Financial Services and Markets Act 2000 (c. 8)

[F1 PART 1A U.K. The Regulators

Textual Amendments

F1 Pt. 1A substituted for Pt. 1 (24.1.2013 for specified purposes, 19.2.2013 for specified purposes, 1.4.2013 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 6(1), 122(3) (with Sch. 20); S.I. 2013/113, art. 2(1)(b)(c)(2), Sch. Pts. 2, 3, 4; S.I. 2013/423, art. 3, Sch.

CHAPTER 2 U.K. The Prudential Regulation Authority

The Prudential Regulation Authority U.K.

[F2 2A The Prudential Regulation Authority U.K.

(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.

Textual Amendments

F2 Ss. 2A, 2AB substituted for s. 2A (1.3.2017) by Bank of England and Financial Services Act 2016 (c. 14), ss. 12, 41(3) (with Sch. 3); S.I. 2017/43, reg. 2(c)

2AB Functions of the PRA U.K.

(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, F3 ...

(d) a [F4 qualifying provision] that is specified, or of a description specified, for the purposes of this subsection by the Treasury by order.] [F5 or

(e) regulations made by the Treasury under section 8 of the European Union (Withdrawal) Act 2018.]

Textual Amendments

F2 Ss. 2A, 2AB substituted for s. 2A (1.3.2017) by Bank of England and Financial Services Act 2016 (c. 14), ss. 12, 41(3) (with Sch. 3); S.I. 2017/43, reg. 2(c)

F3 Word in s. 2AB(3)(c) omitted (26.10.2018) by virtue of The Financial Regulators Powers (Technical Standards etc.) (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1115), regs. 1(2), 7(4)(a)

F4 Words in s. 2AB(3)(d) substituted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 6; 2020 c. 1, Sch. 5 para. 1(1)

F5 S. 2AB(3)(e) and word inserted (26.10.2018) by The Financial Regulators Powers (Technical Standards etc.) (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1115), regs. 1(2), 7(4)(b)

The PRA's general duties U.K.

2B The PRA's general objective U.K.

(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 UK financial system, F6 ...

(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 UK financial system [F7 , 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 services].

(4) The adverse effects mentioned in [F8 subsection (3)(a) and (b)] may, in particular, result from the disruption of the continuity of financial services.

[F9 (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.]

(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.

Textual Amendments

F6 Word in s. 2B(3)(a) omitted (1.1.2019) by virtue of Financial Services (Banking Reform) Act 2013 (c. 33), ss. 1(2)(a), 148(5); S.I. 2018/1306, art. 2(a)

F7 S. 2B(3)(c) and word inserted (1.1.2019) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 1(2)(b), 148(5); S.I. 2018/1306, art. 2(a)

F8 Words in s. 2B(4) substituted (1.1.2019) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 1(3), 148(5); S.I. 2018/1306, art. 2(a)

F9 S. 2B(4A) inserted (1.1.2019) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 1(4), 148(5); S.I. 2018/1306, art. 2(a)

2C Insurance objective U.K.

(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 U.K.

(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 U.K.

(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 U.K.

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 U.K.

Nothing in sections 2B to 2D is to be regarded as requiring the PRA to ensure that no PRA-authorised person fails.

[F10 2H Secondary competition objective and duty to have regard to regulatory principles U.K.

(1) When discharging its general functions in a way that advances its objectives (see section 2F), the PRA must so far as is reasonably possible act in a way which, as a secondary objective, facilitates effective competition in the markets for services provided by PRA-authorised persons in carrying on regulated activities.

(2) In discharging its general functions, the PRA must also have regard to the regulatory principles in section 3B.]

Textual Amendments

F10 S. 2H substituted (1.3.2014) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 130(1), 148(5); S.I. 2014/377, art. 2(1)(a), Sch. Pt. 1

Modifications etc. (not altering text)

C1 S. 2H(1) applied (29.6.2017 for specified purposes, 3.7.2017 for specified purposes, 31.7.2017 for specified purposes, 3.1.2018 in so far as not already in force) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701), reg. 1(2)(3)(4)(6), Sch. 1 para. 4(3) (with reg. 7)

2I Guidance about objectives U.K.

(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.

(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 U.K.

(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),

[F11 (aa) its function of making technical standards in accordance with Chapter 2A of Part 9A;]

(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 [F12 an authorised] 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.

[F13 (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.]

(4) In [F14 subsections (3)(a) and (3A)] “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.

Textual Amendments

F11 S. 2J(1)(aa) inserted (26.10.2018) by The Financial Regulators Powers (Technical Standards etc.) (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1115), regs. 1(2), 7(5)

F12 Words in s. 2J(3) substituted (1.1.2019) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 1(5)(a), 148(5); S.I. 2018/1306, art. 2(a)

F13 S. 2J(3A) inserted (1.1.2019) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 1(5)(b), 148(5); S.I. 2018/1306, art. 2(a)

F14 Words in s. 2J(4) substituted (1.1.2019) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 1(5)(c), 148(5); S.I. 2018/1306, art. 2(a)

Supervision U.K.

2K Arrangements for supervision of PRA-authorised persons U.K.

The PRA must maintain arrangements for supervising PRA-authorised persons.

Arrangements for consulting practitioners U.K.

2L The PRA's general duty to consult U.K.

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.

2M The PRA Practitioner Panel U.K.

(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.

2N Duty to consider representations U.K.

(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.

Reviews] U.K.

F15 2O Reviews U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F15 S. 2O omitted (1.3.2017) by virtue of Bank of England and Financial Services Act 2016 (c. 14), s. 41(3), Sch. 2 para. 27 (with Sch. 3); S.I. 2017/43, reg. 2(g)

F16 2P Right to obtain documents and information U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F16 S. 2P omitted (1.3.2017) by virtue of Bank of England and Financial Services Act 2016 (c. 14), s. 41(3), Sch. 2 para. 28 (with Sch. 3); S.I. 2017/43, reg. 2(g)