Financial Services and Markets Act 2000

Part II U.K. Exercise of Passport Rights by EEA Firms

Firms qualifying for authorisation U.K.

12 (1) Once an EEA firm which is seeking to establish a branch in the United Kingdom in exercise of an EEA right satisfies the establishment conditions, it qualifies for authorisation. U.K.

(2) Once an EEA firm which is seeking to provide services in the United Kingdom in exercise of an EEA right satisfies the service conditions, it qualifies for authorisation.

[F1 (3) If an EEA firm falling within paragraph 5(a) is seeking to use a tied agent established in the United Kingdom in connection with the exercise of an EEA right deriving from the markets in financial instruments directive, this Part of this Schedule applies as if the firm were seeking to establish a branch in the United Kingdom.

(4) But if—

(a) an EEA firm already qualifies for authorisation by virtue of sub-paragraph (1); and

(b) the EEA right which it is exercising derives from the markets in financial instruments directive,

sub-paragraph (3) does not require the firm to satisfy the establishment conditions in respect of its use of the tied agent in question.]

[F2 (5) An EEA firm which falls within paragraph 5(da) which establishes a branch in the United Kingdom, or provides services in the United Kingdom, in exercise of an EEA right qualifies for authorisation.

(6) Sub-paragraphs (1) and (2) do not apply to an EEA firm falling within paragraph 5(da).]

Textual Amendments

F1 Sch. 3 para. 12(3)(4) inserted (1.4.2007 for certain purposes, otherwise 1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (S.I. 2007/126), regs. 1(2), 3(4), Sch. 4 para. 7

F2 Sch. 3 para. 12(5)(6) inserted (10.12.2007) by The Reinsurance Directive Regulations 2007 (S.I. 2007/3253), reg. 2(1), Sch. 1 para. 6(d)

Commencement Information

I1 Sch. 3 Pt. II para. 12 wholly in force at 1.12.2001; Sch. 3 Pt. II para. 12 not in force at Royal Assent see s. 431(2); Sch. 3 Pt. II para. 12 in force for certain purposes at 25.2.2001 by S.I. 2001/516, art. 2(b)(c), Sch. Pts. 2, 3; Sch. 3 Pt. II para. 12 in force for specified purposes at 18.6.2001 by S.I. 2001/1820, art. 2, Sch.; Sch. 3 Pt. II para. 12 in force in so far as not already in force at 1.12.2001 by S.I. 2001/3538, art. 2(1)

Establishment U.K.

13 (1) [F3 If the firm falls within paragraph 5(a), (b), [F4 (c), (d) or (f)],] the establishment conditions are that— U.K.

(a) the Authority has received notice (“a consent notice”) from the firm’s home state regulator that it has given the firm consent to establish a branch in the United Kingdom;

(b) the consent notice—

(i) is given in accordance with the relevant single market directive;

(ii) identifies the activities to which consent relates; and

(iii) includes such other information as may be prescribed; F5 . . .

[F6 (ba) in the case of a firm falling within paragraph 5(a), the Authority has given the firm notice for the purposes of this paragraph or two months have elapsed beginning with the date when the home state regulator gave the consent notice; and]

(c) [F7 in the case of a firm falling within paragraph 5(b), (c), (d) or (f),] the firm has been informed of the applicable provisions or two months have elapsed beginning with the date when the Authority received the consent notice.

[F8 (1A) If the firm falls within paragraph 5(e), the establishment conditions are that—

(a) the firm has given its home state regulator notice of its intention to establish a branch in the United Kingdom;

(b) the Authority has received notice (“a regulator’s notice”) from the firm’s home state regulator that the firm intends to establish a branch in the United Kingdom;

(c) the firm’s home state regulator has informed the firm that the regulator’s notice has been sent to the Authority; and

(d) one month has elapsed beginning with the date on which the firm’s home state regulator informed the firm that the regulator’s notice has been sent to the Authority.]

(2) If the Authority has received a consent notice, it must—

(a) prepare for the firm’s supervision;

(b) [F9 except if the firm falls within paragraph 5(a),] notify the firm of the applicable provisions (if any); and

(c) if the firm falls within paragraph 5(d), notify its home state regulator of the applicable provisions (if any).

(3) A notice under sub-paragraph (2)(b) or (c) must be given before the end of the period of two months beginning with the day on which the Authority received the consent notice.

