is made.
(6)In calculating the relevant period no account is to be taken of any time during which Parliament is dissolved or prorogued or during which either House is adjourned for more than 4 days.
142Z1 Interpretation of Part 9B
(1)This section has effect for the interpretation of this Part.
(2)Any reference to—
(a)the regulated activity of accepting deposits, or
(b)the regulated activity of dealing in investments as principal,
is to be read in accordance with Schedule 2, taken with any order under section 22.
(3)Any reference to the group restructuring powers is to be read in accordance with section 142L(1).
(4)Any reference to a qualifying parent undertaking is to be read in accordance with section 142L(4).F1212]
[F1213PART 9C Prudential regulation of FCA investment firms
Interpretation
143A FCA investment firms
(1) In this Part, “ FCA investment firm ” means an investment firm that—
(a)is an authorised person within the meaning of section 31(1)(a),
(b)is not for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556), and
(c)has its registered office or, if it has no registered office, its head office in the United Kingdom.
(2)But the following are not FCA investment firms—
(a) a person excluded from the definition of “investment firm” in Article 3(1) of the Financial Services and Markets 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) by paragraph (a) or (b) of that definition;
(b)an investment firm which has a Part 4A permission to carry on regulated activities as an exempt investment firm within the meaning of regulation 8 of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701).
143B Other terms used in this Part
(1)In this Part—
“ authorised parent undertaking ” means a parent undertaking that—
(a)is incorporated in the United Kingdom or has its principal place of business in the United Kingdom, and
(b)is an authorised person;
“ on a consolidated basis ” means as if all members of an FCA investment firm's group are a single FCA investment firm;
“ Directive 2013/36/EU UK law ” means the law of the United Kingdom which was relied on immediately before [F1214 1 January 2022 F1214] to implement the capital requirements directive and its implementing measures as it has effect—
(a)on IP completion day, in the case of rules made by the FCA or the PRA under this Act, and
(b)as amended from time to time, in all other cases;
“ EU tertiary legislation ” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018 ;
“ governance arrangements ” includes organisational structure, lines of responsibility and internal control mechanisms;
“ integrity ”, in relation to the UK financial system, has the meaning given in section 1D;
“ investment firm ” has the meaning given in Article 4(1)(2) of the capital requirements regulation;
“ non-authorised parent undertaking ” means a parent undertaking that—
(a)is incorporated in the United Kingdom or has its principal place of business in the United Kingdom, and
(b)is not an authorised person.
SI (2)The Treasury may by regulations make provision about the meaning of the following terms for the purposes of this Part—
“on a consolidated basis”;
“group”;
“parent undertaking”;
“subsidiary undertaking”.
(3)Regulations under subsection (2) may, among other things, amend, repeal or otherwise modify provisions of this Act.
(4)In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of [F1215 assimilatedF1215] law.
Rules
143C Duty to make rules applying to FCA investment firms cross-notes
(1)In the exercise of its power to make general rules, the FCA must make rules applying to FCA investment firms which impose the following types of prudential requirements—
(a)requirements relating to the types and amounts of capital and liquid assets that such firms must hold in order to manage the risks specified in or under subsection (2);
(b)requirements relating to the management of risks arising from the strength or extent of such firms' relationships with, or direct exposure to, a single client or group of connected clients;
(c)reporting requirements related to requirements described in paragraph (a) or (b);
(d)public disclosure requirements related to requirements described in paragraph (a) or (b);
(e)requirements in respect of governance arrangements related to the risks specified in or under subsection (2);
(f)requirements in respect of remuneration policies and practices related to the risks specified in or under subsection (2).
(2)The risks referred to in subsection (1)(a), (e) and (f) are—
(a)the risks to consumers (as defined in section 1G) arising from FCA investment firms,
(b)the risks to the integrity of the UK financial system arising from FCA investment firms,
(c)the risks to which FCA investment firms are exposed, and
(d)any other risks specified by the Treasury by regulations.
(3)General rules made for the purpose of subsection (1) may, among other things—
(a)impose requirements to be satisfied on an individual basis or on a consolidated basis;
(b)impose requirements relating to the processes for consolidation;
(c)make provision relating to transactions between an FCA investment firm and a member of its group, including provision requiring the disclosure of information;
(d)provide for exceptions from requirements;
(e)make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.
F1216 (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
143D Duty to make rules applying to parent undertakings cross-notes
(1)In the exercise of its power to make general rules, the FCA must make rules applying to authorised parent undertakings of FCA investment firms which impose the following types of prudential requirements—
(a)requirements relating to the types and amounts of capital and liquid assets that such undertakings must hold in order to manage the risks specified in or under subsection (2);
(b)requirements relating to the management of risks arising from the strength or extent of such undertakings' relationships with, or direct exposure to, a single client or group of connected clients;
(c)reporting requirements related to requirements described in paragraph (a) or (b);
(d)public disclosure requirements related to requirements described in paragraph (a) or (b);
(e)requirements in respect of governance arrangements related to the risks specified in or under subsection (2);
(f)requirements in respect of remuneration policies and practices related to the risks specified in or under subsection (2).
(2)The risks referred to in subsection (1)(a), (e) and (f) are—
(a)the risks to consumers (as defined in section 1G) arising from FCA investment firms, from parent undertakings of FCA investment firms and from FCA investment firms belonging to groups,
(b)the risks to the integrity of the UK financial system arising from FCA investment firms, from parent undertakings of FCA investment firms and from FCA investment firms belonging to groups,
(c)the risks to which FCA investment firms are exposed by virtue of their relationship with their parent undertaking, and
(d)any other risks specified by the Treasury by regulations.
(3)The FCA must make rules applying to non-authorised parent undertakings of FCA investment firms which impose requirements described in subsection (1), where such rules appear to it to be necessary or expedient for the purpose of advancing one or more of its operational objectives.
(4)Rules made for the purpose of subsection (1) or under subsection (3) may, among other things—
(a)impose requirements to be satisfied on an individual basis or on a consolidated basis;
(b)impose requirements relating to the processes for consolidation;
(c)make provision relating to transactions between a parent undertaking of an FCA investment firm and a member of its group, including provision requiring the disclosure of information;
(d)provide for exceptions from requirements;
(e)make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.
F1217 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1218 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)Section 137H (rules about remuneration) applies where the FCA makes rules under subsection (3) prohibiting persons, or persons of a specified description, from being remunerated in a specified way as it applies where the FCA makes general rules imposing such a prohibition.
(8)Section 137I (Treasury direction to consider compliance with remuneration policies) applies where the FCA makes rules under subsection (3) requiring non-authorised parent undertakings, or non-authorised parent undertakings of a specified description, to act in accordance with a remuneration policy as it applies where the FCA makes general rules imposing such requirements on authorised persons, but as if—
(a)the references in that section to authorised persons were references to non-authorised parent undertakings of FCA investment firms, and
(b)subsection (7) of that section were omitted.
(9)Section 141A (power to make consequential amendments of references to rules etc) applies to the exercise by the FCA of its power to make, alter or revoke rules under subsection (3) as it applies in relation to the exercise by the FCA of its power to make, alter or revoke rules under Part 9A.
(10)This section is subject to section 143E.
143E Powers to make rules applying to parent undertakings
(1)Subsections (1) and (3) of section 143D do not require the FCA to make rules applying to parent undertakings of FCA investment firms which belong to a group which includes a relevant body, but the FCA may make rules described in those subsections applying to such parent undertakings.
(2) In subsection (1), “ relevant body ” means—
(a)an undertaking (as defined in section 1161(1) of the Companies Act 2006) that has its head office in the United Kingdom and that has permission under Part 4A to accept deposits, other than—
(i)an undertaking that also has permission under Part 4A to effect or carry out contracts of insurance, or
(ii)a credit union within the meaning of section 1 of the Credit Unions Act 1979;
(b)an investment firm that is for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556).
(3)The FCA may make rules applying to parent undertakings of FCA investment firms which impose requirements for the disclosure of information about such undertakings' branches and subsidiary undertakings outside the United Kingdom.
(4)The FCA's powers to make rules under subsections (1) and (3) are powers to do so—
(a)in relation to authorised parent undertakings, in exercise of its power to make general rules, and
(b)in relation to non-authorised parent undertakings, where such rules appear to it to be necessary or expedient for the purpose of advancing one or more of its operational objectives.
(5)Section 143D(4) [F1219 appliesF1219] in relation to rules made by the FCA in exercise of the powers conferred by, or described in, this section as [F1220 it appliesF1220] in relation to rules made in the performance of the FCA's duties under that section.
(6)Section 143D F1221... (7), (8) and (9) apply in relation to rules made under this section applying to non-authorised parent undertakings as they apply in relation to rules made under section 143D(3).
143F Part 9C rules
(1) In this Act, “ Part 9C rules ” means rules made, or to be made, by the FCA—
(a)in the performance of its duties under section 143C or 143D, or
(b)in exercise of the powers conferred by, or described in, section 143E.
(2)The FCA must publish a list of all Part 9C rules in force in the way appearing to the FCA to be best calculated to bring it to the attention of people likely to be affected by the rules.
(3)The FCA's opinion as to whether a rule is a Part 9C rule is conclusive for all purposes.
143G Matters to consider when making Part 9C rules cross-notes
(1)When making Part 9C rules, the FCA must, among other things, have regard to—
(a)any relevant standards set by an international standard-setting body, [F1222 andF1222]
F1223 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1224 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(d)any other matter specified by the Treasury by regulations.
F1225 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)When making Part 9C rules, the FCA must consider, and consult the Treasury about, the likely effect of the rules on relevant equivalence decisions.
(4) For the purpose of this section, an equivalence decision is “relevant” if the Treasury have, by notice in writing, informed the FCA that it is relevant for that purpose.
(5)In this section—
“ equivalence decision ” means a decision as to whether the law and practice of one country or territory is equivalent to the law and practice of another country or territory, either generally or as it relates to a particular matter;
“ territory ” includes the European Union and any other international organisation or authority comprising countries or territories.
(6)This section is subject to section 143I.
143H Explanation to accompany consultation on rules cross-notes
(1)A draft of proposed Part 9C rules published in accordance with section 138I(1)(b) must be accompanied by—
(a)an explanation of the provision that the FCA has considered it appropriate to include in the rules given the risks specified in or under section 143C(2) or 143D(2), and
(b)an explanation of the ways in which having regard to the matters specified in or under section 143G(1) has affected the proposed rules,
(as well as being accompanied by the information listed in section 138I(2)).
(2)If the FCA makes the proposed Part 9C rules, it must publish—
(a)a summary of the purpose of the proposed rules, and
(b)explanations complying with subsection (1),
(as well as the information required by section 138I(4) and (5)).
(3)This section is subject to section 143I.
143I Exceptions from sections 143G and 143H
(1)Sections 143G and 143H do not apply where the FCA makes Part 9C rules—
(a)in order to comply with a direction given by the Financial Policy Committee of the Bank of England under section 9H of the Bank of England Act 1998 (directions requiring macro-prudential measures), or
(b)in order to act in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of the FCA's functions).
(2)Section 143H does not apply in relation to Part 9C rules if the FCA considers that the delay involved in complying with that section would be prejudicial to the interests of consumers (as defined in section 425A).
(3)If the FCA proposes Part 9C rules that change existing Part 9C rules and the changes consist of or include changes which, in the FCA's opinion, are not material—
(a)the explanations described in section 143H(1) are not required in relation to the rules to the extent that they make those changes, but
(b)the draft of the rules must be accompanied by a statement of the FCA's opinion.
(4)If the FCA makes Part 9C rules that change existing Part 9C rules and the changes consist of or include changes which, in the FCA's opinion, are not material—
(a)the summary and explanations described in section 143H(2) are not required in relation to the rules to the extent that they make those changes, but
(b)the FCA must publish a statement of its opinion.
(5)For the purposes of this section, whether a change to Part 9C rules is material is to be determined by the FCA by reference to, among other things, the risks specified in or under section 143C(2) or 143D(2) and the matters specified in or under section 143G(1).
Requirement to have UK parent undertaking
143J Requirement to have UK parent undertaking
(1)This section applies where—
(a)two or more FCA investment firms are subsidiary undertakings of the same parent undertaking,
(b)the parent undertaking's head office is in a country or territory outside the United Kingdom, and
(c)in the FCA's opinion, the law and practice in the other country or territory does not impose requirements on the parent undertaking which have equivalent effect to requirements imposed by Part 9C rules.
(2)Where this section applies, the FCA may exercise its power under section 55L(3) to impose a requirement on the FCA investment firms to secure that a parent undertaking with its head office in the United Kingdom is established.
Imposition of requirements on non-authorised parent undertakings
143K Imposition of requirements on non-authorised parent undertakings
(1)The FCA may, on the application of a non-authorised parent undertaking of an FCA investment firm—
(a)impose a requirement on the parent undertaking,
(b)vary a requirement imposed on the parent undertaking under this section, or
(c)cancel such a requirement.
(2)The FCA may exercise its power under subsection (3) in relation to a non-authorised parent undertaking of an FCA investment firm if it appears to the FCA that—
(a)it is necessary or expedient to do so in order to manage risks specified in or under section 143D(2), and
(b)it is desirable to do so in order to advance one or more of its operational objectives.
(3)The FCA's power under this subsection is a power—
(a)to impose a requirement,
(b)to vary a requirement imposed under this section, or
(c)to cancel such a requirement.
(4)The FCA may refuse an application under subsection (1) if it appears to the FCA that it is desirable to do so in order to advance one or more of the FCA's operational objectives.
(5)A requirement may, in particular, be imposed under this section—
(a)so as to require the parent undertaking to take specified action, or
(b)so as to require the parent undertaking to refrain from taking specified action.
(6)A requirement may be imposed by reference to the parent undertaking's relationship with—
(a)its group, or
(b)other members of its group.
(7)A requirement may refer to the past conduct of the parent undertaking (for example, by requiring the parent undertaking to review or take remedial action in respect of past conduct).
(8)A requirement may be expressed to expire at the end of a specified period, but the imposition of a requirement that expires at the end of a specified period does not affect the FCA's power to impose a new requirement.
(9)A requirement ceases to be in force if the person on whom it is imposed ceases to be a non-authorised parent undertaking of an FCA investment firm.
(10)For the purposes of a provision of this section which refers to the FCA's operational objectives, in relation to the exercise of a power in relation to a particular parent undertaking, it does not matter whether there is a relationship between the parent undertaking and the persons whose interests will be protected by the exercise of the power.
143L Applications under section 143K
(1)An application under section 143K(1) for the imposition or variation of a requirement must contain a statement of the desired requirement or variation.
(2)An application under section 143K(1)—
(a)must be made in such manner as the FCA may direct, and
(b)must contain, or be accompanied by, such other information as the FCA may reasonably require.
(3)At any time after the application is received and before it is determined, the FCA may require the applicant to provide it with such further information as the FCA reasonably considers necessary to enable it to determine the application.
(4)The FCA may require an applicant to provide information which the applicant is required to provide the FCA under this section in such form, or to verify it in such a way, as the FCA may direct.
(5)Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.
143M Determination of applications under section 143K
(1)The FCA must determine an application under section 143K(1)—
(a)if the application is complete, before the end of the period of six months beginning with the day on which the FCA received the application, or
(b)if the application is incomplete, before the end of the period of 12 months beginning with the day on which the FCA received the application.
(2)The applicant may withdraw the application, by giving the FCA a written notice, at any time before the FCA determines it.
(3)If the FCA grants an application under section 143K(1), it must give the applicant a written notice.
(4)The notice must state the date from which the requirement or variation has effect.
143N Refusal of applications under section 143K
(1)If the FCA proposes to refuse an application under section 143K(1), it must give the applicant a warning notice.
(2)If the FCA decides to refuse an application under section 143K(1), it must give the applicant a decision notice.
143O Exercise of own-initiative power under section 143K
(1)The imposition or variation of a requirement by the FCA under section 143K(2) takes effect—
(a)immediately, if the notice given under subsection (3) states that is the case,
(b)on such date as may be specified in the notice, or
(c)if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.
(2)The imposition or variation of the requirement may be expressed to take effect immediately, or on a specified date, only if the FCA reasonably considers that it is necessary for it to take effect immediately or on that date, having regard to the ground on which it is exercising its power under section 143K(2).
(3)If the FCA—
(a)proposes to exercise its power under section 143K(2) so as to impose a requirement on a parent undertaking or to vary a requirement imposed on a parent undertaking, or
(b)exercises that power so as to impose a requirement on a parent undertaking, or to vary a requirement imposed on a parent undertaking, with immediate effect,
it must give the parent undertaking a written notice.
(4)The notice must—
(a)give details of the requirement or its variation,
(b)state the FCA's reasons for imposing or varying the requirement,
(c)inform the parent undertaking that it may make representations to the FCA within the period specified in the notice (whether or not the parent undertaking has referred the matter to the Tribunal),
(d)inform the parent undertaking of when the imposition or variation of the requirement takes effect, and
(e)inform the parent undertaking of its right to refer the matter to the Tribunal.
(5)The FCA may extend the period allowed under the notice for making representations.
(6)If, having considered any representations made by the parent undertaking, the FCA decides—
(a)to impose the requirement or vary the requirement in the way proposed, or
(b)if the requirement has been imposed or varied, not to rescind its imposition or variation,
it must give the parent undertaking a written notice.
(7)A notice under subsection (6) must inform the parent undertaking of its right to refer the matter to the Tribunal.
(8)If, having considered any representations made by the parent undertaking, the FCA decides—
(a)not to impose the requirement or vary the requirement in the way proposed,
(b)to impose a different requirement or vary the requirement in a different way, or
(c)to rescind a requirement or variation which has effect,
it must give the parent undertaking a written notice.
(9)A notice under subsection (8)(b) must comply with subsection (4).
(10)If a notice under this section informs a person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure for such a reference.
(11)For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
143P Right to refer matters to the Tribunal
(1)An applicant who is aggrieved by the determination of an application under section 143K(1) may refer the matter to the Tribunal.
(2)A parent undertaking aggrieved by the exercise by the FCA of its power under section 143K(2) to impose a requirement on the parent undertaking, or vary a requirement imposed on the parent undertaking, may refer the matter to the Tribunal.
143Q Assets requirements
(1) This section makes provision about a requirement imposed on a non-authorised parent undertaking of an FCA investment firm (“N”) under section 143K—
(a)prohibiting the disposal of, or other dealing with, any of N's assets (whether in the United Kingdom or elsewhere) or restricting such disposals or dealings, or
(b)requiring that some or all of N's assets, or some or all assets belonging to consumers (as defined in section 1G) but held by N or to N's order, must be transferred to and held by a trustee approved by the FCA.
(2)If the FCA—
(a)imposes a requirement described in subsection (1)(a), and
(b)gives notice of the requirement to an institution with whom N keeps an account,
the notice has the effects set out in subsection (3).
(3)Those effects are that—
(a)the institution does not act in breach of a contract with N if, having been instructed by N (or on N's behalf) to transfer a sum or otherwise make a payment out of N's account, it refuses to do so in the reasonably held belief that complying with the instruction would be incompatible with the requirement, and
(b)if the institution complies with such an instruction, it is liable to pay to the FCA an amount equal to the amount transferred from, or otherwise paid out of, N's account in contravention of the requirement.
(4)If the FCA imposes a requirement described in subsection (1)(b), no assets held by a person as trustee in accordance with the requirement may, while the requirement is in force, be released or dealt with except with the consent of the FCA.
(5)If, while a requirement described in subsection (1)(b) is in force, N creates a charge over any assets of N held in accordance with the requirement, the charge is (to the extent that it confers security over the assets) void against the liquidator and N's creditors.
(6)Assets held by a person as trustee are to be taken to be held by the trustee in accordance with a requirement mentioned in subsection (1)(b) only if—
(a)N has given the trustee a written notice that those assets are to be held by the trustee in accordance with the requirement, or
(b)they are assets into which assets to which paragraph (a) applies have been transposed by the trustee on the instruction of N.
(7)A person who contravenes subsection (4) commits an offence and is liable—
(a)on summary conviction in England and Wales, to a fine;
(b)on summary conviction in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.
(8)In this section, references to imposing a requirement (however expressed) include imposing a requirement by varying an existing requirement.
(9) In this paragraph, “ charge ” includes a mortgage (or, in Scotland, a security over property).
(10)Subsections (4) and (6) do not affect any equitable interest or remedy in favour of a person who is a beneficiary of a trust as a result of a requirement described in subsection (1)(b).
Control of managers etc of non-authorised parent undertakings
143R Managers of non-authorised parent undertakings
A non-authorised parent undertaking of an FCA investment firm must take reasonable care to ensure that members of its management body—
(a)are of sufficiently good repute, and
(b)possess sufficient knowledge, skills and experience to perform their duties effectively.
143S Part 9C prohibition orders
(1)Subsection (2) applies where it appears to the FCA that an individual—
(a)is not of sufficiently good repute, or
(b)does not possess sufficient knowledge, skills and experience,
to perform a function in relation to an activity carried on by a non-authorised parent undertaking of an FCA investment firm.
(2) The FCA may make an order (“a Part 9C prohibition order”) prohibiting the individual from performing the function.
(3)A Part 9C prohibition order may relate to—
(a)all functions in relation to an activity carried on by a non-authorised parent undertaking of an FCA investment firm, or
(b)a function specified in the order or of a description specified in the order.
(4)A Part 9C prohibition order may relate to—
(a)all activities of a non-authorised parent undertaking of an FCA investment firm, or
(b)an activity specified in the order or of a description specified in the order.
(5)A Part 9C prohibition order may relate to—
(a)all non-authorised parent undertakings of FCA investment firms, or
(b)an undertaking specified, or within a description specified, in the order.
(6)A non-authorised parent undertaking of an FCA investment firm must take reasonable care to ensure that none of its functions is performed by a person who is prohibited from performing that function by a Part 9C prohibition order.
143T Procedure for making a Part 9C prohibition order
(1)If the FCA proposes to make a Part 9C prohibition order it must give the individual to whom the order would apply a warning notice.
(2)The warning notice must set out the terms of the prohibition.
(3)If the FCA decides to make a Part 9C prohibition order it must give the individual to whom the order applies a decision notice.
(4)The decision notice must—
(a)name the individual to whom the Part 9C prohibition order applies, and
(b)set out the terms of the order.
(5)If the FCA decides to make a Part 9C prohibition order, the individual to whom the order applies may refer the matter to the Tribunal.
143U Varying and withdrawing a Part 9C prohibition order
(1)The FCA may vary or revoke a Part 9C prohibition order on the application of the individual named in the order.
(2)On an application for the variation or revocation of a Part 9C prohibition order—
(a)if the FCA decides to grant the application, it must give the applicant written notice of its decision,
(b)if the FCA proposes to refuse the application, it must give the applicant a warning notice, and
(c)if the FCA decides to refuse the application, it must give the applicant a decision notice.
(3)If the FCA gives the applicant a decision notice under subsection (2)(c), the applicant may refer the matter to the Tribunal.
143V Offence of breaching a Part 9C prohibition order
(1)An individual who performs a function, or agrees to perform a function, in breach of a Part 9C prohibition order commits an offence.
(2)An individual who commits an offence under this section is liable—
(a)on summary conviction in England and Wales, to a fine, and
(b)on summary conviction in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.
(3)In proceedings for an offence under this section, it is a defence for the individual to show that they took all reasonable precautions and exercised all due diligence to avoid committing the offence.
Disciplinary measures for non-authorised parent undertakings
143W Disciplinary measures
(1)This section applies if the FCA is satisfied that a non-authorised parent undertaking of an FCA investment firm has contravened—
(a)a provision of Part 9C rules,
(b)a requirement imposed under section 143K,
(c)section 143R, or
(d)section 143S(6).
(2)The FCA may impose a penalty of such amount as it considers appropriate on any of the following—
(a)the non-authorised parent undertaking;
(b)a person who was knowingly concerned in the contravention.
(3)The FCA may (instead of or in addition to imposing a penalty under subsection (2)) publish a statement to the effect that the person has contravened, or been knowingly concerned in a contravention of, a provision of Part 9C rules.
(4)Subsection (5) applies to—
(a)a member of the management body of the non-authorised parent undertaking, or
(b)a person not falling within paragraph (a) who is an employee of the non-authorised parent undertaking,
who was, at any time, knowingly concerned in the contravention.
(5)The FCA may impose, for such period as it considers appropriate, restrictions (including a ban) on the exercise by the person of functions of an FCA investment firm or a parent undertaking of an FCA investment firm.
(6)The FCA may—
(a)vary a restriction imposed under subsection (5) so as to reduce the period for which it has effect or otherwise to limit its effect, or
(b)cancel the restriction.
(7)The FCA may not take action against a person under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the person under section 143X.
(8) In subsection (7), “ the limitation period ” means the period of six years beginning with the first day on which the FCA knew of the contravention.
(9)For the purpose of subsection (8), the FCA is to be treated as knowing of a contravention if it has information from which the contravention can reasonably be inferred.
(10) In this section, “ management body ” means the board of directors or, if there is no such board, the equivalent body responsible for the management of the undertaking concerned.
(11) The reference in subsection (4) to an employee of a person (“P”) includes a person who—
(a)personally provides, or is under an obligation personally to provide, services to P under an arrangement made between P and the person providing the services or another person, and
(b)is subject to (or to the right of) supervision, direction or control by P as to the manner in which those services are provided.
143X Procedure for disciplinary measures
(1)If the FCA proposes to take action against a person under section 143W(2), (3) or (5) it must give the person a warning notice.
(2)A warning notice about a proposal to impose a penalty must state the amount of the penalty.
(3)A warning notice about a proposal to publish a statement must set out the terms of the statement.
(4)A warning notice about a proposal to impose a restriction under section 143W(5) must state—
(a)the terms of the restriction, and
(b)the period for which the restriction is to have effect.
(5)If the FCA decides to take action against a person under section 143W(2), (3) or (5) it must give the person a decision notice.
(6)A decision notice about the imposition of a penalty must state the amount of the penalty.
(7)A decision notice about the publication of a statement must state the terms of the statement.
(8)After the statement is published, the FCA must send a copy of the statement to—
(a)the person in respect of whom it is made, and
(b)any person to whom a copy of the decision notice was given under section 393(4).
(9)A decision notice about the imposition of a restriction under section 143W(5) must state—
(a)the terms of the restriction, and
(b)the period for which the restriction is to have effect.
(10)If the FCA decides to take action against a person under section 143W(2), (3) or (5), the person may refer the matter to the Tribunal.
(11)If the FCA decides to vary or cancel a restriction under section 143W(6), it must give written notice of its decision to the applicant.
143Y Statement of policy for penalties under section 143W
(1)The FCA must prepare and issue a statement of policy with respect to—
(a)the imposition of penalties under section 143W, and
(b)the amount of penalties under that section.
(2)The FCA's policy in determining what the amount of a penalty should be must include having regard to—
(a)the seriousness of the contravention,
(b)the extent to which the contravention was deliberate or reckless, and
(c)whether the person on whom the penalty is to be imposed is an individual.
(3)The FCA may at any time alter or replace a statement issued under this section.
(4)If a statement issued under this section is altered or replaced, the FCA must issue the altered or replacement statement.
(5)In exercising, or deciding whether to exercise, a power under section 143W(2) in the case of any particular contravention, the FCA must have regard to any statement of policy published under this section and in force at a time when the contravention occurred.
(6)A statement under this section must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
(7)The FCA must, without delay, give the Treasury a copy of any statement which it publishes under this section.
(8)The FCA may charge a reasonable fee for providing a person with a copy of a statement published under this section.
143Z Procedure for statement of policy
(1)Before issuing a statement of policy under section 143Y, the FCA must publish a draft of the proposed statement in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
(2)The draft must be accompanied by notice that representations about the proposal may be made to the FCA within a specified time.
(3)Before issuing the proposed statement, the FCA must have regard to any representations made to it in accordance with subsection (2).
(4)If the FCA issues the proposed statement, it must publish an account in general terms of—
(a)the representations made to it in accordance with subsection (2), and
(b)its response to them.
(5)If the statement differs from the draft published under subsection (1) in a way which is, in the FCA's opinion, significant, the FCA must publish details of the difference (in addition to complying with subsection (4)).
(6)The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
(7)This section also applies to a proposal to alter or replace a statement.F1213]
F1226PART 9D Prudential regulation of credit institutions etc
Interpretation
144A CRR rules
(1) In this Act, “ CRR rules ” means rules of a type described in subsection (2) to the extent that they make provision about a matter described in subsection (3).
(2)The types of rules are—
(a)general rules made, or to be made, by the PRA applying to CRR firms or a description of CRR firm;
(b)rules made, or to be made, under section 192XA.
(3)The matters are any matter that is the subject of—
(a)a relevant provision of the capital requirements regulation, or
(b)a CRR Basel standard.
(4) For the purposes of subsection (3)(a), a provision is “relevant” if—
(a)F1227it has been or may be revoked by regulations made under section 3(1) of the Financial Services Act 2021, ...
(b)it has been revoked by regulations made under section 3(3) or (5) of that Act [F1228, or
(c)it has been or may be revoked by section 1 of the Financial Services and Markets Act 2023.F1228]
(5)In subsection (3)—
(a)the reference to a matter that is the subject of a provision of the capital requirements regulation includes a matter that is the subject of an instrument made under the provision, and
(b)the reference to a matter that is the subject of a CRR Basel standard includes such a matter as it relates to any CRR firm (even where the standard in question does not apply to all CRR firms).
144B Terms used in this Part
(1)In this Part—
“ CRR Basel standard ” has the meaning given in section 4 of the Financial Services Act 2021 ;
“ CRR firm ” has the same meaning as in the capital requirements regulation;
“ EU tertiary legislation ” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018 .
(2)In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of [F1229assimilatedF1229] law.
Making CRR rules
144C Matters to consider when making CRR rules cross-notes
(1)When making CRR rules, the PRA must, among other things, have regard to—
(a)relevant standards recommended by the Basel Committee on Banking Supervision from time to time,
(b)the likely effect of the rules on the relative standing of the United Kingdom as a place for internationally active credit institutions and investment firms to be based or to carry on activities,
(c)the likely effect of the rules on the ability of CRR firms to continue to provide finance to businesses and consumers in the United Kingdom on a sustainable basis in the medium and long term,
(d)the target in section 1 of the Climate Change Act 2008 (carbon target for 2050), and
(e)any other matter specified by the Treasury by regulations.
(2)For the purposes of subsection (1)(b), the PRA must consider the United Kingdom's standing in relation to the other countries and territories in which, in its opinion, internationally active credit institutions and investment firms are most likely to choose to be based or carry on activities.
(3)When making CRR rules, the PRA must consider, and consult the Treasury about, the likely effect of the rules on relevant equivalence decisions.
(4) For the purpose of this section, an equivalence decision is “relevant” if the Treasury have, by notice in writing, informed the PRA that it is relevant for that purpose.
(5)In this section—
“ consumer ” means an individual who is acting for purposes outside those of any trade, business or profession carried on by the individual;
“ equivalence decision ” means a decision as to whether the law and practice of one country or territory is equivalent to the law and practice of another country or territory, either generally or as it relates to a particular matter;
“ territory ” includes the European Union and any other international organisation or authority comprising countries or territories.
(6)This section is subject to section 144E.
144D Explanation to accompany consultation on CRR rules cross-notes
(1)A draft of proposed CRR rules published in accordance with section 138J(1)(b) must be accompanied by an explanation of the ways in which having regard to the matters specified in or under section 144C(1) has affected the proposed rules (as well as being accompanied by the information listed in section 138J(2)).
(2)If the PRA makes the proposed CRR rules, it must publish—
(a)a summary of the purpose of the proposed rules, and
(b)an explanation complying with subsection (1),
(as well as the information required by section 138J(4) and (5)).
(3)This section is subject to section 144E.
144E Exceptions from sections 144C and 144D etc cross-notes
(1)Sections 144C and 144D do not apply where the PRA makes CRR rules—
(a)in order to comply with a direction given by the Financial Policy Committee of the Bank of England under section 9H of the Bank of England Act 1998 (directions requiring macro-prudential measures), or
(b)in order to act in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of the PRA's functions).
(2) Section 144C does not apply where the PRA makes CRR rules to the extent that they make provision (“CRR restatement provision”) reproducing without any changes which, in the PRA's opinion, are material—
(a)a provision of the capital requirements regulation as it had effect immediately before it was revoked by regulations made under section 3 of the Financial Services Act 2021, or
(b)a provision of an instrument made under the capital requirements regulation as it had effect immediately before it was revoked by such regulations.
(3)The following do not apply in relation to CRR rules to the extent that they make CRR restatement provision—
(a)section 138J, other than subsection (1)(a),
(b)section 138K, and
(c)section 144D,
but, if it makes rules making such provision, the PRA must publish a statement of which provisions of the capital requirements regulation, or of the instrument made under that regulation, are reproduced and what changes (if any) are made.
(4)Section 144D does not apply in relation to CRR rules if the PRA considers that the delay involved in complying with that section would be prejudicial to the safety and soundness of PRA-authorised persons.
(5)If the PRA proposes CRR rules that change existing CRR rules and the changes consist of or include changes which, in the PRA's opinion, are not material—
(a)the explanation described in section 144D(1) is not required in relation to the rules to the extent that they make those changes, but
(b)the draft of the rules must be accompanied by a statement of the PRA's opinion.
(6)If the PRA makes CRR rules that change existing CRR rules and the changes consist of or include changes which, in the PRA's opinion, are not material—
(a)the summary and explanation described in section 144D(2) are not required in relation to the rules to the extent that they make those changes, but
(b)the PRA must publish a statement of its opinion.
(7)For the purposes of this section, whether a change is material is to be determined by the PRA by reference to, among other things, the matters specified in or under section 144C(1).
F1230144F Power to consequentially amend enactments
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Content of CRR rules
144G Disapplication or modification of CRR rules in individual cases
(1)This section applies to a CRR rule if, or to the extent that, CRR rules provide for it to apply to the rule.
(2)The PRA may, on the application of or with the consent of a person who is subject to CRR rules, give the person a permission that enables the person—
(a)not to apply the CRR rule, or
(b)to apply the CRR rule with the modifications specified in the permission.
(3)The PRA may—
(a)give permission under this section subject to conditions, and
(b)revoke or vary permission under this section.
144H Relationship with the capital requirements regulation
(1)CRR rules may make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.
F1226 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) In this section, “ Directive 2013/36/EU UK law ” means the law of the United Kingdom which was relied on immediately before [F1231 1 January 2022 F1231] to implement the capital requirements directive and its implementing measures as it has effect—
(a)on IP completion day, in the case of rules made by the PRA or the FCA under this Act, and
(b)as amended from time to time, in all other cases.
case F1040Part X Rules and Guidance
F1040Chapter I Rule-making Powers
notecase F1040138 General rule-making power.
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notecase F1040139 Miscellaneous ancillary matters.
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F1040139A General rules about remuneration
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F1040139B Rules about recovery plans
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F1040139C Rules about resolution plans
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F1040139D Sections 139B and 139C: interpretation
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F1040139E Rules about recovery and resolution plans: supplementary provision
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F1040139F Special provision in relation to resolution plans
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F1040140 Restriction on managers of [F1232certain collective investment schemesF1232] .
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note F1040141 Insurance business rules.
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note F1040142 Insurance business: regulations supplementing Authority’s rules.
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note F1040143 Endorsement of codes etc.
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F1040 Specific rules
note F1040144 Price stabilising rules.
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notecase F1040145 Financial promotion rules.
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case F1040146 Money laundering rules.
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notecase F1040147 Control of information rules.
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F1040 Modification or waiver
notecase F1040148 Modification or waiver of rules.
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F1040 Contravention of rules
notecase F1040149 Evidential provisions.
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notecase F1040150 Actions for damages.
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notecase F1040151 Limits on effect of contravening rules.
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F1040 Procedural provisions
note F1040152 Notification of rules to the Treasury.
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notecase F1040153 Rule-making instruments.
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F1040154 Verification of rules.
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notecase F1040155 Consultation.
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notecase F1040156 General supplementary powers.
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F1040Chapter II Guidance
notecase F1040157 Guidance.
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case F1040158 Notification of guidance to the Treasury.
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F1040158A Guidance on outsourcing by investment firms and credit institutions
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F1040Chapter III Competition Scrutiny
F1040159 Interpretation.
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notecase F1040160 Reports by [F1233OFTF1233] .
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note F1040161 Power of OFT to request information.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1040162 Consideration by Competition Commission.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase F1040163 Role of the Treasury.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1040164 The Competition Act 1998.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
case Part XI Information Gathering and Investigations cross-notes
Powers to gather information
notecase 165 [F1234RegulatorsF1234] power to require information [F1235: authorised persons etcF1235] . cross-notes
(1)[F1236 Either regulatorF1236] may, by notice in writing given to an authorised person, require him—
(a)to provide specified information or information of a specified description; or
(b)to produce specified documents or documents of a specified description.
(2)The information or documents must be provided or produced—
(a)before the end of such reasonable period as may be specified; and
(b)at such place as may be specified.
(3)An officer who has written authorisation from the [F1237regulatorF1237] to do so may require an authorised person without delay—
(a)to provide the officer with specified information or information of a specified description; or
(b)to produce to him specified documents or documents of a specified description.
(4)This section applies only to
[F1238 (a)F1238] information and documents reasonably required in connection with the exercise by [F1239either regulatorF1239] of functions conferred on it by or under this Act [F1240, and
(b)in relation to the exercise by the PRA of the powers conferred by subsections (1) and (3), information and documents reasonably required by the Bank of England in connection with the exercise by the Bank of its functions in pursuance of its financial stability objective.F1240]
(5)[F1241 The regulator in questionF1241] may require any information provided under this section to be provided in such form as it may reasonably require.
(6)[F1242 The regulator in questionF1242] may require—
(a)any information provided, whether in a document or otherwise, to be verified in such manner, or
(b)any document produced to be authenticated in such manner,
as it may reasonably require.
(7)The powers conferred by subsections (1) and (3) may also be [F1243exercised—
(a)by either regulator, to impose requirements on a person who is connected with an authorised person;
[F1244 (aa)by the FCA, to impose requirements on a person who is or has been subject to a relevant Part 5A requirement;F1244]
(b)by the FCA, to impose requirements on an operator, trustee or depositary of a scheme recognised under section F1245... [F1246 271A orF1246] 272 who is not an authorised person;
(c)by the FCA, to impose requirements on a recognised investment exchange;
(d)by the FCA, to impose requirements on a person who is connected with a recognised investment exchange.F1243]
[F1247 (da)by the FCA, to impose requirements on a person who provides, or has provided, a service to an FCA investment firm or to a relevant parent undertaking of such a firm;F1247]
[F1248 (e)by either regulator, to impose requirements on a person who provides any service to an insurance undertaking [F1249 or reinsurance undertakingF1249] .F1248]
[F1250 (7A)For the purposes of the exercise by virtue of subsection (7)(aa) of the powers conferred by subsections (1) and (3) in relation to a person who is not an authorised person, the reference in subsection (4)(a) to functions conferred by or under this Act is to be read as referring only to functions so conferred which relate to the carrying on of a designated activity.F1250]
(8) “ Authorised person ” includes a person who was at any time an authorised person but who has ceased to be an authorised person.
F1251 (8A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9) “ Officer ” means an officer of [F1252 the regulator exercising the power F1252] and includes a member of [F1253 that regulator's F1253] staff or an agent of [F1254 that regulator F1254] .
(10) “ Specified ” means—
(a)in subsections (1) and (2), specified in the notice; and
(b)in subsection (3), specified in the authorisation.
(11) For the purposes of this section, a person is connected with [F1255 another person F1255] (“ A ”) if he is or has at any relevant time been—
(a)a member of A’s group;
(b)a controller of A;
(c)F1256any other member of a partnership of which A is a member; ...
(d)in relation to A, a person mentioned in Part I of Schedule 15 [F1257(reading references in that Part to the authorised person as references to A)F1257][F1258 ; or
(e)involved in the administration of any trust arrangement relating to a funeral plan contract entered into or carried out by A.F1258]
[F1259 (12)In subsection (7)(b), the reference to a scheme that is recognised includes a scheme a part of which is recognised.F1259]
[F1260 (13) In this section, “ funeral plan contract ” has the same meaning as in article 59(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 . F1260]
[F1261165A [F1262PRA'sF1262] power to require information: financial stability
(1)The [F1263 PRAF1263] may, by notice in writing given to a person to whom this section applies, require the person—
(a)to provide specified information or information of a specified description; or
(b)to produce specified documents or documents of a specified description.
(2)This section applies to—
(a)a person who has a legal or beneficial interest in any of the assets of a relevant investment fund;
(b)a person who is responsible for the management of a relevant investment fund;
(c) a person (a “service provider”) who provides any service to an authorised person;
(d)a person prescribed by an order made by the Treasury or any person of a description prescribed by such an order (and see also section 165C);
(e)a person who is connected with a person to whom this section applies as a result of any of the above paragraphs.
(3)This section applies only to
[F1264 (a)F1264] information and documents that the [F1263 PRAF1263] considers are, or might be, relevant to the stability of one or more aspects of the dfnUK financial system [F1265 , and
(b)information and documents reasonably required by the Bank of England in connection with the exercise by the Bank of its functions in pursuance of its financial stability objective.F1265]
(4)A notice may be given to a service provider, or to a person who is connected with a service provider, only if the [F1263 PRAF1263] considers that—
(a)the service or the way in which it (or any part of it) is provided, or
(b)any failure to provide the service (or any part of it),
poses, or would be likely to pose, a serious threat to the stability of the dfnUK financial system.
(5)Information or documents required under this section must be provided or produced—
(a)before the end of such reasonable period as may be specified; and
(b)at such place as may be specified.
(6)The [F1263 PRAF1263] may require any information provided under this section to be provided in such form as it may reasonably require.
(7)The [F1263 PRAF1263] may require—
(a)any information provided, whether in a document or otherwise, to be verified in such manner as it may reasonably require; or
(b)any document produced to be authenticated in such manner as it may reasonably require.
F1266 (7A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8)In this section—
“ management ” includes any of the activities listed in [F1267 Schedule 6 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 F1267] ;
“ relevant investment fund ” means an investment fund whose assets consist of or include financial instruments which—
(a)are traded in the United Kingdom; or
(b)were issued by a body incorporated in the United Kingdom;
“ service ” includes facility;
“ specified ” means specified in the notice.
(9) For the purposes of the definition of “relevant investment fund”—
(a)arrangements may constitute an investment fund even if there is only one person participating in the arrangements; and
(b)the reference to financial instruments has the [F1268 same meaning as in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (see article 3(1) of that Order).F1268]
(10) For the purposes of this section a person is connected with another person (“A”) if the person is or has at any relevant time been—
(a)a member of A's group;
(b)a controller of A;
(c)any other member of a partnership of which A is a member; or
(d)in relation to A, a person mentioned in Part 1 of Schedule 15 (reading references in that Part to the authorised person as references to A).
165B Safeguards etc in relation to exercise of power under section 165A
(1)If the [F1269 PRAF1269] proposes to impose a requirement on a person under section 165A, it must give the person a notice in writing warning the person that the [F1269 PRAF1269] is proposing to impose the requirement.
(2)The notice under subsection (1) must—
(a)give the [F1270 PRA'sF1270] reasons for proposing to impose the requirement; and
(b)specify a reasonable period within which the person may make representations to the [F1269 PRAF1269] .
(3)The [F1269 PRAF1269] must then decide, within a reasonable period, whether to impose the requirement.
(4)Subsections (1) to (3) do not apply in any case where the [F1269 PRAF1269] is satisfied that it is necessary for the information or documents to be provided or produced without delay.
(5)If the [F1269 PRAF1269] imposes a requirement on a person under section 165A, the notice under that section must give the [F1270 PRA'sF1270] reasons for imposing the requirement.
