F2A “prohibition order” is an order prohibiting the individual from performing a specified function, any function falling within a specified description or any function.

An individual who performs or agrees to perform a function in breach of a prohibition order is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

In proceedings for an offence under subsection (4) it is a defence for the accused to show that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.

F5A person falling within subsection (3A) must take reasonable care to ensure that no function of his, in relation to the carrying on of a regulated activity, is performed by a person who is prohibited from performing that function by a prohibition order.

F6The regulator that has made a prohibition order may, on the application of the individual named in F7the order, vary or revoke it.

The PRA must consult the FCA before varying or revoking a prohibition order.

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“Specified” means specified in the prohibition order.

If F10a regulator proposes to make a prohibition order it must give the individual concerned a warning notice.

The warning notice must set out the terms of the prohibition.

If F11a regulator decides to make a prohibition order it must give the individual concerned a decision notice.

A person against whom a decision to make a prohibition order is made may refer the matter to the Tribunal.

The PRA must consult the FCA before giving a warning notice under this section.

This section applies to an application for the variation or revocation of a prohibition order.

If the F13appropriate regulator decides to grant the application, it must give the applicant written notice of its decision.

If the F13appropriate regulator proposes to refuse the application, it must give the applicant a warning notice.

If the F13appropriate regulator decides to refuse the application, it must give the applicant a decision notice.

If the F13appropriate regulator gives the applicant a decision notice, he may refer the matter to the Tribunal.

The appropriate regulator” means the regulator to which the application is made.

An authorised person (“A”) must take reasonable care to ensure that no person performs a controlled function under an arrangement entered into by A in relation to the carrying on by A of a regulated activity, unless F15that person is acting in accordance with an approval given by the appropriate regulator under this section.

An authorised person (“A”) must take reasonable care to ensure that no person performs a controlled function under an arrangement entered into by a contractor of A in relation to the carrying on by A of a regulated activity, unless F16that person is acting in accordance with an approval given by the appropriate regulator under this section.

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The PRA may specify a description of function under subsection (3)(a) only if, in relation to the carrying on of a regulated activity by a PRA-authorised person, it is satisfied that the function is a senior management function as defined in section 59ZA.

If a function of a description specified in rules made by the PRA under subsection (3)(a) is a controlled function in relation to the carrying on of a regulated activity by a relevant authorised person, the PRA must designate the function in the rules as a senior management function.

For the meaning of “relevant authorised person”, see section 71A.

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Neither subsection (1) nor subsection (2) applies to an arrangement which allows a person to perform a function if the question of whether he is a fit and proper person to perform the function is reserved under any of the single market directives F23or the emission allowance auctioning regulation to an authority in a country or territory outside the United Kingdom.

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This section has effect for determining whether a function is for the purposes of section 59(6) or (6A) a senior management function.

In subsection (2)(a) the reference to managing one or more aspects of an authorised person's affairs includes a reference to taking decisions, or participating in the taking of decisions, about how one or more aspects of those affairs should be carried on.

The FCA and the PRA must each consult the other before exercising any power under section 59(3)(a).

Any reference in this section to the exercise of a power includes its exercise by way of amendment or revocation of provision previously made in the exercise of the power.

“Senior management function” has the meaning given by section 59ZA.

“Approval” means an approval under section 59.

Any expression which is used both in this section and section 59 has the same meaning in this section as in that section.

The FCA may arrange with the PRA that in such cases as may be described in the arrangements the PRA may give approval under section 59 without obtaining the consent of the FCA.

Arrangements under this section must be in writing, and must specify the date on which they come into force.

The regulators must publish any arrangements under this section in such manner as they think fit.

Section 59(4)(b) has effect subject to any arrangements in force under this section.

An application for the F30appropriate regulator's approval under section 59 may be made by the authorised person concerned.

A statement provided under subsection (2A) is known as a “statement of responsibilities”.

In subsection (2A) “designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B).

At any time after the application is received and before it is determined, the appropriate regulator may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application or, as the case requires, to decide whether to give consent.

The F30appropriate regulator may require an applicant to present information which he is required to give under this section in such form, or to verify it in such a way, as the F30appropriate regulator may direct.

Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.

“The authorised person concerned” includes a person who has applied for permission under F33Part 4A and will be the authorised person concerned if permission is given.

Subsection (6) applies to references to a relevant authorised person as it applies to references to the authorised person concerned.

The PRA must as soon as practicable notify the FCA of the receipt or withdrawal of an application to the PRA, unless the case is one in which by virtue of arrangements under section 59B the consent of the FCA is not required.

Before a relevant authorised person may make an application for a regulator's approval under section 59, the authorised person must be satisfied that the person in respect of whom the application is made (“the candidate”) is a fit and proper person to perform the function to which the application relates.

