http://www.legislation.gov.uk/id/ukpga/2021/22

SCHEDULES

SCHEDULE 1Exclusion of certain investment firms from the Capital Requirements Regulation: consequential amendments

Section 1

PART 1Amendments of the Capital Requirements Regulation

1

The Capital Requirements Regulation is amended as follows.

2 (1)

Article 4(1) (definitions) is amended as follows.

(2)

Omit point (4) (definition of “local firm”).

(3)

After point (22) insert—

“(22A)
‘investment holding company’ means a financial institution which is not a financial holding company and whose subsidiaries—
(a)
are exclusively or mainly investment firms or financial institutions, and
(b)
include at least one investment firm;”.

(4)

In point (26) (definition of “financial institution”)—

(a)

after “including” insert “ an investment firm, ”, and

(b)

after “a mixed financial holding company,” insert “ an investment holding company, ”.

(5)

For point (29a) substitute—

“29a
‘UK parent investment firm’ means a parent undertaking in the United Kingdom that is an investment firm;”.

(6)

For point (51) substitute—

“(51)
‘initial capital’, in relation to an institution, means the amount and types of own funds specified in rule 12.1 of the Definition of Capital Part of the PRA rulebook;”.

(7)

In point (60) (definition of “cash assimilated instrument”), after “institution” (in each place) insert “ or investment firm ”.

3 (1)

Article 4A (definitions: regulators' rules) is amended as follows.

(2)

In paragraph 1(b) (references to FCA sourcebook), for “as the sourcebook has effect on IP completion day” substitute “ as amended from time to time ”.

(3)

At the end insert—

“3
In this Regulation, “Part 9C rules” has the same meaning as in FSMA (see section 417 of that Act).”

4

For Article 4B substitute—

“Article 4BThe consolidating supervisor
The consolidating supervisor is the PRA.”

5

Before Article 11 (and the Section and Chapter headings before it) insert—

“Article 10AApplication of prudential requirements on a consolidated basis where FCA investment firms are parent undertakings
For the purposes of the application of this Chapter, FCA investment firms are to be considered to be UK parent financial holding companies where they are parent undertakings of an institution.”

6

Omit Article 15 (derogation from the application of own funds requirements on a consolidated basis for groups of investment firms).

7

Omit Article 16 (derogation from the application of the leverage ratio requirements on a consolidated basis for groups of investment firms).

8

Omit Article 17 (supervision of investment firms waived from the application of own funds requirements on a consolidated basis).

9

In Article 47c(5) (deduction for non-performing exposures), omit “and the FCA”.

10

In Article 49(6) (requirement for deduction where consolidation, supplementary supervision or institutional protection schemes are applied) omit “and Annex 1 of Chapter 3 of the FCA General Prudential sourcebook”.

11 (1)

Article 81(1)(a) (minority interests that qualify for inclusion in consolidated Common Equity Tier 1 capital) is amended as follows.

(2)

After point (ii) insert—

“(iia)
an intermediate financial holding company or intermediate mixed financial holding company that is subject to the requirements of this Regulation on a sub-consolidated basis;
(iib)
an intermediate investment holding company that is subject to the requirements of Part 9C rules on a consolidated basis;
(iic)
an FCA investment firm;”.

(3)

In point (iii)—

(a)

after “subject to prudential requirements” insert “ which are ”,

(b)

for “where” substitute “ which ”, and

(c)

omit “that those prudential requirements”.

12 (1)

Article 82(a) (Qualifying Additional Tier 1, Tier 1, Tier 2 capital and qualifying own funds) is amended as follows.

(2)

After point (ii) insert—

“(iia)
an intermediate financial holding company or intermediate mixed financial holding company that is subject to the requirements of this Regulation on a sub-consolidated basis;
(iib)
an intermediate investment holding company that is subject to the requirements of Part 9C rules on a consolidated basis;
(iic)
an FCA investment firm;”.

(3)

In point (iii)—

(a)

after “subject to prudential requirements” insert “ which are ”,

(b)

for “where” substitute “ which ”, and

(c)

omit “that those prudential requirements”.

13 (1)

Article 84 (minority interests included in consolidated Common Equity Tier 1 capital) is amended as follows.

