Financial Services and Markets Act 2000

Financial Services and Markets Act 2000

2000 CHAPTER 8

Commentary on Sections

Part Xxviii: Miscellaneous

Section 404: Schemes for reviewing past business

716. This section enables the Treasury, by order under subsection (2), to set out the framework for a scheme to be established and operated by the Authority to require authorised persons to review their past business and, where appropriate, to determine the amounts payable by those persons by way of compensation for liabilities that they have incurred to private investors and certain others.  This power will facilitate the handling of issues such as those which arose in cases of mis-selling - most notably of personal pensions.

Reciprocity powers

717. Sections 405 to 408 concern reciprocity powers.  Under certain EC directives a decision can be taken by the Council of the European Union or the Commission to require individual member States’ regulators to take reciprocal action to deprive subsidiaries of firms from a country outside the European Economic Area (EEA) of access to their markets.  This is referred to in the Act as a “third country decision”.  Such a decision may be taken where it appears to the Commission that EEA firms wishing to establish themselves or provide financial services in third countries are not being treated on the same basis and offered the same competitive opportunities as domestic firms.

718. The potential for reciprocity action has diminished following World Trade Organisation (“WTO”) negotiations on financial services which resulted in the EU, along with many other WTO member countries, making a commitment to offer Most Favoured Nation treatment to other WTO members on a permanent basis.  This commitment came into force on 1 March 1999 and means that EC reciprocity powers can now only be used against countries outside the WTO.