(6)The [F1269 PRAF1269] must prepare a statement of its policy with respect to the exercise of the power conferred by section 165A.
(7)The statement requires the approval of the Treasury.
(8)If the Treasury approve the statement, the [F1269 PRAF1269] must publish it.
(9)The power conferred by section 165A may not be exercised before the statement has been published.
165C Orders under section 165A(2)(d)
[F1271 (1)The Treasury may make an order under section 165A(2)(d) only if either or both of the following conditions is met in relation to the provision made by the order.
(1A)Condition A is that the Treasury consider that—
(a)the activities carried on by the prescribed person or persons of the prescribed description, or the way in which those activities (or any part of them) are carried on, or
(b)any failure to carry on those activities (or any part of them),
pose, or would be likely to pose, a serious threat to the stability of the dfnUK financial system.
(1B)Condition B is that the provision implements all or part of a recommendation made by the Financial Policy Committee of the Bank of England under section 9P of the Bank of England Act 1998.F1271]
(2)Subject as follows, an order under section 165A(2)(d) may not be made unless a draft of the order has been laid before, and approved by a resolution of, each House of Parliament.
(3)Subsection (2) does not apply in any case where the Treasury are satisfied that it is necessary to make an order under section 165A(2)(d) without laying a draft for approval.
(4)In that case, the order—
(a)must be laid before Parliament after being made; and
(b)ceases to have effect at the end of the relevant period unless before the end of that period it is approved by a resolution of each House of Parliament.
(5)If an order ceases to have effect as a result of subsection (4)(b) that does not affect—
(a)anything done under it; or
(b)the power to make a new one.
(6) “ Relevant period ” means a period of 28 days beginning with the day on which the order is made.
(7)In calculating the relevant period no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.
(8)If a statutory instrument containing an order under section 165A(2)(d) would, apart from this subsection, be treated as a hybrid instrument for the purposes of the Standing Orders of either House of Parliament, it is to proceed in that House as if it were not a hybrid instrument.F1261]
notecase [F1272166 Reports by skilled persons. cross-notes
(1) This section applies where either regulator has required or could require a person to whom subsection (2) applies (“ the person concerned ”) to provide information or produce documents with respect to any matter (“the matter concerned”).
(2)This subsection applies to—
(a) an authorised person (“A”),
(b)any other member of A's group,
(c)a partnership of which A is a member, or
(d)a person who has at any relevant time been a person falling within paragraph (a), (b) or (c),
who is, or was at the relevant time, carrying on a business.
(3)The regulator mentioned in subsection (1) may either—
(a)by notice in writing given to the person concerned, require the person concerned to provide the regulator with a report on the matter concerned, or
(b)itself appoint a person to provide the regulator with a report on the matter concerned.
(4)When acting under subsection (3)(a), the regulator may require the report to be in such form as may be specified in the notice.
(5)The regulator must give notice of an appointment under subsection (3)(b) to the person concerned.
(6)The person appointed to make a report—
(a)must be a person appearing to the regulator to have the skills necessary to make a report on the matter concerned, and
(b)where the appointment is to be made by the person concerned, must be a person nominated or approved by the regulator.
(7)It is the duty of—
(a)the person concerned, and
(b)any person who is providing (or who has at any time provided) services to the person concerned in relation to the matter concerned,
to give the person appointed to prepare a report all such assistance as the appointed person may reasonably require.
(8)The obligation imposed by subsection (7) is enforceable, on the application of the regulator in question, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.
(9)A regulator may make rules providing for expenses incurred by it in relation to an appointment under subsection (3)(b) to be payable as a fee by the person concerned.
(10)The powers conferred by this section may also be exercised by the FCA in relation to a person to whom subsection [F1273 (10A),F1273] (11) [F1274 , (12) or (13)F1274] applies, (and references to the person concerned are to be read accordingly).
[F1275 (10A)This subsection applies to a person who is or has been subject to a relevant Part 5A requirement.F1275]
(11)This subsection applies to—
(a) a recognised investment exchange (“A”),
(b)any other member of A's group,
(c)a partnership of which A is a member, or
(d)a person who has at any time been a person falling within paragraph (a), (b) or (c),
who is, or was at the relevant time, carrying on a business.
[F1276 (12)This subsection applies to a person who provides, or has provided, a service to an FCA investment firm or to a relevant parent undertaking of such a firm.F1276]
[F1277 (13)This subsection applies to a person who is or has at any relevant time been involved in the administration of any trust arrangement relating to a funeral plan contract entered into or carried out by an authorised person.
(14) In this section, “ funeral plan contract ” has the same meaning as in article 59(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 . F1277,F1272]]
[F1278166A Appointment of skilled person to collect and update information cross-notes
(1)This section applies if either regulator considers that an authorised person has contravened a requirement in rules made by that regulator to collect, and keep up to date, information of a description specified in the rules.
(2)The regulator may either—
(a)require the authorised person to appoint a skilled person to collect or update the information, or
(b)itself appoint a skilled person to do so.
(3)References in this section to a skilled person are to a person—
(a)appearing to the regulator to have the skills necessary to collect or update the information in question, and
(b)where the appointment is to be made by the authorised person, nominated or approved by the regulator.
(4)The regulator must give notice of an appointment under subsection (2)(b) to the authorised person.
(5)The skilled person may require any person to provide all such assistance as the skilled person may reasonably require to collect or update the information in question.
(6)A requirement imposed under subsection (5) is enforceable, on the application of the regulator in question, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.
(7) A contractual or other requirement imposed on a person (“P”) to keep any information in confidence does not apply if—
(a)the information is or may be relevant to anything required to be done as a result of this section,
(b)an authorised person or a skilled person requests or requires P to provide the information for the purpose of securing that those things are done, and
(c)the regulator in question has approved the making of the request or the imposition of the requirement before it is made or imposed.
(8)An authorised person may provide information (whether received under subsection (7) or otherwise) that would otherwise be subject to a contractual or other requirement to keep it in confidence if it is provided for the purposes of anything required to be done as a result of this section.
(9)A regulator may make rules providing for expenses incurred by it in relation to an appointment under subsection (2)(b) to be payable as a fee by the authorised person.
[F1279 (9A)The powers conferred by this section may also be exercised by the FCA in relation to a recognised investment exchange (and references to an authorised person are to be read accordingly).F1279]
[F1280 (9B)The powers conferred by this section may also be exercised by the FCA in relation to a person who is or has been subject to a relevant Part 5A requirement (and references to an authorised person are to be read accordingly).F1280]
(10) In this section “ authorised person ”, in relation to the PRA, means PRA-authorised person. F1278]
Appointment of investigators
notecase 167 Appointment of persons to carry out general investigations. cross-notes
(1)If it appears to [F1281an investigating authorityF1281] that there is good reason for doing so, the investigating authority may appoint one or more competent persons to conduct an investigation on its behalf into—
(a)the nature, conduct or state of the business of [F1282a person to whom subsection (1A) applies orF1282] an appointed representative;
(b)a particular aspect of that business; or
(c)the ownership or control of [F1283a person to whom subsection (1A) appliesF1283] .
[F1284 (1A)This subsection applies to the following persons—
(a)a recognised investment exchange;
(b)an authorised person;
(c)a relevant parent undertaking of an FCA investment firm;
(d)a person who provides a service to an FCA investment firm or to a relevant parent undertaking of such a firm.
[F1285 (e)a person on whom a relevant Part 5A requirement is imposed.F1285,F1284]]
(2)If a person appointed under subsection (1) thinks it necessary for the purposes of his investigation, he may also investigate the business of a person who is or has at any relevant time been—
(a) F1286 a member of the group of which the person under investigation (“ A ”) is part; ...
(b)a partnership of which A is a member [F1287; orF1287]
[F1288 (c)where A is an insurance undertaking [F1289 or reinsurance undertakingF1289] , a person who provides services to A.F1288]
(3)If a person appointed under subsection (1) decides to investigate the business of any person under subsection (2) he must give that person written notice of his decision.
F1290 (3A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1291 (4A)The power conferred by this section may be exercised in relation to a person who has at any time been an authorised person or a person described in subsection (1A)(c) [F1292 , (d) or (e)F1292] but only in relation to—
(a)business carried on at any time when the person was an authorised person or a person described in subsection (1A)(c) [F1292 , (d) or (e)F1292] , or
(b)the ownership or control of the person at such a time.
(4B)The power conferred by this section may be exercised in relation to a person who has at any time been an appointed representative but only in relation to business carried on at any time when the person was an appointed representative.F1291]
(5) “ Business ” includes any part of a business even if it does not consist of carrying on regulated activities.
[F1293 (5A) “Investigating authority” means—
(a)in relation to a recognised investment exchange, the Secretary of State or the FCA;
(b)in relation to an authorised person or former authorised person, the FCA or the PRA;
(c)in relation to an appointed representative or former appointed representative, the FCA or the PRA.
[F1294 (d)in relation to a person who is, or has at any time been, a person described in subsection (1A)(c) [F1295 , (d) or (e)F1295] who is not an authorised person, the FCA.F1294,F1293]]
[F1296 (6)References in subsection (1) to a recognised investment exchange do not include references to an overseas investment exchange (as defined by section 313(1)).F1296]
notecase 168 Appointment of persons to carry out investigations in particular cases. cross-notesI25
(1)Subsection (3) applies if it appears to an investigating authority that there are circumstances suggesting that—
F1297 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)F1300a person may be guilty of an offence under section [F1298122F,F1298] 177, [F1299191FF1299] , 346 or 398(1) ....
(2)Subsection (3) also applies if it appears to an investigating authority that there are circumstances suggesting that—
(a)F1301,M7an offence under section 24(1) ... [F1302or under Part 7 of the Financial Services Act 2012F1302] or under Part V of the Criminal Justice Act 1993 may have been committed;
(b)there may have been a breach of the general prohibition;
[F1303 (ba)an authorised person may have contravened section 20 in relation to a credit-related regulated activity;F1303]
(c)there may have been a contravention of section 21 or 238; or
[F1304 (d)a person has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation.F1304]
(3)The investigating authority may appoint one or more competent persons to conduct an investigation on its behalf.
(4)Subsection (5) applies if it appears to [F1305an investigating authorityF1305] that there are circumstances suggesting that—
(a)a person may have contravened section 20;
SI (b)a person may be guilty of an offence under prescribed regulations relating to money laundering;
[F1306 (ba)a person may be guilty of an offence under Schedule 7 to the Counter-Terrorism Act 2008 (terrorist financing or money laundering);F1306]
(c)[F1307 a personF1307] may have contravened a rule made by the [F1308investigating authorityF1308] ;
[F1309 (ca)a recognised investment exchange may have contravened the recognition requirements (within the meaning of Part 18) [F1310 or a rule made by the FCA under section 300HF1310] ;F1309]
(d)an individual may not be a fit and proper person to perform functions in relation to a regulated activity carried on by an authorised or exempt person;
(e)an individual may have performed or agreed to perform a function in breach of a prohibition order;
(f)[F1311 a personF1311] may have failed to comply with section 56(6);
(g)an authorised person may have failed to comply with section 59(1) or (2);
(h)F1313a person in relation to whom [F1312a regulatorF1312] has given its approval under section 59 may not be a fit and proper person to perform the function to which that approval relates; . . .
[F1314 (ha)a person may have performed a controlled function without approval for the purposes of section 63A;F1314]
(i)a person may be guilty of misconduct for the purposes of section 66 [F1315; F1316...
[F1317 (iza)a person has effected, or has purported to effect, a unilateral change under subsection (1) of section 117B (unilateral changes by providers of pension schemes), but any of the provisions mentioned in subsection (3) of that section may have been contravened in relation to it;F1317]
[F1318 (ia)a person may have failed to comply with section 143R;
(ib)an individual may have performed or agreed to perform a function in breach of a Part 9C prohibition order;
(ic)a person may have failed to comply with section 143S(6);F1318]
[F1319 (id)a person may have contravened any provision made by or under the Securitisation Regulations 2024;F1319]
(j)a person may have contravened any provision made by or under this Act for the purpose of implementing the markets in financial instruments directive F1320...F1315]
[F1321 (ja)a person may have contravened—
(i)any provision made by or under this Act for the purpose of implementing the alternative investment fund managers directive; F1322...
(ii)any provision made by the Alternative Investment Fund Managers Regulations 2013; F1323...
[F1324 (iii)any provision made by or under this Act for the purpose of implementing the dfnUCITS Directive; or
(iv)any provision made by the Undertakings for Collective Investment in Transferable Securities Regulations 2011; F1325....F1324,F1321]]
[F1326 (jb)a person may have contravened—
(i)any provision made by or under this Act for the purposes of the market abuse regulation; or
(ii)a requirement imposed on that person under sections 122A to 122C, 122G to 122I, 123A or 123B;
(jc)a person may have been knowingly concerned in the contravention of—
(i)a provision of the market abuse regulation other than Article 14 (prohibition of insider dealing) or 15 (prohibition of market manipulation) of that regulation; or
(ii)[F1327 any [F1328 assimilated directF1328] legislation originally made under the market abuse regulation or any subordinate legislation (within the meaning of the Interpretation Act 1978) made on or after IP completion dayF1327] under the market abuse regulation; orF1326]
SI[F1329 (k)a person may have contravened a [F1330 qualifying provisionF1330] that is specified, or of a description specified, for the purposes of this subsection by the Treasury by order.F1329]
[F1331 (4A)Subsection (5) applies if it appears to the investigating authority that there are circumstances suggesting that—
(a)an individual may not be a fit and proper person to perform functions in relation to an activity carried on by a relevant recognised body;
(b)an individual may have performed, or agreed to perform, a function in breach of a Part 18 prohibition order;
(c)a person may have failed to comply with section 309F(1);
(d)a relevant recognised body may have failed to comply with section 309G(1);
(e)a person in relation to whom the FCA has given approval under section 309G may not be a fit and proper person to perform the function to which that approval relates;
(f)a person may have performed a designated senior management function without approval under section 309G (see section 309U(3));
(g)a person may be guilty of misconduct for the purposes of section 309Z2.F1331]
[F1332 (4B)Subsection (5) also applies if it appears to the investigating authority that there are circumstances suggesting that a person may have contravened a relevant Part 5A requirement.F1332]
(5)The [F1333investigating authorityF1333] may appoint one or more competent persons to conduct an investigation on its behalf.
[F1334 (6)Investigating authority” means—
(a)in subsections (1) to (3), the FCA, the PRA or the Secretary of State;
(b)in subsections (4) and (5), the FCA or the PRA.F1334]
[F1335 (c)in [F1336 subsections (4A) and (4B)F1336] , the FCA.F1335]
[F1337 (7) “ Relevant recognised body ” has the same meaning as in Chapter 2A of Part 18 (see section 309A) . F1337]
Assistance to overseas regulators
notecase 169 Investigations etc. in support of overseas regulator. cross-notesI26
(1)At the request of an overseas regulator, [F1338a regulatorF1338] may—
(a)exercise the power conferred by section 165; or
(b)appoint one or more competent persons to investigate any matter.
(2)An investigator has the same powers as an investigator appointed under section 168(3) (as a result of subsection (1) of that section).
[F1339 (2A)But where the investigator is—
(a)appointed by the FCA, and
(b)the appointment is in response to a request to the FCA to investigate a possible contravention by a person of Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation,
the investigator has the same powers as an investigator appointed under section 168(3) (as a result of subsection (2) of that section).F1339]
F1340 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)In deciding whether or not to exercise its investigative power, the [F1341regulatorF1341] may take into account in particular—
(a)whether in the country or territory of the overseas regulator concerned, corresponding assistance would be given to a United Kingdom regulatory authority;
(b)whether the case concerns the breach of a law, or other requirement, which has no close parallel in the United Kingdom or involves the assertion of a jurisdiction not recognised by the United Kingdom;
(c)the seriousness of the case and its importance to persons in the United Kingdom;
(d)whether it is otherwise appropriate in the public interest to give the assistance sought.
(5)The [F1342regulatorF1342] may decide that it will not exercise its investigative power unless the overseas regulator undertakes to make such contribution towards the cost of its exercise as the [F1342regulatorF1342] considers appropriate.
F1340 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)If [F1343a regulatorF1343] has appointed an investigator in response to a request from an overseas regulator, it may direct the investigator to permit a representative of that regulator to attend, and take part in, any interview conducted for the purposes of the investigation.
(8)A direction under subsection (7) is not to be given unless the [F1344regulatorF1344] is satisfied that any information obtained by an overseas regulator as a result of the interview will be subject to safeguards equivalent to those contained in Part XXIII.
(9)[F1345 Each regulatorF1345] must prepare a statement of its policy with respect to the conduct of interviews in relation to which a direction under subsection (7) has been given.
(10)The statement requires the approval of the Treasury.
(11)If the Treasury approve the statement, the [F1346regulatorF1346] must publish it.
(12)No direction may be given under subsection (7) before the statement has been published.
(13) “ Overseas regulator ” has the same meaning as in section 195.
(14) “ Investigative power ” means one of the powers mentioned in subsection (1).
(15) “ Investigator ” means a person appointed under subsection (1)(b).
[F1347169A Support of overseas regulator with respect to financial stability
(1)At the request of an overseas regulator, the [F1348 PRAF1348] may exercise a corresponding section 165A power.
(2) An “ overseas regulator ” means an authority in a country or territory outside the United Kingdom which exercises functions with respect to the stability of the financial system operating in that country or territory.
(3) A “ corresponding section 165A power ” means a power corresponding to the one conferred by section 165A, but reading references in that section to the stability of the UK financial system as references to the stability of the financial system operating in the country or territory of the overseas regulator.
(4)The following provisions apply in relation to the exercise of the corresponding section 165A power—
(a)section 165B(1) to (5); and
(b)section [F1349 169(4)(a) and (d) and (5)F1349] .
(5) In this section “ the financial system ” includes—
(a)financial markets and exchanges;
(b)activities that would be regulated activities if carried on in the United Kingdom; and
(c)other activities connected with financial markets and exchanges.F1347]
Conduct of investigations
notecase 170 Investigations: general. cross-notes
(1) This section applies if an investigating authority appoints one or more competent persons (“ investigators ”) under section 167 or 168(3) or (5) to conduct an investigation on its behalf.
(2) The investigating authority must give written notice of the appointment of an investigator to the person who is the subject of the investigation (“ the person under investigation ”).
(3)Subsections (2) and (9) do not apply if —
(a)the investigator is appointed as a result of section 168(1) [F1350, (4) or (4B)F1350] and the investigating authority believes that the notice required by subsection (2) or (9) would be likely to result in the investigation being frustrated; or
(b)the investigator is appointed as a result of subsection (2) of section 168.
(4)A notice under subsection (2) must—
(a)specify the provisions under which, and as a result of which, the investigator was appointed; and
(b)state the reason for his appointment.
(5)Nothing prevents the investigating authority from appointing a person who is a member of its staff as an investigator.
(6)An investigator must make a report of his investigation to the investigating authority.
(7)The investigating authority may, by a direction to an investigator, control—
(a)the scope of the investigation;
(b)the period during which the investigation is to be conducted;
(c)the conduct of the investigation; and
(d)the reporting of the investigation.
(8)A direction may, in particular—
(a)confine the investigation to particular matters;
(b)extend the investigation to additional matters;
(c)require the investigator to discontinue the investigation or to take only such steps as are specified in the direction;
(d)require the investigator to make such interim reports as are so specified.
(9)If there is a change in the scope or conduct of the investigation and, in the opinion of the investigating authority, the person subject to investigation is likely to be significantly prejudiced by not being made aware of it, that person must be given written notice of the change.
(10) “ Investigating authority ”, in relation to an investigator, means—
[F1351 (a)the FCA, if the FCA appointed the investigator;
(aa)the PRA, if the PRA appointed the investigator;
(b)the Secretary of State, if the Secretary of State appointed the investigator.F1351]
notecase 171 Powers of persons appointed under section 167. cross-notes
(1)[F1352 An investigator may require a person to whom subsection (1A) applies—F1352]
(a)to attend before the investigator at a specified time and place and answer questions; or
(b)otherwise to provide such information as the investigator may require.
[F1353 (1A)This subsection applies to the following persons—
(a) the person who is the subject of the investigation (“the person under investigation”);
(b)any person connected with the person under investigation;
(c)where the person under investigation is an FCA investment firm, a person who provides, or has provided, a service to the firm or to a relevant parent undertaking of the firm;
(d)where the person under investigation is a relevant parent undertaking of an FCA investment firm, a person who provides, or has provided, a service to the parent undertaking or to the firm.F1353]
(2)An investigator may also require any person to produce at a specified time and place any specified documents or documents of a specified description.
(3)A requirement under subsection (1) or (2) may be imposed only so far as the investigator concerned reasonably considers the question, provision of information or production of the document to be relevant to the purposes of the investigation.
[F1354 (3A)Where the investigation relates to a recognised investment exchange, an investigator has the additional powers conferred by sections 172 and 173 (and for this purpose references in those sections to an investigator are to be read accordingly).F1354]
(4) For the purposes of this section and section 172, a person is connected with the person under investigation (“ A ”) if he is or has at any relevant time been—
(a)a member of A’s group;
(b)a controller of A;
(c)a partnership of which A is a member; or
(d)in relation to A, a person mentioned in Part I or II of Schedule 15.
(5) “ Investigator ” means a person conducting an investigation under section 167.
(6) “ Specified ” means specified in a notice in writing.
[F1355 (7)The reference in subsection (3A) to a recognised investment exchange does not include a reference to an overseas investment exchange (as defined by section 313(1)).F1355]
notecase 172 Additional power of persons appointed as a result of section 168(1) [F1356, (4) or (4B)F1356] . cross-notes
(1)An investigator has the powers conferred by section 171.
(2) An investigator may also require a person who is neither the subject of the investigation (“ the person under investigation ”) nor a person connected with the person under investigation—
(a)to attend before the investigator at a specified time and place and answer questions; or
(b)otherwise to provide such information as the investigator may require for the purposes of the investigation.
(3)A requirement may only be imposed under subsection (2) if the investigator is satisfied that the requirement is necessary or expedient for the purposes of the investigation.
(4) “ Investigator ” means a person appointed as a result of subsection (1) [F1357 , (4) or (4B) F1357] of section 168.
(5) “ Specified ” means specified in a notice in writing.
notecase 173 Powers of persons appointed as a result of section 168(2). cross-notes
(1) Subsections (2) to (4) apply if an investigator considers that any person (“ A ”) is or may be able to give information which is or may be relevant to the investigation.
(2)The investigator may require A—
(a)to attend before him at a specified time and place and answer questions; or
(b)otherwise to provide such information as he may require for the purposes of the investigation.
(3)The investigator may also require A to produce at a specified time and place any specified documents or documents of a specified description which appear to the investigator to relate to any matter relevant to the investigation.
(4)The investigator may also otherwise require A to give him all assistance in connection with the investigation which A is reasonably able to give.
(5) “ Investigator ” means a person appointed under subsection (3) of section 168 (as a result of subsection (2) of that section).
notecase 174 Admissibility of statements made to investigators. cross-notes
(1)A statement made to an investigator by a person in compliance with an information requirement is admissible in evidence in any proceedings, so long as it also complies with any requirements governing the admissibility of evidence in the circumstances in question.
(2)But in criminal proceedings in which that person is charged with an offence to which this subsection applies or in proceedings in relation to action to be taken against that person under section 123 [F1358to which this subsection appliesF1358] —
(a)no evidence relating to the statement may be adduced, and
(b)no question relating to it may be asked,
by or on behalf of the prosecution or (as the case may be) [F1359a regulatorF1359] , unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.
(3)Subsection (2) applies to any offence other than one—
(a)under section 177(4) or 398;
(b)M8under section 5 of the Perjury Act 1911 (false statements made otherwise than on oath);
(c)M9under section 44(2) of the Criminal Law (Consolidation)(Scotland) Act 1995 (false statements made otherwise than on oath); or
(d)M10under Article 10 of the Perjury (Northern Ireland) Order 1979.
[F1360 (3A)Subsection (2) applies to proceedings in relation to action to be taken under section 123(2) or (3) against a person who may have contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation.F1360]
(4) “ Investigator ” means a person appointed under section 167 or 168(3) or (5) [F1361 , or a person appointed under section 169 who has the powers conferred by virtue of subsection (2A) of that section F1361] .
(5) “ Information requirement ” means a requirement imposed by an investigator under section 171, 172, 173 or 175.
notecase 175 Information and documents: supplemental provisions. cross-notes
(1)If [F1362either regulatorF1362] or an investigator has power under this Part to require a person to produce a document but it appears that the document is in the possession of a third person, that power may be exercised in relation to the third person.
(2)If a document is produced in response to a requirement imposed under this Part, the person to whom it is produced may—
(a)take copies or extracts from the document; or
(b)require the person producing the document, or any relevant person, to provide an explanation of the document.
[F1363 (2A)A document so produced may be retained for so long as the person to whom it is produced considers that it is necessary to retain it (rather than copies of it) for the purposes for which the document was requested.
(2B)If the person to whom a document is so produced has reasonable grounds for believing—
(a)that the document may have to be produced for the purposes of any legal proceedings, and
(b)that it might otherwise be unavailable for those purposes,
it may be retained until the proceedings are concluded.F1363]
(3)If a person who is required under this Part to produce a document fails to do so, the [F1364regulatorF1364] or an investigator may require him to state, to the best of his knowledge and belief, where the document is.
(4)A lawyer may be required under this Part to furnish the name and address of his client.
(5)No person may be required under this Part to disclose information or produce a document in respect of which he owes an obligation of confidence by virtue of carrying on the business of banking unless—
(a)he is the person under investigation or a member of that person’s group;
(b)the person to whom the obligation of confidence is owed is the person under investigation or a member of that person’s group;
(c)the person to whom the obligation of confidence is owed consents to the disclosure or production; or
(d)the imposing on him of a requirement with respect to such information or document has been specifically authorised by the investigating authority.
F1365 (5A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1366 (5B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6)If a person claims a lien on a document, its production under this Part does not affect the lien.
(7) “ Relevant person ”, in relation to a person who is required to produce a document, means a person who—
(a)has been or is or is proposed to be a director or controller of that person;
(b)has been or is an auditor of that person;
(c)has been or is an actuary, accountant or lawyer appointed or instructed by that person; or
(d)has been or is an employee of that person.
(8) “ Investigator ” means a person appointed under section 167 or 168(3) or (5).
notecase 176 Entry of premises under warrant. cross-notes
(1)A justice of the peace may issue a warrant under this section if satisfied on information on oath given by or on behalf of the Secretary of State, [F1367either regulatorF1367] or an investigator that there are reasonable grounds for believing that the first, second or third set of conditions is satisfied.
(2)The first set of conditions is—
(a)that a person on whom an information requirement has been imposed has failed (wholly or in part) to comply with it; and
(b)that on the premises specified in the warrant—
(i)there are documents which have been required; or
(ii)there is information which has been required.
(3)The second set of conditions is—
(a)that the premises specified in the warrant are premises of [F1368a person to whom subsection (3A) appliesF1368] ;
(b)that there are on the premises documents or information in relation to which an information requirement could be imposed; and
(c)that if such a requirement were to be imposed—
(i)it would not be complied with; or
(ii)the documents or information to which it related would be removed, tampered with or destroyed.
[F1369 (3A)This subsection applies to the following persons—
(a)an authorised person;
(b)an appointed representative;
(c)a relevant parent undertaking of an FCA investment firm;
(d)a person who provides a service to an FCA investment firm or to a relevant parent undertaking of such a firm.
[F1370 (e)a person who is or has been subject to a relevant Part 5A requirement.F1370,F1369]]
(4)The third set of conditions is—
(a)that an offence mentioned in section 168 for which the maximum sentence on conviction on indictment is two years or more has been (or is being) committed by any person;
(b)that there are on the premises specified in the warrant documents or information relevant to whether that offence has been (or is being) committed;
(c)that an information requirement could be imposed in relation to those documents or information; and
(d)that if such a requirement were to be imposed—
(i)it would not be complied with; or
(ii)the documents or information to which it related would be removed, tampered with or destroyed.
(5)A warrant under this section shall authorise a constable—
(a)to enter the premises specified in the warrant;
(b) to search the premises and take possession of any documents or information appearing to be documents or information of a kind in respect of which a warrant under this section was issued (“ the relevant kind ”) or to take, in relation to any such documents or information, any other steps which may appear to be necessary for preserving them or preventing interference with them;
(c)to take copies of, or extracts from, any documents or information appearing to be of the relevant kind;
(d)to require any person on the premises to provide an explanation of any document or information appearing to be of the relevant kind or to state where it may be found; and
(e)to use such force as may be reasonably necessary.
[F1371 (5A)A warrant under this section may be executed by any constable.
(5B)The warrant may authorise persons to accompany any constable who is executing it.
(5C)The powers in subsection (5) may be exercised by a person authorised by the warrant to accompany a constable; but that person may exercise those powers only in the company of, and under the supervision of, a constable.F1371]
(6)M11In England and Wales, sections 15(5) to (8) and section [F137216(3) to (12)F1372] of the Police and Criminal Evidence Act 1984 (execution of search warrants and safeguards) apply to warrants issued under this section.
(7)M12In Northern Ireland, Articles 17(5) to (8) and [F137318(3) to (12)F1373] of the Police and Criminal Evidence (Northern Ireland) Order 1989 apply to warrants issued under this section.
F1374 (8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9)In the application of this section to Scotland—
(a)for the references to a justice of the peace substitute references to a justice of the peace or a sheriff; and
(b)for the references to information on oath substitute references to evidence on oath.
(10) “ Investigator ” means a person appointed under section 167 or 168(3) or (5).
(11) “ Information requirement ” means a requirement imposed—
(a)F1376,F1378by [F1375a regulatorF1375] under section ... 165 [F1377, 165A, 169AF1377] or 175; ...
[F1379 (aa)by the FCA under regulation 26, 28 or 33 of the Public Offers and Admissions to Trading Regulations 2024; [F1380 orF1380,F1379]]
[F1381 (ab)by the FCA by virtue of regulation 21 of the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026; orF1381]
(b)by an investigator under section 171, 172, 173 or 175.
[F1382176A Retention of documents taken under section 176 cross-notes
(1) Any document of which possession is taken under section 176 (“a seized document”) may be retained so long as it is necessary to retain it (rather than copies of it) in the circumstances.
(2)A person claiming to be the owner of a seized document may apply to a magistrates' court or (in Scotland) the sheriff for an order for the delivery of the document to the person appearing to the court or sheriff to be the owner.
(3)If on an application under subsection (2) the court or (in Scotland) the sheriff cannot ascertain who is the owner of the seized document the court or sheriff (as the case may be) may make such order as the court or sheriff thinks fit.
(4)An order under subsection (2) or (3) does not affect the right of any person to take legal proceedings against any person in possession of a seized document for the recovery of the document.
(5)Any right to bring proceedings (as described in subsection (4)) may only be exercised within 6 months of the date of the order made under subsection (2) or (3).F1382]
Offences
notecase 177 Offences. cross-notes
(1) If a person other than the investigator (“ the defaulter ”) fails to comply with a requirement imposed on him under this Part the person imposing the requirement may certify that fact in writing to the court.
(2) If the court is satisfied that the defaulter failed without reasonable excuse to comply with the requirement, it may deal with the defaulter (and in the case of a body corporate, any director or [F1383 other F1383] officer) as if he were in contempt [F1384 ; and “officer”, in relation to a limited liability partnership, means a member of the limited liability partnership. F1384] .
(3)A person who knows or suspects that an investigation is being or is likely to be conducted under this Part is guilty of an offence if—
(a)he falsifies, conceals, destroys or otherwise disposes of a document which he knows or suspects is or would be relevant to such an investigation, or
(b)he causes or permits the falsification, concealment, destruction or disposal of such a document,
unless he shows that he had no intention of concealing facts disclosed by the documents from the investigator.
(4)A person who, in purported compliance with a requirement imposed on him under this Part—
(a)provides information which he knows to be false or misleading in a material particular, or
(b)recklessly provides information which is false or misleading in a material particular,
is guilty of an offence.
(5)A person guilty of an offence under subsection (3) or (4) is liable—
(a)on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum, or both;
(b)on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.
(6)Any person who intentionally obstructs the exercise of any rights conferred by a warrant under section 176 is guilty of an offence and liable on summary conviction to imprisonment for a term not exceeding three months or a fine not exceeding level 5 on the standard scale, or both.
[F1385 (7)In this section—
“court” means—
(a)the High Court;
(b)in Scotland, the Court of Session;
“investigator appointed by the FCA” means an investigator appointed by the FCA under section 167, 168 or 169;
“officer of the FCA” means an officer authorised by the FCA for the purposes of section 165(3). F1385]
[F1386Interpretation
177A Interpretation of Part 11 cross-notes
In this Part—
“ FCA investment firm ” has the meaning given in section 143A;
“ relevant parent undertaking ”, in relation to an FCA investment firm, means an authorised parent undertaking or a non-authorised parent undertaking (as defined in section 143B). F1386]
case Part XII Control Over Authorised Persons cross-notes
[F1387Notices of acquisitions of control over UK authorised persons
notecase X2178 Obligation to notify the [F1388appropriate regulatorF1388] : acquisitions of control
(1) A person who decides to acquire or increase control over a UK authorised person must give the [F1388 appropriate regulatorF1388] notice in writing before making the acquisition.
(2) For the purposes of calculations relating to this section, the holding of shares or voting power by a person (“A1”) includes any shares or voting power held by another (“A2”) if A1 and A2 are acting in concert.
[F1389 (2ZA)This section does not apply if the only regulated activity for which the UK authorised person has a Part 4A permission is the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (administering a benchmark).F1389]
[F1390 (2A) In this Part, “ the appropriate regulator ” means—
(a)where the UK authorised person is a PRA-authorised person, the PRA;
(b)in any other case, the FCA.F1390]
(3) In this Part, a notice given under this section is a “section 178 notice” and a person giving notice is a “section 178 notice-giver”.
note X3179 Requirements for section 178 notices
(1) A section 178 notice must be in such form, include such information and be accompanied by such documents as the [F1388 appropriate regulatorF1388] may reasonably require.
(2)[F1391 Each regulatorF1391] must publish a list of its requirements as to the form, information and accompanying documents for a section 178 notice.
(3)The [F1388 appropriate regulatorF1388] may impose different requirements for different cases and may vary or waive requirements in particular cases.
note X4180 Acknowledgment of receipt
(1) The [F1388 appropriate regulatorF1388] must acknowledge receipt of a completed section 178 notice in writing before the end of the second working day following receipt.
(2)If the [F1388 appropriate regulatorF1388] receives an incomplete section 178 notice it must inform the section 178 notice-giver as soon as reasonably practicable.
Acquiring control and other changes of holding
notecase X5181 Acquiring control
(1) For the purposes of this Part, a person (“A”) acquires control over a dfnUK authorised person (“B”) if any of the cases in subsection (2) begin to apply.
(2)The cases are where A holds—
(a) 10% or more of the shares in B or in a parent undertaking of B (“P”);
(b)10% or more of the voting power in B or P; or
(c)shares or voting power in B or P as a result of which A is able to exercise significant influence over the management of B.
note X6182 Increasing control
(1) For the purposes of this Part, a person (“A”) increases control over a dfnUK authorised person (“B”) whenever—
(a) the percentage of shares which A holds in B or in a parent undertaking of B (“P”) increases by any of the steps mentioned in subsection (2);
(b)the percentage of voting power A holds in B or P increases by any of the steps mentioned in subsection (2); or
(c)A becomes a parent undertaking of B.
(2)The steps are—
(a)from less than 20% to 20% or more;
(b)from less than 30% to 30% or more;
(c)from less than 50% to 50% or more.
noteSI X7183 Reducing or ceasing to have control
(1) For the purposes of this Part, a person (“A”) reduces control over a dfnUK authorised person (“B”) whenever—
(a) the percentage of shares which A holds in B or in a parent undertaking of B (“P”) decreases by any of the steps mentioned in subsection (2);
(b)the percentage of voting power which A holds in B or P decreases by any of the steps mentioned in subsection (2); or
(c)A ceases to be a parent undertaking of B.
SI (2)The steps are—
(a)from 50% or more to less than 50%;
(b)from 30% or more to less than 30%;
(c)from 20% or more to less than 20%.
(3) For the purposes of this Part, a person (“A”) ceases to have control over a dfnUK authorised person (“B”) if A ceases to be in the position of holding—
(a) 10% or more of the shares in B or in a parent undertaking of B (“P”);
(b)10% or more of the voting power in B or P; or
(c)shares or voting power in B or P as a result of which A is able to exercise significant influence over the management of B.
note X8184 Disregarded holdings
(1) For the purposes of sections 181 to 183, shares and voting power that a person holds in a dfnUK authorised person (“B”) or in a parent undertaking of B (“P”) are disregarded in the following circumstances.
(2)Shares held only for the purposes of clearing and settling within a short settlement cycle are disregarded.
(3)Shares held by a custodian or its nominee in a custodian capacity are disregarded, provided that the custodian or nominee is only able to exercise voting power represented by the shares in accordance with instructions given in writing.
(4)Shares representing no more than 5% of the total voting power in B or P held by an investment firm are disregarded, provided that it—
(a)holds the shares in the capacity of a market maker (as defined in [F1392 article 2.1.6 of the markets in financial instruments regulationF1392] );
[F1393 (b)has a Part 4A permission to carry on one or more investment services and activities;F1393]
(c)neither intervenes in the management of B or P nor exerts any influence on B or P to buy the shares or back the share price.
(5)Shares held by a [F1394 qualifying credit institutionF1394] or investment firm in its trading book are disregarded, provided that—
(a)the shares represent no more than 5% of the total voting power in B or P; and
(b)F1395... the voting power is not used to intervene in the management of B or P.
(6)Shares held by a [F1396 qualifying credit institutionF1396] or an investment firm are disregarded, provided that—
(a)the shares are held as a result of performing the investment services and activities of—
(i)underwriting a share issue; or
(ii)placing shares on a firm commitment basis F1397...; and
(b)the [F1396 qualifying credit institutionF1396] or investment firm—
(i)does not exercise voting power represented by the shares or otherwise intervene in the management of the issuer; and
(ii)retains the holding for a period of less than one year.
(7)Where a management company (as defined in [F1398 section 237(2)F1398] ) and its parent undertaking both hold shares or voting power, each may disregard holdings of the other, provided that each exercises its voting power independently of the other.
(8)But subsection (7) does not apply if the management company—
[F1399 (a)manages holdings for its parent undertaking or a controlled undertaking of the parent undertaking;F1399]
(b)has no discretion as to the exercise of the voting power attached to such holdings; and
(c)may only exercise the voting power in relation to such holdings under direct or indirect instruction from—
(i)the parent undertaking; or
[F1400 (ii)a controlled undertaking of the parent undertaking.F1400]
(9)Where an investment firm and its parent undertaking both hold shares or voting power, the parent undertaking may disregard holdings managed by the investment firm on a client by client basis and the investment firm may disregard holdings of the parent undertaking, provided that the investment firm—
(a)has permission to provide portfolio management;
(b)exercises its voting power independently from the parent undertaking; and
(c)may only exercise the voting power under instructions given in writing, or has appropriate mechanisms in place for ensuring that individual portfolio management services are conducted independently of any other services.
[F1401 (9A)Shares acquired for stabilisation purposes in accordance with [F1402 the market abuse regulation and the Commission Delegated Regulation (EU) No. 1052/2016 of 8 March 2016 supplementing Regulation (EU) No. 596/2014 of the European Parliament and the Council with regard to the regulatory technical standards for conditions applicable to buy-back programmes and stabilisation measuresF1402] are disregarded, provided that the voting power attached to those shares is not exercised or otherwise used to intervene in the management of B or P.F1401]
[F1403 (10)For the purposes of this section, an undertaking is a controlled undertaking of the parent undertaking if it is controlled by the parent undertaking; and for this purpose the question of whether one undertaking controls another is to be determined in accordance with section 89J(4) and (5).F1403]
Assessment procedure
note X9185 Assessment: general
(1) Where the [F1388 appropriate regulatorF1388] receives a section 178 notice, it must—
(a)determine whether to approve the acquisition to which it relates unconditionally; or
(b)propose to—
(i)approve the acquisition subject to conditions (see section 187); or
(ii)object to the acquisition.
(2)The [F1388 appropriate regulatorF1388] must—
(a)consider the suitability of the section 178 notice-giver and the financial soundness of the acquisition in order to ensure the sound and prudent management of the dfnUK authorised person;
(b)have regard to the likely influence that the section 178 notice-giver will have on the dfnUK authorised person; and
(c)disregard the economic needs of the market.
(3)The [F1388 appropriate regulatorF1388] may only object to an acquisition—
(a)if there are reasonable grounds for doing so on the basis of the matters set out in section 186; or
(b)if the information provided by the section 178 notice-giver is incomplete.
note X10186 Assessment criteria
The matters specified in section 185(3)(a) are—
(a)the reputation of the section 178 notice-giver;
(b)the reputation [F1404 , knowledge, skillsF1404] and experience of any person who will direct the business of the UK authorised person as a result of the proposed acquisition;
(c)the financial soundness of the section 178 notice-giver, in particular in relation to the type of business that the UK authorised person pursues or envisages pursuing;
(d)whether the UK authorised person will be able to comply with its prudential requirements (including the threshold conditions in relation to all of the regulated activities for which it has or will have permission);
(e)if the UK authorised person is to become part of a group as a result of the acquisition, whether that group has a structure which makes it possible to—
(i)exercise effective supervision;
(ii)exchange information among regulators; and
(iii)determine the allocation of responsibility among regulators; and
(f)whether there are reasonable grounds to suspect that in connection with the proposed acquisition—
(i)money laundering or terrorist financing ([F1405 as defined in regulation 3(1) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017F1405] ) is being or has been committed or attempted; or
(ii)the risk of such activity could increase.
note X11187 Approval with conditions
(1) The [F1388 appropriate regulatorF1388] may impose conditions on its approval of an acquisition.
[F1406 (2)The appropriate regulator may only impose conditions where—
(a)if it did not impose those conditions, it would propose to object to the acquisition, F1407...
[F1408 (aa)it appears to that regulator that it is desirable to impose those conditions in order to advance any of that regulator’s objectives (subject to section 185(2)(c)), orF1408]
(b)it is required to do so by a direction under section 187A(3)(b) or section 187B(3).F1406]
(3)The [F1388 appropriate regulatorF1388] may not impose conditions requiring a particular level of holding to be acquired.
(4)The [F1388 appropriate regulatorF1388] may vary or cancel the conditions.
[F1409187A Assessment: consultation by PRA with FCA
(1)The PRA must consult the FCA before acting under section 185.
(2)The FCA may make representations to the PRA in relation to any of the matters set out in sections 185(2) and 186.
(3)If the FCA considers that on the basis of the matters set out in section 186(f) there are reasonable grounds to object to the acquisition, the FCA may—
(a)direct the PRA to object to the acquisition, or
(b)direct the PRA not to approve the acquisition unless it does so subject to conditions specified in the direction (with or without other conditions).
(4)Before giving a direction under subsection (3), the FCA must notify the PRA of its proposal to do so.
(5)In order to comply with the obligation under subsection (1), the PRA must provide the FCA with—
(a)copies of—
(i)the section 178 notice, and
(ii)any document included with that notice,
(b)any further information provided pursuant to section 190, and
(c)any other information in the possession of the PRA which—
(i)in the opinion of the PRA, is relevant to the application, or
(ii)is reasonably requested by the FCA.
[F1410 (5A)Where the PRA notifies the FCA that it [F1411 is required by section 189(1ZB)F1411] to act in a timely manner, the FCA may take action under subsection (2), (3) or (4) after the time it receives that notification only if that action is taken as soon as reasonably practicable after that time.F1410]
(6)If the PRA acts under section 185(1)(b), it must indicate to the section 178 notice-giver any representations or directions received from the FCA.