For the meaning of “relevant authorised person”, see section 71A.

Subsections (1) and (2) apply in relation to the giving by the FCA of any required consent as they apply in relation to the grant of the application.

Consent given by the FCA for the granting of the application may be conditional on the manner in which the PRA exercises its power under subsection (2B).

In the case of a relevant senior management application, the reference in subsection (3)(a) to granting the application is a reference to granting it without imposing conditions or limiting the period for which the approval has effect.

For the meaning of “relevant authorised person”, see section 71A.

F52If the regulator to which an application is made under section 60 (“an application”) decides to grant the application, it must give written notice of its decision to each of the interested parties.

If F53the regulator to which an application is made proposes to refuse F54the application F55, or to grant the application subject to conditions or for a limited period (or both), it must give a warning notice to each of the interested parties.

If F53the regulator to which an application is made decides to refuse F54the application F56, or to grant the application subject to conditions or for a limited period (or both), it must give a decision notice to each of the interested parties.

If F53the regulator to which an application is made decides to refuse F54the application F57, or to grant the application subject to conditions or for a limited period (or both), each of the interested parties may refer the matter to the Tribunal.

If, since the granting of the application, there has been any significant change in the aspects of the authorised person's affairs which the person is responsible for managing in performing the function, the authorised person must provide the appropriate regulator with a revised statement of responsibilities.

The FCA may withdraw an approval under section 59 given by the FCA or the PRA in relation to the performance by a person of a function if the FCA considers that the person is not a fit and proper person to perform the function.

In subsection (1A) “relevant senior management function” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA).

Before one regulator withdraws an approval given by the other regulator, it must consult the other regulator.

When considering whether to withdraw F62an approval, the FCA or the PRA may take into account any matter which could be taken into account in considering an application made under section 60 in respect of the performance of the function to which the approval relates F63(on the assumption, if it is not the case, that the application was one falling to be considered by it).

If F65a regulator proposes to withdraw F66an approval, it must give each of the interested parties a warning notice.

If F65a regulator decides to withdraw F66an approval, it must give each of the interested parties a decision notice.

If F65a regulator decides to withdraw F66an approval, each of the interested parties may refer the matter to the Tribunal.

The PRA must consult the FCA before determining an application under this section, unless the application relates to the variation or removal of a condition which was imposed by the PRA in exercise of its power under section 63ZB.

“The period for consideration” means the period of 3 months beginning with the date on which the regulator receives the application.

The FCA may refuse an application under this section if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.

The PRA may refuse an application under this section if it appears to the PRA that it is desirable to do so in order to advance any of its objectives.

The following provisions apply to an application made under this section for variation of an approval as they apply to an application for approval made under section 60—

• section 60(2) to (8),

• section 61(4) and (5),

• section 62.

The FCA may vary an approval under section 59 given by the FCA or the PRA for the performance of a designated senior management function in relation to the carrying on of a regulated activity by a relevant authorised person if the FCA considers that it is desirable to do so in order to advance one or more of its operational objectives.

Before one regulator varies an approval given by the other regulator, it must consult the other regulator.

In this section “designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B).

For the meaning of “relevant authorised person”, see section 71A.

This section applies to an exercise, by either regulator, of the power to vary an approval under section 63ZB.

A variation may be expressed to take effect immediately (or on a specified date) only if the regulator concerned, having regard to the ground on which it is exercising the power to vary, reasonably considers that it is necessary for the variation to take effect immediately (or on that date).

If either regulator proposes to vary an approval or varies an approval with immediate effect, it must give each of the interested parties written notice.

The regulator giving the notice may extend the period allowed under the notice for making representations.

A notice under subsection (8) must inform the interested parties of the right of each of them to refer the matter to the Tribunal.

A notice under subsection (9)(b) must comply with subsection (5).

If a notice informs the interested parties of the right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.

For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 391(8).

“Approval” means an approval under section 59.

A regulator may at any time alter or replace a statement issued by it under this section.

If a statement issued under this section is altered or replaced by a regulator, the regulator must issue the altered or replacement statement.

A statement issued under this section must be published by the regulator concerned in the way appearing to the regulator to be best calculated to bring it to the attention of the public.

A regulator may charge a reasonable fee for providing a person with a copy of a statement published under this section.

A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.

The duty of the FCA to consult the PRA under subsection (1)(a) applies only in so far as the statement of policy applies to persons whose approval under section 59 relates to the performance of a function designated by the FCA as a senior management function under section 59(6A) in relation to the carrying on by PRA-authorised persons of regulated activities.

The draft must be accompanied by notice that representations about the proposal may be made to the issuing regulator within a specified time.

Before issuing the proposed statement, the issuing regulator must have regard to any representations made to it in accordance with subsection (3).