(4) For the purposes of this paragraph—

• “applicable provisions” means the host state rules with which the firm is required to comply when carrying on a permitted activity through a branch in the United Kingdom;

• “host state rules” means rules—

  (a)

  made in accordance with the relevant single market directive; and

  (b)

  which are the responsibility of the United Kingdom (both as to implementation and as to supervision of compliance) in accordance with that directive; and

• “permitted activity” means an activity identified in the consent notice [F10 or regulator’s notice, as the case may be].

Textual Amendments

F3 Words in Sch. 3 para. 13(1) inserted (14.1.2005) by The Insurance Mediation Directive (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/1473), reg. 3(2)

F4 Words in Sch. 3 para. 13(1) substituted (13.2.2004) by The Collective Investment Schemes (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/2066), reg. 3(1)(a)

F5 Word in Sch. 3 para. 13(1)(b) omitted (1.4.2007 for certain purposes, otherwise 1.11.2007) by virtue of The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (S.I. 2007/126), regs. 1(2), 3(4), Sch. 4 para. 8(a)(i) (with reg. 6)

F6 Sch. 3 para. 13(1)(ba) inserted (1.4.2007 for certain purposes, otherwise 1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (S.I. 2007/126), regs. 1(2), 3(4), Sch. 4 para. 8(a)(ii) (with reg. 6)

F7 Words in Sch. 3 para. 13(1)(c) inserted (1.4.2007 for certain purposes, otherwise 1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (S.I. 2007/126), regs. 1(2), 3(4), Sch. 4 para. 8(a)(iii) (with reg. 6)

F8 Sch. 3 para. 13(1A) inserted (14.1.2005) by The Insurance Mediation Directive (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/1473), reg. 3(3)

F9 Words in Sch. 3 para. 13(2)(b) inserted (1.4.2007 for certain purposes, otherwise 1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (S.I. 2007/126), regs. 1(2), 3(4), Sch. 4 para. 8(b) (with reg. 6)

F10 Sch. 3 para. 13(4): words in definition of "permitted activity" inserted (14.1.2005) by The Insurance Mediation Directive (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/1473), reg. 3(4)

Modifications etc. (not altering text)

C1 Sch. 3 para. 13 extended (1.12.2001) by S.I. 2001/3592, arts. 1(2), 96 (with art. 23(2))

Commencement Information

I2 Sch. 3 Pt. II para. 13 wholly in force at 1.12.2001; Sch. 3 Pt. II para. 13 not in force at Royal Assent see s. 431(2); Sch. 3 Pt. II para. 13 in force for certain purposes at 25.2.2001 by S.I. 2001/516, art. 2(b)(c), Sch. Pts. 2, 3; Sch. 3 Pt. II para. 13 in force for specified purposes at 18.6.2001 by S.I. 2001/1820, art. 2, Sch.; Sch. 3 Pt. II para. 13 in force in so far as not already in force at 1.12.2001 by S.I. 2001/3538, art. 2(1)

Services U.K.

14 (1) The service conditions are that— U.K.

(a) the firm has given its home state regulator notice of its intention to provide services in the United Kingdom (“a notice of intention”);

(b) if the firm falls within [F11 paragraph 5(a), [F12 (d), (e) or (f)]], the Authority has received notice (“a regulator’s notice”) from the firm’s home state regulator containing such information as may be prescribed; F13 . . .

[F14 (ba) if the firm falls within paragraph 5(b) and is seeking to provide services in exercise of the right under Article 31.5 of the markets in financial instruments directive, the Authority has received notice (“a regulator's notice”) from the firm's home state regulator stating that the firm intends to exercise that right in the United Kingdom;]

(c) if the firm falls within [F15 paragraph 5(d) or (e)], its home state regulator has informed it that the regulator’s notice has been sent to the Authority.[F16 ; and

(d) if the firm falls within paragraph 5(e), one month has elapsed beginning with the date on which the firm’s home state regulator informed the firm that the regulator’s notice has been sent to the Authority.]

(2) If the Authority has received a regulator’s notice or, where none is required by sub-paragraph (1), has been informed of the firm’s intention to provide services in the United Kingdom, it must [F17 , unless the firm falls within paragraph 5(e),]—

(a) prepare for the firm’s supervision; and

(b) notify the firm of the applicable provisions (if any).

[F18 (2A) Sub-paragraph (2)(b) does not apply in the case of a firm falling within paragraph 5(a).]

(3) A notice under sub-paragraph (2)(b) must be given before the end of the period of two months beginning on the day on which the Authority received the regulator’s notice, or was informed of the firm’s intention.

