F1PART 9ARules and Guidance
C35C33CHAPTER 2Rules: modification, waiver, contravention and procedural provisions
Pt. 9A Ch. 2 applied (with modifications) by S.I. 2011/99, Sch. 3 para. 2A(2)(3) (as inserted (13.8.2017 for specified purposes, 13.10.2017 for specified purposes, 13.1.2018 in so far as not already in force) by The Payment Services Regulations 2017 (S.I. 2017/752), reg. 1(2)(c)(iii)(3)(f)(i)(6), Sch. 8 para. 5(31)(a) (with reg. 3))
Pt. 9A Ch. 2 applied (with modifications) (13.8.2017 for specified purposes, 13.1.2018 in so far as not already in force) by The Payment Services Regulations 2017 (S.I. 2017/752), reg. 1(2)(b)(ii)(6), Sch. 6 para. 3(2) (with reg. 3)
Procedural provisions
C43C40C47C46C45138FNotification of rules
F31
If either regulator makes, alters or revokes any rules, that regulator must without delay give written notice F14to the Treasury.
F131A
The FCA must also give written notice to the Bank of England.
F42
C41C47C46C45138GRule-making instruments
1
Any power conferred on either regulator to make rules is exercisable in writing.
2
An instrument by which rules are made by either regulator (“a rule-making instrument”) must specify the provision under which the rules are made.
3
To the extent that a rule-making instrument does not comply with subsection (2), it is void.
4
A rule-making instrument must be published by the regulator making the rule in the way appearing to that regulator to be best calculated to bring it to the attention of the public.
5
The regulator making the rule may charge a reasonable fee for providing a person with a copy of a rule-making instrument.
6
A person is not to be taken to have contravened any rule made by a regulator if the person shows that at the time of the alleged contravention the rule-making instrument concerned had not been made available in accordance with this section.
C1C7C24C44C42C49C47C46C45138HVerification of rules
1
The production of a printed copy of a rule-making instrument purporting to be made by a regulator—
a
on which is endorsed a certificate signed by a member of staff of that regulator who is authorised by the regulator for that purpose, and
b
which contains the required statements,
is evidence (or in Scotland sufficient evidence) of the facts stated in the certificate.
2
The required statements are—
a
that the instrument was made by the FCA or the PRA (as the case may be),
b
that the copy is a true copy of the instrument, and
c
that on a specified date the instrument was made available to the public in accordance with section 138G(4).
3
A certificate purporting to be signed as mentioned in subsection (1) is to be taken to have been properly signed unless the contrary is shown.
4
A person who wishes in any legal proceedings to rely on a rule-making instrument may require the regulator that made the rule to endorse a copy of the instrument with a certificate of the kind mentioned in subsection (1).
C2C8C9C18C19C21C25C27C30C37C39C48C47C46C45138IConsultation by the FCA
1
Before making any rules, the FCA must—
a
consult the PRA, and
C10b
after doing so, publish a draft of the proposed rules in the way appearing to the FCA to be best calculated to bring them to the attention of the public.
2
The draft must be accompanied by—
C20a
a cost benefit analysis,
b
an explanation of the purpose of the proposed rules,
c
any statement prepared under section 138K(2),
C6C38d
an explanation of the FCA's reasons for believing that making the proposed rules is compatible with its duties under section 1B(1) and (5)(a), and
C10e
notice that representations about the proposals may be made to the FCA within a specified time.
C103
Before making the proposed rules, the FCA must have regard to any representations made to it in accordance with subsection (2)(e).
4
If the FCA makes the proposed rules, it must publish an account, in general terms, of—
a
the representations made to it in accordance with subsection (2)(e), and
b
its response to them.
5
If the rules differ from the draft published under subsection (1)(b) in a way which is, in the opinion of the FCA, significant the FCA must publish—
a
details of the difference (in addition to complying with subsection (4)) together with a cost benefit analysis, and
b
any statement prepared under section 138K(4).
6
The requirements to carry out a cost benefit analysis under this section do not apply in relation to rules made under—
a
section 136(2);
F5aa
section 137FB;
F11ab
section 137FBA;
F24ac
section 137FC;
F17ad
section 137SA;
F20ae
section 137SB;
b
subsection (1) of section 213 as a result of subsection (4) of that section;
c
section 234;
F25ca
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F26cb
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F9cc
section 333T;
d
paragraph 23 of Schedule 1ZA;
F29e
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
“Cost benefit analysis” means—
a
an analysis of the costs together with an analysis of the benefits that will arise—
i
if the proposed rules are made, or
ii
if subsection (5) applies, from the rules that have been made, and
b
subject to subsection (8), an estimate of those costs and of those benefits.
