The Individual Savings Account Regulations 1998 (S.I. 1998/1870)
Introduction
168. Amend the Individual Savings Account Regulations 1998 in accordance with Articles 169 to 178.
Interpretation
169.—(1) Amend regulation 2(1) (interpretation)(1) as follows.
(2) Amend sub-paragraph (a) in accordance with paragraphs (3) to (6) below.
(3) In the definition of “account” in paragraph (iv) for “an institution authorised under the Banking Act 1987” substitute “a person falling within section 840A(1)(b) of the Taxes Act”.
(4) In the definition of “company” in paragraph (i) for “75(8) of the Financial Services Act 1986” substitute “236 of the Financial Services and Markets Act 2000”.
(5) For the definition of “European institution” substitute—
““European institution” means an EEA firm of the kind mentioned in paragraph 5(a), (b) or (c) of Schedule 3 to the Financial Services and Markets Act 2000 which is an authorised person for the purposes of that Act as a result of qualifying for authorisation under paragraph 12 of that Schedule;”.
(6) Omit the definition of “long term business”.
(7) Amend sub-paragraph (b) in accordance with paragraphs (8) to (17) below.
(8) Before the definition of “authorised unit trust” insert—
““authorised fund” means—
(i)an authorised unit trust, or
(ii)an open-ended investment company with variable capital incorporated in the United Kingdom in the case of which an authorisation order made by the Financial Services Authority under regulation 14 of the Open-Ended Investment Companies Regulations 2001 is in force;”.
(9) In the definition of “authorised unit trust” for “78 of the Financial Services Act 1986” substitute “243 of the Financial Services and Markets Act 2000”.
(10) In the definition of “the first condition” for the words from “subject to” to the end substitute “of the scheme, or subject to the trusts of the scheme, to consist of units in, or shares of, authorised funds or parts of umbrella schemes which are not securities schemes or warrant schemes”.
(11) In the definition of “the second condition”—
(a)for “subject to the trusts of the scheme” substitute “of the scheme, or subject to the trusts of the scheme”;
(b)in paragraph (i) for “87 or 88 of the Financial Services Act 1986” substitute “270 or 272 of the Financial Services and Markets Act 2000”;
(c)for paragraph (ii) and the words immediately after it substitute—
“(ii)a part of a scheme mentioned in paragraph (i) which would be a part of an umbrella scheme if the definition of “umbrella scheme” and a part thereof applied to a scheme mentioned in paragraph (i),
where the terms of the scheme mentioned in paragraph (i) identify that scheme, or part thereof, as the case may be, as a scheme or part that would belong to one of the categories of securities scheme or warrant scheme, if that scheme or part, as the case may be, were independently an authorised fund;”.
(12) In the definition of “fund of funds”—
(a)for ““fund of funds”” substitute ““funds of funds scheme””;
(b)in paragraph (i)—
(i)for “authorised unit trust” substitute “authorised fund”;
(ii)for “fund of funds” substitute “fund of funds scheme”;
(c)in paragraph (ii) for “authorised unit trust” substitute “authorised fund”.
(13) In the definition of “money market fund”—
(a)for ““money market fund”” substitute ““money market scheme””;
(b)in paragraph (i)—
(i)for “authorised unit trust” substitute “authorised fund”;
(ii)for “money market fund” substitute “money market scheme”;
(c)in paragraph (ii) for “authorised unit trust” substitute “authorised fund”.
(14) In the definition of a “relevant UCITS”—
(a)in paragraph (i) for “86 of the Financial Services Act 1986” substitute “264 of the Financial Services and Markets Act 2000”;
(b)in paragraph (ii) for the words from “an umbrella company” to “in either case” substitute “an umbrella scheme, if the definition of “umbrella scheme” and a part thereof”;
(c)for “securities fund, warrant fund, securities company or warrant company” substitute “securities scheme or warrant scheme”;
(d)for the words from “authorised unit trust or an open-ended investment company” to the end substitute “authorised fund;”.
