S. 32(1) in force at 7.3.2016 by S.I. 2015/490, art. 2(1)(c) (as amended by S.I. 2015/2055, art. 2(3) and with savings and transitional provisions in S.I. 2015/492 (as amended by S.I. 2015/1660))

S. 32(2) in force at 10.5.2016 by S.I. 2016/568, art. 2

S. 32(2) in force at 7.3.2017 for specified purposes by S.I. 2015/490, art. 2(1)(e) (as inserted by S.I. 2015/2055, art. 2(4) and with savings and transitional provisions in S.I. 2015/492 (as amended by S.I. 2015/1660))

http://www.legislation.gov.uk/ukpga/2013/33/section/32/2018-07-13Financial Services (Banking Reform) Act 2013An Act to make further provision about banking and other financial services, including provision about the Financial Services Compensation Scheme; to make provision for the amounts owed in respect of certain deposits to be treated as a preferential debt on insolvency; to make further provision about payment systems and securities settlement systems; to make provision about the accounts of the Bank of England and its wholly owned subsidiaries; to make provision in relation to persons providing claims management services; and for connected purposes.texttext/xmlenStatute Law Database2024-09-06Expert Participation2018-07-13PART 4Conduct of persons working in financial services sectorAmendments of FSMA 2000
32Definition of “misconduct”1

In section 66 of FSMA 2000 (disciplinary powers)—

a

after subsection (1) insert—

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.

;

b

omit subsections (2), (2A), (6) and (7).

2

After that section insert—

66AMisconduct: action by the FCA1

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, or

ii

an employee of a relevant authorised person.

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, or

ii

in the case of a relevant authorised person, an employee of the authorised person.

4

In this section “relevant requirement” means a requirement—

a

imposed by or under this Act, or

b

imposed by any qualifying EU provision 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 relevant authorised person,

b

there has at that time been (or continued to be) a contravention of a relevant requirement by the authorised person, and

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.

6

But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the FCA that P had taken such steps as a person in P's position could reasonably be expected to take to avoid the contravention occurring (or continuing).

7

For the purposes of subsection (5)—

senior manager”, in relation to a relevant 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;

designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B).

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;

employee”, in relation to a person, has the same meaning as in section 64A.

9

For the meaning of “relevant authorised person”, see section 71A.

66BMisconduct: action by the PRA1

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, or

ii

an employee of a relevant PRA-authorised person.

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, or

ii

in the case of a relevant PRA-authorised person, an employee of the authorised person.

4

In this section “relevant requirement” means a requirement—

a

imposed by or under this Act, or

b

imposed by any qualifying EU provision 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 relevant PRA-authorised person,

b

there has at that time been (or continued to be) a contravention of a relevant requirement by the authorised person, and

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.

6

But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the PRA that P had taken such steps as a person in P's position could reasonably be expected to take to avoid the contravention occurring (or continuing).

7

For the purposes of subsection (5)—

senior manager”, in relation to a relevant 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;

designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B).

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;

employee”, in relation to a person, has the same meaning as in section 64A;

relevant PRA-authorised person” means a PRA-authorised person that is a relevant authorised person;

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).

9

For the meaning of “relevant authorised person”, see section 71A.