(7)Directions given by the FCA under this section are subject to any directions given to the FCA under section 3I or 3J.
187B Assessment: consultation by FCA with PRA
(1)The FCA must consult the PRA before acting under section 185 if—
(a)the UK authorised person to which the section 178 notice relates has as a member of its immediate group a PRA-authorised person, or
(b)the section 178 notice-giver is a PRA-authorised person.
(2)The PRA may make representations to the FCA in relation to any of the matters set out in sections 185(2) and 186.
(3)If the PRA considers that on the basis of relevant matters there are reasonable grounds to object to the acquisition, the PRA may direct the FCA not to approve the acquisition unless it does so subject to conditions specified in the direction (with or without other conditions).
(4) In subsection (3) “relevant matters”—
(a)means the matters in paragraphs (d) and (e)(i) of section 186, and
(b)in a case falling within subsection (1)(b) of this section, also includes the matter in paragraph (c) of section 186.
(5)In order to comply with the obligation under subsection (1), the FCA must provide the PRA with—
(a)copies of—
(i)the section 178 notice, and
(ii)any document included with that notice,
(b)any further information provided pursuant to section 190, and
(c)any other information in the possession of the FCA which—
(i)in the opinion of the FCA, is relevant to the application, or
(ii)is reasonably requested by the PRA.
(6)If the FCA acts under section 185(1)(b), it must indicate to the section 178 notice-giver any representations or directions received from the PRA.
187C Variation etc of conditions
(1)Where the PRA has imposed conditions required by a direction given by the FCA under section 187A(3)—
(a)the FCA may direct the PRA to exercise its power under section 187(4) to vary or cancel any of those conditions;
(b)the PRA must consult the FCA before it exercises that power in relation to those conditions otherwise than in accordance with a direction under paragraph (a).
(2)Where the FCA has imposed conditions required by a direction given by the PRA under section 187B(3)—
(a)the PRA may direct the FCA to exercise its power under section 187(4) to vary or cancel any of those conditions;
(b)the FCA must consult the PRA before it exercises that power in relation to those conditions otherwise than in accordance with a direction under paragraph (a).F1409]
noteSI F1412,X12188 Assessment: consultation with EC competent authorities
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note X13189 Assessment: Procedure
(1) The [F1388 appropriate regulator F1388] must act under section 185 within a period of 60 working days beginning with the day on which the [F1388 appropriate regulator F1388] acknowledges receipt of the section 178 notice (“the assessment period”).
[F1413 (1A)[F1414 Where the appropriate regulator is the FCA andF1414] the section 178 notice relates to an acquisition or increase of control over a [F1415 qualifying credit institutionF1415] , investment firm or banking group company, the Bank of England, acting in the exercise of its functions under sections 6A to 6C of the Banking Act 2009 or under the special resolution regime under Part 1 of that Act, may direct the appropriate regulator to act under this Part in a timely manner, and to shorten the assessment period so far as reasonably practicable.
[F1416 (1ZB)Where the appropriate regulator is the PRA and—
(a)the section 178 notice relates to an acquisition or increase of control over a [F1417 qualifying credit institutionF1417] , investment firm or banking group company, and
(b)the [F1418 qualifying credit institutionF1418] , investment firm or banking group company is one in relation to which the Bank of England is exercising its functions under sections 6A to 6C of the Banking Act 2009 or the special resolution regime under Part 1 of that Act,
the PRA must act under this Part in a timely manner, and shorten the assessment period so far as reasonably practicable.F1416]
(1B)In [F1419 subsections (1A) and (1ZB)F1419] —
F1420 ...
“banking group company” has the meaning given in section 81D of [F1421 the Banking Act 2009 F1421] . F1413]
(2)The assessment period may be interrupted, no more than once, in accordance with section 190.
(3)The [F1388 appropriate regulatorF1388] must inform the section 178 notice-giver in writing of—
(a)the duration of the assessment period;
(b)its expiry date; and
(c)any change to the expiry date by virtue of section 190.
(4)The [F1388 appropriate regulatorF1388] must, within two working days of acting under section 185 (and in any event no later than the expiry date of the assessment period)—
(a)notify the section 178 notice-giver that it has determined to approve the acquisition unconditionally; or
(b)give a warning notice stating that it proposes to—
(i)approve the acquisition subject to conditions; or
(ii)object to the acquisition.
(5)Where the [F1388 appropriate regulatorF1388] gives a warning notice stating that it proposes to approve the acquisition subject to conditions—
(a)it must, in the warning notice, specify those conditions; and
(b)the conditions take effect as interim conditions.
(6)[F1422 Unless section 190A appliesF1422] the [F1388 appropriate regulatorF1388] is treated as having approved the acquisition if, at the expiry of the assessment period, it has neither—
(a)given notice under subsection (4); nor
(b)informed the section 178 notice-giver that the section 178 notice is incomplete.
(7)If the [F1388 appropriate regulatorF1388] decides to approve an acquisition subject to conditions or to object to an acquisition it must give the section 178 notice-giver a decision notice.
(8)Following receipt of a decision notice under this section, the section 178 notice-giver may refer the [F1388 appropriate regulator'sF1388] decision to the Tribunal.
note X14190 Requests for further information
(1) The [F1388 appropriate regulatorF1388] may, no later than the 50th working day of the assessment period, in writing ask the section 178 notice-giver to provide any further information necessary to complete its assessment.
[F1423 (1A)But where a direction has been given by the Bank of England under section 189(1A) [F1424 or section 189(1ZB) appliesF1424] , the appropriate regulator must, as soon as reasonably practicable, ask the section 178 notice-giver to provide any further information necessary to complete its assessment.F1423]
(2) On the first occasion that the [F1388 appropriate regulator F1388] asks for further information, the assessment period is interrupted from the date of the request until the date the [F1388 appropriate regulator F1388] receives the requested information (“the interruption period”).
(3)But the interruption period may not exceed 20 working days, unless subsection (4) applies.
(4)The interruption period may not exceed 30 working days if the notice-giver—
(a)is situated or regulated outside the [F1425 United Kingdom or GibraltarF1425] ; or
[F1426 (b)is not subject to supervision under the laws of the United Kingdom (or any part of the United Kingdom) or of Gibraltar relied on immediately before IP completion day to implement—
(i)the UCITS directive;
(ii)the Solvency 2 Directive;
(iii)the markets in financial instruments directive; or
(iv)the capital requirements directive,
including rules made by the appropriate regulator under this Act, in force on IP completion day, and, as amended from to time, in all other cases.F1426]
(5)The [F1388 appropriate regulatorF1388] may make further requests for information (but a further request does not result in a further interruption of the assessment period).
(6)The [F1388 appropriate regulatorF1388] must acknowledge in writing receipt of further information before the end of the second working day following receipt.
[F1427190A. Assessment and resolution
(1)This section applies if—
(a)the appropriate regulator receives a section 178 notice in relation to a [F1428 qualifying credit institutionF1428] , investment firm or banking group company,
(b)as a result of a direction under section 189(1A) or the application of section 189(1ZB), the appropriate regulator is required to act under this Part in a timely manner in relation to that notice, and
(c)the appropriate regulator does not complete the assessment required by section 185 before a relevant transfer instrument has been made by the Bank of England which transfers shares issued by, or voting power in, that [F1429 qualifying credit institutionF1429] , investment firm or banking group company.
(2) The transfer of shares or voting takes effect in accordance with the terms of the relevant transfer instrument, but the right of the person who acquires shares under that instrument (“the acquirer”) to exercise the voting power represented by those shares is suspended.
(3)During the suspension, the voting power represented by the shares in question may be exercised by the Bank (and only by the Bank).
(4) If the appropriate regulator issues a decision notice under section 189(7) objecting to the acquisition, the Bank may direct the acquirer to sell the shares within a period specified by the Bank in the direction (“the sale period”).
(5)In determining the sale period, the Bank must take account of prevailing market conditions.
(6)The suspension provided for in subsection (2) ends—
(a)if the appropriate regulator gives notice under section 189(4)(a) or (b)(i) that it approves the acquisition, on the date of that notice, or
(b)if the Bank gives a direction under subsection (4), on the earlier of the day on which the sale period ends and the day on which the shares are sold.
(7) In this section a “relevant transfer instrument” means an instrument made by the Bank acting in the exercise of its functions under sections 6A to 6C of the Banking Act 2009 or under the special resolution regime under Part 1 of that Act , which transfers, or has the effect of transferring, shares issued by, or voting power in, the [F1430 qualifying credit institution F1430] , investment firm or banking group company. F1427]
note X15191 Duration of approval
(1) Approval of an acquisition (whether granted unconditionally or subject to conditions) is effective for such period as the [F1388 appropriate regulatorF1388] may specify in writing.
(2)Where the [F1388 appropriate regulatorF1388] has specified a period under subsection (1), it may extend the period.
(3)Where the [F1388 appropriate regulatorF1388] has not specified a period, the approval is effective for one year beginning with the date—
(a)of the notice given under section 189(4)(a) or (b)(i);
(b)on which the [F1388 appropriate regulatorF1388] is treated as having given approval under section 189(6); or
(c)of a decision on a reference to the Tribunal which results in the person receiving approval.
Enforcement procedures
191A Objection by the [F1388appropriate regulatorF1388]
(1) The [F1388 appropriate regulatorF1388] may object to a person's control over a UK authorised person in any of the circumstances specified in subsection (2).
(2)The circumstances are that the [F1388 appropriate regulatorF1388] reasonably believes that—
(a)the person acquired or increased control without giving notice under section 178(1) in circumstances where notice was required;
(b)the person is in breach of a condition imposed under section 187; or
(c)there are grounds for objecting to control on the basis of the matters in section 186.
(3)The [F1388 appropriate regulatorF1388] —
(a)must take into account whether influence exercised by the person is likely to operate to the detriment of the sound and prudent management of the dfnUK authorised person; and
(b)may take into account whether the person has co-operated with any information requests made or requirements imposed by the [F1388 appropriate regulatorF1388] .
(4)If the [F1388 appropriate regulatorF1388] proposes to object to a person's control over a dfnUK authorised person, it must give that person a warning notice.
[F1431 (4A)Where the appropriate regulator is the PRA, it must consult the FCA before giving a warning notice under this section.
(4B)Where the appropriate regulator is the FCA, it must consult the PRA before giving a warning notice under this section if—
(a)the UK authorised person has as a member of its immediate group a PRA-authorised person, or
(b)the person to whom the warning notice is to be given is a PRA-authorised person.F1431]
F1432 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6)If the [F1388 appropriate regulatorF1388] decides to object to a person's control over a dfnUK authorised person, it must give that person a decision notice.
(7)A person to whom the [F1388 appropriate regulatorF1388] gives a decision notice under this section may refer the matter to the Tribunal.
191B Restriction notices
(1) The [F1388 appropriate regulator F1388] may give notice in writing (a “restriction notice”) to a person in the following circumstances.
(2)The circumstances are that—
(a)the person has control over a UK authorised person by virtue of holding shares or voting power; and
(b)in relation to the shares or voting power, the [F1388 appropriate regulatorF1388] has given the person a warning notice or a decision notice under section 189 or 191A or a final notice which confirms a decision notice given under section 189 or 191A.
[F1433 (2A)Where the appropriate regulator is the PRA, it must consult the FCA before giving a restriction notice under this section.
(2B)Where the appropriate regulator is the FCA, it must consult the PRA before giving a restriction notice under this section if—
(a)the UK authorised person has as a member of its immediate group a PRA-authorised person, or
(b)the person to whom the restriction notice is to be given is a PRA-authorised person.F1433]
(3)In a restriction notice, the [F1388 appropriate regulatorF1388] may direct that shares or voting power to which the notice relates are, until further notice, subject to one or more of the following restrictions—
(a)except by court order, an agreement to transfer or a transfer of any such shares or voting power or, in the case of unissued shares, any agreement to transfer or transfer of the right to be issued with them, is void;
(b)no voting power is to be exercisable;
(c)no further shares are to be issued in pursuance of any right of the holder of any such shares or voting power or in pursuance of any offer made to their holder;
(d)except in a liquidation, no payment is to be made of any sums due from the body corporate on any such shares, whether in respect of capital or otherwise.
[F1434 (3A)Subsection (3)(a) and (b) does not apply where the voting power represented by the shares in question is suspended under section 190A(2).F1434]
(4)A restriction notice takes effect—
(a)immediately; or
(b)on such date as may be specified in the notice.
(5)A restriction notice does not extinguish rights which would be enjoyable but for the notice.
(6)A copy of the restriction notice must be served on—
(a)the UK authorised person in question; and
(b)in the case of shares or voting power held in a parent undertaking of a dfnUK authorised person, the parent undertaking.
(7)A person to whom the [F1388 appropriate regulatorF1388] gives a restriction notice may refer the matter to the Tribunal.
191C Orders for sale of shares
(1) The court may, on the application of the [F1388 appropriate regulatorF1388] , order the sale of shares or the disposition of voting power in the following circumstances.
(2)The circumstances are that—
(a)a person has control over a UK authorised person by virtue of holding the shares or voting power; and
(b)the acquisition or continued holding of the shares or voting power by that person is in contravention of a final notice which confirms a decision notice given under section 189 or section 191A.
[F1435 (2A)Where the appropriate regulator is the PRA, it must consult the FCA before making an application to the court under this section.
(2B)Where the appropriate regulator is the FCA, it must consult the PRA before making an application to the court under this section if—
(a)the UK authorised person has as a member of its immediate group a PRA-authorised person, or
(b)the person holding the shares or voting power is a PRA-authorised person.F1435]
(3)Where the court orders the sale of shares or disposition of voting power it may—
(a)if a restriction notice has been given in relation to the shares or voting power, order that the restrictions cease to apply; and
(b)make any further order.
(4)Where the court makes an order under this section, it must take into account the level of holding that the person would have been entitled to acquire, or to continue to hold, without contravening the final notice.
(5)If shares are sold or voting power disposed of in pursuance of an order under this section, any proceeds, less the costs of the sale or disposition, must be paid into court for the benefit of the persons beneficially interested in them; and any such person may apply to the court for payment of a whole or part of the proceeds.
(6)The jurisdiction conferred by this section may be exercised by the High Court and the Court of Session.
[F1436 (7)The appropriate regulator must obtain the consent of the Bank of England before making an application under this section in relation to shares if the Bank has the power to direct the sale of those shares under section 190A(4).
(8)The appropriate regulator may not make an application under this section in relation to shares if the Bank of England has given a direction for the sale of those shares under section 190A(4).F1436]
Notice of reductions of control of UK authorised persons
191D Obligation to notify the [F1388appropriate regulatorF1388] : dispositions of control
(1) A person who decides to reduce or cease to have control over a UK authorised person must give the [F1388 appropriate regulatorF1388] notice in writing before making the disposition.
[F1437 (1A)The PRA must give the FCA a copy of any notice it receives under this section.
(1B)The FCA must give the PRA a copy of any notice it receives under this section which—
(a)relates to a UK authorised person who has as a member of its immediate group a PRA-authorised person, or
(b)is given by a PRA-authorised person.F1437]
(2) For the purposes of calculations relating to this section, the holding of shares or voting power by a person (“A1”) includes any shares or voting power held by another (“A2”) if A1 and A2 are acting in concert.
191E Requirements for notices under section 191D
(1) A notice under section 191D must be in such form, include such information and be accompanied by such documents as the [F1388 appropriate regulatorF1388] may reasonably require.
(2)[F1438 Each regulatorF1438] must publish a list of its requirements as to the form, information and accompanying documents for a notice under section 191D.
(3)The [F1388 appropriate regulatorF1388] may impose different requirements for different cases and may vary or waive requirements in particular cases.
Offences
case 191F Offences under this Part
(1) A person who fails to comply with an obligation to notify the [F1388 appropriate regulatorF1388] under section 178(1) or 191D(1) is guilty of an offence.
(2)A person who gives notice to the [F1388 appropriate regulatorF1388] under section 178(1) and makes the acquisition to which the notice relates before the expiry date of the assessment period is guilty of an offence unless the [F1388 appropriate regulatorF1388] has approved the acquisition or given a warning notice under section 189(4)(b)(i) [F1439 or section 190A appliesF1439] .
(3)A person who contravenes an interim condition in a warning notice given under section 189(4)(b)(i) or a condition in a decision notice given under section 189(7) or a final notice which confirms a decision notice under that section is guilty of an offence.
(4)A person who makes an acquisition in contravention of a warning notice given under section 189(4)(b)(ii) or a decision notice given under section 189(7) or a final notice which confirms a decision notice under that section is guilty of an offence.
[F1440 (4A)A person who fails to comply with a direction given by the Bank of England under section 190A(4) is guilty of an offence.F1440]
(5)A person who makes an acquisition after the [F1388 appropriate regulator'sF1388] approval for the acquisition has ceased to be effective by virtue of section 191 is guilty of an offence.
(6)A person who provides information to the [F1388 appropriate regulatorF1388] which is false in a material particular is guilty of an offence.
(7)A person who breaches a direction contained in a restriction notice given under section 191B is guilty of an offence.
(8)A person guilty of an offence under subsection (1) to (3) or (5) to (7) is liable—
(a)on summary conviction to a fine not exceeding the statutory maximum; or
(b)on conviction on indictment, to a fine.
(9)A person guilty of an offence under subsection (4) [F1441 or (4A)F1441] is liable—
(a)on summary conviction, to a fine not exceeding the statutory maximum; or
(b)on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.
Interpretation
191G Interpretation
(1) In this Part—
“ acquisition ” means the acquisition of control or of an increase in control over a UK authorised person;
[F1442 “ the appropriate regulator ” is to be read in accordance with section 178(2A); F1442]
F1443 ...
[F1444 “ qualifying credit institution ” includes a credit institution which is authorised under the law of Gibraltar relied on immediately before IP completion day to implement the capital requirements directive. F1444]
“ shares ” has the same meaning as in section 422;
“ UK authorised person ” means an authorised person who—
(a)is a body incorporated in, or an unincorporated association formed under the law of, any part of the United Kingdom; and
(b)is not a person authorised as a result of paragraph 1 of Schedule 5 [F1445 , or a person treated as having a Part 4A permission to carry on a regulated activity by virtue of regulation 71 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019F1445] ; and
“ voting power ” has the same meaning as in section 422.
(2) For the purposes of this Part, a “ working day ” is a day other than—
(a)a Saturday or a Sunday; or
(b)a day which is a bank holiday in England and Wales under the M13Banking and Financial Dealings Act 1971.F1387]
Miscellaneous
note 192 Power to change definitions of control etc. I27
The Treasury may by order—
SI (a)provide for exemptions from the obligations to notify imposed by sections 178 and [F1446191DF1446] ;
(b)amend section [F1447181F1447] by varying, or removing, any of the cases in which a person is treated as [F1448acquiringF1448] control over a UK authorised person or by adding a case;
(c)amend section [F1449182F1449] by varying, or removing, any of the cases in which a person is treated as increasing control over a UK authorised person or by adding a case;
(d)amend section [F1450183F1450] by varying, or removing, any of the cases in which a person is treated as [F1451reducing or ceasing to haveF1451] his control over a UK authorised person or by adding a case;
(e)amend section 422 by varying, or removing, any of the cases in which a person is treated as being a controller of a person or by adding a case.
[F1452PART 12A Powers exercisable in relation to parent undertakings
Introductory
192A Meaning of “qualifying authorised person”
(1) In this Part “ qualifying authorised person ” means an authorised person satisfying the following conditions.
(2)Condition A is that the authorised person is a body corporate incorporated in the United Kingdom.
(3)Condition B is that the authorised person is—
(a)a PRA-authorised person, or
(b)an investment firm.
(4)The Treasury may by order—
(a)amend subsection (3) so as to add to or restrict the descriptions of authorised person who can be qualifying authorised persons, or
(b)provide that while the order is in force subsection (3) is not to have effect.
(5)Except as provided by subsection (6), an order under subsection (4) is not to be made unless a draft of the order has been laid before Parliament and approved by a resolution of each House.
(6)An order under subsection (4) may be made without a draft having been laid and approved as mentioned in subsection (5) if the order contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without a draft being so laid and approved.
(7)An order under subsection (4) made in accordance with subsection (6)—
(a)must be laid before Parliament after being made, and
(b)ceases to have effect at the end of the relevant period unless before the end of that period the order is approved by a resolution of each House of Parliament (but without affecting anything done under the order or the power to make a new order).
(8) The “relevant period” is a period of 28 days beginning with the day on which the order is made.
(9)In calculating the relevant period no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.
192B Meaning of “qualifying parent undertaking”
(1) The parent undertaking of a qualifying authorised person or dfnrecognised UK investment exchange is for the purposes of this Part a “qualifying parent undertaking” if the following conditions are satisfied in relation to it.
(2)Condition A is that the parent undertaking is a body corporate which—
(a)is incorporated in the United Kingdom, or
(b)has a place of business in the United Kingdom.
(3)Condition B is that the parent undertaking is not itself an authorised person, a recognised investment exchange [F1453 , a recognised clearing house or a recognised CSDF1453] .
SI (4)Condition C is that the parent undertaking is a financial institution of a kind prescribed by the Treasury by order.
(5) “ Recognised UK investment exchange ” means a recognised investment exchange that is not an overseas investment exchange as defined in section 313(1).
(6)The Treasury may by order—
(a) amend subsection (4) by omitting the words “a financial institution”, and
(b)make any amendment of subsection (2) that they consider desirable in connection with an amendment made under paragraph (a).
Power of direction
192C Power to direct qualifying parent undertaking
(1)The appropriate regulator may give a direction under this section to a qualifying parent undertaking if either the general condition or the consolidated supervision condition is satisfied.
(2)The general condition is that the appropriate regulator considers that it is desirable to give the direction in order to advance—
(a)in the case of the FCA, one or more of its operational objectives;
(b)in the case of the PRA, any of its objectives.
(3)The consolidated supervision condition is that—
(a)the appropriate regulator is the competent authority for the purpose of consolidated supervision that is required, in relation to some or all of the members of the group of a qualifying authorised person, [F1454 in pursuance of—
(i)any implementing provision contained in subordinate legislation (within the meaning of the Interpretation Act 1978) made otherwise than by any of the following—
(aa)statutory instrument, and
(bb)statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)); F1455...
(ii)any other implementing provision (as amended from time to time)F1454] , F1456...
[F1457 (iii)Part 9C rules;
(iv)CRR rules; or
(v)rules made under section 192XA, andF1457]
(b)the appropriate regulator considers that the giving of the direction is desirable for the purpose of the effective consolidated supervision of the group.
[F1458 (4)In subsection (3)(a)—
“ consolidated supervision ” includes supplemental supervision;
“ implementing provision ” has the same meaning as in section 3M. F1458]
(5)In deciding whether to give a direction under this section, a regulator must have regard—
(a)to the desirability where practicable of exercising its powers in relation to authorised persons or recognised investment exchanges rather than its powers under this section, and
(b)to the principle that a burden or restriction which is imposed on a person should be proportionate to the benefits, considered in general terms, which are expected to result from its imposition.
(6) “ The appropriate regulator ” means—
(a)where a direction relates to a qualifying authorised person or recognised investment exchange who is a PRA-authorised person, the FCA or the PRA;
(b)in any other case, the FCA.
192D Requirements that may be imposed
(1)A direction under section 192C may require the parent undertaking—
(a)to take specified action, or
(b)to refrain from taking specified action.
(2)A requirement may be imposed by reference to the parent undertaking's relationship with—
(a)its group, or
(b)other members of its group.
(3)A requirement may refer to the past conduct of the parent undertaking (for example, by requiring the parent undertaking to review or take remedial action in respect of past conduct).
(4)A requirement imposed by the direction may be expressed to expire at the end of a specified period, but the imposition of a requirement that expires at the end of a specified period does not affect the power to give a further direction imposing a new requirement.
(5)The direction—
(a)may be revoked by the regulator which gave it by written notice to the body to which it is given, and
(b)ceases to be in force if the body to which it is given ceases to be a qualifying parent undertaking.
192E Direction: procedure
(1)If a regulator proposes to give a direction under section 192C, or gives such a direction with immediate effect, it must give written notice to—
(a) the parent undertaking to which the direction is given (or to be given) (“P”), and
(b)any authorised person or recognised investment exchange who will, in the opinion of the regulator, be significantly affected by the direction.
(2) In the following provisions of this section “ notified person ” means a person to whom notice under subsection (1) is given.
(3)A direction under section 192C takes effect—
(a)immediately, if the notice under subsection (1) states that that is the case,
(b)on such other date as may be specified in the notice, or
(c)if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.
(4)A direction may be expressed to take effect immediately (or on a specified date) only if the regulator reasonably considers that it is necessary for the direction to take effect immediately (or on that date).
(5)The notice under subsection (1) must—
(a)give details of the direction,
(b)state the regulator's reasons for the direction and for its determination as to when the direction takes effect,
(c)inform the notified person that the person may make representations to the regulator within such period as may be specified in the notice (whether or not the notified person has referred the matter to the Tribunal), and
(d)inform the notified person of the person's right to refer the matter to the Tribunal.
(6)The regulator may extend the period allowed under the notice for making representations.
(7)If, having considered any representations made by any notified person, the regulator decides—
(a)to give the direction proposed, or
(b)if the direction has been given, not to revoke the direction,
it must give each of the notified persons written notice.
(8)If, having considered any representations made by any notified person, the regulator decides—
(a)not to give the direction proposed,
(b)to give a different direction, or
(c)to revoke a direction which has effect,
it must give each of the notified persons written notice.
(9)A notice given under subsection (7) must inform the notified person of the person's right to refer the matter to the Tribunal.
(10)A notice under subsection (8)(b) must comply with subsection (5).
(11)If a notice informs the notified person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(12)For the purposes of subsection (3)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
192F Consultation between regulators
(1)Before the PRA gives a notice under section 192E(1) or (8)(b), it must consult the FCA.
(2)Before the FCA gives a notice under section 192E(1) or (8)(b) in relation to the parent undertaking of a PRA-authorised person, the FCA must consult the PRA.
(3)Before [F1459 the FCAF1459] gives a notice under section 192E(1) or (8)(b) in relation to the parent undertaking of a recognised clearing house [F1460 or a recognised CSDF1460] , [F1461 itF1461] must consult the Bank of England.
192G References to Tribunal
(1)A notified person who is aggrieved by the exercise by either regulator of its powers in relation to directions under section 192C may refer the matter to the Tribunal.
(2) “ Notified person ” is to be read in accordance with subsection (2) of section 192E, except that it includes a person to whom a notice under subsection (1) of that section ought to have been given.
192H Statement of policy: directions under section 192C
(1)Each regulator must prepare and issue a statement of policy with respect to the giving of directions under section 192C.
(2)A regulator may at any time alter or replace a statement issued under this section.
(3)If a statement issued under this section is altered or replaced, the regulator must issue the altered or replacement statement.
(4)In exercising or deciding whether to exercise its power under section 192C in any particular case, a regulator must have regard to any statement published under this section and for the time being in force.
(5)A statement under this section must be published by the regulator concerned in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(6)A regulator may charge a reasonable fee for providing a person with a copy of a statement published under this section.
(7)A regulator must, without delay, give the Treasury a copy of any statement which the regulator publishes under this section.
192I Statement of policy relating to directions: procedure
(1) Before issuing a statement of policy under section 192H, a regulator (“the issuing regulator”) must—
(a)consult the other regulator and [F1462 , where the issuing regulator is the FCA,F1462] the Bank of England, and
(b)publish a draft of the proposed statement in the way appearing to the issuing regulator to be best calculated to bring it to the attention of the public.
(2)The draft must be accompanied by notice that representations about the proposal may be made to the issuing regulator within a specified time.
(3)Before issuing the proposed statement, the issuing regulator must have regard to any representations made to it in accordance with subsection (2).
(4)If the issuing regulator issues the proposed statement it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2), and
(b)its response to them.
(5)If the statement differs from the draft published under subsection (2) in a way which is, in the opinion of the issuing regulator, significant, the issuing regulator—
(a)must before issuing it consult the other regulator again, and
(b)must (in addition to complying with subsection (4)), publish details of the difference.
(6)The issuing regulator may charge a reasonable fee for providing a person with a draft published under subsection (1)(b).
(7)This section also applies to a proposal to alter or replace a statement.
Rules requiring provision of information by parent undertakings
192J Rules requiring provision of information by parent undertakings
(1)The appropriate regulator may make rules requiring qualifying parent undertakings—
(a)to provide to the regulator information of a specified description;
(b)to produce to the regulator documents of a specified description.
(2)The rules may only specify a description of information or documents that is relevant to the exercise by the regulator of its functions.
(3)The rules may make provision—
(a)as to the time within which information must be provided or documents produced;
(b)about the form in which any information is to provided;
(c)about the place where any documents are to be produced;
(d)requiring information provided to be verified in a specified manner;
(e)requiring documents produced to be authenticated in a specified manner.
(4) “ The appropriate regulator ” means—
(a)in relation to the parent undertaking of a qualifying authorised person who is a PRA-authorised person, the FCA or the PRA;
(b)in any other case, the FCA.
[F1463Rules applying to parent undertakings of ring-fenced bodies
192JA Rules applying to parent undertakings of ring-fenced bodies
(1)The appropriate regulator may make such rules applying to bodies corporate falling within subsection (2) as appear to the regulator to be necessary or expedient for the group ring-fencing purposes.
(2)A body corporate falls within this subsection if—
(a)it is incorporated in the United Kingdom or has a place of business in the United Kingdom,
(b)it is a parent undertaking of a ring-fenced body, and
(c)it is not itself an authorised person.
(3) The “group ring-fencing purposes” are the purposes set out in section 142H(4).
(4) “ The appropriate regulator ” means—
(a)in relation to the parent undertaking of a ring-fenced body that is a PRA-authorised person, the PRA;
(b)in any other case, the FCA.F1463]
[F1463Rules requiring parent undertakings to facilitate resolution
192JB Rules requiring parent undertakings to facilitate resolution
[F1464 (1)The appropriate regulator may make rules requiring a qualifying parent undertaking to make arrangements that in the opinion of the regulator—
(a)would facilitate the preparation, maintenance, implementation and review of a recovery plan in relation to the group of the qualifying parent undertaking,
(b)are required in relation to the provision of financial support to other members of the group of the qualifying parent undertaking which encounter or are likely to encounter financial difficulties, or
(c)would allow or facilitate the exercise of the resolution powers in relation to the qualifying parent undertaking or any of its subsidiary undertakings in the event of a situation arising where all or part of the business of the parent undertaking or the subsidiary undertaking encounters or is likely to encounter financial difficulties.F1464]
[F1465 (1A) A “recovery plan” in relation to a group, is a document which provides for measures to be taken to achieve the stabilisation of the group as a whole, or any institution within the group, where the group or institution is in a situation of financial stress, in order to address or remove the causes of the financial stress and restore the financial position of the group or the institution. F1465]
(2) The “resolution powers” are—
(a)the powers conferred on the Treasury and the Bank of England by or under Parts 1 to 3 of the Banking Act 2009, and
(b)any similar powers exercisable by an authority outside the United Kingdom.
(3)The arrangements that may be required include arrangements relating to—
(a)the issue of debt instruments by the parent undertaking;
(b) the provision to a subsidiary undertaking (“S”) or a transferee by the parent undertaking, or by any other subsidiary undertaking of the parent undertaking, of such services and facilities as would be required to enable S or the transferee to operate the business, or part of the business, effectively.
[F1466 (c)the review of a recovery plan by the [F1467 PRAF1467] ;
(d)the entry by the parent undertaking into a group financial support agreement and provision of financial support by the parent undertaking in accordance with that agreement.F1466]
[F1468 (4)In subsection (3)—
F1469 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1470 (b) “ group financial support agreement ” means an agreement for the provision of financial support, by a member of the group of the parent undertaking, to an institution in the group which, at any time after the agreement is concluded, comes to need financial support; F1470]
(c) “transferee” means a person to whom all or part of the business of the parent undertaking or the subsidiary undertaking could be transferred as a result of the exercise of the resolution powers. F1468]
(5) “ Debt instrument ” has the same meaning as in section 142Y.
(6) “ The appropriate regulator ” means—
(a)where the subsidiary undertakings of the qualifying parent undertaking include a ring-fenced body that is a PRA-authorised person, the PRA;
(b)where the subsidiary undertakings of the qualifying parent undertaking include one or more PRA-authorised persons but do not include any authorised person that is not a PRA-authorised person, the PRA;
(c)where the subsidiary undertakings of the qualifying parent undertaking do not include any PRA-authorised person, the FCA;
(d)in any other case, the PRA or the FCA.F1463]
Failure to comply with direction or breach of rules
192K Power to impose penalty or issue censure
(1) This section applies if a regulator is satisfied that a person who is or has been a qualifying parent undertaking (“P”) has contravened—
(a)a requirement of a direction given to P by that regulator under section 192C, F1471...
(b)a provision of rules made by that regulator under section 192J [F1472 or 192JBF1472] , [F1473 orF1473]
[F1474 (c)a requirement imposed by a [F1475 qualifying provisionF1475] specified, or of a description specified, for the purposes of this subsection by the Treasury by order.F1474]
[F1476 (1A) This section also applies if a regulator is satisfied that a person (“P”) who is or has been a parent undertaking of a ring-fenced body has contravened a provision of rules made by that regulator under section 192JA. F1476]
(2)The regulator may impose a penalty of such amount as it considers appropriate on—
(a)P, or
(b)any person who was knowingly concerned in the contravention.
(3)The regulator may, instead of imposing a penalty on a person, publish a statement censuring the person.
[F1477 (3A)The regulator may impose, for such period as it considers appropriate, restrictions (including a temporary ban) on the exercise by any member of the management body or senior management of, or other person who works for, a qualifying parent undertaking of any functions in a PRA-authorised person, an investment firm or a qualifying parent undertaking.
(3B)The regulator may only impose restrictions under subsection (3A) on a person who was, at any time, knowingly concerned in the contravention.F1477]
(4)The regulator may not take action against a person under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the person under section 192L.
(5) “ The limitation period ” means the period of 3 years beginning with the first day on which the regulator knew of the contravention.
(6)For this purpose a regulator is to be treated as knowing of a contravention if it has information from which the contravention can reasonably be inferred.
[F1478 (7)In this section—
“management body” means the board of directors, or if there is no such board, the equivalent body responsible for the management of the undertaking concerned;
“member of the senior management” means a person who—
(a)exercises executive functions within a qualifying parent undertaking, and
(b)is responsible, and directly accountable to the management body, for the day to day management of that qualifying parent undertaking.
(8)A regulator which imposes a restriction on any person under subsection (3A) may—
(a)vary the restriction so as to reduce the period for which it has effect or otherwise to limit its effect, or
(b)cancel the restriction.F1478]
192L Procedure and right to refer to Tribunal
(1)If a regulator proposes to take action against a person under section 192K, it must give the person a warning notice.
(2)A warning notice about a proposal to impose a penalty must state the amount of the penalty.
(3)A warning notice about a proposal to publish a statement must set out the terms of the statement.
[F1479 (3A)A warning notice about a proposal to impose a restriction under section 192K(3A) must state—
(a)the terms of the restriction, and
(b)the period for which the restriction is to have effect.F1479]
(4)If the regulator decides to take action against a person under section 192K, it must give the person a decision notice.
(5)A decision notice about the imposition of a penalty must state the amount of the penalty.
(6)A decision notice about the publication of a statement must set out the terms of the statement.
[F1480 (6B)A decision notice about the imposition of a restriction under section 192K(3A) must state—
(a)the terms of the restriction, and
(b)the period for which the restriction is to have effect.F1480]
(7)If the regulator decides to take action against a person under section 192K, the person may refer the matter to the Tribunal.
192M Duty on publication of statement
After a statement under section 192K(3) is published, the regulator must send a copy of the statement to—
(a)the person in respect of whom it is made, and
(b)any person to whom a copy of the decision notice was given under section 393(4).
192N Imposition of penalties under section 192K: statement of policy
(1)Each regulator must prepare and issue a statement of policy with respect to—
(a)the imposition of penalties under section 192K, and
(b)the amount of penalties under that section.
(2)A regulator's policy in determining what the amount of a penalty should be must include having regard to—
(a)the seriousness of the contravention,
(b)the extent to which the contravention was deliberate or reckless, and
(c)whether the person on whom the penalty is to be imposed is an individual.
(3)A regulator may at any time alter or replace a statement issued under this section.
(4)If a statement issued under this section is altered or replaced, the regulator must issue the altered or replacement statement.
(5)In exercising, or deciding whether to exercise, a power under section 192K(2) in the case of any particular contravention, a regulator must have regard to any statement of policy published under this section and in force at a time when the contravention occurred.
(6)A statement under this section must be published by the regulator concerned in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(7)A regulator may charge a reasonable fee for providing a person with a copy of the statement published under this section.
(8)A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.
(9)Section 192I applies in relation to a statement under this section as it applies in relation to a statement under section 192H.F1452]
[F1481PART 12B Approval of certain holding companies
[F1482InterpretationF1482]
192O. Interpretation
(1)In this Part—
F1483 ...
[F1484 “ on a consolidated basis ” means on the basis of the consolidated situation; F1484]
[F1484 “ consolidated situation ” means the situation that results from an entity being treated, for the purposes of the capital requirements regulation or CRR rules (as appropriate), as if that entity and one or more other entities formed a single entity; F1484]
“designated investment firm” means an investment firm which is for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 ;
“ Directive 2013/36/EU UK law” means—
(a)before IP completion day, the law of the United Kingdom which is relied on by the United Kingdom to implement the capital requirements directive and its implementing measures (“the relevant EU provisions”); and
(b)after IP completion day, the law of the United Kingdom which was relied on immediately before that date to implement the relevant EU provisions as it has effect—
(i)on [F1485 1 January 2022F1485] , in the case of rules made by the FCA or by the PRA under this Act, and
(ii)as amended from time to time, in all other cases,
F1486 ...
[F1487 “ EU tertiary legislation ” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018 ; F1487]
“financial holding company” has the meaning given in Article 4(1)(20) of the capital requirements regulation;
“financial institution” has the meaning given in Article 4(1)(26) of the capital requirements regulation;
“institution” means a credit institution or an investment firm;
“investment firm” has the meaning given in Article 4(1)(2) of the capital requirements regulation;
“mixed financial holding company” has the meaning given in Article 4(1)(21) of the capital requirements regulation;
“parent institution” means an institution which is a parent undertaking;
“parent undertaking” has the meaning given in section 420;
F1488 ...
[F1489 “ section 192XA rules ” means rules made under section 192XA; F1489]
[F1490 “ on a sub-consolidated basis ” means—
(a)on the basis of the consolidated situation of a parent institution, financial holding company or mixed financial holding company, excluding a sub-group of entities, or
(b)on the basis of the consolidated situation of a parent institution, financial holding company or mixed financial holding company that is not the ultimate parent institution, financial holding company or mixed financial holding company;F1490]
“subsidiary institution” means an institution which is a subsidiary undertaking.
(2) A “parent financial holding company” or “parent mixed financial holding company” means a financial holding company or a mixed financial holding company which—
(a)is a UK parent financial holding company or a UK parent mixed financial holding company, within the meaning given in Article 4(1)(30) and 4(1)(32) respectively of the capital requirements regulation; or
(b)is required, whether by the PRA by direction under section 192C or otherwise, to comply with the capital requirements regulation [F1491 , CRR rulesF1491] and Directive 2013/36/EU UK law on a sub-consolidated basis.
[F1492 (3)In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of [F1493 assimilatedF1493] law.F1492]
[F1494Approval F1494]
192P. Requirement for approval
(1)No company may be established in the United Kingdom as a parent financial holding company or a parent mixed financial holding company unless—
(a)the company is approved by the PRA;
(b)the PRA has confirmed that the company is exempt from the requirement for approval under subsection (2); or
(c)the subsidiary undertakings of the company do not include—
(i)a credit institution, or
(ii)a designated investment firm.
(2)A company is exempt from the requirement for approval if—
(a)it is a parent financial holding company and its principal activity is to acquire holdings in subsidiary undertakings; or
(b)it is a parent mixed financial holding company and its principal activity with respect to institutions and financial institutions is to acquire holdings in subsidiary undertakings,
and all of the conditions in subsection (3) are satisfied.
(3)The conditions in this subsection are satisfied if—
(a)the Bank of England has not identified the company as a resolution entity (within the meaning of section 3 of the Banking Act 2009) in a group resolution plan under Part 5 of the Bank Recovery and Resolution (No. 2) Order 2014;
(b)a credit institution or a designated investment firm which is a subsidiary undertaking in the same group as the company—
(i)has been designated by the PRA as responsible to ensure the group’s compliance with prudential requirements on a consolidated or sub-consolidated basis, and
(ii)has the power required to discharge those obligations effectively, whether under contractual arrangements with other companies in the group or otherwise;
(c)the company does not take any management, operational or financial decisions affecting—
(i)the group as a whole, or
(ii)any of its subsidiary undertakings which are institutions or financial institutions;
(d)the PRA is satisfied that there is no impediment to the effective supervision of the group on a consolidated or sub-consolidated basis.
(4)For the purposes of this section, a company is established in the United Kingdom if the company is incorporated in, or formed under the law of, any part of the United Kingdom.
192Q. Application for approval or exemption
(1)An application for—
(a)the PRA’s approval for the purposes of section 192P(1)(a); or
(b)confirmation of exemption from the requirement for approval,
must be made by the company concerned.
(2)The application must—
(a)be made in such manner as the PRA may direct; and
(b)contain or be accompanied by the information referred to in subsection (3).
(3)The information referred to in subsection (2) is—
(a)a description of the structural organisation of the group of which the company is part, indicating—
(i)its subsidiary undertakings and parent undertakings, and
(ii)the location and type of activity undertaken by each of the entities within the group;
(b)the identity of at least two individuals who are directors of the company;
(c)a description as to how each director of the company complies with the requirements that they are of sufficiently good repute, and possess sufficient knowledge, skills and experience, to perform their duties as directors;
(d)where one of the subsidiary undertakings of the company is a credit institution or a designated investment firm—
(i)the identity of any persons who hold, whether directly or indirectly, qualifying holdings (within the meaning of Article 4(1)(36) of the capital requirements regulation), in the credit institution or designated investment firm, and the amounts of those holdings, or
(ii)if no person holds a qualifying holding in the credit institution or designated investment firm, the identity of the 20 largest shareholders in the credit institution or designated investment firm and the amount of their shareholdings;
(e)a description of the internal organisation and the distribution of tasks with the group.
(4)The PRA may, by notice in writing, require the company to provide any further information necessary to enable the PRA to assess whether the conditions referred to in section 192P(2) and (3) or section 192R are fulfilled.
192R. Grant of approval
(1)When the PRA receives an application from a company under section 192Q, it must decide whether—
(a)to approve the company,
(b)to confirm that the company qualifies for an exemption under section 192P(2) and (3), or
(c)to take one or more of the measures in section 192T.
(2)The PRA may only approve the company under this section where conditions A, B and C are satisfied.
(3)Condition A is that the internal arrangements and distribution of tasks within the group of which the company is part are—
(a)adequate for the purpose of complying with the requirements imposed by Directive 2013/36/EU UK law [F1495 , CRR rulesF1495] F1496 ... and the capital requirements regulation on a consolidated or sub-consolidated basis, F1496...
[F1497 (aa)adequate for the purpose of complying with section 192XA rules, andF1497]
(b)effective to—
(i)co-ordinate all the subsidiary undertakings of the company, including, where necessary, through an adequate distribution of tasks among subsidiary institutions;
(ii)prevent or manage intra-group conflicts; and
(iii)enforce the group-wide policies set by the company throughout the group.