(15) For the definitions of “securities company” and “securities fund” substitute—
““securities scheme” means—
(i)an authorised fund which according to the terms of the scheme is a securities scheme belonging to the category under that name established by the Financial Services Authority, and
(ii)a part of an umbrella scheme which the terms of the scheme identify as a part which would belong to that category if it were itself an authorised fund;”.
(16) For the definition of “umbrella company” and “umbrella scheme” substitute—
““umbrella scheme” means an authorised fund which according to the terms of the scheme is an umbrella scheme belonging to the category under that name established by the Financial Services Authority, and
(i)in the case of an authorised fund which is an authorised unit trust, references to a part of an umbrella scheme shall be construed in accordance with subsection (8) of section 468 of the Taxes Act, and, in relation to a part of an umbrella scheme, references to investments subject to the trusts of an authorised unit trust and to a unit holder shall be construed in accordance with subsection (9) of that section, and
(ii)in the case of an authorised fund which is an open-ended investment company, references to a part of an umbrella scheme shall be construed in accordance with subsection (18) of section 468 of the Taxes Act as that subsection is added in relation to open-ended investment companies by regulation 10(4) of the 1997 Regulations, and, in relation to a part of an umbrella scheme, references to investments of the company shall be construed in accordance with subsection (12) of that section as so added;”.
(17) For the definitions of “warrant company” and “warrant fund” substitute—
““warrant scheme” means—
(i)an authorised fund which according to the terms of the scheme is a warrant scheme belonging to the category under that name established by the Financial Services Authority, and
(ii)a part of an umbrella scheme which the terms of the scheme identify as a part that would belong to that category if it were itself an authorised fund;”.
Transfers from matured tax-exempt special savings accounts
170. In regulation 5(3)(a) and (b) (twice), (4)(b)(i) and (ii) and (5) (transfers from matured tax-exempt special savings accounts) after “society” insert “, person”.
General investment rules
171.—(1) Amend regulation 6 (general investment rules) as follows.
(2) In paragraph (1) for sub-paragraphs (a) and (b) substitute—
“(a)in the case of an authorised fund which is a dual priced unit trust, at the manager’s price for the sale of the relevant class of units within the meaning of, and complying with the requirements of, rule 15.4.4 of the Collective Investment Schemes Sourcebook;
(b)in the case of an authorised fund which is a single priced unit trust or an open-ended investment company, at the price of a unit or share within the meaning of, and complying with the requirements of, rule 4.3.11 of the Collective Investment Schemes Sourcebook; and”.
(3) After paragraph (1) insert—
“(1ZA) In paragraph (1)(a) and (b)—
“the Collective Investment Scheme Sourcebook” means the sourcebook of that name made by the Financial Services Authority under the Financial Services and Markets Act 2000(2);
“a dual priced unit trust” means an authorised unit trust in respect of which the manager gives different prices for buying and selling units at the same time;
“a single priced unit trust” means an authorised unit trust in respect of which the manager gives the same price for buying and selling units at the same time.”.
Qualifying investments for a stocks and shares component
172.—(1) Amend regulation 7 (qualifying investments for a stocks and shares component) as follows.
(2) In paragraph (2)—
(a)for sub-paragraph (e) substitute—
“(e)units in, or shares of, a securities scheme or a warrant scheme, in circumstances where the scheme satisfies the condition specified in paragraph (8);”;
(b)for sub-paragraph (g) substitute—
“(g)units in, or shares of, a fund of funds scheme, in circumstances where the scheme satisfies the condition specified in paragraph (9);”.
(3) In paragraph (4)(a) for paragraphs (iv) and (v) substitute—
“(iv) units in or shares in, or rights to units in or shares in, an authorised fund or a part of an umbrella scheme;”.
(4) In paragraph (8) for “company” substitute “scheme” (twice).
(5) For paragraph (9) substitute—
“(9) The condition specified in this paragraph is that not more than 50 per cent. in value of the investments of the scheme, or subject to the trusts of the scheme, are—
(a)units in, or shares of, a securities scheme or a warrant scheme, or
(b)units in, or shares of, a relevant UCITS,
where the securities scheme, warrant scheme or UCITS does not satisfy the condition in paragraph (8).”.