(4) For the purposes of this paragraph—

• “applicable provisions” means the host state rules with which the firm is required to comply when carrying on a permitted activity by providing services in the United Kingdom;

• “host state rules” means rules—

  (a)

  made in accordance with the relevant single market directive; and

  (b)

  which are the responsibility of the United Kingdom (both as to implementation and as to supervision of compliance) in accordance with that directive; and

• “permitted activity” means an activity identified in—

  (a)

  the regulator’s notice; or

  (b)

  where none is required by sub-paragraph (1), the notice of intention.

Textual Amendments

F11 Words in Sch. 3 para. 14(1)(b) substituted (14.1.2005) by The Insurance Mediation Directive (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/1473), reg. 4(2)(a)

F12 Words in Sch. 3 para. 14(1)(b) substituted (13.2.2004) by The Collective Investment Schemes (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/2066), reg. 3(1)(b)

F13 Word in Sch. 3 para. 14(1)(b) omitted (14.1.2005) by virtue of The Insurance Mediation Directive (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/1473), reg. 4(2)(b)

F14 Sch. 3 para. 14(1)(ba) inserted (1.4.2007 for certain purposes, otherwise 1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (S.I. 2007/126), regs. 1(2), 3(4), Sch. 4 para. 9(a)

F15 Words in Sch. 3 para. 14(1)(c) substituted (14.1.2005) by The Insurance Mediation Directive (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/1473), reg. 4(2)(c)

F16 Sch. 3 para. 14(1)(d) and preceding word inserted (14.1.2005) by The Insurance Mediation Directive (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/1473), reg. 4(2)(d)

F17 Words in Sch. 3 para. 14(2) inserted (14.1.2005) by The Insurance Mediation Directive (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/1473), reg. 4(3)

F18 Sch. 3 para. 14(2A) inserted (1.4.2007 for certain purposes, otherwise 1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (S.I. 2007/126), regs. 1(2), 3(4), Sch. 4 para. 9(b)

Modifications etc. (not altering text)

C2 Sch. 3 para. 14(1) extended (1.12.2001) by S.I. 2001/3592, arts. 1(2), 97 (with art. 23(2))

Commencement Information

I3 Sch. 3 Pt. II para. 14 wholly in force at 1.12.2001; Sch. 3 Pt. II para. 14 not in force at Royal Assent see s. 431(2); Sch. 3 Pt. II para. 14 in force for certain purposes at 25.2.2001 by S.I. 2001/516, art. 2(b)(c), Sch. Pts. 2, 3; Sch. 3 Pt. II para. 14 in force for specified purposes at 18.6.2001 by S.I. 2001/1820, art. 2, Sch.; Sch. 3 Pt. II para. 14 in force in so far as not already in force at 1.12.2001 by S.I. 2001/3538, art. 2(1)

Grant of permission U.K.

15 (1) On qualifying for authorisation as a result of [F19 paragraph 12(1), (2) or (3)], a firm has, in respect of each permitted activity which is a regulated activity, permission to carry it on through its United Kingdom branch (if it satisfies the establishment conditions) or by providing services in the United Kingdom (if it satisfies the service conditions). U.K.

[F20 (1A) Sub-paragraph (1) is to be read subject to paragraph 15A(3).]

(2) The permission is to be treated as being on terms equivalent to those appearing from the consent notice, regulator’s notice or notice of intention.

(3) Sections [F21 21 and 39(1)] of the M1 Consumer Credit Act 1974 (business requiring a licence under that Act) do not apply in relation to the carrying on of a permitted activity which is Consumer Credit Act business by a firm which qualifies for authorisation as a result of paragraph 12, unless [F22 the Office of Fair Trading] has exercised the power conferred on [F23 it] by section 203 in relation to the firm.

(4) “Consumer Credit Act business” has the same meaning as in section 203.

[F24 (5) A firm which qualifies for authorisation as a result of paragraph 12(5) has, in respect of each permitted activity which is a regulated activity, permission to carry it on through its United Kingdom branch or by providing services in the United Kingdom.

(6) The permission is to be treated as being on terms equivalent to those appearing in the authorisation granted to the firm under Article 3 of the reinsurance directive by its home state regulator (“its home authorisation”).

(7) For the purposes of sub-paragraph (5), “permitted activity” means an activity which the firm is permitted to carry on under its home authorisation.]

