47AStatements of principle

1

The Secretary of State may issue statements of principle with respect to the conduct and financial standing expected of persons authorised to carry on investment business.

2

The conduct expected may include compliance with a code or standard issued by another person, as for the time being in force, and may allow for the exercise of discretion by any person pursuant to any such code or standard.

3

Failure to comply with a statement of principle under this section is a ground for the taking of disciplinary action or the exercise of powers of intervention, but it does not of itself give rise to any right of action by investors or other persons affected or affect the validity of any transaction.

4

The disciplinary action which may be taken by virtue of subsection (3) is—

a

the withdrawal or suspension of authorisation under section 28 or the termination or suspension of authorisation under section 33,

b

the giving of a disqualification direction under section 59,

c

the making of a public statement under section 60, or

d

the application by the Secretary of State for an injunction, interdict or other order under section 61(1);

and the reference in that subsection to powers of intervention is to the powers conferred by Chapter VI of this Part.

5

Where a statement of principle relates to compliance with a code or standard issued by another person, the statement of principle may provide—

a

that failure to comply with the code or standard shall be a ground for the taking of disciplinary action, or the exercise of powers of intervention, only in such cases and to such extent as may be specified; and

b

that no such action shall be taken, or any such power exercised, except at the request of the person by whom the code or standard in question was issued.

6

The Secretary of State shall exercise his powers in such manner as appears to him appropriate to secure compliance with statements of principle under this section.

47BModification or waiver of statements of principle in particular cases

1

The relevant regulatory authority may on the application of any person—

a

modify a statement of principle issued under section 47A so as to adapt it to his circumstances or to any particular kind of business carried on by him, or

b

dispense him from compliance with any such statement of principle, generally or in relation to any particular kind of business carried on by him.

2

The powers conferred by this section shall not be exercised unless it appears to the relevant regulatory authority—

a

that compliance with the statement of principle in question would be unduly burdensome for the applicant having regard to the benefit which compliance would confer on investors, and

b

that the exercise of those powers will not result in any undue risk to investors.

3

The powers conferred by this section may be exercised unconditionally or subject to conditions; and section 47A(3) applies in the case of failure to comply with a condition as in the case of failure to comply with a statement of principle.

4

The relevant regulatory authority for the purposes of this section is—

a

in the case of a member of a recognised self-regulating organisation or professional body, in relation to investment business in the carrying on of which he is subject to the rules of the organisation or body, that organisation or body;

b

in any other case, or in relation to other investment business, the Secretary of State.

5

The references in paragraph 4(1) of Schedule 2 and paragraph 4(2) of Schedule 3 (requirements for recognition of self-regulating organisations and professional bodies) to monitoring and enforcement of compliance with statements of principle include monitoring and enforcement of compliance with conditions imposed by the organisation or body under this section.

63AApplication of designated rules and regulations to members of self-regulating organisations

1

The Secretary of State may in rules and regulations under—

a

section 48 (conduct of business rules),

b

section 49 (financial resources rules),

c

section 55 (clients' money regulations), or

d

section 56 (regulations as to unsolicited calls),

designate provisions which apply, to such extent as may be specified, to a member of a recognised self-regulating organisation in respect of investment business in the carrying on of which he is subject to the rules of the organisation.

2

It may be provided that the designated rules or regulations have effect, generally or to such extent as may be specified, subject to the rules of the organisation.

3

A member of a recognised self-regulating organisation who contravenes a rule or regulation applying to him by virtue of this section shall be treated as having contravened the rules of the organisation.

4

It may be provided that, to such extent as may be specified, the designated rules or regulations may not be modified or waived (under section 63B below or section 50) in relation to a member of a recognised self-regulating organisation.

Where such provision is made any modification or waiver previously granted shall cease to have effect, subject to any transitional provision or saving contained in the rules or regulations.

5

Except as mentioned in subsection (1), the rules and regulations referred to in that subsection do not apply to a member of a recognised self-regulating organisation in respect of investment business in the carrying on of which he is subject to the rules of the organisation.

