For sections 1 to 18 of the Financial Services and Markets Act 2000 (in this Act referred to as “FSMA 2000”) substitute—

“PART 1AThe Regulators

CHAPTER 1The Financial Conduct Authority

The Financial Conduct Authority

1AThe Financial Conduct Authority

(1)

The body corporate previously known as the Financial Services Authority is renamed as the Financial Conduct Authority.

(2)

The Financial Conduct Authority is in this Act referred to as “the FCA”.

(3)

The FCA is to have the functions conferred on it by or under this Act.

(4)

The FCA must comply with the requirements as to its constitution set out in Schedule 1ZA.

(5)

Schedule 1ZA also makes provision about the status of the FCA and the exercise of certain of its functions.

(6)

References in this Act or any other enactment to functions conferred on the FCA by or under this Act include references to functions conferred on the FCA by or under—

(a)

the Insolvency Act 1986,

(b)

the Banking Act 2009,

(c)

the Financial Services Act 2012, or

(d)

a qualifying EU provision that is specified, or of a description specified, for the purposes of this subsection by the Treasury by order.

The FCA's general duties

1BThe FCA's general duties

(1)

In discharging its general functions the FCA must, so far as is reasonably possible, act in a way which—

(a)

is compatible with its strategic objective, and

(b)

advances one or more of its operational objectives.

(2)

The FCA's strategic objective is: ensuring that the relevant markets (see section 1F) function well.

(3)

The FCA's operational objectives are—

(a)

the consumer protection objective (see section 1C);

(b)

the integrity objective (see section 1D);

(c)

the competition objective (see section 1E).

(4)

The FCA must, so far as is compatible with acting in a way which advances the consumer protection objective or the integrity objective, discharge its general functions in a way which promotes effective competition in the interests of consumers.

(5)

In discharging its general functions the FCA must have regard to—

(a)

the regulatory principles in section 3B, and

(b)

the importance of taking action intended to minimise the extent to which it is possible for a business carried on—

(i)

by an authorised person or a recognised investment exchange, or

(ii)

in contravention of the general prohibition,

to be used for a purpose connected with financial crime.

(6)

For the purposes of this Chapter, the FCA's general functions are—

(a)

its function of making rules under this Act (considered as a whole),

(b)

its function of preparing and issuing codes under this Act (considered as a whole),

(c)

its functions in relation to the giving of general guidance under this Act (considered as a whole), and

(d)

its function of determining the general policy and principles by reference to which it performs particular functions under this Act.

(7)

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 FCA's general functions do not include functions that are transferred functions within the meaning of section 52 of that Act.

(8)

“General guidance” has the meaning given in section 139B(5).

1CThe consumer protection objective

(1)

The consumer protection objective is: securing an appropriate degree of protection for consumers.

(2)

In considering what degree of protection for consumers may be appropriate, the FCA must have regard to—

(a)

the differing degrees of risk involved in different kinds of investment or other transaction;

(b)

the differing degrees of experience and expertise that different consumers may have;

(c)

the needs that consumers may have for the timely provision of information and advice that is accurate and fit for purpose;

(d)

the general principle that consumers should take responsibility for their decisions;

(e)

the general principle that those providing regulated financial services should be expected to provide consumers with a level of care that is appropriate having regard to the degree of risk involved in relation to the investment or other transaction and the capabilities of the consumers in question;

(f)

the differing expectations that consumers may have in relation to different kinds of investment or other transaction;

(g)

any information which the consumer financial education body has provided to the FCA in the exercise of the consumer financial education function;

(h)

any information which the scheme operator of the ombudsman scheme has provided to the FCA pursuant to section 232A.

1DThe integrity objective

(1)

The integrity objective is: protecting and enhancing the integrity of the UK financial system.

(2)

The “integrity” of the UK financial system includes—

(a)

its soundness, stability and resilience,

(b)

its not being used for a purpose connected with financial crime,

(c)

its not being affected by behaviour that amounts to market abuse,

(d)

the orderly operation of the financial markets, and

(e)

the transparency of the price formation process in those markets.

1EThe competition objective

(1)

The competition objective is: promoting effective competition in the interests of consumers in the markets for—

(a)

regulated financial services, or

(b)

services provided by a recognised investment exchange in carrying on regulated activities in respect of which it is by virtue of section 285(2) exempt from the general prohibition.

(2)

The matters to which the FCA may have regard in considering the effectiveness of competition in the market for any services mentioned in subsection (1) include—

(a)

the needs of different consumers who use or may use those services, including their need for information that enables them to make informed choices,

(b)

the ease with which consumers who may wish to use those services, including consumers in areas affected by social or economic deprivation, can access them,

(c)

the ease with which consumers who obtain those services can change the person from whom they obtain them,

(d)

the ease with which new entrants can enter the market, and

(e)

how far competition is encouraging innovation.

Interpretation of terms used in relation to FCA's general duties

1FMeaning of “relevant markets” in strategic objective

In section 1B(2) “the relevant markets” means—

(a)

the financial markets,

(b)

the markets for regulated financial services (see section 1H(2)), and

(c)

the markets for services that are provided by persons other than authorised persons in carrying on regulated activities but are provided without contravening the general prohibition.

1GMeaning of “consumer”

(1)

In sections 1B to 1E “consumers” means persons who—

(a)

use, have used or may use—

(i)

regulated financial services, or

(ii)

services that are provided by persons other than authorised persons but are provided in carrying on regulated activities,

(b)

have relevant rights or interests in relation to any of those services,

(c)

have invested, or may invest, in financial instruments, or

(d)

have relevant rights or interests in relation to financial instruments.

(2)

A person (“P”) has a “relevant right or interest” in relation to any services within subsection (1)(a) if P has a right or interest—

(a)

which is derived from, or is otherwise attributable to, the use of the services by others, or

(b)

which may be adversely affected by the use of the services by persons acting on P's behalf or in a fiduciary capacity in relation to P.

(3)

If a person is providing a service within subsection (1)(a) as trustee, the persons who are, have been or may be beneficiaries of the trust are to be treated as persons who use, have used or may use the service.

(4)

A person who deals with another person (“B”) in the course of B providing a service within subsection (1)(a) is to be treated as using the service.

(5)

A person (“P”) has a “relevant right or interest” in relation to any financial instrument if P has—

(a)

a right or interest which is derived from, or is otherwise attributable to, investment in the instrument by others, or

(b)

a right or interest which may be adversely affected by the investment in the instrument by persons acting on P's behalf or in a fiduciary capacity in relation to P.

1HFurther interpretative provisions for sections 1B to 1G

(1)

The following provisions have effect for the interpretation of sections 1B to 1G.

(2)

“Regulated financial services” means services provided—

(a)

by authorised persons in carrying on regulated activities;

(b)

by authorised persons in carrying on a consumer credit business in connection with the accepting of deposits;

(c)

by authorised persons in communicating, or approving the communication by others of, invitations to engage in investment activity;

(d)

by authorised persons who are investment firms, or credit institutions, in providing relevant ancillary services;

(e)

by persons acting as appointed representatives;

(f)

by payment service providers in providing payment services;

(g)

by electronic money issuers in issuing electronic money;

(h)

by sponsors to issuers of securities;

(i)

by primary information providers to persons who issue financial instruments.

(3)

“Financial crime” includes any offence involving—

(a)

fraud or dishonesty,

(b)

misconduct in, or misuse of information relating to, a financial market,

(c)

handling the proceeds of crime, or

(d)

the financing of terrorism.

(4)

“Offence” includes an act or omission which would be an offence if it had taken place in the United Kingdom.

(5)

“Issuer”, except in the expression “electronic money issuer”, has the meaning given in section 102A(6).

(6)

“Financial instrument” has the meaning given in section 102A(4).

(7)

“Securities” has the meaning given in section 102A(2).

(8)

In this section—

“accepting”, in relation to deposits, includes agreeing to accept;

“consumer credit business” has the same meaning as in the Consumer Credit Act 1974;

“credit institution” means—

(a)

a credit institution authorised under the banking consolidation directive, or

(b)

an institution which would satisfy the requirements for authorisation as a credit institution under that directive if it had its registered office (or if it does not have a registered office, its head office) in an EEA State;

“electronic money” has the same meaning as in the Electronic Money Regulations 2011;

“electronic money issuer” means a person who is an electronic money issuer as defined in regulation 2(1) of the Electronic Money Regulations 2011 other than a person falling within paragraph (f), (g) or (j) of the definition;

“engage in investment activity” has the meaning given in section 21;

“financial instrument” has the meaning given in section 102A(4);

“payment services” has the same meaning as in the Payment Services Regulations 2009;

“payment service provider” means a person who is a payment service provider as defined in regulation 2(1) of the Payment Services Regulations 2009 other than a person falling within paragraph (g) or (h) of the definition;

“primary information provider” has the meaning given in section 89P(2);

“relevant ancillary service” means any service of a kind mentioned in Section B of Annex I to the markets in financial instruments directive the provision of which does not involve the carrying on of a regulated activity;

“sponsor” has the meaning given in section 88(2).

1IMeaning of “the UK financial system”

In this Act “the UK financial system” means the financial system operating in the United Kingdom and includes—

(a)

financial markets and exchanges,

(b)

regulated activities, and

(c)

other activities connected with financial markets and exchanges.

Power to amend objectives

1JPower to amend objectives

The Treasury may by order amend any of the following provisions—

(a)

in section 1E(1), paragraphs (a) and (b),

(b)

section 1G, and

(c)

section 1H(2) and (5) to (8).

Guidance about objectives

1KGuidance about objectives

(1)

The general guidance given by the FCA under section 139A must include guidance about how it intends to advance its operational objectives in discharging its general functions in relation to different categories of authorised person or regulated activity.

(2)

Before giving or altering any guidance complying with subsection (1), the FCA must consult the PRA.

Supervision, monitoring and enforcement

1LSupervision, monitoring and enforcement

(1)

The FCA must maintain arrangements for supervising authorised persons.

(2)

The FCA must maintain arrangements designed to enable it to determine whether persons other than authorised persons are complying—

(a)

with requirements imposed on them by or under this Act, in cases where the FCA is the appropriate regulator for the purposes of Part 14 (disciplinary measures), or

(b)

with requirements imposed on them by any qualifying EU provision that is specified, or of a description specified, for the purposes of this subsection by the Treasury by order.

(3)

The FCA must also maintain arrangements for enforcing compliance by persons other than authorised persons with relevant requirements, within the meaning of Part 14, in cases where the FCA is the appropriate regulator for the purposes of any provision of that Part.

Arrangements for consulting practitioners and consumers

1MThe FCA's general duty to consult

The FCA must make and maintain effective arrangements for consulting practitioners and consumers on the extent to which its general policies and practices are consistent with its general duties under section 1B.

1NThe FCA Practitioner Panel

(1)

Arrangements under section 1M must include the establishment and maintenance of a panel of persons (to be known as “the FCA Practitioner Panel”) to represent the interests of practitioners.

(2)

The FCA must appoint one of the members of the FCA Practitioner Panel to be its chair.

(3)

The Treasury's approval is required for the appointment or dismissal of the chair.

(4)

The FCA must appoint to the FCA Practitioner Panel such—

(a)

persons representing authorised persons, and

(b)

persons representing recognised investment exchanges,

as it considers appropriate.

(5)

The FCA may appoint to the FCA Practitioner Panel such other persons as it considers appropriate.

1OThe Smaller Business Practitioner Panel

(1)

Arrangements under section 1M must include the establishment and maintenance of a panel of persons (to be known as “the Smaller Business Practitioner Panel”) to represent the interests of eligible practitioners.

(2)

“Eligible practitioners” means authorised persons of a description specified in a statement maintained by the FCA.

(3)

The FCA must appoint one of the members of the Smaller Business Practitioner Panel to be its chair.