(4)Condition B is that the structural organisation of the group of which the company is part does not obstruct or otherwise prevent the effective supervision of the subsidiary institutions and parent institutions as concerns the individual, consolidated and, where appropriate, sub-consolidated obligations to which they are subject.
(5)In assessing whether Condition B is satisfied, the PRA must take into account—
(a)the position of the company within the group;
(b)the shareholding structure of the company, and the group of which it is part; and
(c)the role of the company within the group.
(6)Condition C is that—
(a)the PRA has received the information as to the identity of the shareholders of any credit institution in the group, and the amount of their shareholdings, which is required under Directive 2013/36/EU UK law; and
(b)the directors of the company are of sufficiently good repute, and possess sufficient knowledge, skills and experience to perform their duties as directors.
(7)Where the PRA proposes to refuse approval, or to reject an application for confirmation of exemption, it must give the company a warning notice within four months beginning with—
(a)the date on which it received the application under section 192Q; or
(b)if later (subject to subsection (8) and section 387), the date on which it received any further information requested under section 192Q(4).
(8)When the PRA decides to refuse approval, or to reject an application for an exemption, it must give the company a decision notice within six months of the date on which it received which the application under section 192Q.
192S. Regulator’s duty to monitor
(1)The PRA must monitor whether—
(a)a company approved under section 192R continues to satisfy the conditions in section 192R(3) to (6); and
(b)a company which it has confirmed is exempt from the requirement for approval under section 192P continues to satisfy the conditions for exemption set out in section 192P(2) and (3).
(2)A company which is subject to the requirement for approval under section 192P(1), or exempt from that requirement under section 192P(2), must give the PRA notice in writing of—
(a)any change in the structural organisation of the group; and
(b)any other information required by rules made under section 192J.
192T Measures
(1)Where the PRA determines that the conditions in section 192R are not met, or have ceased to be met, by a company which is subject to the requirement for approval under section 192P(1), the PRA must take appropriate measures in relation to the company—
(a) to ensure the continuity and integrity of the consolidated or sub-consolidated supervision of the group of which the company is part (the “relevant group”); F1498 ...
(b)to ensure that the relevant group complies with the requirements in Directive 2013/36/EU UK law [F1499 , CRR rulesF1499] F1500 ... and the capital requirements regulation on a consolidated or sub-consolidated basis [F1501 , and
(c)to ensure that the relevant group complies with section 192XA rules.F1501]
(2)Measures taken under subsection (1) may include a direction—
(a)suspending the exercise by the company of voting rights attached to the shares of specified subsidiary institutions held by the company;
(b)requiring the company to transfer its holdings in its subsidiary institutions to its shareholders;
(c)designating another financial holding company, mixed financial holding company or institution within the group as being responsible for a period specified in the direction for ensuring that the group complies with the requirements laid down in Directive 2013/36/EU UK law [F1502 , CRR rulesF1502] F1503 ... and in the capital requirements regulation on a consolidated or sub-consolidated basis [F1504 and with section 192XA rulesF1504] ;
(d)restricting or prohibiting distributions or interest payments to shareholders;
(e)requiring the company to divest from, or reduce its holdings in, institutions or financial institutions;
(f)requiring the company to submit a plan setting out how it proposes to correct any deficiencies in its compliance with the conditions in section 192R.
(3)Where the PRA determines that a company which it has confirmed is exempt from the requirement for approval under section 192P no longer satisfies the conditions for exemption under section 192P(3), it must direct that company to apply for approval for the purposes of section 192P(1)(a).
192U. Directions: procedure
(1)If the PRA proposes to give a direction under section 192T, or gives such a direction with immediate effect, it must give written notice to—
(a)the financial holding company or mixed financial holding company to which the direction is given (or to be given); and
(b)any authorised person or recognised investment exchange who will, in the opinion of the PRA, be significantly affected by the direction.
(2) In the following provisions of this section “notified person” means a person to whom notice under subsection (1) is given.
(3)A direction under section 192T takes effect—
(a)immediately, if the notice under subsection (1) states that that is the case;
(b)on such other date as may be specified in the notice; or
(c)if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.
(4)A direction may be expressed to take effect immediately (or on a specified date) only if the PRA reasonably considers that it is necessary for the direction to take effect immediately (or on that date).
(5)The notice under subsection (1) must—
(a)give details of the direction;
(b)state the PRA’s reasons for the direction and for its determination as to when the direction takes effect;
(c)inform the notified person that the person may make representations to the PRA within such period as may be specified in the notice (whether or not the notified person has referred the matter to the Tribunal); and
(d)inform the notified person of the person’s right to refer the matter to the Tribunal.
(6)The PRA may extend the period allowed under the notice for making representations.
(7)If, having considered any representations made by any notified person, the PRA decides—
(a)to give the direction proposed; or
(b)if the direction has been given, not to revoke the direction,
it must give each of the notified persons written notice.
(8)If, having considered any representations made by any notified person, the PRA decides—
(a)not to give the direction proposed,
(b)to give a different direction, or
(c)to revoke a direction which has effect,
it must give each of the notified persons written notice.
(9)A notice given under subsection (7) must inform the notified person of the person’s right to refer the matter to the Tribunal.
(10)A notice under subsection (8)(b) must comply with subsection (5).
(11)If a notice informs the notified person of the person’s right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(12)For the purposes of subsection (3)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
F1505192V. Rules imposing consolidated or sub-consolidated requirements
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
192W. Consultation between regulators
The PRA must consult the FCA before—
(a)approving an application under section 192Q; or
(b)giving a notice under section 192U(1) or (8)(b) to the financial holding company or mixed financial company of a group which includes an institution which is not a PRA-authorised person.
192X. References to Tribunal
(1)A reference may be made to the Tribunal by—
(a)a company which is aggrieved by the decision of the PRA under section 192R to refuse approval, or to reject an application for an exemption; or
(b)a notified person who is aggrieved by the exercise by the PRA of its powers in relation to directions under section 192T.
(2) “Notified person” means a person to whom notice under section 192U(1) has been given, or ought to have been given.
[F1506Rules
192XA Rules applying to holding companies cross-notes
(1)The PRA may make rules described in subsection (2) applying to financial holding companies and mixed financial holding companies that are—
(a)approved under section 192R, or
(b)designated under section 192T(2)(c),
where it appears to the PRA to be necessary or expedient to make the rules for the purpose of advancing any of its objectives.
(2)Those rules are—
(a)rules imposing requirements to be complied with by holding companies on a consolidated or sub-consolidated basis;
(b)rules imposing requirements which, in the PRA's opinion, are likely to mitigate group risk;
(c)rules imposing reporting requirements related to requirements described in paragraph (a) or (b);
(d)rules imposing public disclosure requirements related to requirements described in paragraph (a) or (b);
(e)rules imposing requirements in respect of governance arrangements;
(f)rules imposing requirements in respect of remuneration policies and practices.
F1507 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1507 (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)Rules made under this section may make provision by reference to the capital requirements regulation, to instruments made under that regulation or to Directive 2013/36/EU UK law, as amended from time to time.
(6)Section 137H (rules about remuneration) applies where the PRA makes rules under this section prohibiting persons, or persons of a specified description, from being remunerated in a specified way as it applies where the PRA makes general rules imposing such a prohibition.
(7)Section 137I (Treasury direction to consider compliance with remuneration policies) applies where the PRA makes rules under this section requiring financial holding companies or mixed financial holding companies, or a specified description of such companies, to act in accordance with a remuneration policy as it applies where the PRA makes general rules imposing such requirements on authorised persons, but as if—
(a)the references in that section to authorised persons were references to financial holding companies or mixed financial holding companies, and
(b)subsection (7) of that section were omitted.
(8)Section 141A (power to make consequential amendments of references to rules etc) applies to the exercise by the PRA of its power to make, alter or revoke rules under this section as it applies in relation to the exercise by the PRA of its power to make, alter or revoke rules under Part 9A.
(9)In this section—
“ governance arrangements ” includes organisational structure, lines of responsibility and internal control mechanisms;
“ group risk ” means the risk that the financial position of a financial holding company or mixed financial holding company or of a member of its group may be adversely affected—
(a)by its relationships, whether financial or non-financial, with other members of the group, or
(b)by matters which affect the financial position of the group, or of a group which forms part of that group, taken as a whole (including, for example, reputational contagion).
192XB Procedural provision cross-notes
(1)For provision about the making of section 192XA rules that are CRR rules, see Part 9D.
(2)The following provisions of Part 9D apply in relation to section 192XA rules that are not CRR rules as if they were CRR rules—
(a)section 144C (matters to consider when making rules);
(b)section 144D (explanation to accompany consultation on rules);
(c)section 144E(1) and (4) to (7) (exceptions from sections 144C and 144D).
192XC Disapplication or modification of rules in individual cases
(1)This section applies to a section 192XA rule if, or to the extent that, section 192XA rules provide for it to apply to the rule.
(2)The PRA may, on the application of or with the consent of a person who is subject to section 192XA rules, give the person a permission that enables the person—
(a)not to apply the section 192XA rule, or
(b)to apply the section 192XA rule with the modifications specified in the permission.
(3)The PRA may—
(a)give permission under this section subject to conditions, and
(b)revoke or vary permission under this section.F1506]
192Y. Power to impose penalty or issue censure
(1) This section applies if the PRA is satisfied that a company which is or has been a financial holding company or a mixed financial holding company (“the company”) has contravened a requirement imposed by—
(a)this Part;
(b)a direction given to the company by the PRA under section 192T;
F1508 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1509 (ca)section 192XA rules; orF1509]
[F1510 (d)the capital requirements regulation or an instrument made under that regulation.F1510]
(2)The PRA may impose a penalty of such amount as it considers appropriate on—
(a)the company; or
(b)any person who was knowingly concerned in the contravention.
(3)The PRA may, instead of imposing a penalty on a person, publish a statement censuring the person.
(4)The PRA may not take action against a person under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the person under section 192Z.
(5) “The limitation period” means the period of 3 years beginning with the first day on which the PRA knew of the contravention.
(6)For this purpose the PRA is to be treated as knowing of a contravention if it has information from which the contravention can reasonably be inferred.
192Z. Procedure and right to refer to Tribunal
(1)If a regulator proposes to take action against a person under section 192Y, it must give the person a warning notice.
(2)A warning notice about a proposal to impose a penalty must state the amount of the penalty.
(3)A warning notice about a proposal to publish a statement must set out the terms of the statement.
(4)If the regulator decides to take action against a person under section 192Y, it must give the person a decision notice.
(5)A decision notice about the imposition of a penalty must state the amount of the penalty.
(6)A decision notice about the publication of a statement must set out the terms of the statement.
(7)If the regulator decides to take action against a person under section 192Y, the person may refer the matter to the Tribunal.
192Z1. Duty on publication of statement
After a statement under section 192Y(3) is published, the regulator must send a copy of the statement to—
(a)the person in respect of whom it is made; and
(b)any person to whom a copy of the decision notice was given under section 393(4).
192Z2. Directions and penalties: statement of policy
(1)The PRA must prepare and issue a statement of policy with respect to—
(a)the taking of measures, including directions, under section 192T;
(b)the imposition of penalties under section 192Y;
(c)the amount of penalties under that section.
(2)The PRA’s policy in determining what the amount of a penalty should be must include having regard to—
(a)the seriousness of the contravention;
(b)the extent to which the contravention was deliberate or reckless; and
(c)whether the person on whom the penalty is to be imposed is an individual.
(3)The PRA may at any time alter or replace a statement issued under this section.
(4)If a statement issued under this section is altered or replaced, the PRA must issue the altered or replacement statement.
(5)In imposing, or deciding whether to impose a penalty under section 192Y(2) in the case of any particular contravention, the PRA must have regard to any statement of policy published under this section and in force at a time when the contravention occurred.
(6)A statement under this section must be published by the PRA in the way appearing to the PRA to be best calculated to bring it to the attention of the public.
(7)The PRA may charge a reasonable fee for providing a person with a copy of the statement published under this section.
(8)The PRA must, without delay, give the Treasury a copy of any statement which it publishes under this section.
192Z3. Statement of policy relating to directions: procedure
(1)Before issuing a statement of policy under section 192Z2, the PRA must—
(a)consult the FCA; and
(b)publish a draft of the proposed statement in the way appearing to the PRA to be best calculated to bring it to the attention of the public.
(2)The draft must be accompanied by notice that representations about the proposal may be made to the PRA within a specified time.
(3)Before issuing the proposed statement, the PRA must have regard to any representations made to it in accordance with subsection (2).
(4)If the PRA issues the proposed statement it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2); and
(b)its response to them.
(5)If the statement differs from the draft published under subsection (2) in a way which is, in the opinion of the PRA, significant, the PRA must—
(a)consult the FCA again before issuing it; and
(b)in addition to complying with subsection (4), publish details of the difference.
(6)The PRA may charge a reasonable fee for providing a person with a draft published under subsection (1)(b).
(7)This section also applies to a proposal to alter or replace a statement.F1481]
Part XIII Incoming Firms: Intervention by [F1511FCA or PRAF1511] cross-notes
Interpretation
F1512193 Interpretation of this Part.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1512194 General grounds on which power of intervention is exercisable.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512194A Contravention by relevant EEA firm with UK branch of requirement under markets in financial instruments directive: appropriate regulator primarily responsible for securing compliance
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512194B. Contravention by relevant EEA firm of requirement in capital requirements directive or capital requirements regulation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512194C. Contravention by relevant EEA firm with UK branch of requirement in mortgages directive: appropriate regulator primarily responsible for securing compliance
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512194D. Contravention by relevant EEA firm of requirement in insurance distribution directive: appropriate regulator primarily responsible for securing compliance
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note 195 Exercise of power in support of overseas regulator.
F1512 (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512 (2A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) “ An overseas regulator ” means an authority in a country or territory outside the United Kingdom—
(a)which is a home state regulator; or
(b)which exercises any function of a kind mentioned in subsection (4).
(4)The functions are—
(a)a function corresponding to any function of [F1513either regulatorF1513] under this Act;
F1514 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c)a function corresponding to any function exercised by the Secretary of State under [F1515the Companies Acts (as defined in section 2 of the Companies Act 2006)F1515] ;
(d)a function in connection with —
(i)M14the investigation of conduct of the kind prohibited by Part V of the Criminal Justice Act 1993 (insider dealing); or
(ii)the enforcement of rules (whether or not having the force of law) relating to such conduct;
(e)a function prescribed by regulations made for the purposes of this subsection which, in the opinion of the Treasury, relates to companies or financial services.
F1512 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512 (8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512195A Contravention by relevant EEA firm , EEAUCITS or EEAAIFM of directive requirements: home state regulator primarily responsible for securing compliance
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512195B. Contravention by relevant EEA firm of requirement in mortgages directive: home state regulator primarily responsible for securing compliance
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512195C. Contravention by relevant EEA firm of requirement in insurance distribution directive: home state regulator primarily responsible for securing compliance
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1512196 The power of intervention.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise of power of intervention
note F1512197 Procedure on exercise of power of intervention.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1512198 Power to apply to court for injunction in respect of certain overseas insurance companies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1512199 Additional procedure for EEA firms in certain cases.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1512199A Management companies: loss of authorisation
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental
note F1512200 Rescission and variation of requirements.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1512201 Effect of certain requirements on other persons
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1512202 Contravention of requirement imposed under this Part.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Powers of [F1516Office of Fair TradingF1516]
note F1517203 Power to prohibit the carrying on of Consumer Credit Act business.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1517204 Power to restrict the carrying on of Consumer Credit Act business.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1518PART 13A Enhanced supervision of firms exercising rights under the Insurance Distribution Directive
F1518203A. Insurance distribution directive: enhanced supervision of EEA firms by UK regulators
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1518203B. Insurance distribution directive: enhanced supervision of UK firms by an EEA regulator
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1518203C. Modification or waiver of rules where firm subject to enhanced supervision
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1518203D. Publication of directions under section 203C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part XIV Disciplinary Measures cross-notes
case [F1519204A Meaning of “relevant requirement” and “appropriate regulator” cross-notes
(1)The following definitions apply for the purposes of this Part.
SI (2) “ Relevant requirement ” means a requirement imposed—
(a)by or under this Act, F1520...
[F1521 (aa)by regulations under section 11 of the Civil Liability Act 2018,F1521]
[F1522 (aza)by or under Part 1 of the Pensions Act 2008 in relation to the scale requirement in section 28B or the asset allocation requirement in section 28C,F1522]
[F1523 (ab)by or under the Securitisation Regulations 2024,F1523]
[F1524 (ac)by small pots regulations within the meaning of Chapter 2 of Part 2 of the Pension Schemes Act 2026,F1524]
SI (b)by a [F1525 qualifying provisionF1525] specified, or of a description specified, for the purposes of this subsection by the Treasury by order [F1526 , F1527...
(c)by the Alternative Investment Fund Managers Regulations 2013F1526] [F1528 , or
(d)by the Undertakings for Collective Investment in Transferable Securities Regulations 2011.F1528]
(3) The PRA is “the appropriate regulator” in the case of a contravention of—
(a)a requirement that is imposed under any provision of this Act by the PRA;
(b)a requirement under section 56(6) where the authorised person concerned is a PRA-authorised person and the prohibition order concerned is made by the PRA;
F1529 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1530 (d)a requirement under section 62A(2) where [F1531 the revised statement of responsibilities is to be provided to the PRA only;F1531]
(e)a requirement under section 64B(2) or (5) where the conduct rules concerned are made by the PRA;
(f)a requirement under section 64C(1) to notify the PRA that disciplinary action has been taken.F1530]
[F1532 (fa)a requirement imposed by regulation 8A(2) of the Securitisation Regulations 2024 where the institutional investor concerned is a PRA-authorised person;F1532]
[F1533 (g)a requirement imposed by regulation 38 of the Securitisation Regulations 2024 on a PRA-authorised person in a case where the temporary prohibition imposed under regulation 37(1) or (2) of those Regulations was imposed by the PRA.F1533]
[F1534 (3A) Either the PRA or the FCA is “the appropriate regulator” in the case of a contravention of—
(a)a requirement under section 59(1) or (2) where the authorised person concerned is a PRA-authorised person and the approval concerned falls to be given by the PRA;
(b)a requirement under section 60A(1) or (2) where the authorised person concerned is a PRA-authorised person and the approval concerned falls to be given by the PRA;
[F1535 (ba)a requirement under section 62A(2) where the revised statement of responsibilities is to be provided to the FCA and the PRA;F1535]
(c)a requirement under section 63(2A) where the approval concerned is within section 63(1A)(a);
(d)a requirement under section 63E(1) where the authorised person concerned is a PRA-authorised person and the function concerned is of a description specified in rules made by the PRA;
(e)a requirement under section 63F(1), (2), (4), (6) or (7) where the authorised person concerned is a PRA-authorised person and the certificate concerned relates to a function of a description specified in rules made by the PRA.F1534]
SI (4) In the case of a contravention of a requirement that is imposed by a qualifying EU provision, “the appropriate regulator” for the purpose of any provision of this Part is whichever of the PRA or the FCA (or both) is specified by the Treasury by order in relation to the qualifying EU provision for the purposes of that provision of this Part.
(5) In the case of a contravention of a requirement where the contravention constitutes an offence, the “appropriate regulator” is whichever of the PRA or the FCA has power to prosecute the offence (see section 401).
[F1536 (6) The FCA is “the appropriate regulator” in the case of a contravention of any other requirement imposed—
(a)by or under this Act;
[F1537 (aza)by or under Part 1 of the Pensions Act 2008 in relation to the scale requirement in section 28B or the asset allocation requirement in section 28C,F1537]
[F1538 (aa)by regulations under section 11 of the Civil Liability Act 2018;F1538]
[F1539 (ab)by or under the Securitisation Regulations 2024;F1539]
[F1540 (ac)by small pots regulations within the meaning of Chapter 2 of Part 2 of the Pension Schemes Act 2026;F1540]
(b)by the Alternative Investment Fund Managers Regulations 2013; or
(c)by the Undertakings for Collective Investment in Transferable Securities Regulations 2011.F1536]
SI (7) The Treasury may by order amend the provisions defining “the appropriate regulator”. F1519]
notecase 205 Public censure. cross-notes
[F1541 (1)F1541] If the [F1542appropriate regulatorF1542] considers that an authorised person has contravened [F1543a relevant requirement imposed on the person, it mayF1543] publish a statement to that effect.
[F1544 (2)If the FCA considers that a person other than an authorised person has contravened a relevant Part 5A requirement imposed on the person, it may publish a statement to that effect.F1544]
notecase 206 Financial penalties. cross-notes
(1)If the [F1545 appropriate regulatorF1545] considers that an authorised person has contravened [F1546a relevant requirement imposed on the person,F1546] it may impose on him a penalty, in respect of the contravention, of such amount as it considers appropriate.
[F1547 (1A)If the FCA considers that a person other than an authorised person has contravened a relevant Part 5A requirement imposed on the person, it may impose on the person a penalty, in respect of the contravention, of such amount as it considers appropriate.F1547]
(2)F1548. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3)A penalty under this section is payable to the [F1549regulator that imposed the penaltyF1549] .
case [F1550206A Suspending permission to carry on regulated activities etc cross-notes
(1)If the [F1551 appropriate regulatorF1551] considers that an authorised person has contravened a relevant requirement imposed on the person, it may—
(a)suspend, for such period as it considers appropriate, any permission which the person has to carry on a regulated activity; or
(b)impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the carrying on of a regulated activity by the person as it considers appropriate.
[F1552 (1A)The power conferred by subsection (1) is also exercisable by the FCA if it considers that an authorised person has contravened a requirement imposed on the person by—
(a)the Payment Services Regulations [F1553 2017F1553] , or
(b)the Electronic Money Regulations 2011.F1552]
[F1554 (1B)The power conferred by subsection (1) may not be exercised in relation to a contravention of a requirement imposed under section 122A, 122B, 122C, 122G, 122H, 122I, [F1555 122IA,F1555] 123A or 123B.F1554]
(2)In subsection (1)—
“ permission ” means any permission that the authorised person has, whether given (or treated as given) by [F1556 the FCA or the PRA F1556] or conferred by any provision of this Act;
F1557 ...
(3)The period for which a suspension or restriction is to have effect may not exceed 12 months.
(4)A suspension may relate only to the carrying on of an activity in specified circumstances.
(5)A restriction may, in particular, be imposed so as to require the person concerned to take, or refrain from taking, specified action.
(6)The [F1558 appropriate regulatorF1558] may—
(a)withdraw a suspension or restriction; or
(b)vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.
(7)The power under this section may (but need not) be exercised so as to have effect in relation to all the regulated activities that the person concerned carries on.
(8)Any one or more of the powers under—
(a)subsection (1)(a) and (b) of this section, and
(b)sections 205 and 206,
may be exercised in relation to the same contravention.F1550]
[F1559206B Prohibition or restriction on carrying on of relevant designated activities cross-notes
(1)If the FCA considers that a person carrying on a relevant designated activity has contravened a relevant Part 5A requirement imposed on the person in relation to that activity, it may—
(a)prohibit the person, for such period as it considers appropriate, from carrying on that activity, or
(b)impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the carrying on of that activity by the person as it considers appropriate.
(2)A prohibition may relate only to the carrying on of an activity in specified circumstances.
(3)A restriction may, in particular, be imposed so as to require the person concerned to take, or refrain from taking, specified action.
(4)The FCA may, on the application of the person to whom it relates—
(a)withdraw a prohibition or restriction, or
(b)vary a prohibition or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.
(5)The power under this section may, but need not, be exercised so as to have effect in relation to all the relevant designated activities that the person concerned carries on.
(6)Any one or more of the powers under—
(a)subsection (1)(a) and (b) of this section, and
(b)sections 205 and 206,
may be exercised in relation to the same contravention.F1559]
notecase 207 Proposal to take disciplinary measures. cross-notes
(1)If [F1560a regulatorF1560] proposes—
(a)F1562to publish a statement in respect of an authorised person (under section [F1561205(1)F1561] ), ...
(b)to impose a penalty on an authorised person (under section [F1563206(1)F1563] ), [F1564 or
(c)to 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),F1564]
it must give the authorised person a warning notice.
[F1565 (1A)If the FCA proposes—
(a)to publish a statement in respect of a person under section 205(2),
(b)to impose a penalty on a person under section 206(1A), or
(c)to impose a prohibition or restriction on a person under section 206B,
it must give the person a warning notice.F1565]
(2)A warning notice about a proposal to publish a statement must set out the terms of the statement.
(3)A warning notice about a proposal to impose a penalty, must state the amount of the penalty.
[F1566 (4)A warning notice about a proposal to suspend a permission or impose a [F1567 prohibition orF1567] restriction must state the period for which the suspension [F1568 , prohibitionF1568] or restriction is to have effect.F1566]
notecase 208 Decision notice. cross-notes
(1)If [F1569a regulatorF1569] decides—
(a)F1571to publish a statement under section [F1570205(1)F1570] (whether or not in the terms proposed), . . .
(b)to impose a penalty under section [F1572206(1)F1572] (whether or not of the amount proposed), [F1573 or
(c)to suspend a permission or impose a restriction under section 206A (whether or not in the manner proposed),F1573]
it must without delay give the authorised person concerned a decision notice.
[F1574 (1A)If the FCA decides—
(a)to publish a statement in respect of a person under section 205(2),
(b)to impose a penalty on a person under section 206(1A), or
(c)to impose a prohibition or restriction on a person under section 206B,
it must without delay give the person a decision notice.F1574]
(2)In the case of a statement, the decision notice must set out the terms of the statement.
(3)In the case of a penalty, the decision notice must state the amount of the penalty.
[F1575 (3A)In the case of a suspension [F1576 , prohibitionF1576] or restriction, the decision notice must state the period for which the suspension [F1576 , prohibitionF1576] or restriction is to have effect.F1575]
(4)If [F1577a regulatorF1577] decides to—
(a)F1579publish a statement in respect of an authorised person under section [F1578205(1)F1578] , . . .
(b)impose a penalty on an authorised person under section [F1580206(1)F1580] , [F1581 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,F1581]
the authorised person may refer the matter to the Tribunal.
[F1582 (5)If the FCA decides to—
(a)publish a statement in respect of a person under section 205(2),
(b)impose a penalty on a person under section 206(1A), or
(c)impose a prohibition or restriction on a person under section 206B,
the person may refer the matter to the Tribunal.F1582]
[F1583208A Applications under section 206B(4): procedure and right to refer to Tribunal cross-notes
(1)This section applies to an application under subsection (4) of section 206B for the variation or withdrawal of a prohibition or restriction imposed under that section.
(2)If the FCA decides to grant the application, it must give the applicant written notice of its decision.
(3)If the FCA proposes to refuse the application, it must give the applicant a warning notice.
(4)If the FCA decides to refuse the application, it must give the applicant a decision notice.
(5)If the FCA gives the applicant a decision notice, the applicant may refer the matter to the Tribunal.F1583]
note 209 Publication. cross-notes
[F1584 (1)F1584] After a statement under section [F1585205(1)F1585] is published, [F1586the regulator concernedF1586] must send a copy of it to the authorised person and to any person on whom a copy of the decision notice was given under section 393(4).
[F1587 (2)After a statement under section 205(2) is published, the FCA must send a copy of it to the person to whom the statement relates and to any person to whom a copy of the decision notice was given under section 393(4).F1587]
notecase 210 Statements of policy. cross-notes
(1)[F1588 Each regulatorF1588] must prepare and issue a statement of its policy with respect to—
[F1589 (a)the imposition of penalties, suspensions [F1590 , prohibitionsF1590] or restrictions under this Part;
(b)the amount of penalties under this Part; and
(c)the period for which suspensions [F1591 , prohibitionsF1591] or restrictions under this Part are to have effect.F1589]
[F1592 (1A)Each regulator's policy with respect to the imposition of penalties, suspensions or restrictions under this Part must include policy with respect to their imposition in relation to conduct which constitutes or may constitute an offence by virtue of section 23(1A) (authorised persons carrying on credit-related regulated activities otherwise than in accordance with permission).F1592]
(2)[F1593 A regulator'sF1593] policy in determining what the amount of a penalty should be [F1594, or what the period for which a suspension [F1595 , prohibitionF1595] or restriction is to have effect should be,F1594] must include having regard to—
(a)the seriousness of the contravention in question in relation to the nature of the requirement contravened;
(b)the extent to which that contravention was deliberate or reckless; and
(c)whether [F1596the person against whom action is to be takenF1596] is an individual.
(3)[F1597 A regulatorF1597] may at any time alter or replace a statement issued [F1598by itF1598] under this section.
(4)If a statement issued under this section is altered or [F1599replaced by a regulator, the regulatorF1599] must issue the altered or replacement statement.
(5)[F1600 A regulatorF1600] must, without delay, give the Treasury a copy of any statement which it publishes under this section.
(6)A statement issued under this section [F1601by a regulatorF1601] must be published by the [F1602regulatorF1602] in the way appearing to the [F1602regulatorF1602] to be best calculated to bring it to the attention of the public.
(7)In exercising, or deciding whether to exercise, its power under section 206 [F1603, 206A or 206BF1603] in the case of any particular contravention, [F1604a regulatorF1604] must have regard to any statement published [F1605by itF1605] under this section and in force at the time when the contravention in question occurred.
(8)The [F1606regulatorF1606] may charge a reasonable fee for providing a person with a copy of the statement.
note 211 Statements of policy: procedure. cross-notes
(1)Before [F1607a regulator issuesF1607] a statement under section 210, the [F1608regulatorF1608] must publish a draft of the proposed statement in the way appearing to the [F1608regulatorF1608] to be best calculated to bring it to the attention of the public.
(2)The draft must be accompanied by notice that representations about the proposal may be made to the [F1609regulatorF1609] within a specified time.
(3)Before issuing the proposed statement, the [F1609regulatorF1609] must have regard to any representations made to it in accordance with subsection (2).
(4)If the [F1609regulatorF1609] issues the proposed statement it must publish an account, in general terms, of—
(a)the representations made to it in accordance with subsection (2); and
(b)its response to them.
(5)If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the [F1610regulatorF1610] , significant, the [F1610regulatorF1610] must (in addition to complying with subsection (4)) publish details of the difference.
(6)[F1611 A regulatorF1611] may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
(7)This section also applies to a proposal to alter or replace a statement.
case Part XV The Financial Services Compensation Scheme cross-notes
The scheme manager
notecase 212 The scheme manager.
[F1612 (1)The scheme manager” means the body corporate established by the Financial Services Authority under this section as originally enacted.
(2)The regulators must take such steps as are necessary to ensure that the scheme manager is, at all times, capable of exercising the functions conferred on it by or under this Part or Part 15A.F1612]
(3)The constitution of the scheme manager must provide for it to have—
(a)F1613a chairman; ...
[F1614 (aa)a chief executive F1615...; andF1614]
(b)a board (which must include the chairman [F1616and chief executiveF1616] ) whose members are the scheme manager’s directors.
(4)The chairman [F1617, chief executiveF1617] and other members of the board must be persons appointed, and liable to removal from office, by the [F1618regulatorsF1618] (acting, in the case of the chairman [F1619and the chief executiveF1619] , with the approval of the Treasury).
(5)But the terms of their appointment (and in particular those governing removal from office) must be such as to secure their independence from the [F1620regulatorsF1620] in the operation of the compensation scheme.
(6)The scheme manager is not to be regarded as exercising functions on behalf of the Crown.
(7)F1621The scheme manager’s ... officers and staff are not to be regarded as Crown servants.
The scheme
notecase 213 The compensation scheme. cross-notesI28
(1)The [F1622regulatorsF1622] must by rules[F1623 made in accordance with an order under subsection (1A)F1623] establish a scheme for compensating persons in [F1624cases where—
(a)relevant persons are unable, or likely to be unable, to satisfy claims against them, F1625...
[F1626 (aa)relevant exchanges are unable, or likely to be unable, to satisfy claims made against them in connection with a regulated activity relating to a trading facility carried on by the exchange, orF1626]
(b) persons who have assumed responsibility for liabilities arising from acts or omissions of relevant persons [F1627 or relevant exchanges F1627] (“successors”) are unable, or likely to be unable, to satisfy claims against the successors that are based on those acts or omissions. F1624]
SI[F1628 (1A)The Treasury must by order specify—
(a)the cases in which the FCA may, or may not, make rules under subsection (1), and
(b)the cases in which the PRA may, or may not, make rules under that subsection.F1628]
(2) The rules[F1629 (taken together) F1629] are to be known as the Financial Services Compensation Scheme (but are referred to in this Act as “ the compensation scheme ”).
(3)The compensation scheme must, in particular, provide for the scheme manager—
[F1630 (a)to assess and pay compensation, in accordance with the scheme, to claimants in respect of claims made in connection with—
(i)a regulated activity carried on (whether or not with permission) by relevant persons; and
(ii)a regulated activity relating to a trading facility carried on (whether or not in accordance with any requirements relating to that activity resulting from section 286) by relevant exchanges; and
(b)to have power to impose levies for the purpose of meeting its expenses (including in particular expenses incurred, or expected to be incurred, in paying compensation, borrowing or insuring risks)—
(i)on authorised persons, or any class of authorised person;
(ii)on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or any class of such exchanges; or
(iii)on authorised persons and on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or on any class of such persons and exchanges.F1630]
[F1631 (4)The compensation scheme may provide for the scheme manager to have power to impose levies—
(a)on authorised persons, or any class of authorised person;
(b)on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or any class of such exchanges; or
(c)on authorised persons and on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or on any class of such persons and exchanges,
for the purpose of recovering the cost (whenever incurred) of establishing the scheme.F1631]
[F1632 (5)In making any provision of the scheme by virtue of subsection (3)(b), the regulators must take account of the desirability of ensuring that the amount of the levies imposed on a particular —
(a)class of authorised person;
(b)class of recognised investment exchange carrying on a regulated activity relating to a trading facility; or
(c)class of authorised person and of recognised investment exchanges carrying on a regulated activity relating to a trading facility;
reflects, so far as is practicable, the amount of claims [F1633 or recapitalisation payments within the meaning of section 214E, as the case may be,F1633] made, or likely to be made in respect of that class of person, exchange, or persons and exchanges.F1632]
[F1634 (5A)The compensation scheme may not allow the scheme manager to impose levies on credit unions in relation to recapitalisation payments under section 214E.
(5B) In subsection (5A), the reference to “credit unions” is to credit unions within the meaning of—
(a)the Credit Unions Act 1979 (see section 31);
(b)the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)) (see Article 2).F1634]
(6)An amount payable to the scheme manager as a result of any provision of the scheme made by virtue of subsection (3)(b) or (4) may be recovered as a debt due to the scheme manager.
(7)Sections 214 to 217 make further provision about the scheme but are not to be taken as limiting the power conferred on the [F1622regulatorsF1622] by subsection (1).
(8) In those sections “ specified ” means specified in the scheme.
(9) In this Part (except in sections 219, 220 or 224) “ relevant person ” means a person who was—
(a)an authorised person at the time the act or omission giving rise to the claim against him [F1635, or against a successor falling within subsection (1)(b),F1635] took place; or
(b)an appointed representative at that time.
[F1636 (10A)But a person is not to be regarded as a relevant person in relation to a regulated activity if, at that time, the person—
(a)was a Gibraltar-based person with a Schedule 2A permission to carry on the activity, and
(b)fell within a prescribed category, either generally or in relation to the activity.
(10B)Regulations prescribing a category of person for the purposes of subsection (10A) may, among other things, make provision by reference to—
(a)whether the activity is carried on through a branch in the United Kingdom;
(b)the level of protection provided by the compensation scheme and by any comparable scheme operating in Gibraltar.F1636]
SIF1637 (10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1637 (11). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1638 (12) In this Part (except in sections 220 and 224) “relevant exchange” means a body corporate or unincorporated association which was a recognised investment exchange carrying on a regulated activity relating to a trading facility at the time the act or omission giving rise to the claim against it, or against a successor falling within subsection (1)(b), took place.
(13) In this Part “regulated activity relating to a trading facility” means—
(a)the regulated activity of operating a multilateral trading facility; or
(b)the regulated activity of operating an organised trading facility.F1638]
[F1639 (14) In this Part, “ funeral plan contract ” has the same meaning as in article 59(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 . F1639]
Provisions of the scheme
notecase 214 General. cross-notesI29
(1)The compensation scheme may, in particular, make provision—
(a)as to the circumstances in which a relevant person[F1640 or relevant exchangeF1640] is to be taken (for the purposes of the scheme) to be unable, or likely to be unable, to satisfy claims made against him [F1641or itF1641] ;
[F1642 (aa)as to the circumstances in which a successor falling within section 213(1)(b) is to be taken (for the purposes of the scheme) to be unable, or likely to be unable, to satisfy claims against the successor that are based on the acts or omissions of a relevant person [F1643 or relevant exchangeF1643] ;F1642]
(b)for the establishment of different funds for meeting different kinds of claim;
(c)for the imposition of different levies in different cases;
(d)limiting the levy payable by a person in respect of a specified period;
(e)for repayment of the whole or part of a levy in specified circumstances;
(f)for a claim to be entertained only if it is made by a specified kind of claimant;
(g)for a claim to be entertained only if it falls within a specified kind of claim;
(h)as to the procedure to be followed in making a claim;
(i)for the making of interim payments before a claim is finally determined;
(j)limiting the amount payable on a claim to a specified maximum amount or a maximum amount calculated in a specified manner;
(k)for payment to be made, in specified circumstances, to a person other than the claimant.
[F1644 (1A)Rules by virtue of subsection (1)(h) may, in particular, allow the scheme manager to treat persons who are or may be entitled to claim under the scheme as if they had done so.
(1B)A reference in any enactment or instrument to a claim or claimant under this Part includes a reference to a deemed claim or claimant in accordance with subsection (1A).
(1C)Rules by virtue of subsection (1)(j) may, in particular, allow, or be subject to rules which allow, the scheme manager to settle a class of claim by payment of sums fixed without reference to, or by modification of, the normal rules for calculation of maximum entitlement for individual claims.F1644]
(2)Different provision may be made with respect to different kinds of claim.
(3)The scheme may provide for the determination and regulation of matters relating to the scheme by the scheme manager.
(4)The scheme, or particular provisions of the scheme, may be made so as to apply only in relation to—
(a)activities carried on,
(b)claimants,
(c)matters arising, or
(d)events occurring,
in specified territories, areas or localities.
SIF1645 (5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6)The scheme may provide for the scheme manager to have power—
(a)in specified circumstances,
(b)but only if the scheme manager is satisfied that the claimant is entitled to receive a payment in respect of his claim—
(i)under a scheme which is comparable to the compensation scheme, or
(ii)as the result of a guarantee given by a government or other authority,
to make a full payment of compensation to the claimant and recover the whole or part of the amount of that payment from the other scheme or under that guarantee.
Prospective
[F1646214A Contingency funding
(1) The Treasury may make regulations (“ contingency fund regulations ”) permitting the scheme manager to impose levies under section 213 for the purpose of maintaining contingency funds from which possible expenses may be paid.
(2)Contingency fund regulations may make provision about the establishment and management of contingency funds; in particular, the regulations may make provision about—
(a)the number and size of funds;
(b)the circumstances and timing of their establishment;
(c)the classes of person from whom contributions to the funds may be levied;
(d)the amount and timing of payments into and out of funds (which may include provision for different levies for different classes of person);
(e)refunds;
(f)the ways in which funds' contents may be invested (including (i) the extent of reliance on section 223A, and (ii) the application of investment income);
(g)the purposes for which funds may be applied, but only so as to determine whether a fund is to be used (i) for the payment of compensation, (ii) for the purposes of co-operating with a bank liquidator in accordance with section 99 of the Banking Act 2009, or (iii) for contributions under section 214B;
(h)procedures to be followed in connection with funds, including the keeping of records and the provision of information.
(3)The compensation scheme may include provision about contingency funds provided that it is not inconsistent with contingency fund regulations.F1646]
SI [[F1647,F1648214B Contribution to costs of special resolution regime cross-notes
(1)This section applies if—
(a) a stabilisation power under Part 1 of the Banking Act 2009 has been exercised in respect of a bank, building society [F1649 , credit union or investment firm F1649] within the meaning of that Part (“the institution”); and
(b)the Treasury think that the institution was or was likely to have been, or but for the exercise of the power would have become, unable to satisfy claims against it.
(2)The Treasury may require the scheme manager to make payments (to the Treasury or any other person) in respect of expenses of a prescribed description incurred (by the Treasury or that person) in connection with the exercise of the power.
(3)Subsection (2) is subject to section 214C (limit on amount of special resolution regime payments).
(4) In subsection (2) “ expenses ” includes interest at a specified rate on the difference, at any time, between—
(a)the total amount of expenses (including interest) incurred at or before that time; and
(b)the total amount recovered, or received from the scheme manager, in respect of the institution, at or before that time, by—
(i)the Treasury; and
(ii)any other person who has incurred expenses in connection with the exercise of the power that are of a description prescribed under subsection (2).
(5)Any payment made by the scheme manager under subsection (2) is to be treated for the purposes of this Part as an expense under the compensation scheme.
(6) In this section and section 214C “ specified rate ” means a rate specified by the Treasury.
(7)Different rates may be specified under different provisions or for different periods.
(8)A rate may be specified by reference to a rate set (from time to time) by any person.F1648,F1647]]
[F1650214C Limit on amount of special resolution regime payments cross-notes
(1) The total amount of special resolution regime payments required to be made in respect of a person (“the institution”) may not exceed—
(a)notional net expenditure (see subsection (3)), minus
(b)actual net expenditure (see subsection (4)).
(2) A “special resolution regime payment” is—
(a)a payment under section 214B(2); or
(b)a payment required to be made by the scheme manager by virtue of section 61 of the Banking Act 2009 (special resolution regime: compensation).
(3)Notional net expenditure is—
(a)the total amount of expenses that would have been incurred under the compensation scheme in respect of the institution if the stabilisation power had not been exercised and the institution had been unable to satisfy claims against it, minus
(b)the total amount that would have been likely, at the time when the power was exercised, to be recovered by the scheme manager in respect of the institution in those circumstances.
(4)Actual net expenditure is—
(a)the total amount of expenses (other than special resolution regime payments) actually incurred by the scheme manager in respect of the institution, minus
(b)the total amount actually recovered by the scheme manager in respect of the institution.
(5) In subsection (3)(a) “ expenses ” includes interest at a specified rate on the difference, at any time, between—
(a)the total amount of expenses (including interest) that would have been incurred as mentioned in subsection (3)(a) at or before that time; and
(b)the total amount that would have been likely to have been recovered as mentioned in subsection (3)(b) at or before that time.
(6) In subsection (4)(a) “ expenses ” includes interest at a specified rate on the difference, at any time, between—
(a)the total amount of expenses (including special resolution regime payments and interest) actually incurred by the scheme manager in respect of the institution at or before that time; and
(b)the total amount actually recovered by the scheme manager in respect of the institution at or before that time.
(7)In paragraph (b) of subsections (3) to (6) references to amounts recovered (or likely to have been recovered) by the scheme manager do not include any levy received (or likely to have been received) by it.
SI 214D Contributions under section 214B: supplementary cross-notes
(1)This section supplements sections 214B and 214C.
(2)The scheme manager must determine—
(a)the amounts of expenses (other than interest) that would have been incurred as mentioned in section 214C(3)(a); and
(b)the time or times at which those amounts would have been likely to have been incurred.
(3) The Treasury, or a person designated by the Treasury, must in accordance with regulations appoint a person (“the valuer”) to determine—
(a)the amounts that would have been likely, at the time when the stabilisation power was exercised, to be recovered as mentioned in section 214C(3)(b); and
(b)the time or times at which those amounts would have been likely to be recovered.