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<note class="commentary I" eId="key-b812598d200c60328f45ec775e35c14f">
<p>
S. 32(1) in force at 7.3.2016 by
<ref href="http://www.legislation.gov.uk/id/uksi/2015/490">S.I. 2015/490</ref>
,
<ref href="http://www.legislation.gov.uk/id/uksi/2015/490/article/2/1/c">art. 2(1)(c)</ref>
(as amended by
<ref href="http://www.legislation.gov.uk/id/uksi/2015/2055">S.I. 2015/2055</ref>
, art. 2(3) and with savings and transitional provisions in
<ref href="http://www.legislation.gov.uk/id/uksi/2015/492">S.I. 2015/492</ref>
(as amended by
<ref href="http://www.legislation.gov.uk/id/uksi/2015/1660">S.I. 2015/1660</ref>
))
</p>
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<note class="commentary I" eId="key-ce86af46acaa5c0a6667337cd64bd5f3">
<p>
S. 32(2) in force at 10.5.2016 by
<ref href="http://www.legislation.gov.uk/id/uksi/2016/568">S.I. 2016/568</ref>
,
<ref href="http://www.legislation.gov.uk/id/uksi/2016/568/article/2">art. 2</ref>
</p>
</note>
<note class="commentary I" eId="key-b51b886f18a83dbae4843ce9fa4f32a5">
<p>
<ref href="http://www.legislation.gov.uk/id/ukpga/2013/33/section/32/2">S. 32(2)</ref>
in force at 7.3.2017 for specified purposes by
<ref href="http://www.legislation.gov.uk/id/uksi/2015/490">S.I. 2015/490</ref>
,
<ref href="http://www.legislation.gov.uk/id/uksi/2015/490/article/2/1/e">art. 2(1)(e)</ref>
(as inserted by
<ref href="">S.I. 2015/2055</ref>
,
<ref href="">art. 2(4)</ref>
and with savings and transitional provisions in
<ref href="">S.I. 2015/492</ref>
(as amended by
<ref href="">S.I. 2015/1660</ref>
))
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<portionBody period="#period4">
<part eId="part-4" period="#period3">
<num>
<strong>PART 4</strong>
</num>
<heading>Conduct of persons working in financial services sector</heading>
<hcontainer name="crossheading" eId="part-4-crossheading-amendments-of-fsma-2000" period="#period3">
<heading>
<em>Amendments of </em>
FSMA 2000
</heading>
<section eId="section-32" period="#period2">
<num>32</num>
<heading>Definition of “misconduct”</heading>
<subsection eId="section-32-1" period="#period1">
<num>
<noteRef href="#key-b812598d200c60328f45ec775e35c14f" marker="I1" class="commentary I"/>
1
</num>
<intro>
<p>In section 66 of FSMA 2000 (disciplinary powers)—</p>
</intro>
<paragraph eId="section-32-1-a">
<num>a</num>
<content>
<p>after subsection (1) insert—</p>
<p class="BlockAmendment">
<mod>
<quotedStructure class="primary unknown main default" startQuote="" endQuote="">
<subsection eId="d4e172">
<num>1A</num>
<intro>
<p>For provision about when a person is guilty of misconduct for the purposes of action by a regulator—</p>
</intro>
<paragraph eId="d4e178">
<num>a</num>
<content>
<p>see section 66A, in the case of action by the FCA, and</p>
</content>
</paragraph>
<paragraph eId="d4e184">
<num>b</num>
<content>
<p>see section 66B, in the case of action by the PRA.</p>
</content>
</paragraph>
</subsection>
</quotedStructure>
</mod>
<inline name="AppendText">;</inline>
</p>
</content>
</paragraph>
<paragraph eId="section-32-1-b">
<num>b</num>
<content>
<p>omit subsections (2), (2A), (6) and (7).</p>
</content>
</paragraph>
</subsection>
<subsection eId="section-32-2" period="#period2">
<num>
<noteRef href="#key-ce86af46acaa5c0a6667337cd64bd5f3" marker="I2" class="commentary I"/>
<noteRef href="#key-b51b886f18a83dbae4843ce9fa4f32a5" marker="I3" class="commentary I"/>
2
</num>
<content>
<p>After that section insert—</p>
<p class="BlockAmendment">
<mod>
<quotedStructure class="primary unknown main default" startQuote="" endQuote="">
<section eId="d4e210">
<num>66A</num>
<heading>Misconduct: action by the FCA</heading>
<subsection eId="d4e214">
<num>1</num>
<content>
<p>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.</p>
</content>
</subsection>
<subsection eId="d4e220">
<num>2</num>
<intro>
<p>Condition A is that—</p>
</intro>
<paragraph eId="d4e226">
<num>a</num>
<content>
<p>the person has at any time failed to comply with rules made by the FCA under section 64A, and</p>
</content>
</paragraph>
<paragraph eId="d4e232">
<num>b</num>
<intro>
<p>at that time the person was—</p>
</intro>
<subparagraph eId="d4e238">
<num>i</num>
<content>
<p>an approved person, or</p>
</content>
</subparagraph>