(4)

The Treasury's approval is required for the appointment or dismissal of the chair.

(5)

The FCA must appoint to the Smaller Business Practitioner Panel such—

(a)

individuals who are eligible practitioners, and

(b)

persons representing eligible practitioners,

as it considers appropriate.

(6)

The FCA may appoint to the Smaller Business Practitioner Panel such other persons as it considers appropriate.

(7)

In making the appointments, the FCA must have regard to the desirability of ensuring the representation of eligible practitioners carrying on a range of regulated activities.

(8)

The FCA may revise the statement maintained under subsection (2).

(9)

The FCA must—

(a)

give the Treasury a copy of the statement or revised statement without delay, and

(b)

publish the statement as for the time being in force in such manner as it thinks fit.

1PThe Markets Practitioner Panel

(1)

Arrangements under section 1M must include the establishment and maintenance of a panel of persons (to be known as “the Markets Practitioner Panel”) to represent the interests of practitioners who are likely to be affected by the exercise by the FCA of its functions relating to markets, including its functions under Parts 6, 8A and 18.

(2)

The FCA must appoint one of the members of the Markets Practitioner Panel to be its chair.

(3)

The Treasury's approval is required for the appointment or dismissal of the chair.

(4)

The FCA must appoint to the Markets Practitioner Panel such persons to represent the interests of persons within subsection (5) as it considers appropriate.

(5)

The persons within this subsection are—

(a)

authorised persons,

(b)

persons who issue financial instruments,

(c)

sponsors, as defined in section 88(2),

(d)

recognised investment exchanges, and

(e)

primary information providers, as defined in section 89P(2).

(6)

The FCA may appoint to the Markets Practitioner Panel such other persons as it considers appropriate.

1QThe Consumer Panel

(1)

Arrangements under section 1M must include the establishment and maintenance of a panel of persons (to be known as “the Consumer Panel”) to represent the interests of consumers.

(2)

The FCA must appoint one of the members of the Consumer Panel to be its chair.

(3)

The Treasury's approval is required for the appointment or dismissal of the chair.

(4)

The FCA may appoint to the Consumer Panel such consumers, or persons representing the interests of consumers, as it considers appropriate.

(5)

The FCA must secure that membership of the Consumer Panel is such as to give a fair degree of representation to those who are using, or are or may be contemplating using, services otherwise than in connection with businesses carried on by them.

(6)

Sections 425A and 425B (meaning of “consumers”) apply for the purposes of this section, but the references to consumers in this section do not include consumers who are authorised persons.

1RDuty to consider representations made by the Panels

(1)

The FCA must consider representations that are made to it in accordance with arrangements made under section 1M.

(2)

The FCA must from time to time publish in such manner as it thinks fit responses to the representations.

Reviews

1SReviews

(1)

The Treasury may appoint an independent person to conduct a review of the economy, efficiency and effectiveness with which the FCA has used its resources in discharging its functions.

(2)

A review may be limited by the Treasury to such functions of the FCA (however described) as the Treasury may specify in appointing the person to conduct it.

(3)

A review is not to be concerned with the merits of the FCA's general policy or principles in complying with its general duties under section 1B(1) and (4).

(4)

On completion of a review, the person conducting it must make a written report to the Treasury—

(a)

setting out the result of the review, and

(b)

making such recommendations (if any) as the person considers appropriate.

(5)

A copy of the report must be—

(a)

laid before Parliament, and

(b)

published in such manner as the Treasury consider appropriate.

(6)

Any expenses reasonably incurred in the conduct of the review are to be met by the Treasury out of money provided by Parliament.

(7)

“Independent” means appearing to the Treasury to be independent of the FCA.

1TRight to obtain documents and information

(1)

A person conducting a review under section 1S—

(a)

has a right of access at any reasonable time to all such documents as the person may reasonably require for the purposes of the review, and

(b)

may require any person holding or accountable for any such document to provide such information and explanation as are reasonably necessary for that purpose.

(2)

Subsection (1) applies only to documents in the custody of or under the control of the FCA.

(3)

An obligation imposed on a person as a result of the exercise of the powers conferred by subsection (1) is enforceable by injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

CHAPTER 2The Prudential Regulation Authority

The Prudential Regulation Authority

2AThe Prudential Regulation Authority

(1)

The body corporate originally incorporated as the Prudential Regulation Authority Limited is renamed as the Prudential Regulation Authority.

(2)

The Prudential Regulation Authority is in this Act referred to as “the PRA”.

(3)

The PRA is to have the functions conferred on it by or under this Act.

(4)

The PRA must comply with the requirements as to its constitution set out in Schedule 1ZB.

(5)

Schedule 1ZB also confers on the Bank of England functions in relation to the PRA and makes provision about the status of the PRA and the exercise of certain of its functions.

(6)

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, or

(d)

a qualifying EU provision that is specified, or of a description specified, for the purposes of this subsection by the Treasury by order.

The PRA's general duties

2BThe PRA's general objective

(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, and

(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.

(4)

The adverse effects mentioned in subsection (3) may, in particular, result from the disruption of the continuity of financial services.

(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.

2CInsurance objective

(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.

2DPower to provide for additional objectives

(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.

2EStrategy

(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.

2FInterpretation of references to objectives

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.

2GLimit on effect of sections 2B to 2D

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

2HDuty to have regard to regulatory principles

(1)

In discharging its general functions, the PRA must also have regard to—

(a)

the regulatory principles in section 3B, and

(b)

the need to minimise any adverse effect on competition in the relevant markets that may result from the manner in which the PRA discharges those functions.

(2)

In subsection (1)(b) “the relevant markets” means the markets for services provided by PRA-authorised persons in carrying on regulated activities.

2IGuidance about objectives

(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.

2JInterpretation of Chapter 2

(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),

(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 a PRA-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.

(4)

In subsection (3)(a) “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.

Supervision

2KArrangements for supervision of PRA-authorised persons

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

Arrangements for consulting practitioners

2LThe PRA's general duty to consult

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.

2MThe PRA Practitioner Panel

(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.

2NDuty to consider representations

(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

2OReviews

(1)

The Treasury may appoint an independent person to conduct a review of the economy, efficiency and effectiveness with which the PRA has used its resources in discharging its functions.

(2)

A review may be limited by the Treasury to such functions of the PRA (however described) as the Treasury may specify in appointing the person to conduct it.

(3)

A review is not to be concerned with the merits of the PRA's general policy or principles in pursuing the PRA's objectives.

(4)

On completion of a review, the person conducting it must make a written report to the Treasury—

(a)

setting out the result of the review, and

(b)

making such recommendations (if any) as the person considers appropriate.

(5)

A copy of the report must be—

(a)

laid before Parliament, and

(b)

published in such manner as the Treasury consider appropriate.

(6)

Any expenses reasonably incurred in the conduct of the review are to be met by the Treasury out of money provided by Parliament.

(7)

“Independent” means appearing to the Treasury to be independent of the PRA.

2PRight to obtain documents and information

(1)

A person conducting a review under section 2O—

(a)

has a right of access at any reasonable time to all such documents as the person may reasonably require for the purposes of the review, and

(b)

may require any person holding or accountable for any such document to provide such information and explanation as are reasonably necessary for that purpose.

(2)

Subsection (1) applies only to documents in the custody of or under the control of the PRA.

(3)

An obligation imposed on a person as a result of the exercise of the powers conferred by subsection (1) is enforceable by injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

CHAPTER 3Further provisions relating to FCA and PRA

Introductory

3AMeaning of “regulator”

(1)

This section has effect for the interpretation of this Act.

(2)

The FCA and the PRA are the “regulators”, and references to a regulator are to be read accordingly.

(3)

Subsection (2) does not affect—

(a)

the meaning of the following expressions—

“home state regulator”;

“host state regulator”;

“overseas regulator”; or

(b)

the meaning of “the appropriate regulator” in Part 18 (recognised investment exchanges and clearing houses).

Regulatory principles

3BRegulatory principles to be applied by both regulators

(1)

In relation to the regulators, the regulatory principles referred to in section 1B(5)(a) and 2H(1)(a) are as follows—

(a)

the need to use the resources of each regulator in the most efficient and economic way;

(b)

the principle that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction;

(c)

the desirability of sustainable growth in the economy of the United Kingdom in the medium or long term;

(d)

the general principle that consumers should take responsibility for their decisions;

(e)

the responsibilities of the senior management of persons subject to requirements imposed by or under this Act, including those affecting consumers, in relation to compliance with those requirements;

(f)

the desirability where appropriate of each regulator exercising its functions in a way that recognises differences in the nature of, and objectives of, businesses carried on by different persons subject to requirements imposed by or under this Act;

(g)

the desirability in appropriate cases of each regulator publishing information relating to persons on whom requirements are imposed by or under this Act, or requiring such persons to publish information, as a means of contributing to the advancement by each regulator of its objectives;

(h)

the principle that the regulators should exercise their functions as transparently as possible.

(2)

“Consumer” has the meaning given in section 1G.

(3)

“Objectives”, in relation to the FCA, means operational objectives.

(4)

The Treasury may by order amend subsection (2).

Corporate governance

3CDuty to follow principles of good governance

In managing its affairs, each regulator must have regard to such generally accepted principles of good corporate governance as it is reasonable to regard as applicable to it.

Relationship between FCA and PRA

3DDuty of FCA and PRA to ensure co-ordinated exercise of functions

(1)

The regulators must co-ordinate the exercise of their respective functions conferred by or under this Act with a view to ensuring—

(a)

that each regulator consults the other regulator (where not otherwise required to do so) in connection with any proposed exercise of a function in a way that may have a material adverse effect on the advancement by the other regulator of any of its objectives;

(b)

that where appropriate each regulator obtains information and advice from the other regulator in connection with the exercise of its functions in relation to matters of common regulatory interest in cases where the other regulator may be expected to have relevant information or relevant expertise;

(c)

that where either regulator exercises functions in relation to matters of common regulatory interest, both regulators comply with their respective duties under section 1B(5)(a) or 2H(1)(a), so far as relating to the regulatory principles in section 3B(1)(a) and (b).

(2)

The duty in subsection (1) applies only to the extent that compliance with the duty—

(a)

is compatible with the advancement by each regulator of any of its objectives, and

(b)

does not impose a burden on the regulators that is disproportionate to the benefits of compliance.

(3)

A function conferred on either regulator by or under this Act relates to matters of common regulatory interest if—

(a)

the other regulator exercises similar or related functions in relation to the same persons,

(b)

the other regulator exercises functions which relate to different persons but relate to similar subject-matter, or

(c)

its exercise could affect the advancement by the other regulator of any of its objectives.

(4)

“Objectives”, in relation to the FCA, means operational objectives.

3EMemorandum of understanding

(1)

The regulators must prepare and maintain a memorandum which describes in general terms—

(a)

the role of each regulator in relation to the exercise of functions conferred by or under this Act which relate to matters of common regulatory interest, and

(b)

how the regulators intend to comply with section 3D in relation to the exercise of such functions.

(2)

The memorandum may in particular contain provisions about how the regulators intend to comply with section 3D in relation to—

(a)

applications for Part 4A permission;

(b)

the variation of permission;

(c)

the imposition of requirements;

(d)

the obtaining and disclosure of information;

(e)

cases where a PRA-authorised person is a member of a group whose other members include one or more other authorised persons (whether or not PRA-authorised persons);

(f)

functions under Schedule 3 (EEA passport rights) and Schedule 4 (Treaty rights);

(g)

the making of rules;

(h)

directions under section 138A (modification or waiver of rules);

(i)

powers to appoint competent persons under Part 11 (information gathering and investigations) to conduct investigations on their behalf;

(j)

functions under Part 12 (control over authorised persons);

(k)

functions under Part 13 (incoming firms: intervention by regulator);

(l)

functions under Part 19 (Lloyd's);

(m)

functions under section 347 (record of authorised persons etc.);

(n)

functions under Part 24 (insolvency);

(o)

fees payable to either regulator.