The person appointed under this subsection may be the person appointed as valuer under section 54 of the Banking Act 2009 in respect of the exercise of the stabilisation power.
(4)Regulations may enable the Treasury to specify principles to be applied by—
(a)the scheme manager when exercising functions under subsection (2); or
(b)the valuer when exercising functions under subsection (3).
(5)The regulations may in particular enable the Treasury to require the scheme manager or valuer—
(a)to use, or not to use, specified methods;
(b)to take specified matters into account in a specified manner; or
(c)not to take specified matters into account.
(6)Regulations—
(a)must provide for independent verification of expenses within section 214B(2);
(b)may provide for the independent verification of other matters; and
(c)may contain provision about the appointment and payment of an auditor.
(7)Regulations—
(a)must contain provision enabling the valuer to reconsider a decision;
(b)must provide a right of appeal to a court or tribunal against any decision of the valuer;
(c)may provide for payment of the valuer; and
(d)may apply (with or without modifications) or make provision corresponding to—
(i)any provision of sections 54 to 56 of the Banking Act 2009; or
(ii)any provision made, or that could be made, by virtue of any of those sections.
(8)Regulations may make provision for payments under section 214B(2) to be made—
(a)before any verification required by the regulations is undertaken, and
(b)before the limit imposed by section 214C is calculated,
subject to any necessary later adjustment.
(9)If they do so they must provide that the amount of any payment required by virtue of subsection (8) must not be such as to give rise to an expectation that an amount will be required to be repaid to the scheme manager (once any necessary verification has been undertaken and the limit imposed by section 214C has been calculated).
(10)Regulations may—
(a)make provision supplementing section 214B or 214C or this section;
(b)make further provision about the method by which amounts to be paid under section 214B(2) are to be determined;
(c)make provision about timing;
(d)make provision about procedures to be followed;
(e)provide for discretionary functions to be exercised by a specified body or by persons of a specified class; and
(f)make provision about the resolution of disputes (which may include provision conferring jurisdiction on a court or tribunal).
(11) “ Regulations ” means regulations made by the Treasury.
(12)Any payment made by the Treasury by virtue of this section is to be met out of money provided by Parliament.
(13)The compensation scheme may make provision about payments under section 214B(2) and levies in connection with such payments (except provision inconsistent with any provision made by or under section 214B or 214C or this section).F1650]
[F1651214E Recapitalisation payments
(1)The Bank of England may require the scheme manager to make a recapitalisation payment to the Bank or another person where the Bank has exercised or decided to exercise a stabilisation power under Part 1 of the Banking Act 2009 in respect of a financial institution so as to achieve—
(a)a sale of the institution to a private sector purchaser (see section 11 of that Act), or
(b)a transfer of the institution to a bridge bank (see section 12 of that Act).
(2)A recapitalisation payment is a payment in respect of the Bank’s estimate of—
(a)the costs likely to be required for the recapitalisation of the financial institution, and
(b)any other expenses that the Bank or a relevant person has incurred or might incur in connection with the recapitalisation of the institution or the exercise of the stabilisation power.
(3)Before exercising the power in subsection (1), the Bank must consult the scheme manager.
(4)A recapitalisation payment made by the scheme manager under subsection (1) is to be treated for the purposes of this Part as an expense under the compensation scheme.
(5) In subsection (2)(b), “ relevant person ” means—
(a)the Treasury,
(b)a bridge bank, or
(c)an asset management vehicle.
(6) In this section, “bridge bank” and “asset management vehicle” have the meanings given by sections 12 and 12ZA, respectively, of the Banking Act 2009 .
(7) In this section and in section 214H, “ financial institution ” means a bank, building society or investment firm (within the meanings of Part 1 of the Banking Act 2009 ). F1651]
[F1652214F Recapitalisation payment: report
(1)This section applies where the Bank of England requires the scheme manager to make a recapitalisation payment under section 214E.
(2)The Bank must report to the Chancellor of the Exchequer about—
(a)the exercise of the power to require a recapitalisation payment to be made, and
(b)the stabilisation power and the stabilisation option to which the payment relates.
(3) The report (“the final report”) must—
(a)comply with such requirements as to content, and
(b)be provided within such period or at such time,
as the Treasury may specify.
(4)The Bank must provide an interim report if—
(a) the period specified under subsection (3)(b) is a period of more than 3 months beginning with the day on which the Bank requires the recapitalisation payment in question (“the first 3 months”), or the time specified under subsection (3)(b) is after the first 3 months, and
(b)the Bank does not provide the final report within the first 3 months.
(5)An interim report must—
(a)comply with such requirements as to content as the Treasury may specify, and
(b)be provided within the first 3 months.
(6)Subject to subsection (7), the Chancellor of the Exchequer must lay each report, and any interim report, before Parliament.
(7)The Chancellor of the Exchequer may omit from the report, and any interim report, any information which the Chancellor of the Exchequer considers it would not be in the public interest to publish.F1652]
[F1653214G Notification to Parliamentary Committees
(1)Where the Bank of England requires the scheme manager to make a recapitalisation payment under section 214E, the Bank must, as soon as reasonably practicable, notify in writing the chair of each relevant Parliamentary Committee that it has done so.
(2)The relevant Parliamentary Committees are—
(a)the Treasury Committee of the House of Commons, and
(b)the Financial Services Regulation Committee of the House of Lords.
(3)A reference to a committee in subsection (2)—
(a)if the name of that committee is changed, is to be treated as a reference to that committee by its new name, and
(b)if the functions of that committee (or substantially corresponding functions) become functions of a different committee, is to be treated as a reference to the committee by which those functions are exercisable.
(4)Any question arising under subsection (3) is to be determined by—
(a)the Speaker of the House of Commons, in relation to committees of the House of Commons, and
(b)the Chairman of Committees of the House of Lords, in relation to committees of the House of Lords.F1653]
[F1654214H Reimbursement in respect of a recapitalisation payment
(1)The Bank must reimburse the scheme manager for any recapitalisation payment, or any part of a recapitalisation payment, relating to a financial institution, which is not needed to cover the costs and expenses mentioned in section 214E(2)(a) and (b) because—
(a)those costs and expenses were lower than the Bank expected, or
(b)the Bank recovers an amount in relation to the financial institution which it can use to defray those costs and expenses.
(2)For the purposes of subsection (1)—
(a)the reference to the Bank recovering an amount in relation to the financial institution includes recovering an amount as a result of the sale of the institution or the institution being wound up or otherwise;
(b)where more than one recapitalisation payment is required in relation to a financial institution, references to a recapitalisation payment are to be read as references to the sum of those payments;
(c)the reference to the sale of a financial institution in paragraph (a) is to the sale of all or part of the business of the financial institution as part of, or as a result of, the achievement of a stabilisation option.F1654]
notecase 215 [F1655Rights of the scheme in insolvencyF1655] cross-notesI30
[F1656 (1)The compensation scheme may make provision—
(a)about the effect of a payment of compensation under the scheme on rights or obligations arising out of matters in connection with which the compensation was paid;
(b)giving the scheme manager a right of recovery in respect of those rights or obligations.F1656]
(2)Such a right of recovery conferred by the scheme does not, in the event of [F1657a person's insolvencyF1657] , exceed such right (if any) as the claimant would have had in that event.
[F1658 (2ZA)The compensation scheme may also make provision in relation to a relevant person, or to a successor of a description falling within section 213(1)(b), who enters into or carries out funeral plan contracts and is unable, or likely to be unable, to satisfy claims made against them—
(a)about rights or obligations in connection with any trust or contract of insurance relating to the funeral plan contracts entered into or carried out by such a person or successor;
(b)about the effect of a payment of compensation, or of a payment in connection with securing continuity of funeral plan contracts under the scheme, on rights and obligations arising out of matters in connection with which the payment was made;
(c)giving the scheme manager a right of recovery in respect of the rights or obligations referred to in paragraphs (a) and (b).
(2ZB)The amount required to be paid to the scheme manager under such a right of recovery conferred by the scheme may not exceed the amount paid or (in the opinion of the scheme manager) to be paid out by the scheme manager in connection with those funeral plan contracts.
(2ZC)For the purposes of subsection (2ZA)(a), the provision that may be made includes—
(a)provision in respect of rights or obligations that came into existence before or after the date on which that subsection comes into force;
(b)provision to vary existing rights or obligations;
(c)provision to create new rights in favour of, or obligations to, the scheme manager which override existing rights or obligations.F1658]
[F1659 (2A)Any payment made by the scheme manager under section 214B(2) in connection with the exercise of a stabilisation power in respect of a bank, building society or credit union is to be treated as a debt due to the scheme manager from that bank, building society or (as the case may be) credit union.
(2B)In [F1660 subsection (2A)F1660] —
“bank” has the meaning given in section 2 of the Banking Act 2009 ;
“building society” has the meaning given in the Building Societies Act 1986 ;
“credit union” means a credit union within the meaning of—
(a)the Credit Unions Act 1979; or
(b)article 2 of the Credit Unions (Northern Ireland) Order 1985.F1659]
(3)If a person other than the scheme manager[F1661 makes an administration application under Schedule B1 to the 1986 Act or [F1662 Schedule B1 toF1662] the 1989 OrderF1661] in relation to [F1663—
(a)a company or partnership which is a relevant person; or
(b)a body corporate or unincorporated association which is a relevant exchange;
the scheme manager has the same rights as are conferred on the regulators by section 362.F1663]
[F1664 (3A)In subsection (3) the reference to making an administration application includes a reference to—
(a)appointing an administrator under paragraph 14 or 22 of Schedule B1 to the 1986 Act [F1665 or paragraph 15 or 23 of Schedule B1 to the 1989 OrderF1665] , or
(b)filing with the court a copy of notice of intention to appoint an administrator under [F1666 anyF1666] of those paragraphs.F1664]
(4)If a person other than the scheme manager presents a petition for the winding up of a body which is a relevant person[F1667 or relevant exchangeF1667] , the scheme manager has the same rights as are conferred on the [F1668regulatorsF1668] by section 371.
(5)If a person other than the scheme manager presents a bankruptcy petition to the court in relation to an individual who, or an entity which, is a relevant person, the scheme manager has the same rights as are conferred on the [F1668regulatorsF1668] by section 374.
(6)Insolvency rules may be made for the purpose of integrating any procedure for which provision is made as a result of subsection (1) into the general procedure on the administration of a company or partnership or on a winding-up, bankruptcy or sequestration.
(7) “ Bankruptcy petition ” means a petition to the court—
(a)under section 264 of the 1986 Act or Article 238 of the 1989 Order for a bankruptcy order to be made against an individual;
(b)under section [F16692 or 5 of the 2016F1669] Act for the sequestration of the estate of an individual; or
(c)under section 6 of the [F16702016F1670] Act for the sequestration of the estate belonging to or held for or jointly by the members of an entity mentioned in subsection (1) of that section.
(8) “Insolvency rules” are—
(a)for England and Wales, rules made under sections 411 and 412 of the 1986 Act;
(b)for Scotland, rules made by order by the Treasury, after consultation with the Scottish Ministers, for the purposes of this section; and
(c)M15for Northern Ireland, rules made under Article 359 of the 1989 Order and section 55 of the Judicature (Northern Ireland) Act 1978.
(9) F1671 ... “ the 1986 Act ”, “ the 1989 Order ” [F1672 , “the 2016 Act ” F1672] and “ court ” have the same meaning as in Part XXIV.
[F1673215A Continuity etc. of funeral plan contracts
(1)The compensation scheme may, in particular, include provision requiring or enabling the scheme manager to make arrangements for securing continuity of cover for—
(a)plan holders;
(b)plan holders of a specified class;
(c)plan holders of funeral plan contracts of a specified class.
(2)In this section—
“ plan holder ” means—
(a)a person who has a funeral plan contract with a relevant funeral plan provider, or
(b)a person whose funeral is to be provided or secured under a funeral plan contract with a relevant funeral plan provider;
“ relevant funeral plan provider ” means a relevant person who—
(a)has permission to enter into or carry out a funeral plan contract as provider, and
(b)is unable, or likely to be unable, to satisfy claims made against them.
(3)The scheme may provide for the scheme manager to take such measures as appear to it to be appropriate—
(a)for securing or facilitating the transfer of a relevant funeral plan provider’s business so far as it consists of the carrying out of funeral plan contracts, or of any part of that business, to another authorised person;
(b)for securing the issue by another authorised person to the plan holders concerned of funeral plan contracts in substitution for their existing contracts.
(4)The scheme may also provide for the scheme manager to make, or secure the making of, payments to a plan holder or to any other person in connection with the provision of a funeral—
(a)during any period while the scheme manager is seeking to make arrangements mentioned in subsection (1);
(b)if it appears to the scheme manager that it is not reasonably practicable to make such arrangements.
(5)The scheme may also provide, in relation to the administration or winding up of a relevant funeral plan provider, for the scheme manager to make payments—
(a)in specified circumstances,
(b)but only if the scheme manager is satisfied that such payments are made in respect of any reasonable fees, costs, charges or other expenses reasonably and exclusively incurred for the purposes of complying with a request of the scheme manager under section 215B,
to, or on behalf of, the relevant funeral plan provider or to the administrator or liquidator of the funeral plan provider.
(6)A provision of the scheme made by virtue of section 213(3)(b) may include the power to impose levies for the purpose of meeting expenses of the scheme manager incurred in—
(a)taking measures as a result of any provision of the scheme made by virtue of subsection (3);
(b)making, or securing the making of, payments as a result of any provision of the scheme made by virtue of subsection (4) or (5).
215B Scheme manager’s power to require assistance from liquidator etc. in relation to funeral plan contracts
(1)This section applies in relation to the administration or winding up of a relevant funeral plan provider.
(2)The administrator or liquidator of the relevant funeral plan provider must, at the request of the scheme manager, provide any assistance identified by the scheme manager as being necessary—
(a)to enable the scheme manager to administer the compensation scheme in relation to funeral plan contracts, and
(b)to enable the scheme manager to secure continuity of cover in relation to funeral plan contracts.
(3) “ Relevant funeral plan provider ” has the meaning given in section 215A. F1673]
note 216 Continuity of long-term insurance policies.
(1)The compensation scheme may, in particular, include provision requiring the scheme manager to make arrangements for securing continuity of insurance for policyholders, or policyholders of a specified class, of relevant long-term insurers.
(2) “ Relevant long-term insurers ” means relevant persons who—
(a)have permission to effect or carry out contracts of long-term insurance; and
(b)are unable, or likely to be unable, to satisfy claims made against them.
(3)The scheme may provide for the scheme manager to take such measures as appear to him to be appropriate—
(a)for securing or facilitating the transfer of a relevant long-term insurer’s business so far as it consists of the carrying out of contracts of long-term insurance, or of any part of that business, to another authorised person;
(b)for securing the issue by another authorised person to the policyholders concerned of policies in substitution for their existing policies.
(4)The scheme may also provide for the scheme manager to make payments to the policyholders concerned—
(a)during any period while he is seeking to make arrangements mentioned in subsection (1);
(b)if it appears to him that it is not reasonably practicable to make such arrangements.
(5)A provision of the scheme made by virtue of section 213(3)(b) may include power to impose levies for the purpose of meeting expenses of the scheme manager incurred in—
(a)taking measures as a result of any provision of the scheme made by virtue of subsection (3);
(b)making payments as a result of any such provision made by virtue of subsection (4).
note 217 Insurers in financial difficulties.
(1)The compensation scheme may, in particular, include provision for the scheme manager to have power to take measures for safeguarding policyholders, or policyholders of a specified class, of relevant insurers.
(2) “ Relevant insurers ” means relevant persons who—
(a)have permission to effect or carry out contracts of insurance; and
(b)are in financial difficulties.
(3)The measures may include such measures as the scheme manager considers appropriate for—
(a)securing or facilitating the transfer of a relevant insurer’s business so far as it consists of the carrying out of contracts of insurance, or of any part of that business, to another authorised person;
(b)giving assistance to the relevant insurer to enable it to continue to effect or carry out contracts of insurance.
(4)The scheme may provide—
(a)that if measures of a kind mentioned in subsection (3)(a) are to be taken, they should be on terms appearing to the scheme manager to be appropriate, including terms reducing, or deferring payment of, any of the things to which any of those who are eligible policyholders in relation to the relevant insurer are entitled in their capacity as such;
(b)that if measures of a kind mentioned in subsection (3)(b) are to be taken, they should be conditional on the reduction of, or the deferment of the payment of, the things to which any of those who are eligible policyholders in relation to the relevant insurer are entitled in their capacity as such;
(c)for ensuring that measures of a kind mentioned in subsection (3)(b) do not benefit to any material extent persons who were members of a relevant insurer when it began to be in financial difficulties or who had any responsibility for, or who may have profited from, the circumstances giving rise to its financial difficulties, except in specified circumstances;
(d)for requiring the scheme manager to be satisfied that any measures he proposes to take are likely to cost less than it would cost to pay compensation under the scheme if the relevant insurer became unable, or likely to be unable, to satisfy claims made against him.
(5)The scheme may provide for the [F1674either regulator or both regulatorsF1674] to have power—
(a)to give such assistance to the scheme manager as it considers appropriate for assisting the scheme manager to determine what measures are practicable or desirable in the case of a particular relevant insurer;
(b)to impose constraints on the taking of measures by the scheme manager in the case of a particular relevant insurer;
(c)to require the scheme manager to provide it with information about any particular measures which the scheme manager is proposing to take.
(6)The scheme may include provision for the scheme manager to have power—
(a)to make interim payments in respect of eligible policyholders of a relevant insurer;
(b)to indemnify any person making payments to eligible policyholders of a relevant insurer.
(7)A provision of the scheme made by virtue of section 213(3)(b) may include power to impose levies for the purpose of meeting expenses of the scheme manager incurred in—
(a)taking measures as a result of any provision of the scheme made by virtue of subsection (1);
(b)making payments or giving indemnities as a result of any such provision made by virtue of subsection (6).
(8) “ Financial difficulties ” and “ eligible policyholders ” have such meanings as may be specified.
[F1675217ZA Insurers subject to write-down orders
(1)The compensation scheme must include provision requiring the scheme manager to take specified measures for safeguarding policyholders affected by write-down orders.
(2) A person (“ P ”) is a policyholder affected by a write-down order if—
(a)P is a policyholder of an insurer in respect of whom a write-down order has effect, and
(b)the value of any thing to which P is (or may become) entitled, in P’s capacity as a policyholder of the insurer, is reduced under the write-down order.
(3)Measures specified by virtue of subsection (1) must, in particular, require financial assistance to be given to insurers subject to write-down orders for the purpose mentioned in subsection (4).
(4)The purpose is to enable payments to be made to affected policyholders in respect of the reduction in value of their entitlements (or contingent entitlements), as mentioned in subsection (2)(b).
(5)Financial assistance given under this section—
(a)must not be used for any purpose other than the purpose mentioned in subsection (4);
(b)is not to be taken into account, to any extent, in valuing the assets of the insurer for any purpose.
(6)Measures taken by the scheme manager by virtue of this section are in addition to any measures the scheme manager may take under powers provided by virtue of section 217(1).
(7)In this section and section 217ZB—
“ insurer ” means a relevant person who has permission to carry out contracts of insurance;
“ write-down order ” means an order under section 377A (as it has effect in accordance with section 377H) . F1675]
[F1675217ZB Recovery of financial assistance under section 217ZA
(1)The compensation scheme may make provision giving the scheme manager a right of recovery in respect of financial assistance given to an insurer by virtue of section 217ZA.
(2)Any right of recovery the scheme manager has in respect of financial assistance given to an insurer by virtue of subsection (1) must not be exercised against a policyholder of the insurer.
(3)Subsection (4) applies where, by virtue of subsection (1), the scheme manager has a right of recovery in respect of financial assistance given to an insurer.
(4)In valuing the insurer’s liabilities for the purposes of a relevant insolvency provision, no account is to be taken of any expectation that the right will be exercised.
(5) In subsection (4), “ relevant insolvency provision ” has the same meaning as in paragraph 9 of Schedule 19B (treatment of written-down liabilities for purposes of relevant insolvency provisions) . F1675]
[F1676Relationship with the regulators
217A Co-operation
(1)Each regulator and the scheme manager must take such steps as they consider appropriate to co-operate with each other in the exercise of their functions under this Part and Part 15A.
(2)Each regulator and the scheme manager must prepare and maintain a memorandum describing how that regulator and the scheme manager intend to comply with subsection (1).
(3)The scheme manager must ensure that the memoranda as currently in force are published in the way appearing to it to be best calculated to bring them to the attention of the public.F1676]
[F1677Annual plan and reportF1677]
[F1678217B Annual plan
(1)The scheme manager must in respect of each of its financial years prepare an annual plan.
(2)The plan must be prepared before the start of the financial year.
(3)An annual plan in respect of a financial year must make provision about the use of the resources of the scheme manager.
(4)The plan may include material relating to periods longer than the financial year in question.
(5)Before preparing an annual plan, the scheme manager must consult such persons (if any) as the scheme manager considers appropriate.
(6)The scheme manager must publish each annual plan in the way it considers appropriate.F1678]
218 Annual report.
(1)At least once a year, the scheme manager must make a report to the [F1679regulatorsF1679] on the discharge of its functions.
(2)The report must—
(a)include a statement setting out the value of each of the funds established by the compensation scheme; and
(b)comply with any requirements specified in rules made by the [F1680regulatorsF1680] .
(3)The scheme manager must publish each report in the way it considers appropriate.
[F1681 (4)The Treasury may—
(a)require the scheme manager to comply with any provisions of the Companies Act 2006 about accounts and their audit which would not otherwise apply to it, or
(b)direct that any such provision of that Act is to apply to the scheme manager with such modifications as are specified in the direction.
(5)Compliance with any requirement under subsection (4)(a) or (b) is enforceable by injunction or, in Scotland, an order for specific performance under section 45 of the Court of Session Act 1988.
(6)Proceedings under subsection (5) may be brought only by the Treasury.F1681]
[F1682218ZA Audit of accounts
(1)The scheme manager must send a copy of its annual accounts to the Comptroller and Auditor General and the Treasury as soon as is reasonably practicable.
(2)The Comptroller and Auditor General must—
(a)examine, certify and report on accounts received under this section, and
(b)send a copy of the certified accounts and the report to the Treasury.
(3)The Treasury must lay the copy of the certified accounts and the report before Parliament.
(4)The scheme manager must send a copy of the certified accounts and the report to the regulators.
(5)Except as provided by section 218(4), the scheme manager is exempt from the requirements of Part 16 of the Companies Act 2006 (audit), and its balance sheet must contain a statement to that effect.
(6) In this section “ annual accounts ” has the meaning given by section 471 of the Companies Act 2006 . F1682]
Information and documents
[F1683218A [F1684Regulators'F1684] power to require information
[F1685 (1)Each regulator may make rules enabling that regulator to require authorised persons [F1686 or recognised investment exchanges carrying on a regulated activity relating to a trading facilityF1686] to—
(a)provide information to the scheme manager on the request of that regulator or the scheme manager; or
(b)provide information to that regulator, which may then be made available to the scheme manager by that regulator.F1685]
(2)A requirement may be imposed only if the [F1687 regulatorF1687] thinks the information is of a kind that may be of use to the scheme manager in connection with functions in respect of the scheme.
(3)A requirement under this section may apply—
(a)to authorised persons generally or only to specified persons or classes of person;
[F1688 (aa)to recognised investment exchanges mentioned in subsection (1) generally or only to specified exchanges or classes of exchange;F1688]
(b)to the provision of information at specified periods, in connection with specified events or in other ways.
(4)In addition to requirements under this section, a notice under section 165 may relate to information or documents which the [F1689 regulatorF1689] thinks are reasonably required by the scheme manager in connection with the performance of functions in respect of the scheme; and section 165(4) is subject to this subsection.
(5)Rules under subsection (1) shall be prepared, made and treated in the same way as (and may be combined with) the [F1690 regulator'sF1690] general rules.F1683]
F1691218B Treasury's power to require information from scheme manager
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note 219 Scheme manager’s power to require information. cross-notes
(1)The scheme manager may, by notice in writing [F1692require a personF1692] —
(a)to provide specified information or information of a specified description; or
(b)to produce specified documents or documents of a specified description.
[F1693 (1A)A requirement may be imposed only—
(a)on a person (P) against whom a claim has been made under the scheme,
(b)on a person (P) who is unable or likely to be unable to satisfy claims under the scheme against P,
[F1694 (ba)on a person (P) who is an insurer who has been given financial assistance under section 217ZA,F1694]
(c) on a person (“the Third Party”) whom the scheme manager thinks was knowingly involved in matters giving rise to a claim against another person (P) under the scheme, F1695 ...
(d) on a person (“the Third Party”) whom the scheme manager thinks was knowingly involved in matters giving rise to the actual or likely inability of another person (P) to satisfy claims under the scheme [F1696 , or
(e) on a person (“the Third Party”) whom the scheme manager thinks is or was at any relevant time involved in any contract of insurance or in the administration of any trust arrangement relating to a funeral plan contract entered into or carried out by a person (P)—
(i)against whom a claim has been made under the scheme, or
(ii)who is unable or likely to be unable to satisfy claims under the scheme against P.F1696]
(1B)For the purposes of subsection (1A)(b) [F1697 , (d) and (e)(ii)F1697] whether P is unable or likely to be unable to satisfy claims shall be determined in accordance with provision to be made by the scheme (which may, in particular—
(a)apply or replicate, with or without modifications, a provision of an enactment;
(b)confer discretion on a specified person).F1693]
(2)The information or documents must be provided or produced—
(a)before the end of such reasonable period as may be specified; and
(b)in the case of information, in such manner or form as may be specified.
(3)This section applies only to information and documents the provision or production of which the scheme manager considers [F1698 to be necessary (or likely to be necessary) for the fair determination of claims which have been or may be made against PF1698] .
[F1699 (3A)Where a stabilisation power under Part 1 of the Banking Act 2009 has been exercised in respect of a bank, [F1700 building society or credit union,F1700] the scheme manager may by notice in writing require [F1701 the bank, building society or credit union, or the Bank of England,F1701] to provide information that the scheme manager requires for the purpose of [F1702 determining the matters mentioned in section 214D(2)(a) and (b) aboveF1702] .F1699]
(4)If a document is produced in response to a requirement imposed under this section, the scheme manager may—
(a)take copies or extracts from the document; or
(b)require the person producing the document to provide an explanation of the document.
(5)If a person who is required under this section to produce a document fails to do so, the scheme manager may require the person to state, to the best of his knowledge and belief, where the document is.
(6)If [F1703PF1703] is insolvent, no requirement may be imposed under this section on a person to whom section 220 or 224 applies.
(7)If a person claims a lien on a document, its production under this Part does not affect the lien.
(8)F1704. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9) “ Specified ” means specified in the notice given under subsection (1).
(10)F1705. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note 220 Scheme manager’s power to inspect information held by liquidator etc. cross-notes
(1)For the purpose of assisting the scheme manager to discharge its functions in relation to a claim made in respect of an insolvent relevant person[F1706 or insolvent relevant exchangeF1706] , a person to whom this section applies must permit a person authorised by the scheme manager to inspect relevant documents.
(2)A person inspecting a document under this section may take copies of, or extracts from, the document.
(3)This section applies to—
(a)the administrative receiver, administrator, liquidator [F1707, bank liquidatorF1707][F1708 , building society liquidatorF1708] or trustee in bankruptcy of an insolvent relevant person[F1709 or insolvent relevant exchangeF1709] ;
(b)the [F1710trustee in the sequestration, under the Bankruptcy (Scotland) Act 2016, ofF1710] the estate of an insolvent relevant person[F1711 or insolvent relevant exchangeF1711] .
(4)This section does not apply to a liquidator, administrator or trustee in bankruptcy who is—
(a)the Official Receiver;
(b)the Official Receiver for Northern Ireland; or
(c)the Accountant in Bankruptcy.
(5) “ Relevant person ” [F1712 and “relevant exchange” F1712][F1713 have F1713] the same meaning as in section 224.
[F1714220A Power to inspect information held by write-down manager
(1)For the purpose of assisting the scheme manager to discharge its functions under section 217ZA or 217ZB in relation to an insurer, a person to whom this section applies must permit a person authorised by the scheme manager to inspect relevant documents.
(2)This section applies to a person appointed under section 377G to act as the manager of a write-down order which has effect in relation to the insurer.
(3)A person inspecting a document under this section may take copies of, or extracts from, the document.F1714]
note 221 Powers of court where information required. cross-notes
(1) If a person (“ the defaulter ”)—
(a)fails to comply with a requirement imposed under section 219, or
(b)fails to permit documents to be inspected under section 220,
the scheme manager may certify that fact in writing to the court and the court may enquire into the case.
(2) If the court is satisfied that the defaulter failed without reasonable excuse to comply with the requirement (or to permit the documents to be inspected), it may deal with the defaulter (and, in the case of a body corporate, any director or [F1715 other F1715] officer) as if he were in contempt [F1716 ; and “officer”, in relation to a limited liability partnership, means a member of the limited liability partnership. F1716] .
(3) “ Court ” means—
(a)the High Court;
(b)in Scotland, the Court of Session.
Miscellaneous
[F1717221A Delegation of functions
(1) The scheme manager may arrange for any of its functions to be discharged on its behalf by another person (a “scheme agent”).
(2)Before entering into arrangements the scheme manager must be satisfied that the scheme agent—
(a)is competent to discharge the function, and
(b)has been given sufficient directions to enable the agent to take any decisions required in the course of exercising the function in accordance with policy determined by the scheme manager.
(3)Arrangements may include provision for payments to be made by the scheme manager to the scheme agent (which payments are management expenses of the scheme manager [F1718 except where the function in question is one under Part 15AF1718] ).F1717]
notecase 222 Statutory immunity. cross-notes
(1)F1719Neither the scheme manager nor any person who is, or is acting as, its ... officer [F1720, scheme agentF1720] or member of staff is to be liable in damages for anything done or omitted in the discharge, or purported discharge, of the scheme manager’s functions.
(2)Subsection (1) does not apply—
(a)if the act or omission is shown to have been in bad faith; or
(b)M16so as to prevent an award of damages made in respect of an act or omission on the ground that the act or omission was unlawful as a result of section 6(1) of the Human Rights Act 1998.
note 223 Management expenses. I31
(1)The amount which the scheme manager may recover, from the sums levied under the scheme, as management expenses attributable to a particular period may not exceed such amount as may be fixed by the scheme as the limit applicable to that period.
(2)In calculating the amount of any levy to be imposed by the scheme manager, no amount may be included to reflect management expenses unless the limit mentioned in subsection (1) has been fixed by the scheme.
(3) “ Management expenses ” means expenses incurred, or expected to be incurred, by the scheme manager in connection with its functions under this Act other than those incurred—
(a)in paying compensation;
(b)as a result of any provision of the scheme made by virtue of section [F1721215A(3) or (4),F1721] 216(3) or (4) or 217(1) or (6) [F1722;
(c)under section 214B [F1723 or 214DF1723] ;F1722]
[F1724 (ca)under section 214E;F1724]
[F1725 (d)under Part 15A.F1725]
Prospective
[F1726223A Investing in National Loans Fund
(1)Sums levied for the purpose of maintaining a contingency fund may be paid to the Treasury.
(2)The Treasury may receive sums under subsection (1) and may set terms and conditions of receipts.
(3)Sums received shall be treated as if raised under section 12 of the National Loans Act 1968 (and shall therefore be invested as part of the National Loans Fund).
(4)Interest accruing on the invested sums may be credited to the contingency fund (subject to any terms and conditions set under subsection (2)).
(5)The Treasury shall comply with any request of the scheme manager to arrange for the return of sums for the purpose of making payments out of a contingency fund (subject to any terms and conditions set under subsection (2)).F1726]
[F1727223B Borrowing from National Loans Fund
(1)The scheme manager may request a loan from the National Loans Fund for the purpose of funding expenses incurred or expected to be incurred under the scheme.
(2)The Treasury may arrange for money to be paid out of the National Loans Fund in pursuance of a request under subsection (1).
(3)The Treasury shall determine—
(a)the rate of interest on a loan, and
(b)other terms and conditions.
(4)The Treasury may make regulations—
(a)about the amounts that may be borrowed under this section;
(b)permitting the scheme manager to impose levies under section 213 for the purpose of meeting expenses in connection with loans under this section (and the regulations may have effect despite any provision of this Act);
(c)about the classes of person on whom those levies may be imposed;
(d)about the amounts and timing of those levies.
(5)The compensation scheme may include provision about borrowing under this section provided that it is not inconsistent with regulations under this section.F1727]
[F1728223C Payments in error
(1)Payments made by the scheme manager in error may be provided for in setting a levy by virtue of section 213, 214A, 214B [F1729 , 214EF1729] or 223B.
(2)This section does not apply to payments made in bad faith.F1728]
224 Scheme manager’s power to inspect documents held by Official Receiver etc. cross-notesI32
(1)If, as a result of the insolvency or bankruptcy of a relevant person[F1730 or relevant exchangeF1730] , [F1731or a successor falling within section 213(1)(b),F1731] any documents have come into the possession of a person to whom this section applies, he must permit any person authorised by the scheme manager to inspect the documents for the purpose of establishing—
(a)the identity of persons to whom the scheme manager may be liable to make a payment in accordance with the compensation scheme; or
(b)the amount of any payment which the scheme manager may be liable to make.
(2)A person inspecting a document under this section may take copies or extracts from the document.
(3) In this section “ relevant person ” means a person who was—
(a)an authorised person at the time the act or omission which may give rise to the liability mentioned in subsection (1)(a) took place; or
(b)an appointed representative at that time.
SIF1732 (4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1733 (4ZA)But a person is not to be regarded as a relevant person in relation to a regulated activity if, at that time, the person—
(a)was a Gibraltar-based person with a Schedule 2A permission to carry on the activity, and
(b)fell within a prescribed category, either generally or in relation to the activity.
(4ZB)Regulations prescribing a category of person for the purposes of subsection (4ZA) may, among other things, make provision by reference to—
(a)whether the activity is carried on through a branch in the United Kingdom;
(b)the level of protection provided by the compensation scheme and by any comparable scheme operating in Gibraltar.F1733]
[F1734 (4A) In this section “relevant exchange” means a body corporate or unincorporated association carrying on a regulated activity relating to a trading facility at the time the act or omission which may give rise to the liability mentioned in subsection (1)(a) took place. F1734]
(5)This section applies to—
(a)the Official Receiver;
(b)the Official Receiver for Northern Ireland; and
(c)the Accountant in Bankruptcy.
case [F1735224ZA Discharge of functions
(1)In discharging its functions the scheme manager must have regard to—
(a)the need to ensure efficiency and effectiveness in the discharge of those functions, and
(b)the need to minimise public expenditure attributable to loans made or other financial assistance given to the scheme manager for the purposes of the scheme.
(2) In subsection (1)(b) “ financial assistance ” includes the giving of guarantees and indemnities and any other kind of financial assistance (actual or contingent). F1735]
[F1736224A Functions under the Banking Act 2009
[F1737 (1)F1737] A reference in this Part to functions of the scheme manager (including a reference to functions conferred by or under this Part) includes a reference to functions conferred by or under the Banking Act 2009.
[F1738 (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 compensation scheme.F1738,F1736]]
[F1739Part 15A Power to require FSCS manager to act in relation to other schemes
Introduction
224B Meaning of “relevant scheme” etc
(1)The following provisions apply for the purposes of this Part.
(2) “ Relevant scheme ” means a scheme or arrangement (other than the FSCS) for the payment of compensation (in certain cases) to customers of persons who provide financial services or carry on a business connected with the provision of such services.
(3)References to the manager of a relevant scheme are to the person who administers it or (if there is no such person) the person responsible for making payments under it.
(4) “ The FSCS ” means the Financial Services Compensation Scheme (see section 213(2)).
(5) “ The FSCS manager ” means the scheme manager as defined by section 212(1).
(6) “ Expense ” includes anything that, if incurred in relation to the FSCS, would amount to an expense for the purposes of the FSCS.
(7) “ Notice ” means a notice in writing.
(8)In subsection (2)—
(a) “ customers ” includes customers outside the United Kingdom;
(b) “ persons ” includes persons outside the United Kingdom;
(c)references to the provision of financial services include the provision outside the United Kingdom of such services.
(9)This Part applies to cases where the manager of the relevant scheme is the Treasury or any other Minister of the Crown as it applies to cases where that manager is any other person.
Power to require FSCS manager to act
224C Power to require FSCS manager to act on behalf of manager of relevant scheme
(1)This section applies if compensation is payable under a relevant scheme.
(2)The Treasury may by notice require the FSCS manager to exercise (on behalf of the manager of the relevant scheme) specified functions in respect of specified claims for compensation under the relevant scheme.
(3)A notice may be given only with the consent of the manager of the relevant scheme.
(4) In subsection (2) “ specified ” means specified, or of a description specified, in the notice.
(5)Claims or descriptions of claims may be specified by reference to the persons or description of persons whose claims they are.
224D Cases where FSCS manager may decline to act
(1) This section applies where a notice under section 224C(2) (a “section 224C notice”) has been given in respect of a relevant scheme.
(2)The FSCS manager is not under a duty to comply with the section 224C notice if, as soon as reasonably practicable after receiving it, the FSCS manager gives a notice to the Treasury stating that a ground set out in section 224E applies.
(3)Where a notice under subsection (2) is given, the FSCS manager may recover from the manager of the relevant scheme an amount equal to the total expenses incurred by the FSCS manager in connection with the relevant scheme in the period—
(a)beginning with the giving of the section 224C notice; and
(b)ending with the giving of the notice under subsection (2).
(4)The duty to comply with the section 224C notice ceases if, after starting to comply with it, the FSCS manager gives a notice to the Treasury and the manager of the relevant scheme stating that a ground set out in section 224E applies.
(5)Where a notice under subsection (4) is given, the FSCS manager must give the Treasury such information connected with the FSCS manager's exercise of functions in relation to the relevant scheme as the Treasury may reasonably require.
(6)Any notice under this section—
(a)may be given only if, before giving it, the FSCS manager has taken reasonable steps to deal with anything that is causing the ground or grounds in question to apply; and
(b)must contain details of those steps.
224E Grounds for declining to act
(1)This section sets out the grounds referred to in section 224D(2) and (4).
(2)The first ground is that the FSCS manager is not satisfied that it will be able to obtain any information required in order to comply with the section 224C notice.
(3)The second ground is that the FSCS manager is not satisfied that it will be able to obtain any advice or other assistance from the manager of the relevant scheme that is required in order to comply with the section 224C notice.
(4)The third ground is—
(a)that the FSCS manager has not received an amount at least equal to the total expenses it expects to incur in connection with its relevant scheme functions; and
(b)either—
(i)that there are no arrangements for the provision of funds to the FSCS manager to enable it to exercise those functions and meet those expenses; or
(ii)that the FSCS manager considers that any such arrangements are unsatisfactory.
(5)The fourth ground is that the FSCS manager considers that complying with the section 224C notice would detrimentally affect the exercise of its functions under the FSCS.
(6)The fifth ground is—
(a)that there is no undertaking from the manager of the relevant scheme not to bring proceedings against the FSCS manager; or
(b)that the FSCS manager considers that the terms of any such undertaking are unsatisfactory.
(7)The sixth ground is—
(a)that there are no arrangements for the reimbursement of any expenses incurred by the FSCS manager in connection with any proceedings brought against it in respect of its relevant scheme functions (including expenses incurred in meeting any award of damages made against it); or
(b)that the FSCS manager considers that any such arrangements are unsatisfactory.
(8)In subsection (6) references to an undertaking of the kind mentioned there are to an undertaking not to bring proceedings in respect of the FSCS manager's relevant scheme functions except proceedings in respect of an act or omission of the FSCS manager that is alleged to have been in bad faith.
(9) In this section “ proceedings ” includes proceedings outside the United Kingdom.
Rules
224F Rules about relevant schemes
(1)The [F1740 regulatorsF1740] may by rules make provision in connection with the exercise by the FSCS manager of functions in respect of relevant schemes.
(2)The provision that may be made by the rules includes any provision corresponding to provision that could be contained in the FSCS; but this is subject to subsections (3) and (4).
(3)The rules may confer on the FSCS manager a power to impose levies on authorised persons (or any class of authorised persons) for the purpose of meeting its management expenses incurred in connection with its functions in respect of relevant schemes.
(4)But if the rules confer such a power they must provide that the power may be exercised in relation to expenses incurred in connection with a relevant scheme only if the FSCS manager has tried its best to obtain reimbursement of the expenses from the manager of the relevant scheme.
(5)The rules may apply any provision of the FSCS, with or without modifications.
(6)An amount payable to the FSCS manager as a result of any provision of the rules made by virtue of subsection (3) may be recovered as a debt due to the FSCS manager.
(7) References to the FSCS manager's “management expenses” are to its expenses incurred otherwise than in paying compensation. F1739]
case Part XVI The Ombudsman Scheme cross-notes
The scheme
notecase 225 The scheme and the scheme operator.
(1)This Part provides for a scheme under which certain disputes may be resolved quickly and with minimum formality by an independent person.
(2) The scheme is to be administered by a body corporate (“ the scheme operator ”).
(3) The scheme is to be operated under a name chosen by the scheme operator but is referred to in this Act as “ the ombudsman scheme ”.
(4)Schedule 17 makes provision in connection with the ombudsman scheme and the scheme operator.
notecase 226 Compulsory jurisdiction. cross-notesI33
(1) A complaint which relates to an act or omission of a person (“ the respondent ”) in carrying on an activity to which compulsory jurisdiction rules apply is to be dealt with under the ombudsman scheme if the conditions mentioned in subsection (2) are satisfied.
(2)The conditions are that—
(a)the complainant is eligible and wishes to have the complaint dealt with under the scheme;
(b)the respondent was an authorised person[F1741 or an electronic money issuer within the meaning of the Electronic Money Regulations 2011F1741][F1742 , or a payment service provider within the meaning of the Payment Services Regulations [F1743 2017F1743] ,F1742] at the time of the act or omission to which the complaint relates; and
(c)the act or omission to which the complaint relates occurred at a time when compulsory jurisdiction rules were in force in relation to the activity in question.
(3) “ Compulsory jurisdiction rules ” means rules—
(a)made by the [F1744FCAF1744] for the purposes of this section; and
(b)specifying the activities to which they apply.
(4)Only activities which are regulated activities, or which could be made regulated activities by an order under section 22, may be specified.
(5)Activities may be specified by reference to specified categories (however described).
[F1745 (5A)If the FCA specifies activities which are account information services provided by authorised payment institutions or EEA authorised payment institutions, the FCA must specify to the same extent account information services provided by registered account information service providers or, as the case may be, EEA registered account information service providers.
(5B)Expressions used in subsection (5A) and in the Payments Services Regulations 2017 have the same meaning in that subsection as they do in those Regulations.F1745]
(6)A complainant is eligible, in relation to the compulsory jurisdiction of the ombudsman scheme, if he falls within a class of person specified in the rules as eligible.
(7)The rules—
(a)may include provision for persons other than individuals to be eligible; but
(b)may not provide for authorised persons to be eligible except in specified circumstances or in relation to complaints of a specified kind.
[F1746 (7A)The rules must provide that a person within subsection (7B) is eligible in relation to a complaint to which subsection (7C) applies.
(7B)A person is within this subsection if he or she has been identified by a respondent, in carrying on an activity to which the rules apply, as—
(a)a politically exposed person;
(b)a family member of a politically exposed person; or
(c)a known close associate of a politically exposed person.
(7C)This subsection applies to a complaint—
(a)that the complainant has been incorrectly identified as a person within subsection (7B); or
(b)relating to an act or omission of the respondent in consequence of the identification of the complainant as a person within subsection (7B).