The issuing regulator may charge a reasonable fee for providing a person with a draft published under subsection (1)(b).

This section also applies to a proposal to alter or replace a statement.

The F70appropriate regulator may not impose a penalty under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the person concerned under section 63B(1).

“The limitation period” means the F72relevant period beginning with the first day on which the F70appropriate regulator knew that the person concerned had performed a controlled function without approval.

For this purpose the F70appropriate regulator is to be treated as knowing that a person has performed a controlled function without approval if it has information from which that can reasonably be inferred.

Any F75other expression which is used both in this section and section 59 has the same meaning in this section as in that section.

If F76a regulator proposes to impose a penalty on a person under section 63A, it must give the person a warning notice.

A warning notice must state the amount of the penalty.

If F76a regulator decides to impose a penalty on a person under section 63A, it must give the person a decision notice.

A decision notice must state the amount of the penalty.

If F76a regulator decides to impose a penalty on a person under section 63A, the person may refer the matter to the Tribunal.

F79Each regulator's policy in determining whether a penalty should be imposed on a person must also include having regard to the appropriateness of taking action against the person instead of, or in addition to, taking action against an authorised person.

A statement issued under this section must include an indication of the circumstances in which F80the regulator that has issued the statement would expect to be satisfied that a person could reasonably be expected to have known that the person was performing a controlled function without approval.

F81A regulator may at any time alter or replace a statement issued F82by it under this section.

If a statement issued under this section is altered or F83replaced by a regulator, the regulator must issue the altered or replaced statement.

F84A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.

A statement issued under this section F85by a regulator must be published by the F86regulator in the way appearing to the F86regulator to be best calculated to bring it to the attention of the public.

The F87regulator may charge a reasonable fee for providing a person with a copy of the statement.

In exercising, or deciding whether to exercise, its power under section 63A in the case of any particular person, F88a regulator must have regard to any statement of policy published F89by it under this section and in force at a time when the person concerned performed a controlled function without approval.

Before F90a regulator issues a statement under section 63C, the F91regulator must publish a draft of the proposed statement in the way appearing to the F91regulator to be best calculated to bring it to the attention of the public.

The draft must be accompanied by notice that representations about the proposal may be made to the F92regulator within a specified time.

Before issuing the proposed statement, the F93regulator must have regard to any representations made to it in accordance with subsection (2).

If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the F95regulator, significant, the F95regulator must (in addition to complying with subsection (4)) publish details of the difference.

F96A regulator may charge a reasonable fee for providing a person with a copy of a draft published F97by it under subsection (1).

This section also applies to a proposal to alter or replace a statement.

A relevant authorised person (“A”) must take reasonable care to ensure that no employee of A performs a specified function under an arrangement entered into by A in relation to the carrying on by A of a regulated activity, unless the employee has a valid certificate issued by A under section 63F.

Subsection (1) does not apply to an arrangement which allows an employee to perform a function if the question of whether the employee is a fit and proper person to perform the function is reserved under any of the single market directives or the emission allowance auctioning regulation to an authority in a country or territory outside the United Kingdom.

For the meaning of “relevant authorised person”, see section 71A.

A relevant authorised person may issue a certificate to a person under this section only if the authorised person is satisfied that the person is a fit and proper person to perform the function to which the certificate relates.

A certificate issued under this section is valid for a period of 12 months beginning with the day on which it is issued.

A relevant authorised person must maintain a record of every employee who has a valid certificate issued by it under this section.

Expressions used in this section and in section 63E have the same meaning in this section as they have in that section.

Rules made under this section must relate to the conduct of persons in relation to the performance by them of qualifying functions.

This section applies where a regulator makes rules under section 64A (“conduct rules”).

The steps which a relevant authorised person must take to comply with subsection (2)(b) include, in particular, the provision of suitable training.

If a relevant authorised person knows or suspects that a relevant person has failed to comply with any conduct rules, the authorised person must notify the regulator of that fact.

In this section “employee”, in relation to an authorised person, has the same meaning as in section 64A.

For the meaning of “relevant authorised person”, see section 71A.

“Relevant person” has the same meaning as in section 64B.

For the meaning of “relevant authorised person”, see section 71A.

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The period for which a suspension or F114condition is to have effect may not exceed two years.

A suspension F115, condition or limitation may have effect in relation to part of a function.

A F116condition may, in particular, be imposed so as to require any person to take, or refrain from taking, specified action.

F122A regulator may not take action under this section after the end of the F123 relevant period beginning with the first day on which F124the regulator knew of the misconduct, unless proceedings in respect of it against the person concerned were begun before the end of that period.

“Approval” means an approval given under section 59.