(3)

The memorandum must contain provision about the co-ordination by the regulators of—

(a)

the exercise of their functions relating to membership of, and their relations with, the European Supervisory Authorities (namely, the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority),

(b)

their relations with regulatory bodies outside the United Kingdom, and

(c)

the exercise of their functions in relation to the compensation scheme.

(4)

The regulators must review the memorandum at least once in each calendar year.

(5)

The regulators must give the Treasury a copy of the memorandum and any revised memorandum.

(6)

The Treasury must lay before Parliament a copy of any document received by them under this section.

(7)

The regulators must ensure that the memorandum as currently in force is published in the way appearing to them to be best calculated to bring it to the attention of the public.

(8)

The memorandum need not relate to any aspect of compliance with section 3D if the regulators consider—

(a)

that publication of information about that aspect would be against the public interest, or

(b)

that that aspect is a technical or operational matter not affecting the public.

(9)

The reference in subsection (1)(a) to matters of common regulatory interest is to be read in accordance with section 3D(3).

3FWith-profits insurance policies

(1)

The regulators must prepare and maintain a memorandum which describes in general terms—

(a)

the role of each regulator in relation to the exercise of functions conferred by or under this Act so far as they relate to with-profits insurers, and

(b)

how the regulators intend to comply with section 3D in relation to the exercise of those functions so far as they relate to the effecting or carrying out of with-profits policies by with-profits insurers.

(2)

The memorandum required by this section may be combined with the memorandum required by section 3E.

(3)

If the memorandum required by this section is contained in a separate document, the PRA and the FCA must publish the memorandum as currently in force in such manner as they think fit.

(4)

Subsections (1) to (3) apply only if the effecting or carrying out of with-profits policies is a PRA-regulated activity.

(5)

For the purposes of this section—

(a)

a “with-profits policy” is a contract of insurance under which the policyholder is eligible to receive a financial benefit at the discretion of the insurer;

(b)

a “with-profits insurer” is a PRA-authorised person who has a Part 4A permission, or permission resulting from any other provision of this Act, relating to the effecting or carrying out of with-profits policies (whether or not the permission also relates to contracts of insurance of other kinds).

(6)

The Treasury may by order amend the definition of “with-profits policy” applying for the purposes of this section.

3GPower to establish boundary between FCA and PRA responsibilities

(1)

The Treasury may by order specify matters that, in relation to the exercise by either regulator of its functions relating to PRA-authorised persons, are to be, or are to be primarily, the responsibility of one regulator rather than the other.

(2)

The order may—

(a)

provide that one regulator is or is not to have regard to specified matters when exercising specified functions;

(b)

require one regulator to consult the other.

3HParliamentary control of orders under section 3G

(1)

No order may be made under section 3G unless—

(a)

a draft of the order has been laid before Parliament and approved by a resolution of each House, or

(b)

subsection (3) applies.

(2)

Subsection (3) applies if an order under section 3G contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without a draft being so laid and approved.

(3)

Where this subsection applies the order—

(a)

must be laid before Parliament after being made, and

(b)

ceases to have effect at the end of the relevant period unless before the end of that period the order is approved by a resolution of each House of Parliament (but without that affecting anything done under the order or the power to make a new order).

(4)

The “relevant period” is a period of 28 days beginning with the day on which the order is made.

(5)

In calculating the relevant period no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.

Power of PRA to restrain proposed action by FCA

3IPower of PRA to require FCA to refrain from specified action

(1)

Where the first, second and third conditions are met, the PRA may give a direction under this section to the FCA.

(2)

The first condition is that the FCA is proposing—

(a)

to exercise any of its regulatory powers in relation to PRA-authorised persons generally, a class of PRA-authorised persons or a particular PRA-authorised person, or

(b)

to exercise any of its insolvency powers in relation to—

(i)

a PRA-authorised person,

(ii)

an appointed representative whose principal, or one of whose principals, is a PRA-authorised person, or

(iii)

a person who is carrying on a PRA-regulated activity in contravention of the general prohibition.

(3)

In subsection (2)—

(a)

“regulatory powers”, in relation to the FCA, means its powers in relation to the regulation of authorised persons, other than its powers in relation to consent for the purposes of section 55F or 55I or its powers under Part 24;

(b)

“insolvency powers”, in relation to the FCA, means its powers under Part 24.

(4)

The second condition is that the PRA is of the opinion that the exercise of the power in the manner proposed may—

(a)

threaten the stability of the UK financial system, or

(b)

result in the failure of a PRA-authorised person in a way that would adversely affect the UK financial system.

(5)

The third condition is that the PRA is of the opinion that the giving of the direction is necessary in order to avoid the possible consequence falling within subsection (4).

(6)

A direction under this section is a direction requiring the FCA not to exercise the power or not to exercise it in a specified manner.

(7)

The direction may be expressed to have effect during a specified period or until revoked.

(8)

The FCA is not required to comply with a direction under this section if or to the extent that in the opinion of the FCA compliance would be incompatible with any EU obligation or any other international obligation of the United Kingdom.

(9)

The reference in subsection (4)(b) to the “failure” of a PRA-authorised person is to be read in accordance with section 2J(3) and (4).

3JPower of PRA in relation to with-profits policies

(1)

Where the first, second and third conditions are met, the PRA may give a direction under this section to the FCA.

(2)

The first condition is that the FCA is proposing to exercise any of its regulatory powers in relation to with-profits insurers, a class of with-profits insurers or a particular with-profits insurer.

(3)

In subsection (2) “regulatory powers”, in relation to the FCA, means its powers in relation to the regulation of authorised persons, including its powers under Part 24 (insolvency) but not its powers in relation to consent for the purposes of section 55F or 55I.

(4)

The second condition is that the proposed exercise of the power relates to the provision of financial benefits under with-profits policies at the discretion of the insurer, or affects or may affect the amount, timing or distribution of financial benefits that are so provided or the entitlement to future benefits that are so provided.

(5)

The third condition is that the PRA is of the opinion that the giving of the direction is desirable in order to advance the PRA's general objective or its insurance objective.

(6)

A direction under this section is a direction requiring the FCA not to exercise the power or not to exercise it in a specified manner.

(7)

The direction may be expressed to have effect during a specified period or until revoked.

(8)

The FCA is not required to comply with a direction under this section if or to the extent that in the opinion of the FCA compliance would be incompatible with any EU obligation or any other international obligation of the United Kingdom.

(9)

Subsections (1) to (8) apply only if the effecting or carrying out of with-profits policies is a PRA-regulated activity.

(10)

In this section “with-profits insurer” and “with-profits policy” have the same meaning as they have for the purposes of section 3F.

3KRevocation of directions under section 3I or 3J

(1)

The PRA may at any time by notice to the FCA revoke a direction under section 3I or 3J.

(2)

The revocation of a direction under section 3I or 3J does not affect the validity of anything previously done in accordance with it.

3LFurther provisions about directions under section 3I or 3J

(1)

Before giving a direction under section 3I or 3J, the PRA must consult the FCA.

(2)

A direction under section 3I or 3J must be given or confirmed in writing, and must be accompanied by a statement of the reasons for giving it.

(3)

A notice revoking a direction under section 3I or 3J must be given or confirmed in writing.

(4)

The PRA must—

(a)

publish the direction and statement, or the notice, in such manner as it thinks fit, and

(b)

where the direction or notice relates to a particular authorised person or a particular with-profits insurer, give a copy of the direction and statement, or the notice, to that person.

(5)

The PRA must give the Treasury a copy of—

(a)

a direction under section 3I;

(b)

a statement relating to such a direction;

(c)

a notice revoking such a direction.

(6)

The Treasury must lay before Parliament any document received by them under subsection (5).

(7)

Subsection (4) does not apply where the PRA, after consulting the Treasury, decides that compliance with that subsection would be against the public interest, and at any time when this subsection excludes the application of subsection (4) in relation to a direction under section 3I, subsection (6) also does not apply.

(8)

Where the PRA decides that compliance with subsection (4) would be against the public interest, it must from time to time review that decision and if it subsequently decides that compliance is no longer against the public interest it must—

(a)

comply with that subsection, and

(b)

in the case of a direction under section 3I, notify the Treasury for the purposes of subsection (6).

Directions relating to consolidated supervision

3MDirections relating to consolidated supervision of groups

(1)

This section applies where one of the regulators (“the supervising regulator”), but not the other, is the competent authority for the purpose of consolidated supervision that is required in relation to some or all of the members of a group (“the relevant group”) in pursuance of any of the relevant directives.

(2)

“Consolidated supervision” includes supplementary supervision.

(3)

The “relevant directives” are—

(a)

the banking consolidation directive;

(b)

Directive 2002/87/EC of the European Parliament and of the Council on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate;

(c)

Directive 2006/49/EC on the capital adequacy of investment firms and credit institutions;

(d)

Directive 2009/138/EC of the European Parliament and the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).

(4)

The supervising regulator may, if it considers it necessary to do so for the effective consolidated supervision of the relevant group, give the other regulator a direction under this section.

(5)

A direction under this section is a direction requiring the other regulator to exercise, or not to exercise, a relevant function in a specified manner in relation to authorised persons who are members of the relevant group.

(6)

The direction may relate to members of the relevant group other than the members in respect of which consolidated supervision is required.

(7)

A “relevant function”, in relation to either regulator, is a function conferred by or under this Act which relates to the regulation of authorised persons, but does not include—

(a)

the regulator's function of making rules under this Act;

(b)

its function of preparing and issuing codes under this Act;

(c)

its function of determining the general policy and principles by reference to which it performs particular functions;

(d)

the FCA's functions in relation to the giving of general guidance;

(e)

the PRA's functions in relation to the giving of guidance under section 2I;

(f)

the FCA's functions in relation to consent for the purposes of section 55F or 55I.

(8)

The direction may not require the regulator to which it is given (“the directed regulator”) to do anything that it has no power to do, but the direction is relevant to the exercise of any discretion conferred on the directed regulator.

(9)

The directed regulator must comply with the direction as soon as practicable, but this is subject to subsections (10) and (11).

(10)

The directed regulator is not required to comply with a direction under this section if or to the extent that in its opinion compliance would be incompatible with any EU obligation or any other international obligation of the United Kingdom.

(11)

Directions given by the FCA under this section are subject to any directions given to the FCA under section 3I or 3J.

3NRevocation of directions under section 3M

(1)

The supervising regulator may at any time by notice to the other regulator revoke a direction under section 3M.

(2)

The revocation of the direction does not affect the validity of anything previously done in accordance with it.

(3)

Expressions defined for the purposes of section 3M have the same meaning in this section.

3OFurther provisions about directions under section 3M

(1)

Before giving a direction under section 3M, the supervising regulator must consult the other regulator.

(2)

A direction under section 3M must be given or confirmed in writing, and must be accompanied by a statement of the reasons for giving it.

(3)

A notice revoking a direction under section 3M must be given or confirmed in writing.

(4)

The regulator to which a direction under section 3M is given must give a copy of the direction and statement to each of the authorised persons to whom the direction relates.

(5)

The supervising regulator must publish the direction and statement, or the notice, in such manner as it thinks fit.

(6)

But subsection (4) or (5) does not apply in a case where the regulator on which the duty is imposed considers that compliance with that subsection would be against the public interest.

(7)

In a case where a regulator decides that compliance with subsection (4) or (5) would be against the public interest, the regulator must from time to time review that decision and if it subsequently decides that compliance is no longer against the public interest it must comply with the subsection.

(8)

Expressions defined for the purposes of section 3M have the same meaning in this section.