(7D) In subsection (7B), “politically exposed person”, “family member” and “known close associate” have the meanings given in regulation 35(12) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 . F1746]
(8) The jurisdiction of the scheme which results from this section is referred to in this Act as the “ compulsory jurisdiction ”.
case F1747226A Consumer credit jurisdiction
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase 227 Voluntary jurisdiction. cross-notesI34
(1) A complaint which relates to an act or omission of a person (“ the respondent ”) in carrying on an activity to which voluntary jurisdiction rules apply is to be dealt with under the ombudsman scheme if the conditions mentioned in subsection (2) are satisfied.
(2)The conditions are that—
(a)the complainant is eligible and wishes to have the complaint dealt with under the scheme;
(b)at the time of the act or omission to which the complaint relates, the respondent was participating in the scheme;
(c)at the time when the complaint is referred under the scheme, the respondent has not withdrawn from the scheme in accordance with its provisions;
(d)the act or omission to which the complaint relates occurred at a time when voluntary jurisdiction rules were in force in relation to the activity in question; and
(e)F1748the complaint cannot be dealt with under the compulsory jurisdiction ....
(3) “ Voluntary jurisdiction rules ” means rules—
(a)made by the scheme operator for the purposes of this section; and
(b)specifying the activities to which they apply.
(4)The only activities which may be specified in the rules are activities which are, or could be, specified in compulsory jurisdiction rules.
(5)Activities may be specified by reference to specified categories (however described).
(6)The rules require the [F1749FCA'sF1749] approval.
(7)A complainant is eligible, in relation to the voluntary jurisdiction of the ombudsman scheme, if he falls within a class of person specified in the rules as eligible.
(8)The rules may include provision for persons other than individuals to be eligible.
(9)A person qualifies for participation in the ombudsman scheme if he falls within a class of person specified in the rules in relation to the activity in question.
(10)Provision may be made in the rules for persons other than authorised persons to participate in the ombudsman scheme.
(11)The rules may make different provision in relation to complaints arising from different activities.
(12) The jurisdiction of the scheme which results from this section is referred to in this Act as the “ voluntary jurisdiction ”.
(13)In such circumstances as may be specified in voluntary jurisdiction rules, a complaint—
(a)which relates to an act or omission occurring at a time before the rules came into force, and
(b)which could have been dealt with under a scheme which has to any extent been replaced by the voluntary jurisdiction,
is to be dealt with under the ombudsman scheme even though paragraph (b) or (d) of subsection (2) would otherwise prevent that.
(14)In such circumstances as may be specified in voluntary jurisdiction rules, a complaint is to be dealt with under the ombudsman scheme even though—
(a)paragraph (b) or (d) of subsection (2) would otherwise prevent that, and
(b)the complaint is not brought within the scheme as a result of subsection (13),
but only if the respondent has agreed that complaints of that kind were to be dealt with under the scheme.
Determination of complaints
notecase 228 Determination under the compulsory jurisdiction. cross-notes
(1)F1750This section applies only in relation to the compulsory jurisdiction ....
(2)A complaint is to be determined by reference to what is, in the opinion of the ombudsman, fair and reasonable in all the circumstances of the case.
(3)When the ombudsman has determined a complaint he must give a written statement of his determination to the respondent and to the complainant.
(4)The statement must—
(a)give the ombudsman’s reasons for his determination;
(b)be signed by him; and
(c)F1751require the complainant to notify him ..., before a date specified in the statement, whether he accepts or rejects the determination.
(5)If the complainant notifies the ombudsman that he accepts the determination, it is binding on the respondent and the complainant and final.
(6)If, by the specified date, the complainant has not notified the ombudsman of his acceptance or rejection of the determination he is to be treated as having rejected it.
[F1752 (6A)But the complainant is not to be treated as having rejected the determination by virtue of subsection (6) if—
(a)the complainant notifies the ombudsman after the specified date of the complainant's acceptance of the determination,
(b)the complainant has not previously notified the ombudsman of the complainant's rejection of the determination, and
(c)the ombudsman is satisfied that such conditions as may be prescribed by rules made by the scheme operator for the purposes of this section are satisfied.F1752]
(7)The ombudsman must notify the respondent of the outcome.
[F1753 (7A)Where a determination is rejected by virtue of subsection (6), the notification under subsection (7) must contain a general description of the effect of subsection (6A).F1753]
(8)A copy of the determination on which appears a certificate signed by an ombudsman is evidence (or in Scotland sufficient evidence) that the determination was made under the scheme.
(9)Such a certificate purporting to be signed by an ombudsman is to be taken to have been duly signed unless the contrary is shown.
notecase 229 Awards. cross-notesI35
(1)F1754This section applies only in relation to the compulsory jurisdiction ....
(2)If a complaint which has been dealt with under the scheme is determined in favour of the complainant, the determination may include—
(a) an award against the respondent of such amount as the ombudsman considers fair compensation for loss or damage (of a kind falling within subsection (3)) suffered by the complainant (“ a money award ”);
(b)a direction that the respondent take such steps in relation to the complainant as the ombudsman considers just and appropriate (whether or not a court could order those steps to be taken).
(3)A money award may compensate for—
(a)financial loss; or
(b)any other loss, or any damage, of a specified kind.
(4)The [F1755FCAF1755] may specify [F1756for the purposes of the compulsory jurisdictionF1756] the maximum amount which may be regarded as fair compensation for a particular kind of loss or damage specified under subsection (3)(b).
F1757 (4A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)A money award may not exceed the monetary limit; but the ombudsman may, if he considers that fair compensation requires payment of a larger amount, recommend that the respondent pay the complainant the balance.
(6)The monetary limit is such amount as may be specified.
(7)Different amounts may be specified in relation to different kinds of complaint.
(8)A money award—
(a)may provide for the amount payable under the award to bear interest at a rate and as from a date specified in the award; and
(b)F1758is enforceable by the complainant in accordance with Part III of Schedule 17 ....
(9)Compliance with a direction under subsection (2)(b)—
(a)is enforceable by an injunction; or
(b)M17in Scotland, is enforceable by an order under section 45 of the Court of Session Act 1988.
(10)Only the complainant may bring proceedings for an injunction or proceedings for an order.
[F1759 (11) “Specified” means specified in compulsory jurisdiction rules. F1759]
F1760 (12). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase 230 Costs. cross-notes
(1) F1761 The scheme operator may by rules (“ costs rules ”) provide for an ombudsman to have power, on determining a complaint under the compulsory jurisdiction ..., to award costs in accordance with the provisions of the rules.
(2)Costs rules require the approval of the [F1762FCAF1762] .
(3)Costs rules may not provide for the making of an award against the complainant in respect of the respondent’s costs.
(4)But they may provide for the making of an award against the complainant in favour of the scheme operator, for the purpose of providing a contribution to resources deployed in dealing with the complaint, if in the opinion of the ombudsman—
(a)the complainant’s conduct was improper or unreasonable; or
(b)the complainant was responsible for an unreasonable delay.
(5)Costs rules may authorise an ombudsman making an award in accordance with the rules to order that the amount payable under the award bears interest at a rate and as from a date specified in the order.
(6)An amount due under an award made in favour of the scheme operator is recoverable as a debt due to the scheme operator.
(7)F1763Any other award made against the respondent is to be treated as a money award for the purposes of paragraph 16 of Schedule 17 ....
case [F1764230A Reports of determinations cross-notes
(1)The scheme operator must publish a report of any determination made under this Part.
(2)But if the ombudsman who makes the determination informs the scheme operator that, in the ombudsman's opinion, it is inappropriate to publish a report of that determination (or any part of it) the scheme operator must not publish a report of that determination (or that part).
(3)Unless the complainant agrees, a report of a determination published by the scheme operator may not include the name of the complainant, or particulars which, in the opinion of the scheme operator, are likely to identify the complainant.
(4)The scheme operator may charge a reasonable fee for providing a person with a copy of a report.F1764]
Information
notecase 231 Ombudsman’s power to require information. cross-notes
(1)An ombudsman may, by notice in writing given to a party to a complaint, require that party—
(a)to provide specified information or information of a specified description; or
(b)to produce specified documents or documents of a specified description.
(2)The information or documents must be provided or produced—
(a)before the end of such reasonable period as may be specified; and
(b)in the case of information, in such manner or form as may be specified.
(3)This section applies only to information and documents the production of which the ombudsman considers necessary for the determination of the complaint.
(4)If a document is produced in response to a requirement imposed under this section, the ombudsman may—
(a)take copies or extracts from the document; or
(b)require the person producing the document to provide an explanation of the document.
(5)If a person who is required under this section to produce a document fails to do so, the ombudsman may require him to state, to the best of his knowledge and belief, where the document is.
(6)If a person claims a lien on a document, its production under this Part does not affect the lien.
(7) “ Specified ” means specified in the notice given under subsection (1).
notecase 232 Powers of court where information required. cross-notes
(1) If a person (“ the defaulter ”) fails to comply with a requirement imposed under section 231, the ombudsman may certify that fact in writing to the court and the court may enquire into the case.
(2) If the court is satisfied that the defaulter failed without reasonable excuse to comply with the requirement, it may deal with the defaulter (and, in the case of a body corporate, any director or [F1765 other F1765] officer) as if he were in contempt [F1766 ; and “officer”, in relation to a limited liability partnership, means a member of the limited liability partnership. F1766] .
(3) “ Court ” means—
(a)the High Court;
(b)in Scotland, the Court of Session.
case [F1767232A Scheme operator's duty to provide information to FCA cross-notes
[F1768 (1)F1768] If the scheme operator considers that it has information that, in its opinion, would or might be of assistance to the FCA in advancing one or more of the FCA's operational objectives [F1769 , or the purpose for which the FCA must exercise its functions under Part 8B (see section 131U(1)),F1769] , it must disclose that information to the FCA.
[F1770 (2)The reference in subsection (1) to the FCA’s operational objectives includes, in its application as a secondary objective, the competitiveness and growth objective (see section 1EB).F1770,F1767]]
note 233 Data protection.
M18 In section 31 of the Data Protection Act 1998 (regulatory activity), after subsection (4), insert—
“(4A)Personal data processed for the purpose of discharging any function which is conferred by or under Part XVI of the Financial Services and Markets Act 2000 on the body established by the Financial Services Authority for the purposes of that Part are exempt from the subject information provisions in any case to the extent to which the application of those provisions to the data would be likely to prejudice the proper discharge of the function.”
Funding
notecase 234 Industry funding. cross-notes
(1)For the purpose of funding—
(a)the establishment of the ombudsman scheme (whenever any relevant expense is incurred), and
(b)its operation in relation to the compulsory jurisdiction,
the [F1771FCAF1771] may make rules requiring the payment to it or to the scheme operator, by authorised persons or any class of authorised person[F1772 , any electronic money issuer within the meaning of the Electronic Money Regulations 2011F1772][F1773 or any payment service provider within the meaning of the Payment Services Regulations [F1774 2017F1774,F1773]] of specified amounts (or amounts calculated in a specified way).
(2) “ Specified ” means specified in the rules.
F1775234A Funding by consumer credit licensees etc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1776Successors to businesses
234B Transfers of liability cross-notes
(1) This section applies where a person (the “successor”) has assumed a liability (including a contingent one) of a person (the “predecessor”) who was, or (apart from this section) would have been, the respondent in respect of a complaint falling to be dealt with under the ombudsman scheme.
(2)The complaint may (but need not) be dealt with under this Part as if the successor were the respondent.F1776]
[F1777PART 16A Consumer protection and competition
Super-complaints and references to FCA
234C Complaints by consumer bodies
(1)A designated consumer body may make a complaint to the FCA that a feature, or combination of features, of a market in the United Kingdom for financial services [F1778 or of a market in Great Britain for claims management servicesF1778] is, or appears to be, significantly damaging the interests of consumers.
[F1779 (1A)But a complaint may not be made to the FCA under this section if it is a complaint which could be made to the Payment Systems Regulator by a designated representative body under section 68 of the Financial Services (Banking Reform) Act 2013 (complaints by representative bodies).
“ Designated representative body ” and “ the Payment Systems Regulator ” have the same meaning in this subsection as they have in that section. F1779]
SI (2) “ Designated consumer body ” means a body designated by the Treasury by order.
(3)The Treasury—
(a)may designate a body only if it appears to them to represent the interests of consumers of any description, and
(b)must publish in such manner as they think fit (and may from time to time vary) criteria to be applied by them in determining whether to make or revoke a designation.
(4) 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.
(5)In this section—
(a) “ market in the United Kingdom ” has the meaning given in section 140A [F1780 (and “ market in Great Britain ” is to be construed accordingly) F1780] ;
(b)the reference to a feature of a market in the United Kingdom for financial services [F1781 , or of a market in Great Britain for claims management services,F1781] has a meaning corresponding to that which a reference to a feature of a market in the United Kingdom for goods and services has (by virtue of section 140A(3)) for the purposes of Chapter 4 of Part 9A.
234D Reference by scheme operator or regulated person
(1)A relevant person may make a reference to the FCA where it appears to that person that either the first set of conditions or the second set of conditions are satisfied.
(2) Each of the following is a “relevant person”—
(a)the scheme operator;
(b)a regulated person.
(3)The first set of conditions is—
(a)that there may have been—
(i)in the case of a reference by the scheme operator, a regular failure by one or more regulated persons to comply with requirements applicable to the carrying on by them of any activity, or
(ii)in the case of a reference by a regulated person, a regular failure by that person to comply with requirements applicable to the carrying on by that person of any activity, and
(b)that as a result consumers have suffered, or may suffer, loss or damage in respect of which, if they brought legal proceedings, a remedy or relief would be available in the proceedings.
(4) The reference to the failure by a regulated person (“R”) to comply with a requirement applicable to the carrying on by R of any activity includes anything done, or omitted to be done, by R in carrying on the activity—
(a)which is a breach of a duty or other obligation, prohibition or restriction, or
(b)which otherwise gives rise to the availability of remedy or relief in legal proceedings.
(5)It does not matter whether—
(a)the duty or other obligation, prohibition or restriction, or
(b)the remedy or relief,
arises as a result of any provision made by or under this or any other Act, a rule of law or otherwise.
(6)The second set of conditions is—
(a)in the case of a reference by the scheme operator, that one or more regulated persons have, on a regular basis, acted or failed to act, in such a way that, if a complaint were made under the ombudsman scheme in relation to that conduct, the ombudsman would be likely to determine the complaint in favour of the complainant,
(b)in the case of a reference by a regulated person, that the regulated person has, on a regular basis, acted or failed to act in such a way that, if a complaint were made under the ombudsman scheme in relation to that conduct, the ombudsman would be likely to determine the complaint in favour of the complainant, and
(c)in either case, that—
(i)if the complaint would fall within the compulsory jurisdiction F1782..., the ombudsman would be likely to make an award under section 229(2)(a) or give a direction under section 229(2)(b), or
(ii)if voluntary jurisdiction rules made for the purposes of section 227 provide for the making of an award against a respondent or the giving of a direction that a respondent take certain steps in relation to a complainant, and the complaint would fall within the voluntary jurisdiction, the ombudsman would be likely to make such an award or give such a direction.
(7) “ Consumers ” has the meaning given in section 1G.
(8) “ Regulated person ” means—
(a)an authorised person;
(b)an electronic money issuer, as defined in section 1H(8);
(c)a payment service provider, as defined in section 1H(8).
234E Response by FCA
(1)The FCA must within 90 days after the day on which it receives a complaint under section 234C or a reference under section 234D publish a response stating how it proposes to deal with the complaint or reference, and in particular—
(a)whether it has decided to take any action, or to take no action, and
(b)if it has decided to take action, what action it proposes to take.
(2)The response must—
(a)include a copy of the complaint or reference, and
(b)state the FCA's reasons for its proposals.
(3)The Treasury may by order amend subsection (1) by substituting any period for the period for the time being specified there.
234F Section 234E: exceptions
(1)This section applies where the FCA has received a reference under section 234D from a person who is a relevant person as a result of subsection (2)(b) of that section.
(2)The duty to respond in section 234E does not apply if the FCA considers that the reference is frivolous, vexatious or has been made in bad faith.
(3)The FCA must within 90 days after the day on which it receives the reference inform the person who made it—
(a)that the duty to respond under section 234E does not apply by virtue of this section, and
(b)of its reasons for reaching the conclusion in paragraph (a).
(4)The Treasury may by order amend subsection (3) by substituting any period for the period for the time being specified there.
234G Guidance
(1)The guidance given by the FCA under section 139A—
(a)must include guidance about the presentation of a reasoned case for a complaint under section 234C or a reference under section 234D, and
(b)may include guidance about such other matters as appears to the FCA to be appropriate for the purposes of section 234C or 234D.
(2)Guidance given under this section is to be taken to be general guidance as defined in section 139B(5).
CompetitionF1777]
F1784234H Power of FCA to make request to [F1783Competition and Markets AuthorityF1783]
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1785234I The FCA's functions under Part 4 of the Enterprise Act 2002
(1) The functions to which this subsection applies (“the concurrent functions”) are to be concurrent functions of the FCA and the Competition and Markets Authority (referred to in this Part as “ the CMA ”).
(2)Subsection (1) applies to the functions of the CMA under Part 4 of the Enterprise Act 2002 (market investigations), so far as those functions—
(a)are exercisable by the CMA Board (within the meaning of Schedule 4 to the Enterprise and Regulatory Reform Act 2013), and
(b)relate to the provision of financial services [F1786 or to the provision of claims management services in Great BritainF1786] .
(3)But subsection (1) does not apply to functions under the following sections of the Enterprise Act 2002—
section 166 (duty to maintain register of undertakings and orders);
[F1787 section 167C (statement of policy in relation to functions under sections 167 and 167A);F1787]
section 171 (duty to publish guidance).
[F1788 section 174E (statement of policy on penalties).F1788]
(4)So far as is necessary for the purposes of, or in connection with, subsections (1) and (2)—
(a)references in Part 4 of the Enterprise Act 2002 to the CMA (including references in provisions of that Act applied by that Part) are to be read as including references to the FCA, and
(b)references in that Part to section 5 of that Act are to be read as including references to section 234M of this Act.
(5)But subsection (4) does not apply—
(a)in relation to section 166 [F1789 , 167C, 171 or 174EF1789] of that Act, or
(b)where the context otherwise requires.
(6)Section 130A of the Enterprise Act 2002 has effect in relation to the FCA by virtue of subsections (1) and (2) as if—
(a)in subsection (2)(a) of that section, the reference to the acquisition or supply of goods or services of one or more than one description in the United Kingdom were a reference to the acquisition or provision in the United Kingdom of financial services [F1790 or in Great Britain of claims management servicesF1790] , and
(b)in subsection (2)(b) of that section, the reference to the extent to which steps can and should be taken were a reference to the extent to which steps that might include steps under Part 4 of that Act can and should be taken.
(7)Before the CMA or the FCA first exercises any of the concurrent functions in relation to any matter, it must consult the other.
(8)Neither the CMA nor the FCA may exercise any of the concurrent functions in relation to any matter if any of those functions have been exercised in relation to that matter by the other.
[F1791 (9)In making any decision, or otherwise taking action, for the purposes of any of its functions that, by virtue of this section, are functions exercisable concurrently with the CMA, the FCA must have regard to the need for making a decision, or taking action, as soon as reasonably practicable.F1791]
234J The FCA's functions under the Competition Act 1998
(1)The functions to which this subsection applies are to be concurrent functions of the FCA and the CMA.
(2)Subsection (1) applies to the functions of the CMA under the provisions of Part 1 of the Competition Act 1998, so far as relating to any of the following that relate to the provision of financial services [F1792 or relate to the provision of claims management services in Great BritainF1792] —
(a)agreements, decisions or concerted practices of the kind mentioned in section 2(1) of that Act,
(b)conduct of the kind mentioned in section 18(1) of that Act, [F1793 andF1793]
[F1794 (c)transferred EU anti-trust commitments or transferred EU anti-trust directions (as defined in section 40ZA of that Act).F1794]
(3)But subsection (1) does not apply to functions under the following provisions of that Act—
section 31D(1) to (6) (duty to publish guidance);
[F1795 section 35C (statement of policy in relation to functions under sections 31E, 34 and 35A);F1795]
section 38(1) to (6) (duty to publish guidance about penalties);
section 40B(1) to (4) (duty to publish statement of policy on penalties);
section 51 (rules).
(4)So far as necessary for the purposes of, or in connection with, the provisions of subsections (1) and (2), references to the CMA in Part 1 of the Competition Act 1998 [F1796 (including references in provisions of the Enterprise Act 2002 applied by that Part)F1796] are to be read as including references to the FCA.
(5)But subsection (4) does not apply—
(a)in relation to sections 31D(1) to (6) [F1797 , 35CF1797] , 38(1) to (6), 40B(1) to (4), 51, 52(6) and (8) and 54 of that Act, or
(b)where the context otherwise requires.
[F1798 (6)In making any decision, or otherwise taking action, for the purposes of any of its functions that—
(a)by virtue of this section, are functions exercisable concurrently with the CMA, and
(b)are functions within Schedule 4A to the Enterprise and Regulatory Reform Act 2013 by virtue of paragraph 5 of that Schedule,
the FCA must have regard to the need for making a decision, or taking action, as soon as reasonably practicable.F1798]
234K Duty to consider exercise of powers under Competition Act 1998
(1)Before exercising a power listed in subsection (3), the FCA must consider whether it would be more appropriate to proceed under the Competition Act 1998.
(2)The FCA must not exercise such a power if it considers that it would be more appropriate to proceed under the Competition Act 1998.
(3)Those powers are—
(a)the power under section 55J(2) to vary or cancel a Part 4A permission;
(b)the power under section 55L to impose a requirement on an authorised person with a Part 4A permission, or to vary a requirement imposed under that section;
(c)the power to take action under section 88E;
(d)the power to take action under section 89U;
(e)the power to give a direction under section 192C;
F1799 (f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
234L Provision of information and assistance to a CMA group
(1)For the purpose of assisting a CMA group in carrying out a relevant investigation, the FCA must give the CMA group—
(a)any relevant information which the FCA has in its possession, and
(b)any other assistance which the CMA group may reasonably require in relation to any matters falling within the scope of the investigation.
(2) A “relevant investigation” is an investigation carried out on a reference made by the FCA under section 131 of the Enterprise Act 2002 by virtue of section 234I.
(3) “ Relevant information ”, in relation to a relevant investigation, is information—
(a)which relates to matters falling within the scope of the investigation, and
(b)which—
(i)is requested by the CMA group for the purpose of the investigation, or
(ii)in the FCA's opinion, it would be appropriate to give to the CMA group for that purpose.
(4)A CMA group, in carrying out a relevant investigation, must take into account any information given to it under this section.
(5) In this section “ CMA group ” has the same meaning as in Schedule 4 to the Enterprise and Regulatory Reform Act 2013 .
234M Function of keeping market under review
(1)For the purpose of the functions conferred on it by sections 234I to 234L the FCA is to have the function of keeping under review the market for financial services [F1800 and the market in Great Britain for claims management servicesF1800] .
(2)The function conferred by subsection (1) is to be carried out with a view to (among other things) ensuring that the FCA has sufficient information to take informed decisions and to carry out its other functions effectively.
234N Exclusion of general duties
(1)Section 1B (the FCA's general duties) does not apply in relation to anything done by the FCA in the carrying out of its functions by virtue of sections 234I to 234L.
(2)But in the carrying out of any functions by virtue of sections 234I to 234L, the FCA may have regard to any of the matters in respect of which a duty is imposed by section 1B if it is a matter to which the CMA is entitled to have regard in the carrying out of those functions.
234O Supplementary provision
(1)If any question arises as to whether, by virtue of section 234I or 234J, any functions fall to be, or are capable of being, carried out by the FCA in relation to any particular case, that question is to be referred to, and determined by, the Treasury.
(2)No objection is to be taken to anything done under the Competition Act 1998 or Part 4 of the Enterprise Act 2002 by or in relation to the FCA on the ground that it should have been done by or in relation to the CMA.F1785]
case Part XVII Collective Investment Schemes cross-notes
Chapter I Interpretation
case 235 Collective investment schemes.
(1) In this Part “ collective investment scheme ” means any arrangements with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.
(2) The arrangements must be such that the persons who are to participate (“ participants ”) do not have day-to-day control over the management of the property, whether or not they have the right to be consulted or to give directions.
(3)The arrangements must also have either or both of the following characteristics—
(a)the contributions of the participants and the profits or income out of which payments are to be made to them are pooled;
(b)the property is managed as a whole by or on behalf of the operator of the scheme.
(4)If arrangements provide for such pooling as is mentioned in subsection (3)(a) in relation to separate parts of the property, the arrangements are not to be regarded as constituting a single collective investment scheme unless the participants are entitled to exchange rights in one part for rights in another.
SI (5)The Treasury may by order provide that arrangements do not amount to a collective investment scheme—
(a)in specified circumstances; or
(b)if the arrangements fall within a specified category of arrangement.
[F1801235A. Contractual schemes
(1) In this Part “contractual scheme” means—
(a)a co-ownership scheme; or
(b)a partnership scheme.
(2) In this Part “co-ownership scheme” means a collective investment scheme which satisfies the conditions in subsection (3).
(3)The conditions are—
(a)that the arrangements constituting the scheme are contractual;
(b)that they are set out in a deed that is entered into between the operator and a depositary and meets the requirements of subsection (4);
(c)that the scheme does not constitute a body corporate, a partnership or a limited partnership;
(d)that the property subject to the scheme is held by, or to the order of, a depositary; and
(e)that either—
(i)the property is beneficially owned by the participants as tenants in common (or, in Scotland, is the common property of the participants); or
(ii)where the arrangements constituting the scheme provide for such pooling as is mentioned in section 235(3)(a) in relation to separate parts of the property, each part is beneficially owned by the participants in that part as tenants in common (or, in Scotland, is the common property of the participants in that part).
(4)The deed—
(a)must contain a statement that the arrangements are intended to constitute a co-ownership scheme as defined in section 235A of the Financial Services and Markets Act 2000;
(b)must make provision for the issue and redemption of units;
(c)must—
(i)prohibit the transfer of units,
(ii)allow units to be transferred only if specified conditions are met, or
(iii)where the arrangements constituting the scheme provide for such pooling as is mentioned in section 235(3)(a) in relation to separate parts of the property, in relation to each separate part make provision falling within sub-paragraph (i) or (ii);
(d)must authorise the operator—
(i)to acquire, manage and dispose of property subject to the scheme; and
(ii)to enter into contracts which are binding on participants for the purposes of, or in connection with, the acquisition, management or disposal of property subject to the scheme; and
(e)must make provision requiring the operator and depositary to wind up the scheme in specified circumstances.
(5) In this Part “partnership scheme” means a collective investment scheme which satisfies the conditions in subsection (6).
(6)The conditions are—
(a)that the scheme is a limited partnership;
[F1802 (aa)that the limited partnership is not designated under section 8(2) of the Limited Partnerships Act 1907 as a private fund limited partnership;F1802]
(b)that the limited partnership—
(i)at any time has only one general partner; and
(ii) on formation has only one limited partner, who is a person nominated by the general partner (“the nominated partner”);
(c)that the arrangements constituting the partnership are set out in a deed that is entered into between the general partner and the nominated partner;
(d)that the deed prohibits such pooling as is mentioned in section 235(3)(a) in relation to separate parts of the property; and
(e)that the deed provides that if an authorisation order is made in respect of the limited partnership under section 261D(1)—
(i)the property subject to the scheme is to be held by, or to the order of, a person appointed to be a depositary;
(ii)the limited partners, other than the nominated partner, are to be the participants in the scheme; and
(iii)the partnership is not dissolved on any person ceasing to be a limited partner provided that there remains at least one limited partner.
(7) In this section “general partner”, “limited partner” and “limited partnership” have the same meaning as in the Limited Partnerships Act 1907 .
(8) In this Part “contractual scheme deed” means—
(a)in relation to a co-ownership scheme, the deed referred to in subsection (3)(b); and
(b)in relation to a partnership scheme, the deed referred to in subsection (6)(c).F1801]
notecase 236 Open-ended investment companies.
(1) In this Part “ an open-ended investment company ” means a collective investment scheme which satisfies both the property condition and the investment condition.
(2) The property condition is that the property belongs beneficially to, and is managed by or on behalf of, a body corporate (“ BC ”) having as its purpose the investment of its funds with the aim of—
(a)spreading investment risk; and
(b)giving its members the benefit of the results of the management of those funds by or on behalf of that body.
(3)The investment condition is that, in relation to BC, a reasonable investor would, if he were to participate in the scheme—
(a)expect that he would be able to realize, within a period appearing to him to be reasonable, his investment in the scheme (represented, at any given time, by the value of shares in, or securities of, BC held by him as a participant in the scheme); and
(b)be satisfied that his investment would be realized on a basis calculated wholly or mainly by reference to the value of property in respect of which the scheme makes arrangements.
(4)In determining whether the investment condition is satisfied, no account is to be taken of any actual or potential redemption or repurchase of shares or securities under—
[F1803 (a)Chapters 3 to 7 of Part 18 of the Companies Act 2006;F1803]
(c)F1804... or
(d)F1805provisions in force in a country or territory ... which the Treasury have, by order, designated as corresponding provisions.
(5) The Treasury may by order amend the definition of “ an open-ended investment company ” for the purposes of this Part.
[F1806236A Meaning of “UCITS”
(1) For the purposes of this Act, and subject to subsection (4), “ UCITS ” means an undertaking established in the United Kingdom or an EEA State—
(a)with the sole object of collective investment, operating on the principle of risk-spreading, in transferable securities or other liquid financial assets mentioned in subsection (3), of capital raised from the public; and
(b)with units which are, at the request of holders, repurchased or redeemed, directly or indirectly, out of the undertaking's assets.
(2)A UCITS may consist of several sub-funds (see section 237(4)).
(3)The transferable securities or other liquid financial assets referred to in subsection (1)(a) are—
(a)in the case of an undertaking established in the United Kingdom, those permitted by section 2 of chapter 5 of the Collective Investment Schemes sourcebook; or
(b)in the case of an undertaking established in an EEA State, those referred to in Article 50(1) of the UCITS directive.
(4)For the purposes of subsection (1)(b), action taken by the undertaking to ensure that the price of its units on an investment exchange does not significantly vary from their net asset value is to be regarded as equivalent to the repurchase or redemption of units at the request of holders.
(5)An undertaking is not a UCITS if it is any of the following—
(a)a collective investment undertaking of the closed-ended type;
(b)a collective investment undertaking which raises capital without promoting the sale of its units to the public within the relevant area or any part of it;
(c)an open-ended investment company, or other collective investment undertaking, the units of which may, under its fund rules or instruments of incorporation, be sold only to the public in countries or territories outside the relevant area.
(6) In subsection (5) “ the relevant area ” means—
(a)in the case of an undertaking established in the United Kingdom, the United Kingdom;
(b)in the case of an undertaking established in an EEA State, the EEA States.F1806]
case 237 Other definitions.
(1) In this Part “ unit trust scheme ” means a collective investment scheme under which the property is held on trust for the participants[F1807 , except that it does not include a contractual scheme F1807] .
(2)In this Part—
“ trustee ”, in relation to a unit trust scheme, means the person holding the property in question on trust for the participants;
“ depositary ”, in relation to—
(a)a collective investment scheme which is constituted by a body incorporated by virtue of regulations under section 262, or
(b)any other collective investment scheme which is not a unit trust scheme,
means any person to whom the property subject to the scheme is entrusted for safekeeping;
[F1808 “ management company ” means an undertaking, as defined in section 1161 of the Companies Act 2006 , whose regular business is the management of UK UCITS; F1808]
[F1809 “the operator”—
(a)in relation to a unit trust scheme with a separate trustee, means the manager;
(aa)[F1810 in relation to a co-ownership scheme, means the operator appointed under the terms of the contractual scheme deed;
(ab)in relation to a partnership scheme, means the general partner;F1810] F1811 ...
(b)in relation to an open-ended investment company, means that company; F1812... [F1813 , and
(ba)in relation to a recognised scheme, means the legal entity with overall responsibility for the management and performance of the functions of the scheme.F1813]
(c)F1814 ...F1809]
“ units ” means the rights or interests (however described) of the participants in a collective investment scheme.
[F1815 “ working day ” has the meaning given in section 191G(2). F1815]
(3)In this Part—
“ an authorised unit trust scheme ” means a unit trust scheme which is authorised for the purposes of this Act by an authorisation order in force under section 243;
[F1816 “an authorised contractual scheme” means a contractual scheme which is authorised for the purposes of this Act by an authorisation order in force under section 261D(1); F1816]
“ an authorised open-ended investment company ” means a body incorporated by virtue of regulations under section 262 in respect of which an authorisation order is in force under any provision made in such regulations by virtue of subsection (2)(l) of that section;
[F1817 “ the Collective Investment Schemes sourcebook ” means the Collective Investment Schemes sourcebook made under this Act by the FCA, as it has effect on IP completion day;
“ EEA UCITS ” means a UCITS which is authorised pursuant to Article 5 of the UCITS directive in an EEA State; F1817]
F1818 ...
[F1819 “ feeder UCITS ” means—
(a)a UK UCITS which has been approved by the FCA to invest 85% or more of the total property which is subject to the collective investment scheme constituted by the UK UCITS in units of—
(i)another UK UCITS,
(ii)a sub-fund of another UK UCITS,
(iii)an EEA UCITS, or
(iv)a sub-fund of an EEA UCITS, or
(b)a sub-fund of a UK UCITS which has been approved by the FCA to invest 85% or more of the sub-fund's separate pool of the property of the UK UCITS in units of—
(i)another UK UCITS,
(ii)another sub-fund of a UK UCITS,
(iii)an EEA UCITS, or
(iv)a sub-fund of an EEA UCITS;
“ master UCITS ”, in relation to a feeder UCITS, means (as the case may be)—
(a)the other UK UCITS mentioned in paragraph (a)(i) or (b)(i) of the definition of “feeder UCITS”,
(b)the EEA UCITS mentioned in paragraph (a)(iii) or (b)(iii) of that definition, or
(c)the sub-fund mentioned in paragraph (a)(ii) or (iv) or (b)(ii) or (iv) of that definition;F1819]
F1821 “ a recognised scheme ” means [F1820 a section 271A scheme or F1820] a scheme recognised under section ... 272 [F1822 (and see also section 282C) F1822] .
[F1823 “ a section 271A scheme ” means a scheme recognised under section 271A (and see also section 271S) ; F1823]
F1818 ...
[F1824 “ UCITS-related direct EU legislation ” means—
(a)Commission Regulation (EU) 2010/583 of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards key investor information and conditions to be met when providing key investor information or the prospectus in a durable medium other than paper or by means of a website, or
(b)Commission Delegated Regulation (EU) 2016/438 of 17 December 2015 supplementing Directive 2009/65/EC of the European Parliament and of the Council with regard to obligations of depositaries;F1824]
[F1825 “UK UCITS” means a UCITS which is an authorised unit trust scheme [F1826 , an authorised contractual scheme F1826] or an authorised open-ended investment company. F1825]
[F1827 (4)In this Part, references to a sub-fund of a UCITS are references to a part of the property of the UCITS which forms a separate pool where—
(a)the UCITS provides arrangements for separate pooling of the contributions of the participants and the profits and income out of which payments are made to them; and
(b)the participants are entitled to exchange rights in one pool for rights in another.F1827]
[F1828 (5) In this Part “umbrella co-ownership scheme” means an authorised contractual scheme which satisfies the conditions in subsection (6).
(6)The conditions are—
(a)that the scheme is a co-ownership scheme;
(b)that the arrangements constituting the scheme provide for such pooling as is mentioned in section 235(3)(a) in relation to separate parts of the property; and
(c)that the participants are entitled under the terms of the scheme to exchange rights in one part for rights in another.
(7) In this Part “sub-scheme”, in relation to an umbrella co-ownership scheme, means the arrangements constituting the scheme so far as they relate to a separate part of the property.
(8) In this Part “stand-alone co-ownership scheme” means an authorised contractual scheme which—
(a)is a co-ownership scheme; and
(b)is not an umbrella co-ownership scheme.F1828]
Chapter II Restrictions on Promotion cross-notes
notecase 238 Restrictions on promotion. I36
(1)An authorised person must not communicate an invitation or inducement to participate in a collective investment scheme.
(2)But that is subject to the following provisions of this section and to section 239.
(3)Subsection (1) applies in the case of a communication originating outside the United Kingdom only if the communication is capable of having an effect in the United Kingdom.
(4)Subsection (1) does not apply in relation to—
(a)an authorised unit trust scheme;
[F1829 (aa)an authorised contractual scheme;F1829]
(b)a scheme constituted by an authorised open-ended investment company; or
(c)a recognised scheme.
(5)Subsection (1) does not apply to anything done in accordance with rules made by the [F1830FCAF1830] for the purpose of exempting from that subsection the promotion otherwise than to the general public of schemes of specified descriptions.
SI (6)The Treasury may by order specify circumstances in which subsection (1) does not apply.
SI (7)An order under subsection (6) may, in particular, provide that subsection (1) does not apply in relation to communications—
(a)of a specified description;
(b)originating in a specified country or territory outside the United Kingdom;
(c)originating in a country or territory which falls within a specified description of country or territory outside the United Kingdom; or
(d)originating outside the United Kingdom.
(8)The Treasury may by order repeal subsection (3).
(9) “ Communicate ” includes causing a communication to be made.
(10) “ Promotion otherwise than to the general public ” includes promotion in a way designed to reduce, so far as possible, the risk of participation by persons for whom participation would be unsuitable.
(11) “ Participate ”, in relation to a collective investment scheme, means become a participant (within the meaning given by section 235(2)) in the scheme.
note 239 Single property schemes. I37
(1)The Treasury may by regulations make provision for exempting single property schemes from section 238(1).
(2)For the purposes of subsection (1) a single property scheme is a scheme which has the characteristics mentioned in subsection (3) and satisfies such other requirements as are prescribed by the regulations conferring the exemption.
(3)The characteristics are—
(a)that the property subject to the scheme (apart from cash or other assets held for management purposes) consists of—
(i)a single building (or a single building with ancillary buildings) managed by or on behalf of the operator of the scheme, or
(ii)a group of adjacent or contiguous buildings managed by him or on his behalf as a single enterprise,
with or without ancillary land and with or without furniture, fittings or other contents of the building or buildings in question; and
(b)that the units of the participants in the scheme are either dealt in on a recognised investment exchange or offered on terms such that any agreement for their acquisition is conditional on their admission to dealings on such an exchange.
(4)If regulations are made under subsection (1), the [F1830FCAF1830] may make rules imposing duties or liabilities on the operator and (if any) the trustee or depositary of a scheme exempted by the regulations.
(5)The rules may include, to such extent as the [F1830FCAF1830] thinks appropriate, provision for purposes corresponding to those for which provision can be made under section 248 in relation to authorised unit trust schemes.
notecase 240 Restriction on approval of promotion.
(1)An authorised person may not approve for the purposes of section 21 the content of a communication relating to a collective investment scheme if he would be prohibited by section 238(1) from effecting the communication himself or from causing it to be communicated.
(2)For the purposes of determining in any case whether there has been a contravention of section 21(1), an approval given in contravention of subsection (1) is to be regarded as not having been given.
notecase 241 Actions for damages.
If an authorised person contravenes a requirement imposed on him by section 238 or 240, [F1831section 138DF1831] applies to the contravention as it applies to a contravention mentioned in [F1831section 138D(2)F1831] .
[F1832CHAPTER 2A PROHIBITION ON ISSUE OF BEARER UNITS
241A. Bearer units no longer to be issued
(1)No bearer units in a collective investment scheme may be issued, converted or cancelled after 1 January 2021.
(2)Subsection (1) applies in relation to a collective investment scheme even if the arrangements constituting the scheme purport to authorise the issue, conversion or cancellation of bearer units in the scheme.
(3) In this section “bearer units”, in relation to a collective investment scheme, means units in the scheme evidenced by a certificate, or any other documentary evidence of title, which indicates—
(a)that the holder of the document is entitled to the units specified in it; and
(b)that no entry identifying the holder of those units will be made in any register, or other record, of participants in the scheme.
(4)Subsection (1) does not apply to a collective investment scheme constituted by an open-ended investment company, but regulation 48 of the Open-Ended Investment Companies Regulations 2001 (S.I. 2001/1228) makes corresponding provision.F1832]
Chapter III Authorised Unit Trust Schemes
Applications for authorisation
note 242 Applications for authorisation of unit trust schemes. cross-notesI38
[F1833 (1)The manager and trustee, or proposed manager and trustee, of a unit trust scheme may apply to the FCA for—
(a)an order declaring the scheme to be an authorised unit trust scheme;
(b)an order declaring the scheme to be an authorised money market fund.F1833]
(2)The manager and trustee (or proposed manager and trustee) must be different persons.
(3)[F1834 An applicationF1834] —
(a)must be made in such manner as the [F1835FCAF1835] may direct; and
(b)must contain or be accompanied by such information as the [F1835FCAF1835] may reasonably require for the purpose of determining the application.
(4)At any time after receiving an application and before determining it, the [F1835FCAF1835] may require the applicants to provide it with such further information as it reasonably considers necessary to enable it to determine the application.
(5)Different directions may be given, and different requirements imposed, in relation to different applications.
(6)The [F1835FCAF1835] may require applicants to present information which they are required to give under this section in such form, or to verify it in such a way, as the [F1835FCAF1835] may direct.
note 243 Authorisation orders [F1836: authorised unit trust schemesF1836] . cross-notesI39
(1)If, on an application under section [F1837242(1)(a)F1837] in respect of a unit trust scheme, the [F1835FCAF1835] —
(a)is satisfied that the scheme complies with the requirements set out in this section,
(b)is satisfied that the scheme complies with the requirements of the trust scheme rules, and
(c)has been provided with a copy of the trust deed and a certificate signed by a solicitor to the effect that it complies with such of the requirements of this section or those rules as relate to its contents,
the [F1835FCAF1835] may make an order declaring the scheme to be an authorised unit trust scheme.
(2)If the [F1835FCAF1835] makes an order under subsection (1), it must give written notice of the order to the applicant.
F1838 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)The manager and the trustee must be persons who are independent of each other.
[F1839 (5)The manager and the trustee must each be a body corporate incorporated in the United Kingdom F1840..., and the affairs of each must be administered in the [F1841 United KingdomF1841] .F1839]
[F1842 (5A)The manager and the trustee must each have a place of business in the United Kingdom.F1842]
F1843 (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7)The manager and the trustee must each be an authorised person and the manager must have permission to act as manager and the trustee must have permission to act as trustee.
[F1844 (7A)The manager must be a fit and proper person to manage the unit trust scheme to which the application relates.F1844]
(8)The name of the scheme must not be undesirable or misleading.
(9)The purposes of the scheme must be reasonably capable of being successfully carried into effect.
(10)The participants must be entitled to have their units redeemed in accordance with the scheme at a price—
(a)related to the net value of the property to which the units relate; and
(b)determined in accordance with the scheme.
(11)But a scheme is to be treated as complying with subsection (10) if it requires the manager to ensure that a participant is able to sell his units on an investment exchange at a price not significantly different from that mentioned in that subsection.
[F1845243A Authorisation orders: authorised money market funds
(1)If, on an application under section 242(1)(b) in respect of a unit trust scheme, conditions A and B are met the FCA may make an order declaring the scheme to be an authorised money market fund.
(2)Condition A is that the FCA is satisfied that the scheme will be able to comply with the requirements imposed on a money market fund under the MMF Regulation.
(3)Condition B is that—
(a)the scheme is an authorised unit trust scheme, or
(b)the scheme—
(i)is the subject of an application under section 242(1)(a), and
(ii)the conditions in section 243(1)(a) to (c) are met in relation to that application.