Textual Amendments

F19 Words in Sch. 3 para. 15(1) substituted (10.12.2007) by The Reinsurance Directive Regulations 2007 (S.I. 2007/3253), reg. 2(1), Sch. 1 para. 6(e)(i)

F20 Sch. 3 para. 15(1A) inserted (13.2.2004) by The Collective Investment Schemes (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/2066), reg 3(1)(c)

F21 Words in Sch. 3 para. 15(3) substituted (6.4.2008) by Consumer Credit Act 2006 (c. 14), ss. 33(9), 71(2); S.I. 2007/3300, art. 3(2), Sch. 2

F22 Words in Sch. 3 para. 15(3) substituted (1.4.2003) by Enterprise Act 2002 (c. 40), ss. 278(1), 279, Sch. 25 para. 40(19)(a); S.I. 2003/766, art. 2, Sch. (with art. 3)

F23 Word in Sch. 3 para. 15(3) substituted (1.4.2003) by Enterprise Act 2002 (c. 40), ss. 278(1), 279, Sch. 25 para. 40(19)(a); S.I. 2003/766, art. 2, Sch. (with art. 3)

F24 Sch. 3 para. 15(5)-(7) inserted (10.12.2007) by The Reinsurance Directive Regulations 2007 (S.I. 2007/3253), reg. 2(1), Sch. 1 para. 6(e)(ii)

Commencement Information

I4 Sch. 3 Pt. II para. 15 wholly in force at 1.12.2001; Sch. 3 Pt. II para. 15 not in force at Royal Assent see s. 431(2); Sch. 3 Pt. II para. 15 in force for certain purposes at 25.2.2001 by S.I. 2001/516, art. 2(b)(c), Sch. Pts. 2, 3; Sch. 3 Pt. II para. 15 in force for specified purposes at 18.6.2001 by S.I. 2001/1820, art. 2, Sch.; Sch. 3 Pt. II para. 15 in force in so far as not already in force at 1.12.2001 by S.I. 2001/3538, art. 2(1)

Marginal Citations

M1 1974 c. 39.

[F25 Power to restrict permission of management companies U.K.

Textual Amendments

F25 Sch. 3 para. 15A and cross-heading inserted (13.2.2004) by The Collective Investment Schemes (Miscellaneous Amendments) Regulations 2003 (S.I. 2003/2066), reg. 3(1)(d)

Application for approval to manage UCITS U.K.

[F26 15A (1) An EEA firm falling within paragraph 5(f) which wishes to manage a UK UCITS must apply to the Authority in the specified form for approval to manage that UCITS.

(2) Where the EEA firm satisfies the conditions in paragraph 13 (establishment conditions) or paragraph 14 (service conditions), the Authority may only refuse the application if it determines that one of the grounds set out in sub-paragraph (3) applies.

(3) The grounds referred to in sub-paragraph (2) are—

(a) that the EEA firm does not comply with the UCITS home state rules;

(b) that the firm is not authorised by its home state regulator to manage the type of collective investment scheme for which authorisation is requested; or

(c) that the firm has not provided the documentation required under Article 20(1) of the UCITS directive.

(4) The Authority must give a notice to the EEA firm, the firm's home state regulator and the Commission of the Authority's determination under sub-paragraph (2).

(5) Before giving a notice under sub-paragraph (4), the Authority must consult the home state regulator of the firm.

(6) A notice given by the Authority under sub-paragraph (4) must—

(a) give the Authority's reasons for considering that one of the grounds set out in sub-paragraph (3) is satisfied; and

(b) specify a reasonable period (which may not be less than 28 days) within which any person to whom it is given may make representations to the Authority.

(7) In this paragraph—

• “specified” means specified—

  (a)

  in rules made by the Authority to implement the UCITS directive, or

  (b)

  in any directly applicable Community regulation or decision made under the UCITS directive;

• “UCITS home state rules” means requirements which are imposed by or under this Act so far as relating to matters falling within Article 19(3) and (4) of the UCITS directive.]

Textual Amendments

F26 Sch. 3 paras. 15A-15C substituted for Sch. 3 para. 15A (1.7.2011) by The Undertakings for Collective Investment in Transferable Securities Regulations 2011 (S.I. 2011/1613), reg. 2(33)(d)

Representations and references to the Tribunal U.K.

[F27 [F27 15B (1) Within a reasonable time after the end of the period for making representations, the Authority must decide, in the light of any representations made to it during that period by a person to whom notice has been given under paragraph 15A(4), whether to withdraw the notice.

(2) If the Authority decides not to withdraw its notice, it must—

(a) give a decision notice to each person to whom the notice under paragraph 15A(4) was given, and

(b) inform the firm's home state regulator and the Commission that authorisation has been refused, and of the grounds for the refusal.