3PConsultation by regulator complying with direction

(1)

If the directed regulator is required by this Act to consult any person other than the supervising regulator before exercising the relevant function to which the direction relates, the directed regulator must give the supervising regulator copies of any written representations received from the persons consulted.

(2)

Expressions defined for the purposes of section 3M have the same meaning in this section.

Co-operation with Bank of England

3QCo-operation by FCA and PRA with Bank of England

(1)

Each regulator must take such steps as it considers appropriate to co-operate with the Bank of England in connection with—

(a)

the pursuit by the Bank of its Financial Stability Objective, and

(b)

the Bank's compliance with its duties under sections 58 and 59 of the Financial Services Act 2012 (duty to notify Treasury of possible need for public funds and of subsequent changes).

(2)

Co-operation under subsection (1) may include the sharing of information that the regulator is not prevented from disclosing.

Arrangements for provision of services

3RArrangements for provision of services

(1)

The regulators may enter into arrangements with each other for the provision of services by one of them to the other.

(2)

Either regulator may enter into arrangements with the Bank of England for the provision of services—

(a)

by the Bank to the regulator, or

(b)

by the regulator to the Bank.

(3)

Either regulator may enter into arrangements with any of the bodies specified in subsection (4) for the provision of services by the regulator to that body.

(4)

Those bodies are—

(a)

the consumer financial education body (see section 3S(2)),

(b)

the scheme manager (see section 212(1)), and

(c)

the scheme operator (see section 225(2)).

(5)

The FCA may enter into arrangements with—

(a)

a local weights and measures authority in England, Wales or Scotland, or

(b)

the Department of Enterprise, Trade and Investment in Northern Ireland,

for the provision by the authority or department to the FCA of services which relate to activities to which this subsection applies.

(6)

Subsection (5) applies to activities that are regulated activities by virtue of—

(a)

an order made under section 22(1) in relation to an investment of a kind falling within paragraph 23 or 23B of Schedule 2, or

(b)

an order made under section 22(1A)(a).

(7)

Arrangements under this section are to be on such terms as may be agreed by the parties.

Enhancing public understanding of financial matters etc.

3SThe consumer financial education body

(1)

The consumer financial education body continues to have the consumer financial education function.

(2)

The “consumer financial education body” means the body corporate originally established by the Financial Services Authority under section 6A of this Act (as it had effect before the passing of the Financial Services Act 2012).

(3)

The consumer financial education function is to enhance—

(a)

the understanding and knowledge of members of the public of financial matters (including the UK financial system), and

(b)

the ability of members of the public to manage their own financial affairs.

(4)

The consumer financial education function includes, in particular—

(a)

promoting awareness of the benefits of financial planning;

(b)

promoting awareness of the financial advantages and disadvantages in relation to particular decisions relating to different kinds of goods or services;

(c)

promoting awareness of the benefits and risks associated with different kinds of financial dealing (which includes informing the FCA and other bodies of those benefits and risks);

(d)

the publication of educational materials or the carrying out of other educational activities;

(e)

the provision of information and advice to members of the public;

(f)

assisting members of the public with the management of debt;

(g)

working with other organisations which provide debt services, with a view to improving—

(i)

the availability to the public of those services;

(ii)

the quality of the services provided;

(iii)

consistency in the services available, in the way in which they are provided and in the advice given.

(5)

In subsection (4) “debt services” means debt advice or assistance with the management of debt.

(6)

Schedule 1A makes further provision about the consumer financial education body.”

For paragraph 23 (and the italic heading before it) substitute—

“Loans and other forms of credit

23

(1)

Rights under any contract under which one person provides another with credit.

(2)

“Credit” includes any cash loan or other financial accommodation.

(3)

“Cash” includes money in any form.

(4)

It is immaterial for the purposes of sub-paragraph (1) whether or not the obligation of the borrower is secured on property of any kind.”

After paragraph 23A insert—

“Contracts for hire of goods

23B

(1)

Rights under a contract for the bailment or (in Scotland) hiring of goods to a person other than a body corporate.

(2)

“Goods” has the meaning given in section 61(1) of the Sale of Goods Act 1979.

(3)

It is immaterial for the purposes of sub-paragraph (1) whether the rights of the person to whom the goods are bailed or hired have been assigned to a body corporate.”

After paragraph 24 insert—

“PART 2ARegulated activities relating to information about persons' financial standing

General

24A

The matters with respect to which provision may be made under section 22(1A)(a) include, in particular, those described in general terms in this Part of this Schedule.

Providing credit reference services

24B

Furnishing persons with information that—

(a)

is relevant to the financial standing of persons other than bodies corporate, and

(b)

is collected for that purpose by the person furnishing it.

Providing credit information services

24C

(1)

Taking steps on behalf of a person other than a body corporate in connection with information relevant to that person's financial standing that is or may be held by a regulated person.

(2)

“Regulated person” means—

(a)

a person who is carrying on a regulated activity, or

(b)

a person who is carrying on a business in respect of which a licence under section 21 of the Consumer Credit Act 1974 is required.

24D

Giving advice to a person other than a body corporate in relation to the taking of any steps of the kind mentioned in paragraph 24C(1).

PART 2BRegulated activities relating to the setting of benchmarks

General

24E

The matters with respect to which provisions may be made under section 22(1A)(b) include, in particular, those described in general terms in this Part of this Schedule.

Providing information

24F

Providing any information or expression of opinion that—

(a)

is required by another person in connection with the determination of a benchmark, and

(b)

is provided to that person for that purpose.

Administration

24G

(1)

Administering the arrangements for determining a benchmark.

(2)

Collecting, analysing or processing information or expressions of opinion for the purpose of the determination of a benchmark.

Determining or publishing benchmark or publishing connected information

24H

(1)

Determining a benchmark.

(2)

Publishing a benchmark or information connected with a benchmark.”

For paragraph 26 substitute—

“Parliamentary control

26

(1)

This paragraph applies to any order made under section 22(1) or (1A) which contains a statement by the Treasury that, in their opinion, the effect (or one of the effects) of the proposed order would be that an activity which is not a regulated activity would become a regulated activity.

(2)

No order to which this paragraph applies may be made unless—

(a)

a draft of the order has been laid before Parliament and approved by a resolution of each House, or

(b)

sub-paragraph (4) applies.

(3)

Sub-paragraph (4) applies if an order to which this paragraph applies also contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without a draft being so laid and approved.

(4)

Where this sub-paragraph applies the order—

(a)

must be laid before Parliament after being made, and

(b)

ceases to have effect at the end of the relevant period unless before the end of that period the order is approved by a resolution of each House of Parliament (but without that affecting anything done under the order or the power to make a new order).

(5)

The “relevant period” is a period of 28 days beginning with the day on which the order is made.

(6)

In calculating the relevant period no account is to be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.”

After subsection (1B) insert—

“(1C)

Subsection (1D) applies where an authorised person (“A”)—

(a)

has permission under Part 4A, or permission resulting from any other provision of this Act, only in relation to one or more qualifying activities,

(b)

is a party to a contract with another authorised person (A's “principal”) which—

(i)

permits or requires A to carry on business of a prescribed description (“the relevant business”), and

(ii)

complies with such requirements as may be prescribed, and

(c)

is someone for whose activities in carrying on the whole or part of the relevant business A's principal has accepted responsibility in writing.

(1D)

Sections 20(1) and (1A) and 23(1A) do not apply in relation to the carrying on by A of a relevant additional activity.

(1E)

In subsections (1C) and (1D)—

(a)

“qualifying activity” means a regulated activity which is of a prescribed kind and relates—

(i)

to rights under a contract of the kind mentioned in paragraph 23 of Schedule 2, other than one under which the obligation of the borrower to repay is secured on land, or

(ii)

to rights under a contract of the kind mentioned in paragraph 23B of that Schedule;

(b)

“relevant additional activity” means a regulated activity which—

(i)

is not one to which A's permission relates, and

(ii)

is comprised in the carrying on of the business for which A's principal has accepted responsibility.”

For subsection (2) substitute—

“(2)

In this Act “appointed representative” means—

(a)

a person who is exempt as a result of subsection (1), or

(b)

a person carrying on a regulated activity in circumstances where, as a result of subsection (1D), sections 20(1) and (1A) and 23(1A) do not apply.”

For sections 40 to 55 of FSMA 2000 substitute—

“PART 4APermission to carry on regulated activities

Application for permission

55AApplication for permission

(1)

An application for permission to carry on one or more regulated activities may be made to the appropriate regulator by—

(a)

an individual,

(b)

a body corporate,

(c)

a partnership, or

(d)

an unincorporated association.

(2)

“The appropriate regulator”, in relation to an application under this section, means—

(a)

the PRA, in a case where—

(i)

the regulated activities to which the application relates consist of or include a PRA-regulated activity, or

(ii)

the applicant is a PRA-authorised person otherwise than by virtue of a Part 4A permission;

(b)

the FCA, in any other case.

(3)

An authorised person who has a permission under this Part which is in force may not apply for permission under this section.

(4)

An EEA firm may not apply for permission under this section to carry on a regulated activity which it is, or would be, entitled to carry on in exercise of an EEA right, whether through a United Kingdom branch or by providing services in the United Kingdom.

(5)

A permission given by the appropriate regulator under this Part or having effect as if so given is referred to in this Act as “a Part 4A permission”.

55BThe threshold conditions

(1)

“The threshold conditions”, in relation to a regulated activity, means the conditions set out in or specified under Schedule 6, as read with any threshold condition code made by either regulator under section 137O.

(2)

Any reference in this Part to the threshold conditions for which either regulator is responsible is to be read as a reference to the conditions set out in or specified under Schedule 6 that are expressed to be relevant to the discharge by that regulator of its functions, as read with any threshold condition code made by that regulator under section 137O.

(3)

In giving or varying permission, imposing or varying a requirement, or giving consent, under any provision of this Part, each regulator must ensure that the person concerned will satisfy, and continue to satisfy, in relation to all of the regulated activities for which the person has or will have permission, the threshold conditions for which that regulator is responsible.

(4)

But the duty imposed by subsection (3) does not prevent a regulator, having due regard to that duty, from taking such steps as it considers are necessary, in relation to a particular person, in order to advance—

(a)

in the case of the FCA, any of its operational objectives;

(b)

in the case of the PRA, any of its objectives.

55CPower to amend Schedule 6

(1)

The Treasury may by order amend Parts 1 and 2 of Schedule 6 by altering, adding or repealing provisions, or by substituting for those Parts as they have effect for the time being provisions specified in the order.

(2)

Different provision may be made under this section—

(a)

in relation to the discharge of the functions of each regulator;

(b)

in relation to different regulated activities;

(c)

in relation to persons who carry on, or seek to carry on, activities that consist of or include a PRA-regulated activity and in relation to other persons.

55DFirms based outside EEA

(1)

This section applies in relation to a person (“the non-EEA firm”)—

(a)

who is a body incorporated in, or formed under the law of, or is an individual who is a national of, any country or territory outside the EEA, and

(b)

who is carrying on a regulated activity in any country or territory outside the United Kingdom in accordance with the law of that country or territory (“the overseas state”).

(2)

In determining whether the non-EEA firm is satisfying or will satisfy, and continue to satisfy, any one or more of the threshold conditions for which a UK regulator is responsible, the UK regulator may have regard to any opinion notified to it by a regulatory authority in the overseas state (“the overseas regulator”) which relates to the non-EEA firm and appears to the UK regulator to be relevant to compliance with those conditions.

(3)

In considering how much weight (if any) to attach to the opinion, the UK regulator must have regard to the nature and scope of the supervision exercised in relation to the non-EEA firm by the overseas regulator.

(4)

In this section “UK regulator” means the FCA or the PRA.

55EGiving permission: the FCA

(1)

This section applies where the FCA is the appropriate regulator in relation to an application for permission under section 55A.