(4)If the FCA makes an order under subsection (1), it must give written notice of the order to the applicant.
(5) In this Chapter “authorisation order” means—
(a)an order under section 243(1), or
(b)an order under subsection (1) of this section.F1845]
note 244 Determination of applications. cross-notesI40
(1)[F1846 Subject to subsection (1A),F1846] An application under section [F1847242(1)(a)F1847] must be determined by the [F1835FCAF1835] before the end of the period of six months beginning with the date on which it receives the completed application.
[F1848 (1A)An application under [F1849 section 242(1)(a) in respect of a unit trust scheme which is a UCITS, or an application under section 242(1)(b),F1849] must be determined by the [F1835 FCAF1835] before the end of two months beginning with the date on which it receives the application.F1848]
(2)The [F1835FCAF1835] may determine an incomplete application if it considers it appropriate to do so; and it must in any event determine such an application within twelve months beginning with the date on which it first receives the application.
(3)The applicant may withdraw his application, by giving the [F1835FCAF1835] written notice, at any time before the [F1835FCAF1835] determines it.
Applications refused
note 245 Procedure when refusing an application. I41
(1)If the [F1835FCAF1835] proposes to refuse an application made under section 242 it must give each of the applicants a warning notice.
(2)If the [F1835FCAF1835] decides to refuse the application—
(a)it must give each of the applicants a decision notice; and
(b)either applicant may refer the matter to the Tribunal.
Certificates
note 246 Certificates. cross-notesI42
(1)If the manager or trustee of a unit trust scheme which complies with the conditions necessary for it to [F1850be a UK UCITSF1850] so requests, the [F1835FCAF1835] may issue a certificate to the effect that the scheme complies with those conditions.
(2)Such a certificate may be issued on the making of an authorisation order in respect of the scheme or at any subsequent time.
Rules
note 247 Trust scheme rules.
(1) The [F1835 FCA F1835] may make rules (“ trust scheme rules ”) as to—
(a)the constitution, management and operation of authorised unit trust schemes;
(b)the powers, duties, rights and liabilities of the manager and trustee of any such scheme;
(c)the rights and duties of the participants in any such scheme; and
(d)the winding up of any such scheme.
(2)Trust scheme rules may, in particular, make provision—
(a)as to the issue and redemption of the units under the scheme;
(b)as to the expenses of the scheme and the means of meeting them;
(c)for the appointment, removal, powers and duties of an auditor for the scheme;
(d)for restricting or regulating the investment and borrowing powers exercisable in relation to the scheme;
(e)requiring the keeping of records with respect to the transactions and financial position of the scheme and for the inspection of those records;
(f)requiring the preparation of periodical reports with respect to the scheme and the provision of those reports to the participants and to the [F1835FCAF1835] ; and
(g)with respect to the amendment of the scheme.
(3)Trust scheme rules may make provision as to the contents of the trust deed, including provision requiring any of the matters mentioned in subsection (2) to be dealt with in the deed.
(4)But trust scheme rules are binding on the manager, trustee and participants independently of the contents of the trust deed and, in the case of the participants, have effect as if contained in it.
(5)If—
(a)a modification is made of the statutory provisions in force in [F1851the United KingdomF1851] relating to companies,
(b)the modification relates to the rights and duties of persons who hold the beneficial title to any shares in a company without also holding the legal title, and
(c)it appears to the Treasury that, for the purpose of assimilating the law relating to authorised unit trust schemes to the law relating to companies as so modified, it is expedient to modify the rule-making powers conferred on the [F1835FCAF1835] by this section,
the Treasury may by order make such modifications of those powers as they consider appropriate.
note 248 Scheme particulars rules.
(1) The [F1835 FCA F1835] may make rules (“ scheme particulars rules ”) requiring the manager of an authorised unit trust scheme—
(a)to submit scheme particulars to the [F1835FCAF1835] ; and
(b)to publish scheme particulars or make them available to the public on request.
(2) “ Scheme particulars ” means particulars in such form, containing such information about the scheme and complying with such requirements, as are specified in scheme particulars rules.
(3)Scheme particulars rules may require the manager of an authorised unit trust scheme to submit, and to publish or make available, revised or further scheme particulars if there is a significant change affecting any matter—
(a)which is contained in scheme particulars previously published or made available; and
(b)whose inclusion in those particulars was required by the rules.
(4)Scheme particulars rules may require the manager of an authorised unit trust scheme to submit, and to publish or make available, revised or further scheme particulars if—
(a)a significant new matter arises; and
(b)the inclusion of information in respect of that matter would have been required in previous particulars if it had arisen when those particulars were prepared.
(5)Scheme particulars rules may provide for the payment, by the person or persons who in accordance with the rules are treated as responsible for any scheme particulars, of compensation to any qualifying person who has suffered loss as a result of—
(a)any untrue or misleading statement in the particulars; or
(b)the omission from them of any matter required by the rules to be included.
(6) “ Qualifying person ” means a person who—
(a)has become or agreed to become a participant in the scheme; or
(b)although not being a participant, has a beneficial interest in units in the scheme.
(7)Scheme particulars rules do not affect any liability which any person may incur apart from the rules.
note 249 [F1852Disciplinary measuresF1852] cross-notes
(1)If it appears to the [F1835FCAF1835] that an auditor has failed to comply with a duty imposed on him by trust scheme rules, [F1853it may do one or more of the following—
(a)disqualify the auditor from being the auditor of any authorised unit trust scheme [F1854 , authorised contractual schemeF1854] or authorised open-ended investment company;
(b)publish a statement to the effect that it appears to the FCA that the auditor has failed to comply with the duty;
(c)impose on the auditor a penalty, payable to the FCA, of such amount as the FCA considers appropriate.F1853]
[F1855 (2)Sections 345B to 345E have effect in relation to the taking of action under subsection (1) as they have effect in relation to the taking of action under section 345(2).F1855]
note 250 Modification or waiver of rules. cross-notes
(1) In this section “ rules ” means—
(a)trust scheme rules; or
(b)scheme particulars rules.
(2)The [F1835FCAF1835] may, on the application or with the consent of any person to whom any rules apply, direct that all or any of the rules—
(a)are not to apply to him as respects a particular scheme; or
(b)are to apply to him, as respects a particular scheme, with such modifications as may be specified in the direction.
(3)The [F1835FCAF1835] may, on the application or with the consent of the manager and trustee of a particular scheme acting jointly, direct that all or any of the rules—
(a)are not to apply to the scheme; or
(b)are to apply to the scheme with such modifications as may be specified in the direction.
(4)[F1856 Section 138A and subsections (1) to (3), (5) and (6) of section 138BF1856] have effect in relation to a direction under subsection (2) as they have effect in relation to a direction under [F1857section 138A(1)F1857] but with the following modifications—
(a)F1858. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)any reference to the [F1859personF1859] is to be read as a reference to the person mentioned in subsection (2); and
(c) [F1860 section 138B(3)(c) F1860] is to be read, in relation to a participant of the scheme, as if the word “commercial” were omitted.
(5)[F1861 Section 138A and subsections (1) to (3), (5) and (6) of section 138BF1861] have effect in relation to a direction under subsection (3) as they have effect in relation to a direction under [F1862section 138A(1)F1862] but with the following modifications—
(a) F1864[F1863 subsection (4)(a) of section 138A F1863] is to be read as if the words “by the . . . person” were omitted;
(b) F1864[F1865 section 138B(3)(c) and the definition of “immediate group” in section 421ZA as it applies to that section F1865] are to be read as if references to the . . . person were references to each of the manager and the trustee of the scheme;
(c) [F1866 section 138B(3)(c) F1866] is to be read, in relation to a participant of the scheme, as if the word “commercial” were omitted;
(d)F1864[F1867 section 138B(5)F1867] is to be read as if the reference to the . . . person concerned were a reference to the scheme concerned and to its manager and trustee; and
(e)F1864[F1868 section 138A(7)F1868] is to be read as if the reference to the . . . person were a reference to the manager and trustee of the scheme acting jointly.
Alterations
note 251 Alteration of schemes and changes of manager or trustee. cross-notesI43
[F1869 (A1)This section applies where the manager of an authorised unit trust scheme proposes—
(a)to make an alteration to the scheme, other than an alteration—
(i)to which section 252A applies; or
(ii)to which Part 4 of the Undertakings for Collective Investment in Transferable Securities Regulations 2011 (mergers) applies; or
(b)to replace its trustee.
(1)The manager must give written notice of the proposal to the [F1835 FCAF1835] .F1869]
(2)Any notice given in respect of a proposal to alter the scheme involving a change in the trust deed must be accompanied by a certificate signed by a solicitor to the effect that the change will not affect the compliance of the deed with the trust scheme rules.
(3)The trustee of an authorised unit trust scheme must give written notice to the [F1835FCAF1835] of any proposal to replace the manager of the scheme.
(4)Effect is not to be given to any proposal of which notice has been given under subsection (1) or (3) unless—
(a)the [F1835FCAF1835] , by written notice, has given its approval to the proposal; or
(b)one month, beginning with the date on which the notice was given, has expired without the manager or trustee having received from the [F1835FCAF1835] a warning notice under section 252 in respect of the proposal.
(5)The [F1835FCAF1835] must not approve a proposal to replace the manager or the trustee of an authorised unit trust scheme unless it is satisfied that, if the proposed replacement is made, the scheme will continue to comply with the requirements of section 243(4) to (7).
note 252 Procedure when refusing approval [F1870of a proposal under section 251F1870] . cross-notesI44
(1)If the [F1835FCAF1835] proposes to refuse approval of a proposal [F1871under section 251F1871] to replace the trustee or manager of an authorised unit trust scheme, it must give a warning notice to the person by whom notice of the proposal was given under section 251(1) or (3).
(2)If the [F1835FCAF1835] proposes to refuse approval of a proposal [F1871under section 251F1871] to alter an authorised unit trust scheme it must give separate warning notices to the manager and the trustee of the scheme.
(3)To be valid the warning notice must be received by that person before the end of one month beginning with the date on which notice of the proposal was given.
(4)If, having given a warning notice to a person, the [F1835FCAF1835] decides to refuse approval—
(a)it must give him a decision notice; and
(b)he may refer the matter to the Tribunal.
[F1872252A Proposal to convert to a non-feeder UCITS
(1)This section applies where the manager of an authorised unit trust scheme which is a dfnfeeder UCITS proposes to make an alteration to the scheme which—
(a)involves a change in the trust deed, and
(b)will enable the scheme to convert into a [F1873 dfnUKF1873] UCITS which is not a feeder UCITS.
(2)The manager must give written notice of the proposal to the [F1835 FCAF1835] .
(3)Any notice given in respect of such a proposal must be accompanied by—
(a)a certificate signed by a solicitor to the effect that the change will not affect the compliance of the deed with the trust scheme rules; and
(b)the specified information.
(4)The [F1835 FCAF1835] must, within 15 working days after the date on which it received the notice under subsection (2), give—
(a)written notice to the manager of the scheme that the [F1835 FCAF1835] approves the proposed amendments to the trust deed, or
(b)separate warning notices to the manager and trustee of the scheme that the [F1835 FCAF1835] proposes to refuse approval of the proposed amendments.
(5)Effect is not to be given to any proposal of which notice has been given under subsection (2) unless the [F1835 FCAF1835] , by written notice, has given its approval to the proposal.
(6)If, having given a warning notice to a person, the [F1835 FCAF1835] decides to refuse approval—
(a)it must give that person a decision notice; and
(b)that person may refer the matter to the Tribunal.
(7)Subsection (8) applies where—
(a)the notice given under subsection (2) relates to a proposal to amend the trust deed of a dfnfeeder UCITS to enable it to convert into a [F1874 dfnUKF1874] UCITS which is not a dfnfeeder UCITS following the winding-up of its dfnmaster UCITS; and
(b)the proceeds of the winding-up are to be paid to the dfnfeeder UCITS before the date on which the dfnfeeder UCITS proposes to start investing in accordance with the new investment objectives and policy provided for in its amended trust deed and scheme rules.
(8)Where this subsection applies, the [F1835 FCAF1835] may only approve the proposal subject to the conditions set out in section 283A(5) and (6).
(9) In this section, “ specified ” means—
[F1875 (a)specified in rule 11.6.3(2) of the Collective Investment Schemes sourcebook, orF1875]
[F1875 (b)specified in UCITS-related direct EU legislation.F1875,F1872]]
Exclusion clauses
note 253 Avoidance of exclusion clauses.
Any provision of the trust deed of an authorised unit trust scheme is void in so far as it would have the effect of exempting the manager or trustee from liability for any failure to exercise due care and diligence in the discharge of his functions in respect of the scheme.
Ending of authorisation
note 254 Revocation of authorisation order otherwise than by consent. cross-notes
(1)An authorisation order may be revoked by an order made by the [F1876FCAF1876] if it appears to the [F1876FCAF1876] that—
(a)one or more of the requirements for the making of the order are no longer satisfied;
(b)the manager or trustee of the scheme concerned has contravened a requirement imposed on him by or under this Act;
(c)the manager or trustee of the scheme has, in purported compliance with any such requirement, knowingly or recklessly given the [F1876FCAF1876] information which is false or misleading in a material particular;
(d)no regulated activity is being carried on in relation to the scheme and the period of that inactivity began at least twelve months earlier; or
(e)none of paragraphs (a) to (d) applies, but it is desirable to revoke the authorisation order in order to protect the interests of participants or potential participants in the scheme.
(2)For the purposes of subsection (1)(e), the [F1876FCAF1876] may take into account any matter relating to—
(a)the scheme;
(b)the manager or trustee;
(c)any person employed by or associated with the manager or trustee in connection with the scheme;
(d)any director of the manager or trustee;
(e)any person exercising influence over the manager or trustee;
(f)any body corporate in the same group as the manager or trustee;
(g)any director of any such body corporate;
(h)any person exercising influence over any such body corporate.
note 255 Procedure. cross-notes
(1) If the [F1876 FCA F1876] proposes to make an order under section 254 revoking an authorisation order (“ a revoking order ”), it must give separate warning notices to the manager and the trustee of the scheme.
(2)If the [F1876FCAF1876] decides to make a revoking order, it must without delay give each of them a decision notice and either of them may refer the matter to the Tribunal.
note 256 Requests for revocation of authorisation order. cross-notes
(1)An authorisation order may be revoked by an order made by the [F1876FCAF1876] at the request of the manager or trustee of the scheme concerned.
(2)If the [F1876FCAF1876] makes an order under subsection (1), it must give written notice of the order to the manager and trustee of the scheme concerned.
(3)The [F1876FCAF1876] may refuse a request to make an order under this section if it considers that—
(a)the public interest requires that any matter concerning the scheme should be investigated before a decision is taken as to whether the authorisation order should be revoked; or
(b)F1877revocation would not be in the interests of the participants ....
(4)If the [F1876FCAF1876] proposes to refuse a request under this section, it must give separate warning notices to the manager and the trustee of the scheme.
(5)If the [F1876FCAF1876] decides to refuse the request, it must without delay give each of them a decision notice and either of them may refer the matter to the Tribunal.
Powers of intervention
note 257 Directions. cross-notesI45
(1)The [F1876FCAF1876] may give a direction under this section if it appears to the [F1876FCAF1876] that—
(a)one or more of the requirements for the making of an authorisation order are no longer satisfied;
[F1878 (b)the manager or trustee of an authorised unit trust scheme has contravened, or is likely to contravene, a requirement imposed—
(i)by or under this Act; F1879...
(ii)by [F1880 UCITS-related direct EU legislation;F1880] or
[F1881 (iii)by the MMF Regulation or any directly applicable regulation or decision made under that Regulation [F1882 which constitutes [F1883 assimilated directF1883] legislationF1882] ;F1881,F1878]]
(c)the manager or trustee of such a scheme has, in purported compliance with any such requirement, knowingly or recklessly given the [F1876FCAF1876] information which is false or misleading in a material particular; or
(d)none of paragraphs (a) to (c) applies, but it is desirable to give a direction in order to protect the interests of participants or potential participants in such a scheme.
(2)A direction under this section may—
(a)require the manager of the scheme to cease the issue or redemption, or both the issue and redemption, of units under the scheme;
(b)require the manager and trustee of the scheme to wind it up.
(3)If the authorisation order is revoked, the revocation does not affect any direction under this section which is then in force.
(4)A direction may be given under this section in relation to a scheme in the case of which the authorisation order has been revoked if a direction under this section was already in force at the time of revocation.
(5)If a person contravenes a direction under this section, [F1884section 138DF1884] applies to the contravention as it applies to a contravention mentioned in that section.
(6)The [F1876FCAF1876] may, either on its own initiative or on the application of the manager or trustee of the scheme concerned, revoke or vary a direction given under this section if it appears to the [F1876FCAF1876] —
(a)in the case of revocation, that it is no longer necessary for the direction to take effect or continue in force;
(b)in the case of variation, that the direction should take effect or continue in force in a different form.
note 258 Applications to the court.
(1)If the [F1876FCAF1876] could give a direction under section 257, it may also apply to the court for an order—
(a)removing the manager or the trustee, or both the manager and the trustee, of the scheme; and
(b)replacing the person or persons removed with a suitable person or persons nominated by the [F1876FCAF1876] .
(2)The [F1876FCAF1876] may nominate a person for the purposes of subsection (1)(b) only if it is satisfied that, if the order was made, the requirements of section 243(4) to (7) would be complied with.
(3)If it appears to the [F1876FCAF1876] that there is no person it can nominate for the purposes of subsection (1)(b), it may apply to the court for an order—
(a)removing the manager or the trustee, or both the manager and the trustee, of the scheme; and
(b)appointing an authorised person to wind up the scheme.
(4)On an application under this section the court may make such order as it thinks fit.
(5)The court may, on the application of the [F1876FCAF1876] , rescind any such order as is mentioned in subsection (3) and substitute such an order as is mentioned in subsection (1).
(6)The [F1876FCAF1876] must give written notice of the making of an application under this section to the manager and trustee of the scheme concerned.
(7)The jurisdiction conferred by this section may be exercised by—
(a)the High Court;
(b)in Scotland, the Court of Session.
[F1885258A Winding up or merger of master UCITS
(1)Subsection (2) applies if a dfnmaster UCITS which has one or more dfnfeeder UCITS which are authorised unit trust schemes is wound up, whether as a result of a direction given by the [F1876 FCAF1876] under section 257 [F1886 or 261XF1886] , an order of the court under section 258 [F1887 or 261YF1887] , rules made by the [F1876 FCAF1876] or otherwise.
(2)The [F1876 FCAF1876] must direct the manager and trustee of any authorised unit trust scheme which is a dfnfeeder UCITS of the dfnmaster UCITS to wind up the dfnfeeder UCITS unless—
(a)the [F1876 FCAF1876] approves under section 283A the investment by the dfnfeeder UCITS of at least 85% of the total property which is subject to the collective investment scheme constituted by the dfnfeeder UCITS in units of another UCITS or dfnmaster UCITS; or
(b)the [F1876 FCAF1876] approves under section 252A an amendment of the trust deed of the dfnfeeder UCITS which would enable it to convert into a [F1888 dfnUKF1888] UCITS which is not a feeder UCITS.
(3)Subsection (4) applies if a dfnmaster UCITS which has one or more dfnfeeder UCITS which are authorised unit trust schemes—
(a)merges with another UCITS, or
(b)is divided into two or more UCITS.
(4)The [F1876 FCAF1876] must direct the manager and trustee of any authorised unit trust scheme which is a dfnfeeder UCITS of the dfnmaster UCITS to wind up the scheme unless—
(a)the [F1876 FCAF1876] approves under section 283A the investment by the scheme of at least 85% of the total property which is subject to the collective investment scheme constituted by the dfnfeeder UCITS in the units of—
(i)the dfnmaster UCITS which results from the merger;
(ii)one of the UCITS resulting from the division; or
(iii)another UCITS or dfnmaster UCITS;
(b)the [F1876 FCAF1876] approves under section 252A an amendment of the trust deed of the scheme which would enable it to convert into a [F1889 dfnUKF1889] UCITS which is not a feeder UCITS.F1885]
note 259 Procedure on giving directions under section 257 [F1890or 258AF1890] and varying them on [F1891FCA'sF1891] own initiative. I46
(1)A direction [F1892under section 257 or 258AF1892] takes effect—
(a)immediately, if the notice given under subsection (3) states that that is the case;
(b)on such date as may be specified in the notice; or
(c)if no date is specified in the notice, when the matter to which it relates is no longer open to review.
(2)A direction [F1893under section 257F1893] may be expressed to take effect immediately (or on a specified date) only if the [F1876FCAF1876] , having regard to the ground on which it is exercising its power under [F1894that sectionF1894] , considers that it is necessary for the direction to take effect immediately (or on that date).
(3)If the [F1876FCAF1876] proposes to give a direction under [F1895section 257 or 258A, or gives a direction under either sectionF1895] with immediate effect, it must give separate written notice to the manager and the trustee of the scheme concerned.
(4)The notice must—
(a)give details of the direction;
(b)inform the person to whom it is given of when the direction takes effect;
(c)state the [F1876FCA'sF1876] reasons for giving the direction and for its determination as to when the direction takes effect;
(d)inform the person to whom it is given that he may make representations to the [F1876FCAF1876] within such period as may be specified in it (whether or not he has referred the matter to the Tribunal); and
(e)inform him of his right to refer the matter to the Tribunal.
(5)If the direction imposes a requirement under section 257(2)(a), the notice must state that the requirement has effect until—
(a)a specified date; or
(b)a further direction.
(6)If the direction [F1896is given under section 257(2)(b) or section 258A(2) or (4)F1896] , the scheme must be wound up—
(a)by a date specified in the notice; or
(b)if no date is specified, as soon as practicable.
(7)The [F1876FCAF1876] may extend the period allowed under the notice for making representations.
(8)If, having considered any representations made by a person to whom the notice was given, the [F1876FCAF1876] decides—
(a)to give the direction in the way proposed, or
(b)if it has been given, not to revoke the direction,
it must give separate written notice to the manager and the trustee of the scheme concerned.
(9)If, having considered any representations made by a person to whom the notice was given, the [F1876FCAF1876] decides—
(a)not to give the direction in the way proposed,
(b)to give the direction in a way other than that proposed, or
(c)to revoke a direction which has effect,
it must give separate written notice to the manager and the trustee of the scheme concerned.
(10)A notice given under subsection (8) must inform the person to whom it is given of his right to refer the matter to the Tribunal.
(11)A notice under subsection (9)(b) must comply with subsection (4).
(12)If a notice informs a person of his right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(13)This section applies to the variation of a direction on the [F1876FCA'sF1876] own initiative as it applies to the giving of a direction.
(14)For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
note 260 Procedure: refusal to revoke or vary direction. I47
(1)If on an application under section 257(6) for a direction to be revoked or varied the [F1876FCAF1876] proposes—
(a)to vary the direction otherwise than in accordance with the application, or
(b)to refuse to revoke or vary the direction,
it must give the applicant a warning notice.
(2)If the [F1876FCAF1876] decides to refuse to revoke or vary the direction—
(a)it must give the applicant a decision notice; and
(b)the applicant may refer the matter to the Tribunal.
note 261 Procedure: revocation of direction and grant of request for variation. I48
(1)If the [F1876FCAF1876] decides on its own initiative to revoke a direction under section 257 it must give separate written notices of its decision to the manager and trustee of the scheme.
(2)If on an application under section 257(6) for a direction to be revoked or varied the [F1876FCAF1876] decides to revoke the direction or vary it in accordance with the application, it must give the applicant written notice of its decision.
(3)A notice under this section must specify the date on which the decision takes effect.
(4)The [F1876FCAF1876] may publish such information about the revocation or variation, in such way, as it considers appropriate.
F1897261A Information for home state regulator
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1898261B Information for feeder UCITS
(1)The [F1876 FCAF1876] must immediately inform the operator of any authorised unit trust scheme which is a dfnfeeder UCITS of an authorised unit trust scheme [F1899 , an authorised contractual schemeF1899] or an authorised open-ended investment company (the dfnmaster UCITS) of—
(a)any failure of which the [F1876 FCAF1876] becomes aware by the dfnmaster UCITS to comply with a provision made [F1900 by or under any enactmentF1900] in implementation of Chapter VIII of the dfnUCITS directive;
(b)any warning notice or decision notice given to the dfnmaster UCITS in relation to a contravention of any provision made in implementation of Chapter VIII of the dfnUCITS directive by or under any enactment or in rules of the [F1876 FCAF1876] ;
(c)any information reported to the [F1876 FCAF1876] pursuant to rules of the [F1876 FCAF1876] made to implement Article 106(1) of the dfnUCITS directive which relates to the dfnmaster UCITS, or to one or more of its directors, or its management company, trustee, depositary or auditor.F1898]
F1901 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1901 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1902CHAPTER 3A AUTHORISED CONTRACTUAL SCHEMES
Applications for authorisation
261C. Applications for authorisation of contractual schemes
[F1903 (1)The operator and depositary, or proposed operator and depositary, of a contractual scheme may apply to the FCA for—
(a)an order declaring the scheme to be an authorised contractual scheme;
(b)an order declaring the scheme to be an authorised money market fund.F1903]
(2)[F1904 An application under subsection (1)(a)F1904] —
(a)must be made in such manner as the FCA may direct;
(b)must state the name and the registered office, or if it does not have a registered office, the head office, of the operator or proposed operator and of the depositary or proposed depositary; and
(c)in the case of a partnership scheme, must be accompanied by a copy of the certificate of registration as a limited partnership under the Limited Partnerships Act 1907.
[F1905 (2A)An application under subsection (1)(b) must—
(a)be made in such a manner as the FCA may direct, and
(b)contain or be accompanied by such information as the FCA may reasonably require for the purpose of determining the application.F1905]
(3)At any time after receiving an application and before determining it, the FCA may require the applicants to provide it with such further information as it reasonably considers necessary to enable it to determine the application.
(4)Different directions may be given, and different requirements imposed, in relation to different applications.
(5)The FCA may require applicants to present information which they are required to give under this section in such form, or to verify it in such a way, as the FCA may direct.
261D. Authorisation orders [F1906: authorised contractual schemesF1906] cross-notes
(1)If, on an application under section [F1907 261C(1)(a)F1907] in respect of a contractual scheme, the FCA—
(a)is satisfied that the scheme complies with the requirements set out in this section and section 261E,
(b)is satisfied that the scheme complies with the requirements of contractual scheme rules, and
(c)has been provided with a copy of the contractual scheme deed and a certificate signed by a solicitor to the effect that it complies with such of the requirements of this section or those rules as relate to its contents,
the FCA may make an order declaring the scheme to be an authorised contractual scheme.
(2)If the FCA makes an order under subsection (1), it must give written notice of the order to the applicants.
F1908 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4)The operator and the depositary must be persons who are independent of each other.
(5)The operator and the depositary must each be a body corporate incorporated in the United Kingdom F1909..., and the affairs of each must be administered in the [F1910 United KingdomF1910] .
[F1911 (6)The operator and the depositary must each have a place of business in the United Kingdom.F1911]
F1912 (7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8)The operator and the depositary must each be an authorised person, and the operator must have [F1913 such permission as may be necessary to act as operatorF1913] and the depositary must have permission to act as depositary.
(9)The operator must be a fit and proper person to manage the scheme to which the application relates.
(10)The name of the scheme must not be undesirable or misleading.
(11)The purposes of the scheme must be reasonably capable of being successfully carried into effect.
261E. [F1914Authorised contractual schemesF1914] : holding of units
[F1915 (A1)This section sets out requirements for the purposes of section 261D(1)(a) (authorisation orders).F1915]
(1)The participants in [F1916 theF1916] scheme must be entitled to have their units redeemed in accordance with the scheme at a price—
(a)related to the net value of the property to which the units relate; and
(b)determined in accordance with the scheme.
(2)The scheme must not allow units in the scheme to be issued to anyone other than—
(a)a professional investor;
(b)a large investor; or
(c)a person who already holds units in the scheme.
(3)The scheme must require the operator, if it becomes aware that units have become vested in a person to whom as a result of subsection (2) the units could not have been issued, to redeem the units as soon as practicable.
(4)In subsection (2)—
“professional investor” means a person who falls within one of the categories [F1917 (a) to (d) of paragraph 3 of Schedule 1 to the markets in financial instruments regulation F1917] ; and
“large investor” means a person who, in exchange for units in the scheme, makes a payment of, or contributes property with a value of, not less than £1,000,000.
[F1918261EA Authorisation orders: authorised money market funds
(1)If, on an application under section 261C(1)(b) in respect of a contractual scheme, conditions A and B are met the FCA may make an order declaring the scheme to be an authorised money market fund.
(2)Condition A is that the FCA is satisfied that the scheme will be able to comply with the requirements imposed on a money market fund under the MMF Regulation.
(3)Condition B is that—
(a)the scheme is an authorised contractual scheme, or
(b)the scheme—
(i)is the subject of an application under section 261C(1)(a), and
(ii)the conditions in section 261D(1)(a) to (c) are met in relation to that application.
(4)If the FCA makes an order under subsection (1), it must give written notice of the order to the applicant.
(5) In this Chapter “authorisation order” means—
(a)an order under section 261D(1), or
(b)an order under subsection (1) of this section.F1918]
261F. Determination of applications
(1)Subject to subsection (2), an application under section [F1919 261C(1)(a)F1919] must be determined by the FCA before the end of the period of six months beginning with the date on which it receives the completed application.
(2)An application under section [F1920 261C(1)(a) in respect of a contractual scheme which is a UCITS, or an application under section 261C(1)(b),F1920] must be determined by the FCA before the end of two months beginning with the date on which it receives the application.
(3)The FCA may determine an incomplete application if it considers it appropriate to do so; and it must in any event determine such an application within twelve months beginning with the date on which it first receives the application.
(4)The applicants may withdraw the application, by giving the FCA written notice, at any time before the FCA determines it.
Applications refused
261G. Procedure when refusing an application
(1)If the FCA proposes to refuse an application made under section 261C, it must give each of the applicants a warning notice.
(2)If the FCA decides to refuse the application—
(a)it must give each of the applicants a decision notice; and
(b)either applicant may refer the matter to the Tribunal.
Certificates
261H. Certificates
(1)If the operator of a contractual scheme which complies with the conditions necessary for it to [F1921 be a UK UCITSF1921] so requests, the FCA may issue a certificate to the effect that the scheme complies with those conditions.
(2)Such a certificate may be issued on the making of an authorisation order in respect of the scheme or at any subsequent time.
Rules
261I. Contractual scheme rules
(1) The FCA may by rules (“contractual scheme rules”) make in relation to authorised contractual schemes provision corresponding to that which may be made under section 247 in relation to authorised unit trust schemes.
(2)For the purposes of subsection (1), section 247 is to be read with the following modifications—
(a)a reference to trust scheme rules is to be read as a reference to contractual scheme rules;
(b)a reference to authorised unit trust schemes is to be read as a reference to authorised contractual schemes;
(c)a reference to the manager is to be read as a reference to the operator;
(d)a reference to the trustee is to be read as a reference to the depositary; and
(e)a reference to the trust deed is to be read as a reference to the contractual scheme deed.
(3)The Treasury’s power by order under section 247(5) to modify the FCA’s power to make trust scheme rules shall also be exercisable in relation to the FCA’s power to make contractual scheme rules.
(4)For the purposes of subsection (3), section 247(5) is to be read as if the reference to authorised unit trust schemes were a reference to authorised contractual schemes.
261J. Contractual scheme particulars rules
(1) The FCA may by rules (“contractual scheme particulars rules”) make in relation to authorised contractual schemes provision corresponding to that which may be made under section 248 in relation to authorised unit trust schemes.
(2)For the purposes of subsection (1), section 248 is to be read with the following modifications—
(a)a reference to scheme particulars rules is to be read as a reference to contractual scheme particulars rules;
(b)a reference to scheme particulars is to be read as a reference to contractual scheme particulars; and
(c)a reference to the manager of an authorised unit trust scheme is to be read as a reference to the operator of an authorised contractual scheme.
261K. Disciplinary measures
(1)If it appears to the FCA that an auditor has failed to comply with a duty imposed on the auditor by contractual scheme rules, it may do one or more of the following—
(a)disqualify the auditor from being the auditor of any authorised unit trust scheme, authorised contractual scheme or authorised open-ended investment company;
(b)publish a statement to the effect that it appears to the FCA that the auditor has failed to comply with the duty;
(c)impose on the auditor a penalty, payable to the FCA, of such amount as the FCA considers appropriate.
(2)Sections 345B to 345E have effect in relation to the taking of action under subsection (1) as they have effect in relation to the taking of action under section 345(2).
261L. Modification or waiver of rules
(1) In this section “rules” means—
(a)contractual scheme rules; or
(b)dfncontractual scheme particulars rules.
(2)The FCA may, on the application or with the consent of any person to whom rules apply, direct that all or any of the rules—
(a)are not to apply to that person as respects a particular scheme; or
(b)are to apply to that person, as respects a particular scheme, with such modifications as may be specified in the direction.
(3)The FCA may, on the application or with the consent of the operator and depositary of a particular scheme acting jointly, direct that all or any of the rules—
(a)are not to apply to the scheme; or
(b)are to apply to the scheme with such modifications as may be specified in the direction.
(4)Section 138A and subsections (1) to (3), (5) and (6) of section 138B have effect in relation to a direction under subsection (2) as they have effect in relation to a direction under section 138A(1) but with the following modifications—
(a)any reference to the person is to be read as a reference to the person mentioned in subsection (2); and
(b) section 138B(3)(c) is to be read, in relation to a participant in the scheme, as if the word “commercial” were omitted.
(5)Section 138A and subsections (1) to (3), (5) and (6) of section 138B have effect in relation to a direction under subsection (3) as they have effect in relation to a direction under section 138A(1) but with the following modifications—
(a) subsection (4)(a) of section 138A is to be read as if the words “by the person” were omitted;
(b) section 138B(3)(c) and the definition of “immediate group” in section 421ZA as it applies to that section are to be read as if references to the person were references to each of the operator and the depositary of the scheme;
(c) section 138B(3)(c) is to be read, in relation to a participant in the scheme, as if the word “commercial” were omitted;
(d)section 138B(5) is to be read as if the reference to the person concerned were a reference to the scheme concerned and to its operator and depositary; and
(e)section 138A(7) is to be read as if the reference to the person were a reference to the operator and depositary of the scheme acting jointly.
Co-ownership schemes: rights and liabilities of participants
261M. Contracts cross-notes
(1) In this section “authorised contract” means a contract which the operator of a co-ownership scheme is authorised to enter into on behalf of the relevant participants for the purposes of, or in connection with, the acquisition, management or disposal of property subject to the scheme (but does not include a contract by which a person becomes a participant in the scheme).
(2)The relevant participants are—
(a)in the case of a contract relating to a stand-alone co-ownership scheme, the participants in the scheme;
(b)in the case of a contract relating to an umbrella co-ownership scheme, the participants in the sub-scheme of the umbrella co-ownership scheme to which the contract relates.
(3)The operator on behalf of the relevant participants may—
(a)exercise rights under an authorised contract;
(b)bring and defend proceedings for the resolution of any matter relating to an authorised contract; and
(c)take action in relation to the enforcement of any judgment given in such proceedings.
(4)The relevant participants may not themselves do any of the things mentioned in subsection (3), but this does not affect their rights as against the operator.
(5)A person who enters into a contract which purports to be an authorised contract is deemed to have actual knowledge of the scope of the authority given to the operator by the contractual scheme deed.
(6)The validity of an authorised contract is not to be called into question on the ground that a participant lacks capacity to authorise the operator to enter into such a contract.
(7)An authorised contract must make provision for any property which is acquired under or by virtue of the contract to be held by, or to the order of, the depositary of the scheme concerned.
261N. Effect of becoming or ceasing to be a participant cross-notes
(1)A person who at any time becomes a participant in a relevant scheme acquires the rights and becomes subject to the liabilities to which the other participants in the relevant scheme are entitled or subject at that time under, or in connection with, authorised contracts.
(2)A person who ceases to be a participant in a relevant scheme ceases to have any of the rights and to be subject to any of the liabilities to which a participant in the relevant scheme is entitled or subject under, or in connection with, authorised contracts.
(3)In this section—
(a) “authorised contract” has the meaning given in section 261M(1); and
(b) each of the following is a “relevant scheme”—
(i)a stand-alone co-ownership scheme; and
(ii)a sub-scheme of an umbrella co-ownership scheme.
261O. Limited liability cross-notes
(1)The debts of a relevant scheme are to be paid by the operator out of the property subject to the relevant scheme.
(2)The participants in a relevant scheme are not liable for the debts of the relevant scheme beyond the amount of the property subject to the relevant scheme which is available to the operator to meet the debts.
(3)In this section—
(a)a reference to the debts of a relevant scheme is a reference to debts and obligations incurred under, or in connection with, authorised contracts;
(b) “authorised contract” has the meaning given in section 261M(1); and
(c) “relevant scheme” has the meaning given in section 261N(3).
261P. Segregated liability in relation to umbrella co-ownership schemes cross-notes
(1)The property subject to a sub-scheme of an umbrella co-ownership scheme must not be used to discharge any liabilities of, or meet any claims against, any person other than the participants in that sub-scheme.
(2)Any provision contained in any contract, agreement or other document is void in so far as it is inconsistent with subsection (1), and any transaction involving the application of property in contravention of that subsection is void.
(3)The FCA may give a direction under section 261X(2) in relation to a sub-scheme of an umbrella co-ownership scheme as if the sub-scheme were an authorised contractual scheme, but this subsection does not enable the FCA to apply to the court for an order under section 261Y in relation to a sub-scheme of an umbrella co-ownership scheme.
(4)Where such a direction is given, the reference in section 261Z1(6) to the scheme is to be read as a reference to the sub-scheme concerned.
Alterations
261Q. Alteration of contractual schemes and changes of operator or depositary
(1)This section applies where the operator of an authorised contractual scheme proposes to make an alteration to the scheme, other than an alteration—
(a)to which section 261S applies; or
(b)to which Part 4 of the Undertakings for Collective Investment in Transferable Securities Regulations 2011 (mergers) applies.
(2)The operator must give written notice of the proposal to the FCA.
(3)Any notice given in respect of a proposal to alter the scheme involving a change in the contractual scheme deed must be accompanied by a certificate signed by a solicitor to the effect that the change will not affect the compliance of the deed with the contractual scheme rules.
(4)The operator of an authorised contractual scheme must give written notice to the FCA of any proposal to replace the depositary of the scheme.
(5)The depositary of an authorised contractual scheme must give written notice to the FCA of any proposal to replace the operator of the scheme.
(6)Effect is not to be given to any proposal of which notice has been given under subsection (2), (4) or (5) unless—
(a)the FCA, by written notice, has given its approval to the proposal; or
(b)one month, beginning with the date on which the notice was given, has expired without the operator or the depositary having received from the FCA a warning notice under section 261R in respect of the proposal.
(7)The FCA must not approve a proposal to replace the operator or the depositary of an authorised contractual scheme unless it is satisfied that, if the proposed replacement is made, the scheme will continue to comply with the requirements of section 261D(4) to (9).
261R. Procedure when refusing approval of a proposal under section 261Q
(1)If the FCA proposes to refuse approval of a proposal under section 261Q to replace the depositary or operator of an authorised contractual scheme, it must give a warning notice to the person by whom notice of the proposal was given under section 261Q(4) or (5).
(2)If the FCA proposes to refuse approval of a proposal under section 261Q to alter an authorised contractual scheme, it must give separate warning notices to the operator and the depositary of the scheme.
(3)To be valid the warning notice must be received by the person to whom it is given before the end of one month beginning with the date on which notice of the proposal was given.
(4)If, having given a warning notice to a person, the FCA decides to refuse approval—
(a)it must give that person a decision notice; and
(b)that person may refer the matter to the Tribunal.
261S. Proposal to convert to a non-feeder UCITS
(1)This section applies where the operator of an authorised contractual scheme which is a dfnfeeder UCITS proposes to make an alteration to the scheme which—
(a)involves a change in the contractual scheme deed, and
(b)will enable the scheme to convert into a [F1922 dfnUKF1922] UCITS which is not a dfnfeeder UCITS.
(2)The operator must give written notice of the proposal to the FCA.
(3)Any notice given in respect of such a proposal must be accompanied by—
(a)a certificate signed by a solicitor to the effect that the change will not affect the compliance of the deed with the contractual scheme rules; and
(b)the specified information.
(4)The FCA must, within 15 working days after the date on which it received the notice under subsection (2), give—
(a)written notice to the operator of the scheme that the FCA approves the proposed amendments to the contractual scheme deed, or
(b)separate warning notices to the operator and depositary of the scheme that the FCA proposes to refuse approval of the proposed amendments.
(5)Effect is not to be given to any proposal of which notice has been given under subsection (2) unless the FCA, by written notice, has given its approval to the proposal.
(6)If, having given a warning notice to a person, the FCA decides to refuse approval—
(a)it must give that person a decision notice; and
(b)that person may refer the matter to the Tribunal.
(7)Subsection (8) applies where—
(a)the notice given under subsection (2) relates to a proposal to amend the contractual scheme deed of a dfnfeeder UCITS to enable it to convert into a [F1923 dfnUKF1923] UCITS which is not a dfnfeeder UCITS following the winding-up of its dfnmaster UCITS; and
(b)the proceeds of the winding-up are to be paid to the dfnfeeder UCITS before the date on which the dfnfeeder UCITS proposes to start investing in accordance with the new investment objectives and policy provided for in its amended contractual scheme deed and contractual scheme rules.
(8)Where this subsection applies, the FCA may only approve the proposal subject to the conditions set out in section 283A(5) and (6).
(9) In this section “specified” means—
[F1924 (a)specified in rule 11.6.3(2) of the Collective Investment Schemes sourcebook, orF1924]
[F1924 (b)specified in UCITS-related direct EU legislation.F1924]
Exclusion clauses
261T. Avoidance of exclusion clauses
Any provision—
(a)of the contractual scheme deed of an authorised contractual scheme, or
(b)in the case of an authorised contractual scheme which is a partnership scheme, of the contract under which the depositary of the scheme is appointed,
is void in so far as it would have the effect of exempting the operator or the depositary from liability for any failure to exercise due care and diligence in the discharge of its functions in respect of the scheme.
Ending of authorisation
261U. Revocation of authorisation order otherwise than by consent
(1)An authorisation order may be revoked by an order made by the FCA if it appears to the FCA that—
(a)one or more of the requirements for the making of the order are no longer satisfied;
(b)the operator or depositary of the scheme concerned has contravened a requirement imposed on the operator or depositary by or under this Act;
(c)the operator or depositary of the scheme has, in purported compliance with any such requirement, knowingly or recklessly given the FCA information which is false or misleading in a material particular;
(d)no regulated activity is being carried on in relation to the scheme and the period of that inactivity began at least twelve months earlier; or
(e)none of paragraphs (a) to (d) applies, but it is desirable to revoke the authorisation order in order to protect the interests of participants or potential participants in the scheme.
(2)For the purposes of subsection (1)(e), the FCA may take into account any matter relating to—
(a)the scheme;
(b)the operator or depositary;
(c)any person employed by or associated with the operator or depositary in connection with the scheme;
(d)any director of the operator or depositary;
(e)any person exercising influence over the operator or depositary;
(f)any body corporate in the same group as the operator or depositary;
(g)any director of any such body corporate;
(h)any person exercising influence over any such body corporate.
261V. Procedure for revoking authorisation order
(1) If the FCA proposes to make an order under section 261U revoking an authorisation order (“a revoking order”), it must give separate warning notices to the operator and the depositary of the scheme.
(2)If the FCA decides to make a revoking order, it must without delay give each of them a decision notice and either of them may refer the matter to the Tribunal.