8
If, in the opinion of the FCA—
a
the costs or benefits referred to in subsection (7) cannot reasonably be estimated, or
b
it is not reasonably practicable to produce an estimate,
the cost benefit analysis need not estimate them, but must include a statement of the FCA's opinion and an explanation of it.
9
The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1)(b).
10
Subsection (1)(a) does not apply to F6—
a
b
rules made by the FCA in relation to recognised investment exchanges under Part 18.
11
This section is subject to section 138L.
C19C23C29C26C31C47C46C45138JConsultation by the PRA
1
Before making any rules, the PRA must—
a
consult the FCA, and
b
after doing so, publish a draft of the proposed rules in the way appearing to the PRA to be best calculated to bring them to the attention of the public.
2
The draft must be accompanied by—
b
an explanation of the purpose of the proposed rules,
c
any statement prepared under section 138K(2),
d
an explanation of the PRA's reasons for believing that making the proposed rules is compatible with its duties under—
i
section 2B(1) or, as the case requires, section 2C(1) or 2D(3), and
ii
section 2H, and
e
notice that representations about the proposals may be made to the PRA within a specified time.
3
Before making the proposed rules, the PRA must have regard to any representations made to it in accordance with subsection (2)(e).
4
If the PRA makes the proposed rules, it must publish an account, in general terms, of—
a
the representations made to it in accordance with subsection (2)(e), and
b
its response to them.
5
If the rules differ from the draft published under subsection (1)(b) in a way which is, in the opinion of the PRA, significant the PRA must publish—
C4a
details of the difference (in addition to complying with subsection (4)) together with a cost benefit analysis, and
b
any statement prepared under section 138K(4).
6
The requirements to carry out a cost benefit analysis under this section do not apply in relation to rules made under—
a
section 136(2);
b
subsection (1) of section 213 as a result of subsection (4) of that section;
c
section 234;
d
paragraph 31 of Schedule 1ZB;
e
paragraph 12 of Schedule 1A.
7
“Cost benefit analysis” means—
a
an analysis of the costs together with an analysis of the benefits that will arise—
i
if the proposed rules are made, or
ii
if subsection (5) applies, from the rules that have been made, and
b
subject to subsection (8), an estimate of those costs and of those benefits.
8
If, in the opinion of the PRA—
a
the costs or benefits referred to in subsection (7) cannot reasonably be estimated, or
b
it is not reasonably practicable to produce an estimate,
the cost benefit analysis need not estimate them, but must include a statement of the PRA's opinion and an explanation of it.
9
The PRA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1)(b).
10
This section is subject to section 138L.
C3C19C28C26C32C47C46C45138KConsultation: mutual societies
1
Subsection (2) applies where a regulator proposes to make a rule (“the proposed rule”) which would apply both to—
a
authorised persons which are mutual societies, and
b
other authorised persons.
2
The regulator must prepare a statement setting out—
a
its opinion whether or not the impact of the proposed rule on persons within subsection (1)(a) will be significantly different from its impact on persons within subsection (1)(b), and
b
if so, details of the difference.
3
Subsection (4) applies where a regulator makes a rule which—
a
applies both to—
i
authorised persons which are mutual societies, and
ii
other authorised persons, and
b
differs from the draft of the proposed rule published under section 138I(1)(b) or section 138J(1)(b) (as the case may be).
4
The regulator must prepare a statement setting out—
a
its opinion whether or not the impact of the rule is significantly different from the impact of the proposed rule on—
i
the persons within subsection (3)(a)(i), and
ii
those persons as compared with persons within subsection (3)(a)(ii), and
b
if so, details of the difference.
5
A “mutual society” is—
a
a building society within the meaning of the Building Societies Act 1986;
b
a friendly society within the meaning of the Friendly Societies Act 1992;
c
a registered society within the meaning of F2the Co-operative and Community Benefit Societies Act 2014;
d
an EEA mutual society.