(2)

The FCA may give permission for the applicant to carry on the regulated activity or activities to which the application relates or such of them as may be specified in the permission.

(3)

If the applicant is a member of a group which includes a PRA-authorised person, the FCA must consult the PRA before determining the application.

(4)

If it gives permission, the FCA must specify the permitted regulated activity or activities, described in such manner as the FCA considers appropriate.

(5)

The FCA may—

(a)

incorporate in the description of a regulated activity such limitations (for example as to circumstances in which the activity may, or may not, be carried on) as it considers appropriate;

(b)

specify a narrower or wider description of regulated activity than that to which the application relates;

(c)

give permission for the carrying on of a regulated activity which is not included among those to which the application relates and is not a PRA-regulated activity.

55FGiving permission: the PRA

(1)

This section applies where the PRA is the appropriate regulator in relation to an application for permission under section 55A.

(2)

The PRA may with the consent of the FCA give permission for the applicant to carry on the regulated activity or activities to which the application relates or such of them as may be specified in the permission.

(3)

If it gives permission, the PRA must specify the permitted regulated activity or activities, described in such manner as the PRA considers appropriate.

(4)

The PRA may—

(a)

incorporate in the description of a regulated activity such limitations (for example as to circumstances in which the activity may, or may not, be carried on) as it considers appropriate;

(b)

specify a narrower or wider description of regulated activity than that to which the application relates;

(c)

give permission for the carrying on of a regulated activity which is not included among those to which the application relates.

(5)

Consent given by the FCA for the purposes of this section may be conditional on the manner in which the PRA exercises its powers under subsections (3) and (4).

(6)

Subsections (3) and (4)(b) and (c) do not enable the PRA to give permission that relates only to activities that are not PRA-regulated activities, except where the applicant is a PRA-authorised person otherwise than by virtue of a Part 4A permission.

55GGiving permission: special cases

(1)

“The applicant” means an applicant for permission under section 55A.

(2)

If the applicant—

(a)

in relation to a particular regulated activity, is exempt from the general prohibition as a result of section 39(1) or an order made under section 38(1), but

(b)

has applied for permission in relation to another regulated activity,

the application is to be treated as relating to all the regulated activities which, if permission is given, the applicant will carry on.

(3)

If the applicant—

(a)

in relation to a particular regulated activity, is exempt from the general prohibition as a result of section 285(2) or (3), but

(b)

has applied for permission in relation to another regulated activity,

the application is to be treated as relating only to that other regulated activity.

(4)

If the applicant—

(a)

is a person to whom, in relation to a particular regulated activity, the general prohibition does not apply as a result of Part 19, but

(b)

has applied for permission in relation to another regulated activity,

the application is to be treated as relating only to that other regulated activity.

(5)

Subsection (6) applies where either regulator (“the responsible regulator”) receives an application for permission under section 55A which is in the regulator's opinion similar to an application which was previously made to the other regulator and was either—

(a)

treated by the other regulator as not being a valid application to that regulator because of the regulated activities to which it related, or

(b)

refused by the other regulator after being considered.

(6)

The responsible regulator must have regard to the desirability of minimising—

(a)

the additional work for the applicant in dealing with the new application, and

(b)

the time taken to deal with the new application.

Variation and cancellation of Part 4A permission

55HVariation by FCA at request of authorised person

(1)

This section applies in relation to an authorised person who has a Part 4A permission but is not a PRA-authorised person.

(2)

The FCA may, on the application of the authorised person, vary the permission by—

(a)

adding a regulated activity, other than a PRA-regulated activity, to those to which the permission relates;

(b)

removing a regulated activity from those to which the permission relates;

(c)

varying the description of a regulated activity to which the permission relates.

(3)

The FCA may, on the application of the authorised person, cancel the permission.

(4)

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

(5)

If the applicant is a member of a group which includes a PRA-authorised person, the FCA must consult the PRA before determining the application.

(6)

If as a result of a variation of a Part 4A permission under this section there are no longer any regulated activities for which the authorised person concerned has permission, the FCA must, once it is satisfied that it is no longer necessary to keep the permission in force, cancel it.

(7)

The FCA's power to vary a Part 4A permission under this section extends to including in the permission as varied any provision that could be included if a fresh permission were being given by it in response to an application under section 55A.

55IVariation by PRA at request of authorised person

(1)

On the application of a PRA-authorised person with a Part 4A permission, the PRA may with the consent of the FCA vary the permission by—

(a)

adding a regulated activity to those to which the permission relates;

(b)

removing a regulated activity from those to which the permission relates;

(c)

varying the description of a regulated activity to which the permission relates.

(2)

On the application of a PRA-authorised person with a Part 4A permission, the PRA may, after consulting the FCA, cancel the permission.

(3)

On the application of an authorised person other than a PRA-authorised person, the PRA may with the consent of the FCA vary the permission by adding to the regulated activities to which the permission relates one or more regulated activities which include a PRA-regulated activity.

(4)

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

(5)

The FCA may withhold its consent to a proposed variation under this section if it appears to it that it is desirable to do so in order to advance one or more of its operational objectives.

(6)

If as a result of a variation of a Part 4A permission under this section there are no longer any regulated activities for which the authorised person concerned has permission, the PRA must, once it is satisfied after consulting the FCA that it is no longer necessary to keep the permission in force, cancel it.

(7)

The PRA's power to vary a Part 4A permission under this section extends to including in the permission as varied any provision that could be included if a fresh permission were being given by it in response to an application under section 55A.

(8)

Consent given by the FCA for the purposes of subsection (1) may be conditional on the manner in which the PRA exercises its powers under section 55F(3) and (4) (as a result of subsection (7)).

55JVariation or cancellation on initiative of regulator

(1)

Either regulator may exercise its power under this section in relation to an authorised person with a Part 4A permission (“A”) if it appears to the regulator that—

(a)

A is failing, or is likely to fail, to satisfy the threshold conditions for which the regulator is responsible,

(b)

A has failed, during a period of at least 12 months, to carry on a regulated activity to which the Part 4A permission relates, or

(c)

it is desirable to exercise the power in order to advance—

(i)

in the case of the FCA, one or more of its operational objectives,

(ii)

in the case of the PRA, any of its objectives.

(2)

The FCA's power under this section is the power—

(a)

to vary the Part 4A permission by—

(i)

adding a regulated activity other than a PRA-regulated activity to those to which the permission relates,

(ii)

removing a regulated activity from those to which the permission relates, or

(iii)

varying the description of a regulated activity to which the permission relates in a way which, if it is a PRA-regulated activity, does not, in the opinion of the FCA, widen the description, or

(b)

to cancel the Part 4A permission.

(3)

The PRA's power under this section is the power—

(a)

in the case of a PRA-authorised person, to vary the Part 4A permission in any of the ways mentioned in section 55I(1) or to cancel it;

(b)

in the case of an authorised person who is not a PRA-authorised person, to vary the Part 4A permission by adding a PRA-regulated activity to those to which the permission relates and, if the PRA does so, to vary the Part 4A permission in any of the other ways mentioned in section 55I(1).

(4)

The FCA—

(a)

must consult the PRA before exercising its power under this section in relation to—

(i)

a PRA-authorised person, or

(ii)

a member of a group which includes a PRA-authorised person, and

(b)

in the case of a PRA-authorised person, may exercise the power so as to add a new activity to those to which the permission relates or to widen the description of a regulated activity to which the permission relates, only with the consent of the PRA.

(5)

The PRA—

(a)

must consult the FCA before exercising its power under this section, and

(b)

may exercise the power so as to add a new activity to those to which the permission relates or to widen the description of a regulated activity to which the permission relates, only with the consent of the FCA.

(6)

Without prejudice to the generality of subsections (1) to (3), a regulator may, in relation to an authorised person who is an investment firm, exercise its power under this section to cancel the Part 4A permission if it appears to it that any of the conditions in section 55K is met.

(7)

Without prejudice to the generality of subsections (1) and (2), the FCA may, in relation to an authorised person who has permission to carry on the regulated activity specified in article 24A of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (which relates to bids in emission allowance auctions), exercise its power under this section to vary the Part 4A permission of the person concerned by removing that activity from those to which the permission relates if it appears to the FCA that the person has seriously and systematically infringed the provisions of paragraph 2 or 3 of Article 59 of the emission allowance auctioning regulation.

(8)

If, as a result of a variation of a Part 4A permission under this section, there are no longer any regulated activities for which the authorised person concerned has permission, the regulator responsible for the variation must, once it is satisfied that it is no longer necessary to keep the permission in force, cancel it.

(9)

Before cancelling under subsection (8) a Part 4A permission which relates to a person who (before the variation) was a PRA-authorised person, the regulator must consult the other regulator.

(10)

The power of either regulator to vary a Part 4A permission under this section extends to including in the permission as varied any provision that could be included if a fresh permission were being given in response to an application to that regulator under section 55A.

(11)

Consent given by one regulator for the purpose of subsection (4)(b) or (5)(b) may be conditional on the manner in which the other regulator exercises its powers under section 55E(4) and (5) or 55F(3) and (4) (as a result of subsection (10)).

(12)

The power of the FCA or the PRA under this section is referred to in this Part as its own-initiative variation power.

55KInvestment firms: particular conditions that enable cancellation

(1)

The conditions referred to in section 55J(6) are as follows—

(a)

that the firm has failed, during a period of at least 6 months, to carry on a regulated activity which is an investment service or activity for which it has a Part 4A permission;

(b)

that the firm obtained the Part 4A permission by making a false statement or by other irregular means;

(c)

that the firm no longer satisfies the requirements for authorisation pursuant to Chapter I of Title II of the markets in financial instruments directive, or pursuant to or contained in any EU legislation made under that Chapter, in relation to a regulated activity which is an investment service or activity for which it has a Part 4A permission;

(d)

that the firm has seriously and systematically infringed the operating conditions pursuant to Chapter II of Title II of the markets in financial instruments directive, or pursuant to or contained in any EU legislation made under that Chapter, in relation to a regulated activity which is an investment service or activity for which it has a Part 4A permission.

(2)

For the purposes of this section a regulated activity is an investment service or activity if it falls within the definition of “investment services and activities” in section 417(1).

Imposition and variation of requirements

55LImposition of requirements by FCA

(1)

Where a person has applied (whether to the FCA or the PRA) for a Part 4A permission or the variation of a Part 4A permission, the FCA may impose on that person such requirements, taking effect on or after the giving or variation of the permission, as the FCA considers appropriate.

(2)

The FCA may exercise its power under subsection (3) in relation to an authorised person with a Part 4A permission (whether given by it or by the PRA) (“A”) if it appears to the FCA that—

(a)

A is failing, or is likely to fail, to satisfy the threshold conditions for which the FCA is responsible,

(b)

A has failed, during a period of at least 12 months, to carry on a regulated activity to which the Part 4A permission relates, or

(c)

it is desirable to exercise the power in order to advance one or more of the FCA's operational objectives.

(3)

The FCA's power under this subsection is a power—

(a)

to impose a new requirement,

(b)

to vary a requirement imposed by the FCA under this section, or

(c)

to cancel such a requirement.

(4)

The FCA's power under subsection (3) is referred to in this Part as its own-initiative requirement power.

(5)

The FCA may, on the application of an authorised person with a Part 4A permission—

(a)

impose a new requirement,

(b)

vary a requirement imposed by the FCA under this section, or

(c)

cancel such a requirement.

(6)

The FCA may refuse an application under subsection (5) if it appears to it that it is desirable to do so in order to advance any of its operational objectives.

(7)

The FCA must consult the PRA before imposing or varying a requirement which relates to—

(a)

a person who is, or will on the granting of an application for Part 4A permission be, a PRA-authorised person, or

(b)

a person who is a member of a group which includes a PRA-authorised person.