<subparagraph eId="d4e244">
<num>ii</num>
<content>
<p>an employee of a relevant authorised person.</p>
</content>
</subparagraph>
</paragraph>
</subsection>
<subsection eId="d4e250">
<num>3</num>
<intro>
<p>Condition B is that—</p>
</intro>
<paragraph eId="d4e256">
<num>a</num>
<content>
<p>the person has at any time been knowingly concerned in a contravention of a relevant requirement by an authorised person, and</p>
</content>
</paragraph>
<paragraph eId="d4e262">
<num>b</num>
<intro>
<p>at that time the person was—</p>
</intro>
<subparagraph eId="d4e268">
<num>i</num>
<content>
<p>an approved person in relation to the authorised person, or</p>
</content>
</subparagraph>
<subparagraph eId="d4e274">
<num>ii</num>
<content>
<p>in the case of a relevant authorised person, an employee of the authorised person.</p>
</content>
</subparagraph>
</paragraph>
</subsection>
<subsection eId="d4e280">
<num>4</num>
<intro>
<p>
In this section “
<term refersTo="#term-relevant-requirement">relevant requirement</term>
” means a requirement—
</p>
</intro>
<paragraph eId="d4e289">
<num>a</num>
<content>
<p>imposed by or under this Act, or</p>
</content>
</paragraph>
<paragraph eId="d4e295">
<num>b</num>
<content>
<p>
imposed by any qualifying
<abbr class="Acronym" title="European Union">EU</abbr>
provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order.
</p>
</content>
</paragraph>
</subsection>
<subsection eId="d4e304">
<num>5</num>
<intro>
<p>Condition C is that—</p>
</intro>
<paragraph eId="d4e310">
<num>a</num>
<content>
<p>the person has at any time been a senior manager in relation to a relevant authorised person,</p>
</content>
</paragraph>
<paragraph eId="d4e316">
<num>b</num>
<content>
<p>there has at that time been (or continued to be) a contravention of a relevant requirement by the authorised person, and</p>
</content>
</paragraph>
<paragraph eId="d4e322">
<num>c</num>
<content>
<p>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.</p>
</content>
</paragraph>
</subsection>
<subsection eId="d4e328">
<num>6</num>
<content>
<p>But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the FCA that P had taken such steps as a person in P's position could reasonably be expected to take to avoid the contravention occurring (or continuing).</p>
</content>
</subsection>
<subsection eId="d4e334">
<num>7</num>
<content>
<p>For the purposes of subsection (5)—</p>
<blockList class="unordered">
<item>
<p>
<term refersTo="#term-senior-manager">senior manager</term>
”, in relation to a relevant 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;
</p>
</item>
<item>
<p>
<term refersTo="#term-designated-senior-management-function">designated senior management function</term>
” means a function designated as a senior management function under section 59(6A) or (6B).
</p>
</item>
</blockList>
</content>
</subsection>
<subsection eId="d4e355">
<num>8</num>
<content>
<p>In this section—</p>
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<item>
<p>“approved person”—</p>
<blockList class="ordered">
<item>
<num>a</num>
<p>means a person in relation to whom an approval is given under section 59, and</p>
</item>
<item>
<num>b</num>
<p>in relation to an authorised person, means a person in relation to whom such approval is given on the application of the authorised person;</p>
</item>
</blockList>
</item>
<item>
<p>
<term refersTo="#term-employee">employee</term>
”, in relation to a person, has the same meaning as in section 64A.
</p>
</item>
</blockList>
</content>
</subsection>
<subsection eId="d4e382">
<num>9</num>
<content>
<p>For the meaning of “relevant authorised person”, see section 71A.</p>
</content>
</subsection>
</section>
<section eId="d4e391">
<num>66B</num>
<heading>Misconduct: action by the PRA</heading>
<subsection eId="d4e395">
<num>1</num>
<content>
<p>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.</p>
</content>
</subsection>
<subsection eId="d4e401">
<num>2</num>
<intro>
<p>Condition A is that—</p>
</intro>
<paragraph eId="d4e407">
<num>a</num>
<content>
<p>the person has at any time failed to comply with rules made by the PRA under section 64A, and</p>
</content>
</paragraph>
<paragraph eId="d4e413">
<num>b</num>
<intro>
<p>at that time the person was—</p>
</intro>
<subparagraph eId="d4e419">