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In relation to any time while a suspension is in force under subsection (3)(aa) in relation to part of a function, any reference in section 59 or 63A to the performance of a function includes the performance of part of a function.

If at any time a F131condition imposed under subsection (3)(ab) is contravened, the approval in relation to the person concerned is to be treated for the purposes of sections 59 and 63A as if it had been withdrawn at that time.

For the purposes of action by the FCA under section 66, a person is guilty of misconduct if any of conditions A to C is met in relation to the person.

But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the FCA that P had taken such steps as a person in P's position could reasonably be expected to take to avoid the contravention occurring (or continuing).

In this section—

• “approved person”—

  1. (a)

     means a person in relation to whom an approval is given under section 59, and

  2. (b)

     in relation to an authorised person, means a person in relation to whom such approval is given on the application of the authorised person;

• “employee”, in relation to a person, has the same meaning as in section 64A.

For the meaning of “relevant authorised person”, see section 71A.

For the purposes of action by the PRA under section 66, a person is guilty of misconduct if any of conditions A to C is met in relation to the person.

But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the PRA that P had taken such steps as a person in P's position could reasonably be expected to take to avoid the contravention occurring (or continuing).

In this section—

• “approved person”—

  1. (a)

     means a person in relation to whom—

     1. (i)

        the PRA has given its approval under section 59, or

     2. (ii)

        the FCA has given its approval under section 59 in respect of the performance by the person of a relevant senior management function in relation to the carrying on by a PRA-authorised person of a regulated activity, and

  2. (b)

     in relation to an authorised person, means a person in relation to whom approval under section 59 is given on the application of the authorised person;

• “employee”, in relation to a person, has the same meaning as in section 64A;

• “relevant PRA-authorised person” means a PRA-authorised person that is a relevant authorised person;

• “relevant senior management function” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA).

For the meaning of “relevant authorised person”, see section 71A.

If F137a regulator proposes to take action against a person under section 66, it must give him a warning noticeF138; and if it proposes to take action under subsection (3)(aa) F139, (ab) or (ac) of that section, it must also give each of the other interested parties a warning notice.

A warning notice about a proposal to impose a penalty must state the amount of the penalty.

A warning notice about a proposal to limit the period for which an approval is to have effect must state the length of that period.

A warning notice about a proposal to publish a statement must set out the terms of the statement.

If F143a regulator decides to take action against a person under section 66, it must give him a decision noticeF144; and if it decides to take action under subsection (3)(aa) F145, (ab) or (ac) of that section, it must also give each of the other interested parties a decision notice.

A decision notice about the imposition of a penalty must state the amount of the penalty.

A decision notice about limiting the period for which an approval is to have effect must state the length of that period.

A decision notice about the publication of a statement must set out the terms of the statement.

If F149a regulator decides to take action against a person under section 66, he may refer the matter to the TribunalF150; and if F151the regulator decides to take action under section 66(3)(aa) F152, (ab) or (ac), each of the other interested parties may also refer the matter to the Tribunal.

Approval” means an approval given under section 59.

F166A regulator may at any time alter or replace a statement issued F167by it under this section.

If a statement issued under this section is altered or F168replaced by a regulator, the regulator must issue the altered or replacement statement.

F169A regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.

A statement issued under this section F170by a regulator must be published by F171the regulator in the way appearing to F171the regulator to be best calculated to bring it to the attention of the public.

The F172regulator may charge a reasonable fee for providing a person with a copy of the statement.

In exercising, or deciding whether to exercise, its power under section 66 in the case of any particular misconduct, F173a regulator must have regard to any statement of policy published F174by it under this section and in force at the time when the misconduct in question occurred.

Before F175a regulator issues a statement under section 69, the F176regulator must publish a draft of the proposed statement in the way appearing to the F176regulator to be best calculated to bring it to the attention of the public.

The draft must be accompanied by notice that representations about the proposal may be made to the F177regulator within a specified time.

Before issuing the proposed statement, the F178regulator must have regard to any representations made to it in accordance with subsection (2).

If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the F180regulator, significant, the F180regulator must (in addition to complying with subsection (4)) publish details of the difference.

F181A regulator may charge a reasonable fee for providing a person with a copy of a draft published F182by it under subsection (1).

This section also applies to a proposal to alter or replace a statement.

A contravention of section 56(6) or 59(1) or (2) is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.

In prescribed cases, a contravention of that kind which would be actionable at the suit of a private person is actionable at the suit of a person who is not a private person, subject to the defences and other incidents applying to actions for breach of statutory duty.

“Private person” has such meaning as may be prescribed.

Condition A is that the institution has permission under Part 4A to carry on the regulated activity of accepting deposits.

Subsections (2), (3) and (6)(d) are to be read in accordance with Schedule 2, taken with any order under section 22.