55MImposition of requirements by PRA

(1)

Where—

(a)

a person has applied for a Part 4A permission in relation to activities which consist of or include a PRA-regulated activity,

(b)

a PRA-authorised person has applied for a Part 4A permission or the variation of a Part 4A permission, or

(c)

an authorised person other than a PRA-authorised person has applied for a Part 4A permission to be varied by adding to the regulated activities to which it relates one or more regulated activities which include a PRA-regulated activity,

the PRA may impose on that person such requirements, taking effect on or after the giving or variation of the permission, as the PRA considers appropriate.

(2)

The PRA may exercise its power under subsection (3) in relation to a PRA-authorised person with a Part 4A permission (“P”) if it appears to the PRA that—

(a)

P is failing, or is likely to fail, to satisfy the threshold conditions for which the PRA is responsible,

(b)

P has failed, during a period of at least 12 months, to carry on a regulated activity to which the Part 4A permission relates, or

(c)

it is desirable to exercise the power in order to advance any of the PRA's objectives.

(3)

The PRA's power under this subsection is a power—

(a)

to impose a new requirement,

(b)

to vary a requirement imposed by the PRA under this section, or

(c)

to cancel such a requirement.

(4)

The PRA's power under subsection (3) is referred to in this Part as its own-initiative requirement power.

(5)

The PRA may, on the application of a PRA-authorised person with a Part 4A permission—

(a)

impose a new requirement,

(b)

vary a requirement imposed by the PRA under this section, or

(c)

cancel such a requirement.

(6)

The PRA may refuse an application under subsection (5) if it appears to it that it is desirable to do so in order to advance any of its objectives.

(7)

The PRA must consult the FCA before imposing or varying a requirement.

55NRequirements under section 55L or 55M: further provisions

(1)

A requirement may, in particular, be imposed—

(a)

so as to require the person concerned to take specified action, or

(b)

so as to require the person concerned to refrain from taking specified action.

(2)

A requirement may extend to activities which are not regulated activities.

(3)

A requirement may be imposed by reference to the person's relationship with—

(a)

the person's group, or

(b)

other members of the person's group.

(4)

A requirement may be expressed to expire at the end of such period as the regulator imposing it may specify, but the imposition of a requirement that expires at the end of a specified period does not affect the regulator's power to impose a new requirement.

(5)

A requirement may refer to the past conduct of the person concerned (for example, by requiring the person concerned to review or take remedial action in respect of past conduct).

(6)

In this section “requirement” means a requirement imposed under section 55L or 55M.

55OImposition of requirements on acquisition of control

(1)

This section applies if it appears to the appropriate regulator that—

(a)

a person has acquired control over a UK authorised person who has a Part 4A permission, but

(b)

there are no grounds for exercising its own-initiative requirement power.

(2)

If it appears to the appropriate regulator that the likely effect of the acquisition of control on the UK authorised person, or on any of its activities, is uncertain, the appropriate regulator may—

(a)

impose on the UK authorised person a requirement that could be imposed by that regulator under section 55L or 55M (as the case may be) on the giving of permission, or

(b)

vary a requirement imposed by that regulator under that section on the UK authorised person.

(3)

“The appropriate regulator” means—

(a)

in a case where the UK authorised person is a PRA-authorised person, the FCA or the PRA;

(b)

in any other case, the FCA.

(4)

This section does not affect any duty of the appropriate regulator to consult or obtain the consent of the other regulator in connection with the imposition of the requirement.

(5)

Any reference to a person having acquired control is to be read in accordance with Part 12.

55PProhibitions and restrictions

(1)

This section applies if—

(a)

on a person being given a Part 4A permission, either regulator imposes an assets requirement on that person,

(b)

an assets requirement is imposed on an authorised person, or

(c)

an assets requirement previously imposed on such a person is varied.

(2)

A person on whom an assets requirement is imposed is referred to in this section as “A”.

(3)

The “appropriate regulator” is the regulator which imposed the requirement.

(4)

“Assets requirement” means a requirement under section 55L or 55M—

(a)

prohibiting the disposal of, or other dealing with, any of A's assets (whether in the United Kingdom or elsewhere) or restricting such disposals or dealings, or

(b)

that all or any of A's assets, or all or any assets belonging to consumers but held by A or to A's order, must be transferred to and held by a trustee approved by the appropriate regulator.

(5)

If the appropriate regulator—

(a)

imposes a requirement of the kind mentioned in subsection (4)(a), and

(b)

gives notice of the requirement to any institution with whom A keeps an account,

the notice has the effects mentioned in subsection (6).

(6)

Those effects are that—

(a)

the institution does not act in breach of any contract with A if, having been instructed by A (or on A's behalf) to transfer any sum or otherwise make any payment out of A's account, it refuses to do so in the reasonably held belief that complying with the instruction would be incompatible with the requirement, and

(b)

if the institution complies with such an instruction, it is liable to pay to the appropriate regulator an amount equal to the amount transferred from, or otherwise paid out of, A's account in contravention of the requirement.

(7)

If the appropriate regulator imposes a requirement of the kind mentioned in subsection (4)(b), no assets held by a person as trustee in accordance with the requirement may, while the requirement is in force, be released or dealt with except with the consent of the appropriate regulator.

(8)

If, while a requirement of the kind mentioned in subsection (4)(b) is in force, A creates a charge over any assets of A held in accordance with the requirement, the charge is (to the extent that it confers security over the assets) void against the liquidator and any of A's creditors.

(9)

Assets held by a person as trustee (“T”) are to be taken to be held by T in accordance with any requirement mentioned in subsection (4)(b) only if—

(a)

A has given T written notice that those assets are to be held by T in accordance with the requirement, or

(b)

they are assets into which assets to which paragraph (a) applies have been transposed by T on the instructions of A.

(10)

A person who contravenes subsection (7) is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

(11)

“Charge” includes a mortgage (or in Scotland a security over property).

(12)

Subsections (7) and (9) do not affect any equitable interest or remedy in favour of a person who is a beneficiary of a trust as a result of a requirement of the kind mentioned in subsection (4)(b).

Exercise of power in support of overseas regulator

55QExercise of power in support of overseas regulator

(1)

Either UK regulator's own-initiative powers may be exercised in respect of an authorised person at the request of, or for the purpose of assisting, an overseas regulator of a prescribed kind.

(2)

Subsection (1) applies whether or not the UK regulator has powers which are exercisable in relation to the authorised person by virtue of any provision of Part 13.

(3)

Subsection (1) does not affect any duty of one UK regulator to consult or obtain the consent of the other UK regulator in relation to the exercise of its own-initiative powers.

(4)

If a request to a UK regulator for the exercise of its own-initiative powers has been made by an overseas regulator who is—

(a)

of a prescribed kind, and

(b)

acting in pursuance of provisions of a prescribed kind,

the UK regulator must, in deciding whether or not to exercise those powers in response to the request, consider whether it is necessary to do so in order to comply with an EU obligation.

(5)

In deciding whether or not to do so, in any case in which the UK regulator does not consider that the exercise of its own-initiative powers is necessary in order to comply with an EU obligation, it may take into account in particular—

(a)

whether in the country or territory of the overseas regulator concerned, corresponding assistance would be given to a United Kingdom regulatory authority;

(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.

(6)

The UK regulator may decide not to exercise its own-initiative powers, in response to a request, unless the overseas regulator concerned undertakes to make such contribution towards the cost of their exercise as the UK regulator considers appropriate.

(7)

Subsection (6) does not apply if the UK regulator decides that it is necessary for it to exercise its own-initiative powers in order to comply with an EU obligation.

(8)

In subsection (6) “request” means a request of a kind mentioned in subsection (1).

(9)

In this section—

(a)

“UK regulator” means the FCA or the PRA;

(b)

“overseas regulator” means a regulator outside the United Kingdom;

(c)

“own-initiative powers”, in relation to the FCA or the PRA, means its own-initiative variation power and its own-initiative requirement power.

Connected persons

55RPersons connected with an applicant

(1)

In considering—

(a)

an application for a Part 4A permission,

(b)

whether to vary or cancel a Part 4A permission,

(c)

whether to impose or vary a requirement under this Part, or

(d)

whether to give any consent required by any provision of this Part,

the regulator concerned may have regard to any person appearing to it to be, or likely to be, in a relationship with the applicant or a person given permission which is relevant.

(2)

Before—

(a)

giving permission in response to an application under section 55A made by a person who is connected with an EEA firm (other than an EEA firm falling within paragraph 5(e) of Schedule 3 (insurance and reinsurance intermediaries)), or

(b)

cancelling or varying a Part 4A permission given to such a person,

the regulator concerned must in prescribed circumstances consult the firm's home state regulator.

(3)

A person (“A”) is connected with an EEA firm if—

(a)

A is a subsidiary undertaking of the firm, or

(b)

A is a subsidiary undertaking of a parent undertaking of the firm.

Additional permissions

55SDuty of FCA or PRA to consider other permissions

(1)

“Additional Part 4A permission” —

(a)

in relation to either regulator, means a Part 4A permission which is in force in relation to an EEA firm or a Treaty firm, and

(b)

in relation to the FCA, also includes a Part 4A permission which is in force in relation to a person authorised as a result of paragraph 1(1) of Schedule 5.

(2)

If either regulator is considering whether, and if so how, to exercise its own-initiative variation power or its own-initiative requirement power in relation to an additional Part 4A permission, it must take into account—

(a)

the home state authorisation of the authorised person concerned,

(b)

any relevant directive, and

(c)

relevant provisions of the Treaty.

Persons whose interests are protected

55TPersons whose interests are protected

For the purpose of any provision of this Part which refers to the FCA's operational objectives, or the PRA's objectives in relation to the exercise of a power in relation to a particular person, it does not matter whether there is a relationship between that person and the persons whose interests will be protected by the exercise of the power.

Procedure

55UApplications under this Part

(1)

An application for a Part 4A permission must—

(a)

contain a statement of the regulated activity or regulated activities which the applicant proposes to carry on and for which the applicant wishes to have permission, and

(b)

give the address of a place in the United Kingdom for service on the applicant of any notice or other document which is required or authorised to be served on the applicant under this Act.

(2)

An application for the variation of a Part 4A permission must contain a statement—

(a)

of the desired variation, and

(b)

of the regulated activity or regulated activities which the applicant proposes to carry on if the permission is varied.

(3)

An application for the variation of a requirement imposed under section 55L or 55M or for the imposition of a new requirement must contain a statement of the desired variation or requirement.

(4)

An application under this Part must—

(a)

be made in such manner as the regulator to which it is to be made may direct, and

(b)

contain, or be accompanied by, such other information as that regulator may reasonably require.

(5)

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.

(6)

In subsection (5), the “appropriate regulator” means—

(a)

in a case where the application is made to the FCA, the FCA;

(b)

in a case where the application is made to the PRA, the FCA or the PRA.

(7)

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

(8)

Each regulator may require an applicant to provide information which the applicant is required to provide to it under this section in such form, or to verify it in such a way, as the regulator may direct.

(9)

The PRA must consult the FCA before—

(a)

giving a direction under this section in relation to a class of applications, or

(b)

imposing a requirement under this section in relation to a class of applications.

55VDetermination of applications

(1)

An application under this Part must be determined by the regulator to which it is required to be made (“the appropriate regulator”) before the end of the period of 6 months beginning with the date on which it received the completed application.

(2)

The appropriate regulator may determine an incomplete application if it considers it appropriate to do so; and it must in any event determine such an application within 12 months beginning with the date on which it received the application.

(3)

Where the application cannot be determined by the appropriate regulator without the consent of the other regulator, the other regulator's decision must also be made within the period required by subsection (1) or (2).

(4)

The applicant may withdraw the application, by giving the appropriate regulator written notice, at any time before the appropriate regulator determines it.