<num>i</num>
<content>
<p>an approved person, or</p>
</content>
</subparagraph>
<subparagraph eId="d4e425">
<num>ii</num>
<content>
<p>an employee of a relevant PRA-authorised person.</p>
</content>
</subparagraph>
</paragraph>
</subsection>
<subsection eId="d4e431">
<num>3</num>
<intro>
<p>Condition B is that—</p>
</intro>
<paragraph eId="d4e437">
<num>a</num>
<content>
<p>the person has at any time been knowingly concerned in a contravention of a relevant requirement by a PRA-authorised person, and</p>
</content>
</paragraph>
<paragraph eId="d4e443">
<num>b</num>
<intro>
<p>at that time the person was—</p>
</intro>
<subparagraph eId="d4e449">
<num>i</num>
<content>
<p>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, or</p>
</content>
</subparagraph>
<subparagraph eId="d4e455">
<num>ii</num>
<content>
<p>in the case of a relevant PRA-authorised person, an employee of the authorised person.</p>
</content>
</subparagraph>
</paragraph>
</subsection>
<subsection eId="d4e461">
<num>4</num>
<intro>
<p>
In this section “
<term refersTo="#term-relevant-requirement">relevant requirement</term>
” means a requirement—
</p>
</intro>
<paragraph eId="d4e470">
<num>a</num>
<content>
<p>imposed by or under this Act, or</p>
</content>
</paragraph>
<paragraph eId="d4e476">
<num>b</num>
<content>
<p>
imposed by any qualifying
<abbr class="Acronym" title="European Union">EU</abbr>
provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order.
</p>
</content>
</paragraph>
</subsection>
<subsection eId="d4e485">
<num>5</num>
<intro>
<p>Condition C is that—</p>
</intro>
<paragraph eId="d4e491">
<num>a</num>
<content>
<p>the person has at any time been a senior manager in relation to a relevant PRA-authorised person,</p>
</content>
</paragraph>
<paragraph eId="d4e497">
<num>b</num>
<content>
<p>there has at that time been (or continued to be) a contravention of a relevant requirement by the authorised person, and</p>
</content>
</paragraph>
<paragraph eId="d4e503">
<num>c</num>
<content>
<p>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.</p>
</content>
</paragraph>
</subsection>
<subsection eId="d4e509">
<num>6</num>
<content>
<p>But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the PRA that P had taken such steps as a person in P's position could reasonably be expected to take to avoid the contravention occurring (or continuing).</p>
</content>
</subsection>
<subsection eId="d4e515">
<num>7</num>
<content>
<p>For the purposes of subsection (5)—</p>
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<item>
<p>
<term refersTo="#term-senior-manager">senior manager</term>
”, in relation to a relevant 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;
</p>
</item>
<item>
<p>
<term refersTo="#term-designated-senior-management-function">designated senior management function</term>
” means a function designated as a senior management function under section 59(6A) or (6B).
</p>
</item>
</blockList>
</content>
</subsection>
<subsection eId="d4e536">
<num>8</num>
<content>
<p>In this section—</p>
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<p>“approved person”—</p>
<blockList class="ordered">
<item>
<num>a</num>
<p>means a person in relation to whom—</p>
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<num>i</num>
<p>the PRA has given its approval under section 59, or</p>
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<item>
<num>ii</num>
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</item>
<item>
<p>
<term refersTo="#term-employee">employee</term>
”, in relation to a person, has the same meaning as in section 64A;
</p>
</item>
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<term refersTo="#term-relevant-pra-authorised-person">relevant PRA-authorised person</term>
” means a PRA-authorised person that is a relevant authorised person;
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</item>
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<term refersTo="#term-relevant-senior-management-function">relevant senior management function</term>
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</subsection>
<subsection eId="d4e586">
<num>9</num>
<content>
<p>For the meaning of “relevant authorised person”, see section 71A.</p>
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