261W. Requests for revocation of authorisation order
(1)An authorisation order may be revoked by an order made by the FCA at the request of the operator or depositary of the scheme concerned.
(2)If the FCA makes an order under subsection (1), it must give written notice of the order to the operator and depositary of the scheme concerned.
(3)The FCA may refuse a request to make an order under this section if it considers that—
(a)the public interest requires that any matter concerning the scheme should be investigated before a decision is taken as to whether the authorisation order should be revoked; or
(b)revocation would not be in the interests of the participants F1925....
(4)If the FCA proposes to refuse a request under this section, it must give separate warning notices to the operator and the depositary of the scheme.
(5)If the FCA decides to refuse the request, it must without delay give each of them a decision notice and either of them may refer the matter to the Tribunal.
Powers of intervention
261X. Directions
(1)The FCA may give a direction under this section if it appears to the FCA that—
(a)one or more of the requirements for the making of an authorisation order are no longer satisfied;
(b)the operator or depositary of an authorised contractual scheme has contravened, or is likely to contravene, a requirement imposed—
(i)by or under this Act; F1926...
(ii)by [F1927 UCITS-related direct EU legislation;F1927] [F1928 orF1928]
[F1929 (iii)by the MMF Regulation or any directly applicable regulation or decision made under that Regulation [F1930 which constitutes [F1931 assimilated directF1931] legislationF1930] ;F1929]
(c)the operator or depositary of such a scheme has, in purported compliance with any such requirement, knowingly or recklessly given the FCA information which is false or misleading in a material particular; or
(d)none of paragraphs (a) to (c) applies, but it is desirable to give a direction in order to protect the interests of participants or potential participants in such a scheme.
(2)A direction under this section may—
(a)require the operator of the scheme to cease the issue or redemption, or both the issue and redemption, of units under the scheme;
(b)require the operator and depositary of the scheme to wind it up.
(3)If the authorisation order is revoked, the revocation does not affect any direction under this section which is then in force.
(4)A direction may be given under this section in relation to a scheme in the case of which the authorisation order has been revoked.
(5)If a person contravenes a direction under this section, section 138D applies to the contravention as it applies to a contravention mentioned in that section.
(6)The FCA may revoke or vary a direction given under this section, either on its own initiative or on the application of a person to whom the direction was given, if it appears to the FCA—
(a)in the case of revocation, that it is no longer necessary for the direction to take effect or continue in force;
(b)in the case of variation, that the direction should take effect or continue in force in a different form.
261Y. Applications to the court
(1)If the FCA could give a direction under section 261X, it may also apply to the court for an order—
(a)removing the operator or the depositary, or both the operator and the depositary, of the scheme; and
(b)replacing the person or persons removed with a suitable person or persons nominated by the FCA.
(2)The FCA may nominate a person for the purposes of subsection (1)(b) only if it is satisfied that, if the order was made, the requirements of section 261D(4) to (9) would be complied with.
(3)If it appears to the FCA that there is no person it can nominate for the purposes of subsection (1)(b), it may apply to the court for an order—
(a)removing the operator or the depositary, or both the operator and the depositary, of the scheme; and
(b)appointing an authorised person to wind up the scheme.
(4)On an application under this section the court may make such order as it thinks fit.
(5)The court may, on the application of the FCA, rescind any such order as is mentioned in subsection (3) and substitute such an order as is mentioned in subsection (1).
(6)The FCA must give written notice of the making of an application under this section to the operator and depositary of the scheme concerned.
(7)The jurisdiction conferred by this section may be exercised by—
(a)the High Court;
(b)in Scotland, the Court of Session.
261Z. Winding up or merger of master UCITS
(1)Subsection (2) applies if a dfnmaster UCITS which has one or more dfnfeeder UCITS which are authorised contractual schemes is wound up, whether as a result of a direction given by the FCA under section 257 or 261X, an order of the court under section 258 or 261Y, rules made by the FCA or otherwise.
(2)The FCA must direct the operator and depositary of any authorised contractual scheme which is a dfnfeeder UCITS of the dfnmaster UCITS to wind up the dfnfeeder UCITS unless—
(a)the FCA approves under section 283A the investment by the dfnfeeder UCITS of at least 85% of the total property which is subject to the collective investment scheme constituted by the dfnfeeder UCITS in units of another UCITS or dfnmaster UCITS; or
(b)the FCA approves under section 261S an amendment of the contractual scheme deed of the dfnfeeder UCITS which would enable it to convert into a [F1932 dfnUKF1932] UCITS which is not a dfnfeeder UCITS.
(3)Subsection (4) applies if a dfnmaster UCITS which has one or more dfnfeeder UCITS which are authorised contractual schemes—
(a)merges with another UCITS, or
(b)is divided into two or more UCITS.
(4)The FCA must direct the operator and depositary of any authorised contractual scheme which is a dfnfeeder UCITS of the dfnmaster UCITS to wind up the scheme unless—
(a)the FCA approves under section 283A the investment by the scheme of at least 85% of the total property which is subject to the collective investment scheme constituted by the dfnfeeder UCITS in the units of—
(i)the dfnmaster UCITS which results from the merger;
(ii)one of the UCITS resulting from the division; or
(iii)another UCITS or dfnmaster UCITS;
(b)the FCA approves under section 261S an amendment of the contractual scheme deed of the scheme concerned which would enable it to convert into a [F1933 dfnUKF1933] UCITS which is not a dfnfeeder UCITS.
261Z1. Procedure on giving directions under section 261X or 261Z and varying them on FCA ’s own initiative
(1)A direction under section 261X or 261Z takes effect—
(a)immediately, if the notice given under subsection (3) states that that is the case;
(b)on such date as may be specified in the notice; or
(c)if no date is specified in the notice, when the matter to which it relates is no longer open to review.
(2)A direction under section 261X may be expressed to take effect immediately (or on a specified date) only if the FCA, having regard to the ground on which it is exercising its power under that section, considers that it is necessary for the direction to take effect immediately (or on that date).
(3)If the FCA proposes to give a direction under section 261X or 261Z, or gives a direction under either section with immediate effect, it must give separate written notice to the operator and the depositary of the scheme concerned.
(4)The notice must—
(a)give details of the direction;
(b)inform the person to whom it is given of when the direction takes effect;
(c)state the FCA’s reasons for giving the direction and for its determination as to when the direction takes effect;
(d)inform the person to whom it is given that representations may be made to the FCA within such period as may be specified in it (whether or not the matter has been referred to the Tribunal); and
(e)inform the person to whom it is given of the right to refer the matter to the Tribunal.
(5)If the direction imposes a requirement under section 261X(2)(a), the notice must state that the requirement has effect until—
(a)a specified date; or
(b)a further direction.
(6)If the direction is given under section 261X(2)(b) or section 261Z(2) or (4), the scheme must be wound up—
(a)by a date specified in the notice; or
(b)if no date is specified, as soon as practicable.
(7)The FCA may extend the period allowed under the notice for making representations.
(8)If, having considered any representations made by a person to whom the notice was given, the FCA decides—
(a)to give the direction in the way proposed, or
(b)if it has been given, not to revoke the direction,
it must give separate written notice to the operator and the depositary of the scheme concerned.
(9)If, having considered any representations made by a person to whom the notice was given, the FCA decides—
(a)not to give the direction in the way proposed,
(b)to give the direction in a way other than that proposed, or
(c)to revoke a direction which has effect,
it must give separate written notice to the operator and the depositary of the scheme concerned.
(10)A notice given under subsection (8) must inform the persons to whom it is given of the right to refer the matter to the Tribunal.
(11)A notice under subsection (9)(b) must comply with subsection (4).
(12)If a notice informs a person of the right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(13)This section applies to the variation of a direction on the FCA’s own initiative as it applies to the giving of a direction.
(14)For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
261Z2. Procedure: refusal to revoke or vary direction
(1)If on an application under section 261X(6) for a direction to be revoked or varied the FCA proposes—
(a)to vary the direction otherwise than in accordance with the application, or
(b)to refuse to revoke or vary the direction,
it must give the applicant a warning notice.
(2)If the FCA decides to refuse to revoke or vary the direction—
(a)it must give the applicant a decision notice; and
(b)the applicant may refer the matter to the Tribunal.
261Z3. Procedure: revocation of direction and grant of request for variation
(1)If the FCA decides on its own initiative to revoke a direction under section 261X it must give separate written notice of its decision to the operator and the depositary of the scheme.
(2)If on an application under section 261X(6) for a direction to be revoked or varied the FCA decides to revoke the direction or vary it in accordance with the application, it must give the applicant written notice of its decision.
(3)A notice under this section must specify the date on which the decision takes effect.
(4)The FCA may publish such information about the revocation or variation, in such way, as it considers appropriate.
F1934261Z4. Information for home state regulator
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
261Z5. Information for feeder UCITS
(1)The FCA must immediately inform the operator of any authorised contractual scheme which is a dfnfeeder UCITS of an authorised unit trust scheme, an authorised contractual scheme or an authorised open-ended investment company (the dfnmaster UCITS) of—
(a)any failure of which the FCA becomes aware by the dfnmaster UCITS to comply with a provision made [F1935 by or under any enactmentF1935] in implementation of Chapter VIII of the dfnUCITS directive;
(b)any warning notice or decision notice given to the dfnmaster UCITS in relation to a contravention of any provision made in implementation of Chapter VIII of the dfnUCITS directive by or under any enactment or in rules of the FCA;
(c)any information reported to the FCA pursuant to rules of the FCA made to implement Article 106(1) of the dfnUCITS directive which relates to the dfnmaster UCITS, or to one or more of its directors, or its management company, trustee, depositary or auditor.
F1936 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1936 (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F1902]
[F1937CHAPTER 3B Unauthorised co-ownership AIFs
261Z6 Power to make provision about unauthorised co-ownership AIFs
SI (1)The Treasury may by regulations make provision about unauthorised co-ownership AIFs that corresponds or is similar to, or applies with modifications, any of sections 261M to 261O and section 261P(1) and (2) (rights and liabilities of participants in authorised co-ownership schemes).
(2)Regulations under subsection (1) may make provision about unauthorised co-ownership AIFs generally, or about unauthorised co-ownership AIFs of a description specified in the regulations.
(3) In this section “ unauthorised co-ownership AIF ” means a co-ownership scheme that—
(a)is an AIF, and
(b)is not authorised for the purposes of this Act by an authorisation order in force under section 261D(1).F1937]
Chapter IV Open-ended Investment Companies
noteSI 262 Open-ended investment companies.
(1)The Treasury may by regulations make provision for—
SI (a)facilitating the carrying on of collective investment by means of open-ended investment companies;
(b)regulating such companies.
(2)The regulations may, in particular, make provision—
(a)for the incorporation and registration in [F1938the United KingdomF1938] of bodies corporate;
(b)for a body incorporated by virtue of the regulations to take such form as may be determined in accordance with the regulations;
(c)as to the purposes for which such a body may exist, the investments which it may issue and otherwise as to its constitution;
(d)as to the management and operation of such a body and the management of its property;
SI (e)as to the powers, duties, rights and liabilities of such a body and of other persons, including—
(i)the directors or sole director of such a body;
(ii)its depositary (if any);
(iii)its shareholders, and persons who hold the beneficial title to shares in it without holding the legal title;
(iv)its auditor; and
(v)any persons who act or purport to act on its behalf;
(f)as to the merger of one or more such bodies and the division of such a body;
(g)for the appointment and removal of an auditor for such a body;
(h)as to the winding up and dissolution of such a body;
(i)for such a body, or any director or depositary of such a body, to be required to comply with directions given by the [F1876FCAF1876] ;
(j)enabling the [F1876FCAF1876] to apply to a court for an order removing and replacing any director or depositary of such a body;
(k)for the carrying out of investigations by persons appointed by the [F1876FCAF1876] or the Secretary of State;
(l)corresponding to any provision made in relation to unit trust schemes by Chapter III of this Part.
(3)Regulations under this section may—
(a)impose criminal liability;
(b)confer functions on the [F1876FCAF1876] ;
(c)in the case of provision made by virtue of subsection (2)(l), authorise the making of rules by the [F1876FCAF1876] ;
(d)confer jurisdiction on any court or on the Tribunal;
(e)provide for fees to be charged by the [F1876FCA in connection with the carrying out of any of its functions under the regulations (including fees payable on a periodical basis);
SI (f)modify, exclude or apply (with or without modifications) any primary or subordinate legislation (including any provision of, or made under, this Act);
(g)make consequential amendments, repeals and revocations of any such legislation;
(h)modify or exclude any rule of law.
(4)The provision that may be made by virtue of subsection (3)(f) includes provision extending or adapting any power to make subordinate legislation.
(5)Regulations under this section may, in particular—
(a)revoke the M19Open-Ended Investment Companies (Investment Companies with Variable Capital) Regulations 1996; and
(b)provide for things done under or in accordance with those regulations to be treated as if they had been done under or in accordance with regulations under this section.F1876]
note 263 Amendment of section 716 Companies Act 1985.
M20 In section 716(1) of the Companies Act 1985 (prohibition on formation of companies with more than 20 members unless registered under the Act etc.), after “this Act,” insert “ is incorporated by virtue of regulations made under section 262 of the Financial Services and Markets Act 2000 ”.
Chapter V Recognised Overseas Schemes
Schemes constituted in other EEA States
note F1939264 Schemes constituted in other EEA States.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note 265 Representations and references to the Tribunal.
F1940 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
notecase F1939266 Disapplication of rules.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1939267 Power of [F1941FCAF1941] to suspend promotion of scheme.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1939268 Procedure on giving directions under section 267 and varying them on [F1942FCA'sF1942] own initiative.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1939269 Procedure on application for variation or revocation of direction.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1943 ...
noteSI F1943270 Schemes authorised in designated countries or territories.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
note F1943271 Procedure.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1944Schemes authorised in approved countries
271A Schemes authorised in approved countries
SI (1)A collective investment scheme which is authorised under the law of a country or territory outside the United Kingdom is a recognised scheme if—
(a)regulations made by the Treasury approving the country or territory for the purposes of this section are in force,
(b)the scheme is of a description specified in the regulations in relation to which the country or territory is approved,
(c)the operator of the scheme has applied to the FCA for recognition of the scheme,
(d)the FCA has made (and has not revoked) an order granting the application, and
(e)no direction under section 271L (suspension of recognition) has effect in relation to the scheme.
(2)In making regulations under this section, the Treasury may have regard to any matter that they consider relevant (and see the restrictions in sections 271B and 271C).
271B Approval of country: equivalent protection afforded to participants
(1)The Treasury may not make regulations under section 271A approving a country or territory and specifying a description of collective investment scheme unless satisfied that the equivalent protection test is met.
(2)The equivalent protection test is met if the protection afforded to participants or potential participants in the schemes by the law and practice of the country or territory is at least equivalent to that afforded to participants or potential participants in comparable authorised schemes by the law and practice of the United Kingdom under which such schemes are authorised and supervised.
(3)In this section—
“ comparable authorised schemes ” means whichever of the following the Treasury consider to be the most appropriate—
(a)authorised unit trust schemes;
(b)authorised contractual schemes which are co-ownership schemes;
(c)authorised contractual schemes which are partnership schemes;
(d)authorised open-ended investment companies;
(e)any two or more of the kinds of collective investment scheme mentioned in paragraphs (a) to (d);
“ participants ” means participants in the United Kingdom.
271C Approval of country: regulatory co-operation
(1)The Treasury may not make regulations under section 271A approving a country or territory and specifying a description of collective investment scheme unless satisfied that adequate arrangements exist, or will exist, for co-operation between the FCA and the overseas regulator.
(2) In this section, “ the overseas regulator ” means the authority responsible for the authorisation and supervision of schemes of that description in the country or territory.
271D Report by the FCA in relation to approval
(1)When considering whether to make, vary or revoke regulations under section 271A approving a country or territory and specifying a description of collective investment scheme, the Treasury may ask the FCA to prepare a report on—
(a)the law and practice of the country or territory under which such schemes are authorised and supervised, or particular aspects of such law and practice, and
(b)any existing or proposed arrangements for co-operation between the FCA and the overseas regulator.
(2)A request for a report under subsection (1) must be made in writing.
(3)If the Treasury ask for a report under subsection (1), the FCA must provide the Treasury with the report.
(4) In this section, “ the overseas regulator ” has the same meaning as in section 271C.
271E Power to impose requirements on schemes
(1)The Treasury may by regulations—
(a)provide that a section 271A scheme of a description specified in the regulations must comply with requirements specified in the regulations, and
(b)impose requirements on the operator of such a scheme.
(2)In making regulations under this section in relation to a description of section 271A scheme, the Treasury must have regard to any requirements imposed in relation to comparable authorised schemes by or under this Act.
(3)Regulations under this section may describe requirements by reference to—
(a)rules made or to be made by the FCA, or
(b)other enactments.
(4)The power under subsection (3) includes power to make provision by reference to rules or other enactments as amended from time to time.
(5)The FCA may make, amend or revoke a rule if it considers it necessary or appropriate to do so for the purposes of a requirement imposed (or varied or withdrawn) by regulations under this section which is described by reference to a rule made or to be made by the FCA.
(6)If, for the purposes of a requirement imposed (or varied or withdrawn) by regulations under this section which is described by reference to a rule made or to be made by the FCA, the Treasury consider that it is necessary or appropriate for the FCA to make, amend or revoke a rule, they may direct the FCA to do so.
(7)If the Treasury give a direction under subsection (6), the FCA must comply with the direction within such time as the Treasury may specify in the direction.
(8)The references in paragraphs (5) and (6) to the amendment or revocation of rules are to the amendment or revocation of rules made by the FCA.
(9)Section 141A (power to make consequential amendments of references to rules) applies in relation to the FCA's power to make, amend or revoke rules under this section as it applies in relation to its power to make, amend or revoke rules under Part 9A.
(10)In this section—
“ comparable authorised schemes ” has the same meaning as in section 271B;
“ enactment ” includes—
(a)[F1945 assimilated directF1945] legislation,
(b)an enactment comprised in subordinate legislation,
(c)an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,
(d)an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and
(e)an enactment comprised in, or in an instrument made under, Northern Ireland legislation;
“ subordinate legislation ” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act ).
271F Application for recognition to the FCA
(1)An application for recognition of a collective investment scheme under section 271A—
(a)must be made in such manner as the FCA may direct,
(b)must contain the address of a place in the United Kingdom for service of notices, or other documents, required or authorised to be served on the operator under this Act, and
(c)must contain or be accompanied by such information as the FCA may reasonably require for the purpose of determining the application.
(2)Where requirements imposed by regulations under section 271E would apply to the scheme or its operator if the application were granted, the application must contain an explanation of how each requirement would be satisfied.
(3)At any time after the application is received and before it is determined, the FCA may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application.
(4)The FCA may require the applicant to present information provided under this section in such form, or to verify the information in such a way, as the FCA may direct.
(5)Different directions may be given, and different requirements imposed, in relation to different applications.
271G Determination of applications cross-notes
(1)The FCA—
(a)may only make an order under section 271A granting an application under that section if it is satisfied that the conditions in subsection (2) are met, and
(b)if it is so satisfied, must make such an order unless it is permitted to refuse the application under subsection (3) or required to do so under subsection (4).
(2)Those conditions are—
(a)that the scheme is authorised in a country or territory which is approved by the Treasury in regulations under section 271A,
(b)that the scheme is of a description of scheme specified in the regulations,
(c)that adequate arrangements exist for co-operation between the FCA and the overseas regulator, and
(d)that, where requirements imposed by regulations under section 271E would apply to the scheme or its operator if the application were granted, each such requirement would be satisfied.
(3)The FCA may refuse an application under section 271A if it appears to the FCA that the operator of the scheme—
(a)has contravened a requirement imposed on them by or under this Act, or would contravene such a requirement if the application were granted, or
(b)has, in purported compliance with such a requirement, knowingly or recklessly given the FCA information which is false or misleading in a material particular.
(4)The FCA must refuse an application under section 271A if it considers it desirable to do so in order to protect the interests of participants or potential participants in the scheme in the United Kingdom.
(5)Where the FCA receives an application under section 271A which is complete, it must give the applicant a notice under section 271H(1) or (2) before the end of the period of two months beginning with the day on which the FCA receives the application.
(6)An application under section 271A is complete if the FCA considers that the application satisfies section 271F(1) and (2).
(7)Where the FCA receives an application under section 271A which is not complete, it must—
(a)notify the operator of the scheme that it does not consider that the application satisfies section 271F(1) or (2) (as applicable), and
(b)identify the information needed to complete the application.
(8) In this section, “ the overseas regulator ” has the same meaning as in section 271C.
271H Procedure when determining an application
(1)If the FCA decides to make an order under section 271A granting an application under that section, it must give written notice of its decision to the applicant.
(2)If the FCA proposes to refuse an application under section 271A, it must give the applicant a warning notice.
(3)If the FCA decides to refuse the application, it must give the applicant a decision notice.
(4)If the FCA gives the applicant a decision notice under subsection (3), the applicant may refer the matter to the Tribunal, except where the FCA refuses the application on the ground that it is not satisfied that a condition in section 271G(2)(a) or (c) is met.
271I Obligations on operator of a section 271A scheme
(1)The operator of a section 271A scheme must notify the FCA if the operator becomes aware that it has contravened, or expects to contravene, a requirement imposed on it by or under this Act.
(2)The operator of a section 271A scheme must notify the FCA of any change to—
(a)the name or address of the operator of the scheme,
(b)the name or address of any trustee or depositary of the scheme,
(c)the name or address of any representative of the operator in the United Kingdom, and
(d)the address of the place in the United Kingdom for service of notices, or other documents, required or authorised to be served on the operator under this Act.
(3)A notification under subsection (1) or (2) must be made in writing as soon as reasonably practicable.
271J Provision of information to the FCA
(1)The operator of a section 271A scheme must provide to the FCA such information as the FCA may direct, at such times as the FCA may direct, for the purpose of determining whether—
(a)the conditions set out in section 271G(2)(a) to (c) are met, and
(b)any requirements relating to the scheme or its operator imposed by or under this Act are satisfied.
(2)The FCA may require the operator to present information provided under this section in such form, or to verify the information in such a way, as the FCA may direct.
(3)Different directions may be given in relation to different schemes or different descriptions of scheme.
271K Rules as to scheme particulars
(1)The FCA may make rules in relation to section 271A schemes for purposes corresponding to those for which rules may be made under section 248 in relation to authorised unit trust schemes.
(2)For the purposes of subsection (1), a reference in section 248 to the manager of an authorised unit trust scheme is to be read as a reference to the operator of a section 271A scheme.
(3)Rules made under this section do not affect any liability which a person may incur apart from the rules.
271L Suspension of recognition
(1)The FCA may direct that a section 271A scheme is not to be a recognised scheme—
(a)for a specified period,
(b)until the occurrence of a specified event, or
(c)until specified conditions are complied with.
(2)The FCA may give a direction under subsection (1) only if—
(a)the FCA is no longer satisfied that the conditions set out in section 271G(2)(a) to (c) are met,
(b)it appears to the FCA that a requirement relating to the scheme or its operator imposed by or under this Act has not been satisfied, or is likely not to be satisfied,
(c)it appears to the FCA that the operator of the scheme has, in purported compliance with any such requirement, knowingly or recklessly given the FCA information which is false or misleading in a material particular, or
(d)although none of paragraphs (a) to (c) applies, the FCA considers it desirable to do so in order to protect the interests of participants or potential participants in the United Kingdom.
271M Procedure when suspending recognition
(1)A direction under section 271L takes effect—
(a)immediately, if the notice given under subsection (3) states that to be the case,
(b)on a day specified in the notice, or
(c)if no day is specified in the notice, when the matter to which it relates is no longer open to review.
(2)A direction under section 271L may be expressed to take effect immediately or on a specified day only if the FCA, having regard to its reason for giving the direction, reasonably considers that it is necessary for the direction to take effect immediately or on that day (as appropriate).
(3)If the FCA proposes to give a direction under section 271L, or gives such a direction with immediate effect, it must give written notice to—
(a)the operator of the scheme, and
(b)the trustee or depositary of the scheme (if any).
(4)The notice must—
(a)set out details of the direction,
(b)set out when the direction takes effect,
(c)state the FCA's reasons for giving the direction and for its determination as to when the direction takes effect,
(d)state that the recipient of the notice may make representations to the FCA within such period as may be specified in the notice (whether or not the matter has been referred to the Tribunal), and
(e)set out the recipient's right to refer the matter to the Tribunal.
(5)The FCA may extend the period allowed under the notice for making representations.
(6)The FCA must give written notice to the operator and (if any) the trustee or depositary of the scheme concerned if, having considered any representations made, the FCA decides—
(a)to give the direction in the way proposed, or
(b)if it has been given, not to revoke the direction.
(7)The FCA must give written notice to the operator and (if any) the trustee or depositary of the scheme concerned if, having considered any representations made, the FCA decides—
(a)not to give the direction in the way proposed,
(b)to give the direction in a way other than that proposed, or
(c)where the direction has been given, to revoke it.
(8)A notice under subsection (6) must set out the recipient's right to refer the matter to the Tribunal.
(9)A notice under subsection (7)(b) must comply with subsection (4).
(10)Where a notice sets out the right of the recipient to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(11)This section applies to the variation of a direction as it applies to the giving of a direction.
(12)For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
271N Revocation of recognition on the FCA's initiative
(1)The FCA may revoke an order made under section 271A in relation to a collective investment scheme if—
(a)the FCA is no longer satisfied that the conditions set out in section 271G(2)(a) to (c) are met,
(b)it appears to the FCA that a requirement relating to the scheme or its operator imposed by or under this Act has not been satisfied,
(c)it appears to the FCA that the operator of the scheme has, in purported compliance with any such requirement, knowingly or recklessly given the FCA information which is false or misleading in a material particular, or
(d)although none of paragraphs (a) to (c) applies, the FCA considers it desirable to revoke the order to protect the interests of participants or potential participants in the United Kingdom.
(2)If the FCA proposes to revoke an order made under section 271A, it must give a warning notice to—
(a)the operator of the scheme, and
(b)the trustee or depositary of the scheme (if any).
(3)If the FCA decides to revoke the order—
(a)it must without delay give a decision notice to the operator and (if any) the trustee or depositary of the scheme, and
(b)the operator, trustee or depository may refer the matter to the Tribunal.
271O Requests for revocation of recognition
(1)The FCA may revoke an order made under section 271A in relation to a collective investment scheme at the request of the scheme's operator.
(2)If the FCA decides to do so, it must give written notice to the operator and (if any) the trustee or depositary of the scheme.
(3)The FCA may refuse a request under this section if it considers that—
(a)the public interest requires that any matter concerning the scheme should be investigated before a decision is taken as to whether the order should be revoked, or
(b)revocation would not be in the interests of participants in the scheme.
(4)If the FCA proposes to refuse a request under this section, it must give a warning notice to the operator and (if any) the trustee or depositary of the scheme.
(5)If the FCA decides to refuse the request—
(a)it must without delay give a decision notice to the operator and (if any) the trustee or depositary of the scheme, and
(b)the operator, trustee or depositary may refer the matter to the Tribunal.
271P Obligations on operator where recognition is revoked or suspended
(1)This section applies where—
(a)the FCA gives a decision notice under section 271N(3), or a written notice under section 271O(2), in relation to a section 271A scheme, or
(b)a direction given by the FCA under section 271L(1) in relation to a section 271A scheme takes effect.
(2)The operator of the scheme must notify such persons as the FCA may direct that the FCA has revoked an order under section 271A for recognition of the scheme or given a direction under section 271L in relation to the scheme (as applicable).
(3)A notification under subsection (2) that relates to a direction under section 271L must set out the terms of the direction.
(4)A notification under subsection (2) must—
(a)contain such information as the FCA may direct, and
(b)be made in such form and manner as the FCA may direct.
(5)Different directions may be given under subsection (2) or (4) in relation to—
(a)different schemes or different descriptions of scheme;
(b)different persons or descriptions of persons to whom a notification under subsection (2) must be given.
271Q Effect of variation or revocation of Treasury regulations
(1)This section applies, in relation to a section 271A scheme, where the Treasury vary or revoke regulations under section 271A and, as a result, the scheme ceases to be a recognised scheme because—
(a)the country or territory in which the scheme is authorised is no longer approved for the purposes of that section, or
(b)the scheme is no longer of a description of scheme specified in regulations under that section.
(2)Where this section applies, the order given by the FCA under section 271A in relation to the scheme is revoked.
(3)The Treasury may by regulations make provision, in relation to a scheme which has ceased to be recognised under section 271A by virtue of this section—
(a)requiring an application under section 272 by such a scheme to be made during a period specified in the regulations or in a direction given by the FCA, and
(b)modifying or disapplying section 275(1) and (2) (time limits for determining applications under section 272) for the purposes of an application under section 272 relating to such a scheme.
271R Public censure
(1)This section applies where the FCA considers that—
(a)a requirement imposed by regulations under section 271E has been contravened,
(b)rules made under section 271K have been contravened,
(c)the operator of a section 271A scheme has contravened section 271I, 271J or 271P, or
(d)the operator of a section 271A scheme has contravened a rule made, or a requirement imposed, under section 283.
(2)The FCA may publish a statement to that effect.
(3)Where the FCA proposes to publish a statement under subsection (2) relating to a scheme or the operator of a scheme, it must give the operator a warning notice setting out the terms of the statement.
(4)If the FCA decides to publish the statement—
(a)it must give the operator, without delay, a decision notice setting out the terms of the statement, and
(b)the operator may refer the matter to the Tribunal.
(5)After a statement under subsection (2) is published, the FCA must send a copy of it to the operator and to any person to whom a copy of the decision notice was given under section 393(4).
271S Recognition of parts of schemes under section 271A
(1)Section 271A(1) applies in relation to a part of a collective investment scheme as it applies in relation to such a scheme.
(2)Accordingly, the following include a part of a scheme recognised under section 271A—
(a) the reference to a scheme recognised under section 271A in the definition of “section 271A scheme” in section 237(3), and
(b)other references to such a scheme (however expressed) in or in provision made under this Part of this Act (unless the contrary intention appears).
(3)Provisions of or made under this Part of this Act have effect in relation to parts of schemes recognised, or seeking recognition, under section 271A with appropriate modifications.
(4)The Treasury may by regulations—
(a)make provision about what are, or are not, appropriate modifications for the purposes of subsection (3);
SI (b)make provision so that a relevant enactment has effect in relation to parts of schemes recognised, or seeking recognition, under section 271A with such modifications as the Treasury consider appropriate;
(c)make provision so that a relevant enactment does not have effect in relation to such parts of schemes.
(5)Regulations under subsection (4)(b) or (c) may amend, repeal or revoke an enactment.
(6)In this section—
“ enactment ” has the same meaning as in section 271E;
“ relevant enactment ” means an enactment passed or made before the day on which subsection (1) comes into force that makes provision in relation to collective investment schemes recognised, or seeking recognition, under section 271A. F1944]
Individually recognised overseas schemes
note 272 Individually recognised overseas schemes. cross-notesI49
(1)The [F1946FCAF1946] may, on the application of the operator of a collective investment scheme which—
(a)F1947is managed in a country or territory outside the United Kingdom, ...
F1948 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1949 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[F1950 (ca)does not have the benefit of section 271A, andF1950]
(d)appears to the [F1946FCAF1946] to satisfy the requirements set out in [F1951subsections (2) to (15)F1951] ,
make an order declaring the scheme to be a recognised scheme.
[F1952 (1A)For the purposes of subsection (1)(ca), a collective investment scheme has the benefit of section 271A if—
(a)it is authorised under the law of a country or territory which is for the time being approved by regulations under section 271A, and
(b)it falls within a description of schemes specified in the regulations.F1952]
(2)Adequate protection must be afforded to participants in the scheme.
(3)The arrangements for the scheme’s constitution and management must be adequate.
(4)The powers and duties of the operator and, if the scheme has a trustee or depositary, of the trustee or depositary must be adequate.
(5)In deciding whether the matters mentioned in subsection (3) or (4) are adequate, the [F1946FCAF1946] must have regard to—
(a)any rule of law, and
(b)F1953any matters which are... the subject of rules,
applicable in relation to comparable authorised schemes.
(6) “ Comparable authorised schemes ” means whichever of the following the [F1946 FCA F1946] considers the most appropriate, having regard to the nature of scheme in respect of which the application is made—
(a)authorised unit trust schemes;
[F1954 (aa)authorised contractual schemes which are co-ownership schemes;
(ab)authorised contractual schemes which are partnership schemes;F1954]
(b)authorised open-ended investment companies;
[F1955 (c)any two or more of the kinds of collective investment scheme mentioned in paragraphs (a) to (b).F1955]
(7)The scheme must take the form of an open-ended investment company or (if it does not take that form) the operator must be a body corporate.
(8)The operator of the scheme must—
(a)if an authorised person, have permission to act as operator;
(b)if not an authorised person, be a fit and proper person to act as operator.
(9)The trustee or depositary (if any) of the scheme must—
(a)if an authorised person, have permission to act as trustee or depositary;
(b)if not an authorised person, be a fit and proper person to act as trustee or depositary.
(10)The operator and the trustee or depositary (if any) of the scheme must be able and willing to co-operate with the [F1946FCAF1946] by the sharing of information and in other ways.
(11)The name of the scheme must not be undesirable or misleading.
(12)The purposes of the scheme must be reasonably capable of being successfully carried into effect.
(13)The participants must be entitled to have their units redeemed in accordance with the scheme at a price related to the net value of the property to which the units relate and determined in accordance with the scheme.
(14)But a scheme is to be treated as complying with subsection (13) if it requires the operator to ensure that a participant is able to sell his units on an investment exchange at a price not significantly different from that mentioned in that subsection.
(15)Subsection (13) is not to be read as imposing a requirement that the participants must be entitled to have their units redeemed (or sold as mentioned in subsection (14)) immediately following a demand to that effect.
note 273 Matters that may be taken into account. I50
For the purposes of subsections (8)(b) and (9)(b) of section 272, the [F1946FCAF1946] may take into account any matter relating to—
(a)any person who is or will be employed by or associated with the operator, trustee or depositary in connection with the scheme;
(b)any director of the operator, trustee or depositary;
(c)any person exercising influence over the operator, trustee or depositary;
(d)any body corporate in the same group as the operator, trustee or depositary;
(e)any director of any such body corporate;
(f)any person exercising influence over any such body corporate.
note 274 Applications for recognition of individual schemes. cross-notesI51
(1)An application under section 272 for an order declaring a scheme to be a recognised scheme must be made to the [F1946FCAF1946] by the operator of the scheme.
(2)The application—
(a)must be made in such manner as the [F1946FCAF1946] may direct;
(b)must contain the address of a place in the United Kingdom for the service on the operator of notices or other documents required or authorised to be served on him under this Act;
(c)must contain or be accompanied by such information as the [F1946FCAF1946] may reasonably require for the purpose of determining the application.
(3)At any time after receiving an application and before determining it, the [F1946FCAF1946] may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application.
(4)Different directions may be given, and different requirements imposed, in relation to different applications.
(5)The [F1946FCAF1946] may require an applicant to present information which he is required to give under this section in such form, or to verify it in such a way, as the [F1946FCAF1946] may direct.
note 275 Determination of applications. cross-notesI52
(1)An application under section 272 must be determined by the [F1946FCAF1946] before the end of the period of six months beginning with the date on which it receives the completed application.
(2)The [F1946FCAF1946] may determine an incomplete application if it considers it appropriate to do so; and it must in any event determine such an application within twelve months beginning with the date on which it first receives the application.
(3)If the [F1946FCAF1946] makes an order under section 272(1), it must give written notice of the order to the applicant.
note 276 Procedure when refusing an application. I53
(1)If the [F1946FCAF1946] proposes to refuse an application made under section 272 it must give the applicant a warning notice.
(2)If the [F1946FCAF1946] decides to refuse the application—
(a)it must give the applicant a decision notice; and
(b)the applicant may refer the matter to the Tribunal.
note 277 Alteration of schemes and changes of operator, trustee or depositary. cross-notesI54
(1)The operator of a scheme recognised by virtue of section 272 must give written notice to the [F1946FCAF1946] of any proposed alteration to the scheme [F1956which, if made, would be a material alterationF1956] .
(2)Effect is not to be given to any such proposal unless—
(a)the [F1946FCAF1946] , by written notice, has given its approval to the proposal; or
(b)one month, beginning with the date on which notice was given under subsection (1), has expired without the [F1946FCAF1946] having given written notice to the operator that it has decided to refuse approval.
(3)F1957... Before any replacement of the operator, trustee or depositary of such a scheme, notice of the proposed replacement must be given to the [F1946FCAF1946] —
(a)by the operator, trustee or depositary (as the case may be); or
(b)by the person who is to replace him.
[F1958 (3A)A notice under subsection (3) must be given—
(a)at least one month before the proposed replacement, or
(b)if that is not reasonably practicable, as soon as is reasonably practicable in the period of one month before the proposed replacement.
(3B)The operator of such a scheme must give written notice to the FCA, as soon as reasonably practicable, of any change to—
(a)the name or address of the operator of the scheme,
(b)the name or address of any trustee or depositary of the scheme,
(c)the name or address of any representative of the operator in the United Kingdom, and
(d)the address of the place in the United Kingdom for service of notices, or other documents, required or authorised to be served on the operator under this Act.F1958]
[F1959 (4)If a change is made, or is to be made, to the law which applies to such a scheme in the country or territory in which it is managed and the change affects or will affect any of the matters mentioned at section 272(2) to (4), the operator of the scheme must give written notice of the change to the FCA—
(a)at least one month before the change takes effect; or
(b)if that is not reasonably practicable, as soon as it is reasonably practicable to do so.
(5)A notice under this section—
(a)must be given in such manner as the FCA may direct; and
(b)where the notice is given under subsection (1) or (3), must include such information as the FCA may direct for the purpose of determining whether the requirements for the making of an order under section 272 in respect of the scheme would continue to be satisfied following the alteration or replacement that is the subject of the notice.F1959]
[F1960 (6)The FCA may make rules specifying when a proposed alteration is a material alteration for the purposes of subsection (1).F1960]
[F1961277A. Regular provision of information relating to compliance with requirements for recognition
(1)The operator of a scheme recognised by virtue of section 272 must provide to the FCA such information as the FCA may direct, at such times as the FCA may direct, for the purpose of determining whether the requirements for the making of an order under section 272 in respect of the scheme continue to be satisfied.
(2)A direction under subsection (1) may not require information to be provided within the period of 12 months beginning with the date on which information was last required to be provided to the FCA in respect of the scheme pursuant to a requirement under section 274(2)(c) or a direction under subsection (1) or section 277(5)(b).
(3)The information must be provided in such manner as the FCA may direct.F1961]
F1962...
note 278 Rules as to scheme particulars.
F1963 The [F1946FCAF1946] may make rules imposing duties or liabilities on the operator of a scheme recognised under section ... 272 for purposes corresponding to those for which rules may be made under section 248 in relation to authorised unit trust schemes.
note 279 Revocation of recognition. cross-notes
F1964 The [F1946FCAF1946] may ... revoke an order under section 272 if it appears to the [F1946FCAF1946] —
(a)that the operator, trustee or depositary of the scheme has contravened a requirement imposed on him by or under this Act;
(b)that the operator, trustee or depositary of the scheme has, in purported compliance with any such requirement, knowingly or recklessly given the [F1946FCAF1946] information which is false or misleading in a material particular;
(c)F1965... that one or more of the requirements for the making of the order are no longer satisfied; or
(d)that none of paragraphs (a) to (c) applies, but it is undesirable in the interests of the participants or potential participants that the scheme should continue to be recognised.
note 280 Procedure. cross-notes
(1)If the [F1946FCAF1946] proposes to [F1966make an order under section 279F1966] revoking a recognition order, it must give a warning notice to the operator and (if any) the trustee or depositary of the scheme.
(2)F1967If the [F1946FCAF1946] decides to ... make an order under that section—
(a)it must without delay give a decision notice to the operator and (if any) the trustee or depositary of the scheme; and
(b)the operator or the trustee or depositary may refer the matter to the Tribunal.
note 281 Directions. cross-notes
(1) F1968 In this section a “ relevant recognised scheme ” means a scheme recognised under section ... 272.
(2)If it appears to the [F1946FCAF1946] that—
(a)the operator, trustee or depositary of a relevant recognised scheme has contravened, or is likely to contravene, a requirement imposed on him by or under this Act,
(b)the operator, trustee or depositary of such a scheme has, in purported compliance with any such requirement, knowingly or recklessly given the [F1946FCAF1946] information which is false or misleading in a material particular,
(c)one or more of the requirements for the recognition of [F1969such a schemeF1969] are no longer satisfied, or
(d)none of paragraphs (a) to (c) applies, but the exercise of the power conferred by this section is desirable in order to protect the interests of participants or potential participants in a relevant recognised scheme who are in the United Kingdom,
it may direct that the scheme is not to be a recognised scheme for a specified period or until the occurrence of a specified event or until specified conditions are complied with.
note 282 Procedure on giving directions under section 281 and varying them otherwise than as requested.
(1)A direction takes effect—
(a)immediately, if the notice given under subsection (3) states that that is the case;
(b)on such date as may be specified in the notice; or
(c)if no date is specified in the notice, when the matter to which it relates is no longer open to review.
(2)A direction may be expressed to take effect immediately (or on a specified date) only if the [F1946FCAF1946] , having regard to the ground on which it is exercising its power under section 281, considers that it is necessary for the direction to take effect immediately (or on that date).
(3)If the [F1946FCAF1946] proposes to give a direction under section 281, or gives such a direction with immediate effect, it must give separate written notice to the operator and (if any) the trustee or depositary of the scheme concerned.
(4)The notice must—
(a)give details of the direction;
(b)inform the person to whom it is given of when the direction takes effect;
(c)state the [F1946FCA'sF1946] reasons for giving the direction and for its determination as to when the direction takes effect;
(d)inform the person to whom it is given that he may make representations to the [F1946FCAF1946] within such period as may be specified in it (whether or not he has referred the matter to the Tribunal); and
(e)inform him of his right to refer the matter to the Tribunal.
(5)The [F1946FCAF1946] may extend the period allowed under the notice for making representations.
(6)If, having considered any representations made by a person to whom the notice was given, the [F1946FCAF1946] decides—
(a)to give the direction in the way proposed, or
(b)if it has been given, not to revoke the direction,
it must give separate written notice to the operator and (if any) the trustee or depositary of the scheme concerned.
(7)If, having considered any representations made by a person to whom the notice was given, the [F1946FCAF1946] decides—
(a)not to give the direction in the way proposed,
(b)to give the direction in a way other than that proposed, or
(c)to revoke a direction which has effect,
it must give separate written notice to the operator and (if any) the trustee or depositary of the scheme concerned.
(8)A notice given under subsection (6) must inform the person to whom it is given of his right to refer the matter to the Tribunal.
(9)A notice under subsection (7)(b) must comply with subsection (4).
(10)If a notice informs a person of his right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(11)This section applies to the variation of a direction on the [F1946FCA'sF1946] own initiative as it applies to the giving of a direction.
(12)For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
[F1970282A Obligations on operator where recognition is revoked or suspended
(1)This section applies where—
(a)the FCA gives a decision notice under section 280(2) in relation to a scheme recognised under section 272, or
(b)a direction given by the FCA under section 281(2) in relation to such a scheme takes effect.
(2)The operator of the scheme must notify such persons as the FCA may direct that the FCA has revoked an order under section 272 for recognition of the scheme or given a direction under section 281 in relation to the scheme (as applicable).
(3)A notification under subsection (2) that relates to a direction under section 281 must set out the terms of the direction.
(4)A notification under subsection (2) must—
(a)contain such information as the FCA may direct, and
(b)be made in such form and manner as the FCA may direct.