(5)

If the appropriate regulator grants an application—

(a)

for Part 4A permission,

(b)

for the variation or cancellation of a Part 4A permission,

(c)

for the variation or cancellation of a requirement imposed under section 55L or 55M, or

(d)

for the imposition of a new requirement under either of those sections,

it must give the applicant written notice.

(6)

The notice must state the date from which the permission, variation, cancellation or requirement has effect.

(7)

A notice under this section which is given by the PRA and relates to the grant of an application for Part 4A permission or for the variation of a Part 4A permission must state that the FCA has given its consent to the grant of the application.

55WApplications under this Part: communications between regulators

The PRA must as soon as practicable notify the FCA of the receipt or withdrawal of—

(a)

an application for permission under section 55A,

(b)

an application under section 55I, or

(c)

an application under section 55M(5).

55XDetermination of applications: warning notices and decision notices

(1)

If a regulator proposes—

(a)

to give a Part 4A permission but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b),

(b)

to give a Part 4A permission but to exercise its power under section 55L(1) or 55M(1) in connection with the application for permission,

(c)

to vary a Part 4A permission on the application of an authorised person but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b),

(d)

to vary a Part 4A permission but to exercise its power under section 55L(1) or 55M(1) in connection with the application for variation, or

(e)

in the case of the FCA, to exercise its power under section 55L(1) in connection with an application to the PRA for a Part 4A permission or the variation of a Part 4A permission,

it must give the applicant a warning notice.

(2)

If a regulator proposes to refuse an application made under this Part, it must (unless subsection (3) applies) give the applicant a warning notice.

(3)

This subsection applies if it appears to the regulator that—

(a)

the applicant is an EEA firm, and

(b)

the application is made with a view to carrying on a regulated activity in a manner in which the applicant is, or would be, entitled to carry on that activity in the exercise of an EEA right whether through a United Kingdom branch or by providing services in the United Kingdom.

(4)

If a regulator decides—

(a)

to give a Part 4A permission but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b),

(b)

to give a Part 4A permission but to exercise its power under section 55L(1) or 55M(1) in connection with the giving of the permission,

(c)

to vary a Part 4A permission on the application of an authorised person but to exercise its power under section 55E(5)(a) or (b) or 55F(4)(a) or (b),

(d)

to vary a Part 4A permission on the application of an authorised person but to exercise its power under section 55L(1) or 55M(1) in connection with the variation,

(e)

in the case of the FCA, to exercise its power under section 55L(1) in connection with an application to the PRA for a Part 4A permission or the variation of a Part 4A permission, or

(f)

to refuse an application under this Part,

it must give the applicant a decision notice.

55YExercise of own-initiative power: procedure

(1)

This section applies to an exercise of either regulator's own-initiative variation power or own-initiative requirement power in relation to an authorised person (“A”).

(2)

A variation of a permission or the imposition or variation of a requirement takes effect—

(a)

immediately, if the notice given under subsection (4) states that that is the case,

(b)

on such date as may be specified in the notice, or

(c)

if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.

(3)

A variation of a permission, or the imposition or variation of a requirement, 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 its own-initiative variation power or own-initiative requirement power, reasonably considers that it is necessary for the variation, or the imposition or variation of the requirement, to take effect immediately (or on that date).

(4)

If either regulator proposes to vary a Part 4A permission or to impose or vary a requirement, or varies a Part 4A permission or imposes or varies a requirement, with immediate effect, it must give A written notice.

(5)

The notice must—

(a)

give details of the variation of the permission or the requirement or its variation,

(b)

state the regulator's reasons for the variation of the permission or the imposition or variation of the requirement,

(c)

inform A that A may make representations to the regulator within such period as may be specified in the notice (whether or not A has referred the matter to the Tribunal),

(d)

inform A of when the variation of the permission or the imposition or variation of the requirement takes effect, and

(e)

inform A of A's right to refer the matter to the Tribunal.

(6)

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

(7)

If, having considered any representations made by A, the regulator decides—

(a)

to vary the permission, or impose or vary the requirement, in the way proposed, or

(b)

if the permission has been varied or the requirement imposed or varied, not to rescind the variation of the permission or the imposition or variation of the requirement,

it must give A written notice.

(8)

If, having considered any representations made by A, the regulator decides—

(a)

not to vary the permission, or impose or vary the requirement, in the way proposed,

(b)

to vary the permission or requirement in a different way, or impose a different requirement, or

(c)

to rescind a variation or requirement which has effect,

it must give A written notice.

(9)

A notice under subsection (7) must inform A of A's right to refer the matter to the Tribunal.

(10)

A notice under subsection (8)(b) must comply with subsection (5).

(11)

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

(12)

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

55ZCancellation of Part 4A permission: procedure

(1)

If a regulator proposes to cancel an authorised person's Part 4A permission otherwise than at the person's request, it must give the person a warning notice.

(2)

If a regulator decides to cancel an authorised person's Part 4A permission otherwise than at the person's request, it must give the person a decision notice.

Notification

55Z1Notification of ESMA

A regulator must notify ESMA of—

(a)

the giving by it of a Part 4A permission to an investment firm, where the regulated activities to which the permission relates are investment services and activities,

(b)

the giving by it of a Part 4A permission to a management company (as defined in section 237(2)), where the regulated activities to which the permission relates fall within paragraph 8 of Schedule 2,

(c)

the cancellation by it of a Part 4A permission of a description falling within paragraph (b), or

(d)

the cancellation by it of a Part 4A permission under section 55J(6), in reliance on any one or more of the conditions in section 55K(1)(b) to (d).

55Z2Notification of EBA

(1)

A regulator must notify EBA of—

(a)

the giving by it of a Part 4A permission to a credit institution, where the regulated activity to which the permission relates falls within paragraph 4 of Schedule 2, or

(b)

the cancellation by it of a Part 4A permission of a description falling within paragraph (a).

(2)

“Credit institution” has the meaning given in section 1H(8).

References to the Tribunal

55Z3Right to refer matters to the Tribunal

(1)

An applicant who is aggrieved by the determination of an application made under this Part may refer the matter to the Tribunal.

(2)

An authorised person who is aggrieved by the exercise by either regulator of its own-initiative variation power or its own-initiative requirement power may refer the matter to the Tribunal.

Interpretation

55Z4Interpretation of Part 4A

In this Part—

“own-initiative requirement power”, in relation to the FCA or the PRA, is to be read in accordance with section 55L(4) or 55M(4);

“own-initiative variation power”, in relation to the FCA or the PRA, is to be read in accordance with section 55J(12).”

For subsection (1) substitute—

“(1)

The FCA may make a prohibition order if it appears to it that an individual is not a fit and proper person to perform functions in relation to a regulated activity carried on by—

(a)

an authorised person,

(b)

a person who is an exempt person in relation to that activity, or

(c)

a person to whom, as a result of Part 20, the general prohibition does not apply in relation to that activity.

(1A)

The PRA may make a prohibition order if it appears to it that an individual is not a fit and proper person to perform functions in relation to a regulated activity carried on by—

(a)

a PRA-authorised person, or

(b)

a person who is an exempt person in relation to a PRA-regulated activity carried on by the person.”

In subsection (3), for paragraph (b) substitute—

“(b)

all persons falling within subsection (3A) or a particular paragraph of that subsection or all persons within a specified class of person falling within a particular paragraph of that subsection.”

After subsection (3) insert—

“(3A)

A person falls within this subsection if the person is—

(a)

an authorised person,

(b)

an exempt person, or

(c)

a person to whom, as a result of Part 20, the general prohibition does not apply in relation to a regulated activity.”

After subsection (7) insert—

“(7A)

If—

(a)

the FCA proposes to vary or revoke a prohibition order, and

(b)

as a result of the proposed variation or revocation, an individual—

(i)

will no longer be prohibited from performing a function of interest to the PRA, or

(ii)

will be prohibited from performing such a function,

the FCA must consult the PRA before varying or revoking the order.

(7B)

A function is of interest to the PRA if it is performed in relation to a regulated activity carried on by—

(a)

a PRA-authorised person, or

(b)

a person who is an exempt person in relation to a PRA-regulated activity carried on by the person.

(7C)

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

At the end insert—

“(6)

If—

(a)

the FCA proposes to make a prohibition order, and

(b)

as a result of the proposed order, an individual will be prohibited from performing a function of interest to the PRA,

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

(7)

A function is of interest to the PRA if it is performed in relation to a regulated activity carried on by—

(a)

a PRA-authorised person, or

(b)

a person who is an exempt person in relation to a PRA-regulated activity carried on by the person.

(8)

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

After section 59 of FSMA 2000 insert—

“59ASpecifying functions as controlled functions: supplementary

(1)

The FCA must—

(a)

keep under review the exercise of its power under section 59(3)(a) to specify any significant-influence function as a controlled function, and

(b)

exercise that power in a way that it considers will minimise the likelihood that approvals fall to be given by both the FCA and the PRA in respect of the performance by a person of significant-influence functions in relation to the carrying on of a regulated activity by the same PRA-authorised person.

(2)

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

(3)

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.

(4)

“Approval” means an approval under section 59.

(5)

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

59BRole of FCA in relation to PRA decisions

(1)

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.

(2)

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

(3)

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

(4)

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

In section 63 of FSMA 2000 (withdrawal of approval), for subsection (1) substitute—

“(1)

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.

(1A)

The PRA may withdraw an approval under section 59 in relation to the performance by a person (“A”) of a function if—

(a)

the PRA gave the approval, or the FCA gave the approval and the function is a significant-influence function performed in relation to the carrying on by a PRA-authorised person of a regulated activity, and

(b)

the PRA considers that A is not a fit and proper person to perform the function.

(1B)

“Significant-influence function” has the same meaning as in section 59.

(1C)

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

In section 64 of FSMA 2000 (conduct of approved persons: statement and codes), for subsection (1) substitute—

“(1)

The FCA may issue statements of principle with respect to the conduct expected of persons in relation to whom either regulator has given its approval under section 59.

(1A)

The PRA may issue statements of principle with respect to—

(a)

the conduct expected of persons in relation to whom it has given its approval under section 59, and

(b)

the conduct expected of persons in relation to whom the FCA has given its approval under section 59 in respect of the performance by them of significant-influence functions in relation to the carrying on by PRA-authorised persons of regulated activities.

(1B)

A statement of principle issued by either regulator may relate to conduct expected of persons in relation to—

(a)

the performance by them of controlled functions, or

(b)

the performance by them of any other functions in relation to the carrying on by authorised persons of regulated activities.”

For section 89 substitute—

“88ADisciplinary powers: contravention of s.88(3)(c) or (e)

(1)

The FCA may take action against a sponsor under this section if it considers that the sponsor has contravened a requirement or restriction imposed on the sponsor by rules made as a result of section 88(3)(c) or (e).

(2)

If the FCA is entitled to take action under this section against a sponsor, it may do one or more of the following—

(a)

impose a penalty on the sponsor of such amount as it considers appropriate;

(b)

suspend, for such period as it considers appropriate, the sponsor's approval;

(c)

impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the performance of services to which the sponsor's approval relates as it considers appropriate;

(d)

publish a statement to the effect that the sponsor has contravened a requirement or restriction imposed on the sponsor by rules made as a result of section 88(3)(c) or (e).

(3)

The period for which a suspension or restriction is to have effect may not exceed 12 months.

(4)

A suspension may relate only to the performance in specified circumstances of a service to which the approval relates.

(5)

A restriction may, in particular, be imposed so as to require the sponsor to take, or refrain from taking, specified action.

(6)

The FCA may—

(a)

withdraw a suspension or restriction; or

(b)

vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.

(7)

The FCA may not take action against a sponsor 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 sponsor under section 88B(1).

(8)

“The limitation period” means the period of 3 years beginning with the first day on which the FCA knew that the sponsor had contravened the requirement or restriction.