6
An “EEA mutual society” is—
a
a body which is a European Cooperative Society for the purposes of Council Regulation (EC) No 1435/2003 (statute for a European Cooperative Society);
b
a body which is established as a cooperative under the law of an EEA state as mentioned in that Regulation;
c
a body which is a cooperative or mutual undertaking of such description as the Treasury specify by order and which is established or operates in accordance with the laws of an EEA state.
C19C47C46C45138LConsultation: general exemptions
C14C17C15C12C13C11C16C34C361
Sections 138I(1)(b) and (2) to (5) and 138K do not apply in relation to rules made by the FCA if the FCA considers that the delay involved in complying with them would be prejudicial to the interests of consumers, as defined in section 425A.
C14C17C15C12C13C11C162
Sections 138J(1)(b) and (2) to (5) and 138K do not apply in relation to rules made by the PRA if the PRA considers that the delay involved in complying with them would—
a
be prejudicial to the safety and soundness of PRA-authorised persons, or
b
in a case where section 2C applies, be prejudicial to securing the appropriate degree of protection for policyholders.
3
The provisions listed in subsection (4) do not apply if the regulator concerned considers that, making the appropriate comparison—
a
there will be no increase in costs, or
b
there will be an increase in costs but that increase will be of minimal significance.
4
Those provisions are—
a
subsections (2)(a) and (5)(a) of section 138I;
b
subsections (2)(a) and (5)(a) of section 138J.
5
The “appropriate comparison” means—
a
in relation to section 138I(2)(a) or 138J(2)(a), a comparison between the overall position if the rules are made and the overall position if the rules are not made;
b
in relation to section 138I(5)(a) or 138J(5)(a), a comparison between the overall position after the making of the rules and the overall position before they were made.
C47C46C45138MConsultation: exemptions for temporary product intervention rules
1
Sections 138I(1)(b) and (2) to (5) and 138K do not apply in relation to product intervention rules made by the FCA if it considers that it is necessary or expedient not to comply with them for the purpose of advancing—
a
the consumer protection objective or the competition objective, or
b
if an order under section 137D(1)(b) is in force, the integrity objective.
2
Any rules made as a result of subsection (1) (“temporary product intervention rules”) are to cease to have effect at the end of the period specified in the rules.
3
The longest period that may be specified is the period of 12 months beginning with the day on which the rules come into force.
4
Nothing in subsection (2) prevents the FCA from revoking temporary product intervention rules before the end of the period mentioned there.
5
If the FCA has made temporary product intervention rules (“the initial rules”), it may not make further temporary product intervention rules containing the same, or substantially the same, provision as that contained in the initial rules until the prohibited period has ended.
6
“The prohibited period” means the period of 12 months beginning with the day on which the period mentioned in subsection (2) ends (whether or not the initial rules have been revoked before the end of the period mentioned there).
C47C46C45138NTemporary product intervention rules: statement of policy
1
The FCA must prepare and issue a statement of its policy with respect to the making of temporary product intervention rules.
2
The FCA may at any time alter or replace a statement issued under this section.
3
If a statement issued under this section is altered or replaced, the FCA must issue the altered or replacement statement.
4
The FCA must, without delay, give the Treasury a copy of any statement which it publishes under this section.
5
A statement issued under this section must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
6
The FCA may charge a reasonable fee for providing a person with a copy of the statement.
C47C46C45138OStatement of policy under section 138N: procedure
1
Before issuing a statement under section 138N, the FCA must publish a draft of the proposed statement in the way appearing to the FCA to be best calculated to bring it to the attention of the public.
2
The draft must be accompanied by notice that representations about the proposal may be made to the FCA within a specified time.
3
Before issuing the proposed statement, the FCA must have regard to any representations made to it in accordance with subsection (2).
4
If the FCA issues the proposed statement it must publish an account, in general terms, of—
a
the representations made to it in accordance with subsection (2), and
b
its response to them.
5
If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the FCA, significant, the FCA must (in addition to complying with subsection (4)) publish details of the difference.
6
The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
7
This section also applies to a proposal to alter or replace a statement.
Pt. 9A substituted for ss. 138-164 (24.1.2013 for specified purposes, 1.4.2013 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 24(1), 122(3) (with Sch. 20); S.I. 2013/113, art. 2(1)(c), Sch. Pt. 3; S.I. 2013/423, art. 3, Sch.