Qualifying investments for a cash component
173. In regulation 8(2) (qualifying investments for a cash component)(3)—
(a)in sub-paragraph (a) for “an institution authorised under the Banking Act 1987” substitute “a person falling within section 840A(1)(b) of the Taxes Act”;
(b)for sub-paragraph (c) substitute—
“(c)units in, or shares of, a money market scheme;”;
(c)for sub-paragraph (d) substitute—
“(d)units in, or shares of, a fund of funds scheme, within the meaning given in regulation 2(1)(b), with the modification that for the words from “comply with” to the end there are substituted the words
“permit the investments of the scheme, or subject to the trusts of the scheme, to consist only of units in, or shares of, money market schemes;”.”
Qualifying investments for an insurance component
174. In regulation 9(3) (qualifying investments for an insurance component) for sub-paragraph (c) substitute—
“(c)the policy evidences or secures a contract of insurance which—
(i)falls within paragraph I or III of Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, or
(ii)would fall within either of those paragraphs if the insurer was a company with permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance;”.
Account manager—qualifications and Board’s approval
175. Amend regulation 14(2) (account manager—qualifications and Board’s approval)(4) as follows—
(a)in sub-paragraph (b)(i) for the words from “Chapter III” to “Act”) substitute
“section 31(1)(a) or (c) of, or Schedule 5 to, the Financial Services and Markets Act 2000 who has permission to carry on one or more of the activities specified in Articles 14, 21, 25, 37, 40, 45, 51 and 53 and, in so far as it applies to any of those activities, Article 64 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 but excluding any person falling within paragraph (iv) below”;
(b)in sub-paragraph (b)(ii) for the words from “may” to “1992” substitute “carries on one or more of those activities”;
(c)in sub-paragraph (b)(iii) for “an institution authorised under the Banking Act 1987” substitute “a person falling within section 840A(1)(b) of the Taxes Act”;
(d)in sub-paragraph (c) for the words from “any prohibition” to “65 of the 1986 Act” substitute “any requirement imposed under section 43 of the Financial Services and Markets Act 2000, or by any prohibition imposed by or under any rules made by the Financial Services Authority under that Act”.
Account manager ceasing to qualify
176. In regulation 20(1)(d) (account manager ceasing to qualify)—
(a)for “an institution authorised under the Banking Act 1987” substitute “a person falling within section 840A(1)(b) of the Taxes Act”;
(b)in paragraph (i) for “be authorised under the Banking Act 1987” substitute “fall within section 840A(1)(b) of the Taxes Act”.
Returns of information by account manager
177. In regulation 31(4) (returns of information by account manager)—
(a)in sub-paragraph (a) for paragraph (iv) substitute—
“(iv)units in, or shares of, securities schemes and warrant schemes,”;
(b)in sub-paragraph (a) for paragraph (vi) substitute—
“(vi)units in, or shares of, fund of funds schemes, and”;
(c)in sub-paragraph (b) for paragraph (i) substitute—
“(i)units in, or shares of, money market schemes and fund of funds schemes within the meaning given by regulation 8(2)(d),”.
Capital gains tax—adaptation of enactments
178. In regulation 34(4) (capital gains tax—adaptation of enactments) for the words from “in relation to” to “company” substitute “in relation to qualifying investments falling within any of sub-paragraphs (a), (b), (d), (e), (f), (g) and (h) of regulation 7(2)”.
Regulation 2(1) was relevantly amended by regulation 3(3)(a) and (c) of S.I. 1998/3174.
This sourcebook is part of the FSA Handbook. The FSA Handbook may be purchased on paper and on CD Rom from the Publications Department (Sales), Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS and is available on line at www.fsa.gov.uk.
Regulation 8(2) was relevantly amended by regulation 6 of S.I. 1998/3174.
Regulation 14(2) was amended by regulation 8 of S.I. 1998/3174.