(9)

For this purpose the FCA is to be treated as knowing that a sponsor has contravened a requirement or restriction if it has information from which that can reasonably be inferred.

88BAction under s.88A: procedure and right to refer to Tribunal

(1)

If the FCA proposes to take action against a sponsor under section 88A, it must give the sponsor a warning notice.

(2)

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

(3)

A warning notice about a proposal—

(a)

to suspend an approval, or

(b)

to impose a restriction in relation to the performance of a service,

must state the period for which the suspension or restriction is to have effect.

(4)

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

(5)

If the FCA decides to take action against a sponsor under section 88A, it must give the sponsor a decision notice.

(6)

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

(7)

A decision notice about—

(a)

the suspension of an approval, or

(b)

the imposition of a restriction in relation to the performance of a service,

must state the period for which the suspension or restriction is to have effect.

(8)

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

(9)

If the FCA decides to take action against a sponsor under section 88A, the sponsor may refer the matter to the Tribunal.

88CAction under s.88A: statement of policy

(1)

The FCA must prepare and issue a statement of its policy with respect to—

(a)

the imposition of penalties, suspensions or restrictions under section 88A,

(b)

the amount of penalties under that section, and

(c)

the period for which suspensions or restrictions under that section are to have effect.

(2)

The FCA's policy in determining what the amount of a penalty should be, or what the period for which a suspension or restriction is to have effect should be, must include having regard to—

(a)

the seriousness of the contravention in question in relation to the nature of the requirement concerned,

(b)

the extent to which that contravention was deliberate or reckless, and

(c)

whether the sponsor concerned is an individual.

(3)

The FCA may at any time alter or replace a statement issued under this section.

(4)

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

(5)

In exercising, or deciding whether to exercise, its power under section 88A in the case of any particular contravention, the FCA must have regard to any statement of policy published under this section and in force at a time when the contravention in question occurred.

(6)

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.

(7)

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

(8)

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

88DStatement of policy under s.88C: procedure

(1)

Before issuing a statement under section 88C, 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.

88EPowers exercisable to advance operational objectives

(1)

The FCA may take action against a sponsor under this section if it considers that it is desirable to do so in order to advance one or more of its operational objectives.

(2)

If the FCA is entitled to take action under this section against a sponsor, it may—

(a)

suspend, for such period as it considers appropriate, the sponsor's approval, or

(b)

impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the performance of services to which the sponsor's approval relates as it considers appropriate.

(3)

A suspension may relate only to the performance in specified circumstances of a service to which the approval relates.

(4)

A restriction may, in particular, be imposed so as to require the sponsor to take, or refrain from taking, specified action.

(5)

The FCA may—

(a)

withdraw a suspension or restriction, or

(b)

vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.

(6)

A person against whom the FCA takes action under this section may refer the matter to the Tribunal.

88FAction under s.88E: procedure

(1)

Action against a sponsor under section 88E takes effect—

(a)

immediately, if the notice given under subsection (3) so provides, or

(b)

on such later date as may be specified in the notice.

(2)

If the FCA—

(a)

proposes to take action against a sponsor under that section, or

(b)

takes action against a sponsor under that section with immediate effect,

it must give the sponsor written notice.

(3)

The notice must—

(a)

give details of the action,

(b)

state the FCA's reasons for taking the action and for its determination as to when the action takes effect,

(c)

inform the sponsor that the sponsor may make representations to the FCA within such period as may be specified in the notice (whether or not the matter has been referred to the Tribunal),

(d)

inform the sponsor of when the action takes effect,

(e)

inform the sponsor of the right to refer the matter to the Tribunal, and

(f)

give an indication of the procedure on such a reference.

(4)

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

(5)

If the FCA decides—

(a)

to take the action in the way proposed, or

(b)

if the action has taken effect, not to rescind it,

the FCA must give the sponsor written notice.

(6)

If the FCA decides—

(a)

not to take the action in the way proposed,

(b)

to take action under section 88E that differs from the action originally proposed, or

(c)

to rescind action which has taken effect,

the FCA must give the sponsor written notice.

(7)

A notice under subsection (5) must—

(a)

inform the sponsor of the right to refer the matter to the Tribunal, and

(b)

give an indication of the procedure on such a reference.

(8)

A notice under subsection (6)(b) must comply with subsection (3).”

In section 395(13) (meaning of “supervisory notice”), after paragraph (bza) insert—

“(bzb)

section 88F(2), (5) or (6)(b);”.

In Part 6 of FSMA 2000 (official listing), after section 89O insert—

“Primary information providers

89PPrimary information providers

(1)

Part 6 rules may require issuers of financial instruments to use primary information providers for the purpose of giving information of a specified description to a market of a specified description.

(2)

“Primary information provider” means a person approved by the FCA for the purposes of this section.

(3)

“Specified” means specified in the Part 6 rules.

(4)

Part 6 rules made by virtue of subsection (1) may—

(a)

provide for the FCA to maintain a list of providers;

(b)

impose requirements on a provider in relation to the giving of information or of information of a specified description;

(c)

specify the circumstances in which a person is qualified for being approved as a provider;

(d)

provide for limitations or other restrictions to be imposed on the giving of information to which an approval relates (whether or not the approval has already been granted);

(e)

provide for the approval of a provider to be suspended on the application of the provider.

(5)

If the FCA proposes—

(a)

to refuse a person's application under information provider rules,

(b)

to impose limitations or other restrictions on the giving of information to which a person's approval relates, or

(c)

to cancel a person's approval as a provider otherwise than at the person's request,

it must give the person a warning notice.

(6)

If the FCA decides—

(a)

to grant the application under information provider rules,

(b)

not to impose limitations or other restrictions on the giving of information to which a person's approval relates, or

(c)

not to cancel the approval,

it must give the person concerned written notice of its decision.

(7)

If the FCA decides—

(a)

to refuse to grant the application under information provider rules,

(b)

to impose limitations or other restrictions on the giving of information to which a person's approval relates, or

(c)

to cancel the approval,

it must give the person concerned a decision notice.

(8)

A person to whom a decision notice is given under this section may refer the matter to the Tribunal.

(9)

In this section any reference to an application under information provider rules means—

(a)

an application for approval as a provider,

(b)

an application for the suspension of an approval as a provider,

(c)

an application for the withdrawal of the suspension of an approval as a provider, or

(d)

an application for the withdrawal or variation of a limitation or other restriction on the giving of information to which a provider's approval relates.

89QDisciplinary powers: contravention of s.89P(4)(b) or (d)

(1)

The FCA may take action against a provider under this section if it considers that the provider has contravened a requirement or restriction imposed on the provider by rules made as a result of section 89P(4)(b) or (d).

(2)

If the FCA is entitled to take action under this section against a provider, it may do one or more of the following—

(a)

impose a penalty on the provider of such amount as it considers appropriate;

(b)

suspend, for such period as it considers appropriate, the provider's approval;

(c)

impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the giving by the provider of information as it considers appropriate;

(d)

publish a statement to the effect that the provider has contravened a requirement or restriction imposed on the provider by rules made as a result of section 89P(4)(b) or (d).

(3)

The period for which a suspension or restriction is to have effect may not exceed 12 months.

(4)

A suspension may relate only to the giving of information in specified circumstances.

(5)

A restriction may, in particular, be imposed so as to require the provider to take, or refrain from taking, specified action.

(6)

The FCA may—

(a)

withdraw a suspension or restriction, or

(b)

vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.

(7)

The FCA may not take action against a provider 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 provider under section 89R(1).

(8)

“The limitation period” means the period of 3 years beginning with the first day on which the FCA knew that the provider had contravened the requirement or restriction.

(9)

For this purpose the FCA is to be treated as knowing that a provider has contravened a requirement or restriction if it has information from which that can reasonably be inferred.

89RAction under s.89Q: procedure and right to refer to Tribunal

(1)

If the FCA proposes to take action against a provider under section 89Q, it must give the provider a warning notice.

(2)

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

(3)

A warning notice about a proposal—

(a)

to suspend an approval, or

(b)

to impose a restriction in relation to the giving of information,

must state the period for which the suspension or restriction is to have effect.

(4)

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

(5)

If the FCA decides to take action against a provider under section 89Q, it must give the provider a decision notice.

(6)

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

(7)

A decision notice about—

(a)

the suspension of an approval, or

(b)

the imposition of a restriction in relation to the giving of information,

must state the period for which the suspension or restriction is to have effect.

(8)

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

(9)

If the FCA decides to take action against a provider under section 89Q, the provider may refer the matter to the Tribunal.

89SAction under s.89Q: statement of policy

(1)

The FCA must prepare and issue a statement of its policy with respect to—

(a)

the imposition of penalties, suspensions or restrictions under section 89Q,

(b)

the amount of penalties under that section,

(c)

the period for which suspensions or restrictions under that section are to have effect, and

(d)

the matters in relation to which suspensions or restrictions under that section are to have effect.

(2)

The FCA's policy in determining what the amount of a penalty should be, or what the period for which a suspension or restriction is to have effect should be, must include having regard to—

(a)

the seriousness of the contravention in question in relation to the nature of the requirement concerned,

(b)

the extent to which that contravention was deliberate or reckless, and

(c)

whether the provider concerned is an individual.

(3)

The FCA may at any time alter or replace a statement issued under this section.

(4)

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

(5)

In exercising, or deciding whether to exercise, its power under section 89Q in the case of any particular contravention, the FCA must have regard to any statement of policy published under this section and in force at a time when the contravention in question occurred.

(6)

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.

(7)

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

(8)

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

89TStatement of policy under s.89S: procedure

(1)

Before issuing a statement under section 89S, 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.

89UPowers exercisable to advance operational objectives

(1)

The FCA may take action against a provider under this section if it considers that it is desirable to do so in order to advance one or more of its operational objectives.

(2)

If the FCA is entitled to take action under this section against a provider, it may—

(a)

suspend, for such period as it considers appropriate, the provider's approval, or

(b)

impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the giving by the provider of information as it considers appropriate.

(3)

A suspension may relate only to the giving of information in specified circumstances.

(4)

A restriction may, in particular, be imposed so as to require the provider to take, or refrain from taking, specified action.

(5)

The FCA may—

(a)

withdraw a suspension or restriction, or

(b)

vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.

(6)

A person against whom the FCA takes action under this section may refer the matter to the Tribunal.

89VAction under s.89U: procedure

(1)

Action against a provider under section 89U takes effect—

(a)

immediately, if the notice given under subsection (2) so provides, or

(b)

on such later date as may be specified in the notice.

(2)

If the FCA—

(a)

proposes to take action against a provider under that section, or

(b)

takes action against a provider under that section with immediate effect,

it must give the provider written notice.

(3)

The notice must—

(a)

give details of the action,

(b)

state the FCA's reasons for taking the action and for its determination as to when the action takes effect,

(c)

inform the provider that the provider may make representations to the FCA within such period as may be specified in the notice (whether or not the matter has been referred to the Tribunal),

(d)

inform the provider of when the action takes effect,

(e)

inform the provider of the right to refer the matter to the Tribunal, and

(f)

give an indication of the procedure on such a reference.

(4)

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

(5)

If the FCA decides—

(a)

to take the action in the way proposed, or

(b)

if the action has taken effect, not to rescind it,

the FCA must give the provider written notice.

(6)

If the FCA decides—

(a)

not to take the action in the way proposed,

(b)

to take action under section 89U that differs from the action originally proposed, or

(c)

to rescind action which has taken effect,

the FCA must give the provider written notice.

(7)

A notice under subsection (5) must—

(a)

inform the provider of the right to refer the matter to the Tribunal, and

(b)

give an indication of the procedure on such a reference.

(8)

A notice under subsection (6)(b) must comply with subsection (3).”