PART 4Conduct of persons working in financial services sector
Amendments of FSMA 2000
32Definition of “misconduct”
I11
In section 66 of FSMA 2000 (disciplinary powers)—
a
after subsection (1) insert—
1A
For provision about when a person is guilty of misconduct for the purposes of action by a regulator—
a
see section 66A, in the case of action by the FCA, and
b
see section 66B, in the case of action by the PRA.
b
omit subsections (2), (2A), (6) and (7).
I2I32
After that section insert—
66AMisconduct: action by the FCA
1
For the purposes of action by the FCA under section 66, a person is guilty of misconduct if any of conditions A to C is met in relation to the person.
2
Condition A is that—
a
the person has at any time failed to comply with rules made by the FCA under section 64A, and
b
at that time the person was—
i
an approved person, or
ii
an employee of a relevant authorised person.
3
Condition B is that—
a
the person has at any time been knowingly concerned in a contravention of a relevant requirement by an authorised person, and
b
at that time the person was—
i
an approved person in relation to the authorised person, or
ii
in the case of a relevant authorised person, an employee of the authorised person.
4
In this section “relevant requirement” means a requirement—
a
imposed by or under this Act, or
b
imposed by any qualifying EU provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order.
5
Condition C is that—
a
the person has at any time been a senior manager in relation to a relevant authorised person,
b
there has at that time been (or continued to be) a contravention of a relevant requirement by the authorised person, and
c
the senior manager was at that time responsible for the management of any of the authorised person's activities in relation to which the contravention occurred.
6
But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the FCA that P had taken such steps as a person in P's position could reasonably be expected to take to avoid the contravention occurring (or continuing).
7
For the purposes of subsection (5)—
“senior manager”, in relation to a relevant authorised person, means a person who has approval under section 59 to perform a designated senior management function in relation to the carrying on by the authorised person of a regulated activity;
“designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B).
8
In this section—
“approved person”—
- a
means a person in relation to whom an approval is given under section 59, and
- b
in relation to an authorised person, means a person in relation to whom such approval is given on the application of the authorised person;
“employee”, in relation to a person, has the same meaning as in section 64A.
9
For the meaning of “relevant authorised person”, see section 71A.
66BMisconduct: action by the PRA
1
For the purposes of action by the PRA under section 66, a person is guilty of misconduct if any of conditions A to C is met in relation to the person.
2
Condition A is that—
a
the person has at any time failed to comply with rules made by the PRA under section 64A, and
b
at that time the person was—
i
an approved person, or
ii
an employee of a relevant PRA-authorised person.
3
Condition B is that—
a
the person has at any time been knowingly concerned in a contravention of a relevant requirement by a PRA-authorised person, and
b
at that time the person was—
i
an approved person in respect of the performance of a relevant senior management function in relation to the carrying on by the PRA-authorised person of a regulated activity, or
ii
in the case of a relevant PRA-authorised person, an employee of the authorised person.
4
In this section “relevant requirement” means a requirement—
a
imposed by or under this Act, or
b
imposed by any qualifying EU provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order.
5
Condition C is that—
a
the person has at any time been a senior manager in relation to a relevant PRA-authorised person,
b
there has at that time been (or continued to be) a contravention of a relevant requirement by the authorised person, and
c
the senior manager was at that time responsible for the management of any of the authorised person's activities in relation to which the contravention occurred.
6
But a person (“P”) is not guilty of misconduct by virtue of subsection (5) if P satisfies the PRA that P had taken such steps as a person in P's position could reasonably be expected to take to avoid the contravention occurring (or continuing).
7
For the purposes of subsection (5)—
“senior manager”, in relation to a relevant PRA-authorised person, means a person who has approval under section 59 to perform a designated senior management function in relation to the carrying on by the authorised person of a regulated activity;
“designated senior management function” means a function designated as a senior management function under section 59(6A) or (6B).
8
In this section—
“approved person”—
- a
means a person in relation to whom—
- i
the PRA has given its approval under section 59, or
- ii
the FCA has given its approval under section 59 in respect of the performance by the person of a relevant senior management function in relation to the carrying on by a PRA-authorised person of a regulated activity, and
- b
in relation to an authorised person, means a person in relation to whom approval under section 59 is given on the application of the authorised person;
“employee”, in relation to a person, has the same meaning as in section 64A;
“relevant PRA-authorised person” means a PRA-authorised person that is a relevant authorised person;
“relevant senior management function” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA).
9
For the meaning of “relevant authorised person”, see section 71A.