63BModification or waiver of designated rules and regulations

1

A recognised self-regulating organisation may on the application of a member of the organisation—

a

modify a rule or regulation designated under section 63A so as to adapt it to his circumstances or to any particular kind of business carried on by him, or

b

dispense him from compliance with any such rule or regulation, generally or in relation to any particular kind of business carried on by him.

2

The powers conferred by this section shall not be exercised unless it appears to the organisation—

a

that compliance with the rule or regulation in question would be unduly burdensome for the applicant having regard to the benefit which compliance would confer on investors, and

b

that the exercise of those powers will not result in any undue risk to investors.

3

The powers conferred by this section may be exercised unconditionally or subject to conditions; and section 63A(3) applies in the case of a contravention of a condition as in the case of contravention of a designated rule or regulation.

4

The reference in paragraph 4(1) of Schedule 2 (requirements for recognition of self-regulating organisations) to monitoring and enforcement of compliance with rules and regulations includes monitoring and enforcement of compliance with conditions imposed by the organisation under this section.

63CCodes of practice

1

The Secretary of State may issue codes of practice with respect to any matters dealt with by statements of principle issued under section 47A or by rules or regulations made under any provision of this Chapter.

2

In determining whether a person has failed to comply with a statement of principle—

a

a failure by him to comply with any relevant provision of a code of practice may be relied on as tending to establish failure to comply with the statement of principle, and

b

compliance by him with the relevant provisions of a code of practice may be relied on as tending to negative any such failure.

3

A contravention of a code of practice with respect to a matter dealt with by rules or regulations shall not of itself give rise to any liability or invalidate any transaction; but in determining whether a person’s conduct amounts to contravention of a rule or regulation—

a

contravention by him of any relevant provision of a code of practice may be relied on as tending to establish liability, and

b

compliance by him with the relevant provisions of a code of practice may be relied on as tending to negative liability.

4

Where by virtue of section 63A (application of designated rules and regulations to members of self-regulating organisations) rules or regulations—

a

do not apply, to any extent, to a member of a recognised self-regulating organisation, or

b

apply, to any extent, subject to the rules of the organisation,

a code of practice with respect to a matter dealt with by the rules or regulations may contain provision limiting its application to a corresponding extent.

Chapter XVRelations with other Regulatory Authorities

128ARelevance of other controls

In determining—

a

in relation to a self-regulating organisation, whether the requirements of Schedule 2 are met, or

b

in relation to a professional body, whether the requirements of Schedule 3 are met,

the Secretary of State shall take into account the effect of any other controls to which members of the organisation or body are subject.

128BRelevance of information given and action taken by other regulatory authorities

1

The following provisions apply in the case of—

a

a person whose principal place of business is in a country or territory outside the United Kingdom, or

b

a person whose principal business is other than investment business;

and in relation to such a person “the relevant regulatory authority” means the appropriate regulatory authority in that country or territory or, as the case may be, in relation to his principal business.

2

The Secretary of State may regard himself as satisfied with respect to any matter relevant for the purposes of this Part if—

a

the relevant regulatory authority informs him that it is satisfied with respect to that matter, and

b

he is satisfied as to the nature and scope of the supervision exercised by that authority.

3

In making any decision with respect to the exercise of his powers under this Part in relation to any such person, the Secretary of State may take into account whether the relevant regulatory authority has exercised, or proposes to exercise, its powers in relation to that person.

4

The Secretary of State may enter into such arrangements with other regulatory authorities as he thinks fit for the purposes of this section.

5

Where any functions under this Part have been transferred to a designated agency, nothing in this section shall be construed as affecting the responsibility of the Secretary of State for the discharge of Community obligations or other international obligations of the United Kingdom.

128CEnforcement in support of overseas regulatory authority

1

The Secretary of State may exercise his disciplinary powers or powers of intervention at the request of, or for the purpose of assisting, an overseas regulatory authority.