(3) The management company to whom the decision notice is given may refer the matter to the Tribunal.]

Textual Amendments

F27 Sch. 3 paras. 15A-15C substituted for Sch. 3 para. 15A (1.7.2011) by The Undertakings for Collective Investment in Transferable Securities Regulations 2011 (S.I. 2011/1613), reg. 2(33)(d)

Information to home state regulator U.K.

15C (1) Where an EEA firm falling within paragraph 5(f) has applied to manage a UCITS established in the United Kingdom, the Authority must without delay inform the home state regulator of that firm of any problem of which they are aware that may materially affect the ability of the firm—

(a) to perform its duties properly, or

(b) to comply with the home state rules.

(2) In sub-paragraph (1), “home state rules” means rules—

(a) made by the EEA State concerned in accordance with the UCITS directive; and

(b) which are the responsibility of that EEA State (both as to implementation and as to supervision of compliance) in accordance with that directive.]]

Textual Amendments

F27 Sch. 3 paras. 15A-15C substituted for Sch. 3 para. 15A (1.7.2011) by The Undertakings for Collective Investment in Transferable Securities Regulations 2011 (S.I. 2011/1613), reg. 2(33)(d)

Effect of carrying on regulated activity when not qualified for authorisation U.K.

16 (1) This paragraph applies to an EEA firm which is not qualified for authorisation under paragraph 12. U.K.

(2) Section 26 does not apply to an agreement entered into by the firm.

(3) Section 27 does not apply to an agreement in relation to which the firm is a third party for the purposes of that section.

(4) Section 29 does not apply to an agreement in relation to which the firm is the deposit-taker.

Commencement Information

I5 Sch. 3 Pt. II para. 16 wholly in force at 1.12.2001; Sch. 3 Pt. II para. 16 not in force at Royal Assent see s. 431(2); Sch. 3 Pt. II para. 16 in force for certain purposes at 25.2.2001 by S.I. 2001/516, art. 2(b)(c), Sch. Pts. 2, 3; Sch. 3 Pt. II para. 16 in force for specified purposes at 18.6.2001 by S.I. 2001/1820, art. 2, Sch.; Sch. 3 Pt. II para. 16 in force in so far as not already in force at 1.12.2001 by S.I. 2001/3538, art. 2(1)

Continuing regulation of EEA firms U.K.

17 U.K. Regulations may—

(a) modify any provision of this Act which is an applicable provision (within the meaning of paragraph 13 or 14) in its application to an EEA firm qualifying for authorisation;

(b) make provision as to any change (or proposed change) of a prescribed kind relating to an EEA firm or to an activity that it carries on in the United Kingdom and as to the procedure to be followed in relation to such cases;

(c) provide that the Authority may treat an EEA firm’s notification that it is to cease to carry on regulated activity in the United Kingdom as a request for cancellation of its qualification for authorisation under this Schedule.

Commencement Information

I6 Sch. 3 Pt. II para. 17 wholly in force at 1.12.2001; Sch. 3 Pt. II para. 17 not in force at Royal Assent see s. 431(2); Sch. 3 Pt. II para. 17 in force for certain purposes at 25.2.2001 by S.I. 2001/516, art. 2(b)(c), Sch. Pts. 2, 3; Sch. 3 Pt. II para. 17 in force for specified purposes at 18.6.2001 by S.I. 2001/1820, art. 2, Sch.; Sch. 3 Pt. II para. 17 in force in so far as not already in force at 1.12.2001 by S.I. 2001/3538, art. 2(1)

Giving up right to authorisation U.K.

18 U.K. Regulations may provide that in prescribed circumstances an EEA firm falling within paragraph 5(c) may, on following the prescribed procedure—

(a) have its qualification for authorisation under this Schedule cancelled; and

(b) seek to become an authorised person by applying for a Part IV permission.

Commencement Information

I7 Sch. 3 Pt. II para. 18 wholly in force at 1.12.2001; Sch. 3 Pt. II para. 18 not in force at Royal Assent see s. 431(2); Sch. 3 Pt. II para. 18 in force for specified purposes at 25.2.2001 by S.I. 2001/516, art. 2(b)(c), Sch. Pts. 2, 3; Sch. 3 Pt. I para. 18 in force for specified purposes at 18.6.2001 by S.I. 2001/1820, art. 2 Sch.; Sch. 3 Pt. II para. 18 in force in so far as not already in force at 1.12.2001 by S.I. 2001/3538, art. 2(1)