2

The disciplinary powers of the Secretary of State means his powers—

a

to withdraw or suspend authorisation under section 28 or to terminate or suspend authorisation under section 33,

b

to give a disqualification direction under section 59,

c

to make a public statement under section 60, or

d

to apply for an injunction, interdict or other order under section 61(1);

and the reference to his powers of intervention is to the powers conferred by Chapter VI of this Part.

3

An “overseas regulatory authority” means an authority in a country or territory outside the United Kingdom which exercises—

a

any function corresponding to—

i

a function of the Secretary of State under this Act, the Insurance Companies Act 1982 or the [1985 c. 6.] Companies Act 1985,

ii

a function under this Act of a designated agency, transferee body or competent authority, or

iii

a function of the Bank of England under the Banking Act 1987, or

b

any functions in connection with the investigation of, or the enforcement of rules (whether or not having the force of law) relating to, conduct of the kind prohibited by the Company Securities (Insider Dealing) Act 1985, or

c

any function prescribed for the purposes of this subsection, being a function which in the opinion of the Secretary of State relates to companies or financial services.

4

In deciding whether to exercise those powers the Secretary of State may take into account, in particular—

a

whether corresponding assistance would be given in that country or territory to an authority exercising regulatory functions in the United Kingdom;

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 Secretary of State may decline to exercise those powers unless the overseas regulatory authority undertakes to make such contribution towards the cost of their exercise as the Secretary of State considers appropriate.

6

The reference in subsection (3)(c) to financial services includes, in particular, investment business, insurance and banking.

2

The Secretary of State may by order exempt from subsection (1) when issued in such circumstances as may be specified in the order—

a

advertisements appearing to him to have a private character, whether by reason of a connection between the person issuing them and those to whom they are addressed or otherwise;

b

advertisements appearing to him to deal with investments only incidentally;

c

advertisements issued to persons appearing to him to be sufficiently expert to understand any risks involved;

d

such other classes of advertisements as he thinks fit.

3

The Secretary of State may by order exempt from subsection (1) an advertisement issued in whatever circumstances which relates to securities appearing to him to be of a kind that can be expected normally to be bought or dealt in only by persons sufficiently expert to understand any risks involved.

4

An order under subsection (2) or (3) may require a person who by virtue of the order is authorised to issue an advertisement to comply with such requirements as are specified in the order.

4A

An order made by virtue of subsection (2)(a), (b) or (c) or subsection (3) shall be subject to annulment in pursuance of a resolution of either House of Parliament; and no order shall be made by virtue of subsection (2)(d) unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

192International obligations

1

If it appears to the Secretary of State—

a

that any action proposed to be taken by an authority or body to which this section applies would be incompatible with Community obligations or any other international obligations of the United Kingdom, or

b

that any action which that authority or body has power to take is required for the purpose of implementing any such obligation,

he may direct the authority or body not to take or, as the case may be, to take the action in question.

2

The authorities and bodies to which this section applies are the following—

a

a recognised self-regulating organisation,

b

a recognised investment exchange (other than an overseas investment exchange),

c

a recognised clearing house (other than an overseas clearing house),

d

a designated agency,

e

a transferee body,

f

a competent authority.

3

This section also applies to an approved exchange within the meaning of Part V of this Act in respect of any action which it proposes to take or has power to take in respect of rules applying to a prospectus by virtue of a direction under section 162(3) above.

4

A direction under this section may include such supplementary or incidental requirements as the Secretary of State thinks necessary or expedient.

5

Where the function of making or revoking a recognition order in respect of an authority or body to which this section applies is exercisable by a designated agency, any direction in respect of that authority or body shall be a direction requiring the agency to give the authority or body such a direction as is specified in the direction given by the Secretary of State.

6

A direction under this section is enforceable, on the application of the person who gave it, by injunction or, in Scotland, by an order under section 45 of the Court of Session Act 1988.