(2)

In paragraph 1(a), for point (i) substitute—

“(i)
the amount of Common Equity Tier 1 capital of that subsidiary required to meet the following:
(A)
the sum of the requirement laid down in point (a) of Article 92(1), the requirements referred to in Articles 458, 459 and 500, the specific own funds requirements referred to in regulation 34 of the Capital Requirements Regulations 2013, the combined buffer requirement defined in regulation 2 of the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014, and any additional local supervisory regulations in third countries insofar as those requirements are to be met by Common Equity Tier 1 capital, or
(B)
where the subsidiary is an FCA investment firm, the sum of the own funds requirements set out in Part 9C rules which apply to the subsidiary and any requirements set out in additional local supervisory regulations in third countries insofar as those requirements are to be met by Common Equity Tier 1 capital;”.

(3)

In paragraph 3—

(a)

for “a competent authority” substitute “ the PRA ”, and

(b)

for “interest” substitute “ interests ”.

(4)

After paragraph 3 insert—

“3A
Where Part 9C rules provide that, in relation to any subsidiaries which are FCA investment firms, the calculation referred to in paragraph 1 is to be undertaken on a consolidated basis so as to include those subsidiaries, minority interests within those subsidiaries shall not be recognised in own funds at the sub-consolidated or consolidated level, as applicable.”

14 (1)

Article 85 (qualifying Tier 1 instruments included in consolidated Tier 1 capital) is amended as follows.

(2)

In paragraph 1(a), for point (i) substitute—

“(i)
the amount of Tier 1 capital of the subsidiary required to meet the following:
(A)
the sum of the requirement laid down in point (b) of Article 92(1), the requirements referred to in Articles 458, 459 and 500, the specific own funds requirements referred to in regulation 34 of the Capital Requirements Regulations 2013, the combined buffer requirement defined in regulation 2 of the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014, and any additional local supervisory regulations in third countries insofar as those requirements are to be met by Tier 1 Capital, or
(B)
where the subsidiary is an FCA investment firm, the sum of the own funds requirements set out in Part 9C rules which apply to the subsidiary and any requirements set out in additional local supervisory regulations in third countries insofar as those requirements are to be met by Tier 1 capital;”.

(3)

In paragraph 3, for “a competent authority” substitute “ the PRA ”.

(4)

After paragraph 3 insert—

“3A
Where Part 9C rules provide that, in relation to any subsidiaries which are FCA investment firms, the calculation referred to in paragraph 1 is to be undertaken on a consolidated basis so as to include those subsidiaries, Tier 1 instruments within those subsidiaries shall not be recognised in own funds at the sub-consolidated or consolidated level, as applicable.”

15 (1)

Article 87 (qualifying own funds included in consolidated own funds) is amended as follows.

(2)

In paragraph 1(a), for point (i) substitute—

“(i)
the amount of own funds of the subsidiary required to meet the following—
(A)
the sum of the requirement laid down in point (c) of Article 92(1), the requirements referred to in Articles 458, 459 and 500, the specific own funds requirements referred to in regulation 34 of the Capital Requirements Regulations 2013, the combined buffer requirement defined in regulation 2 of the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014, and any additional local supervisory regulations in third countries, or
(B)
where the subsidiary is an FCA investment firm, the sum of the own funds requirements set out in Part 9C rules which apply to the subsidiary and any requirements set out in additional local supervisory regulations in third countries;”.

(3)

In paragraph 3, for “a competent authority” substitute “ the PRA ”.

(4)

After paragraph 3 insert—

“3A
Where Part 9C rules provide that, in relation to any subsidiaries which are FCA investment firms, the calculation referred to in paragraph 1 is to be undertaken on a consolidated basis so as to include those subsidiaries, own funds instruments within those subsidiaries shall not be recognised in own funds at the sub-consolidated or consolidated level, as applicable.”

16

In Article 93 (initial capital requirement on going concern)—

(a)

omit paragraph 3,

(b)

in paragraphs 4 and 5, omit “or 3”, and

(c)

in paragraph 6, for “2 to 5” substitute “ 2, 4 and 5 ”.

17

Omit Article 95 (own funds requirements for investment firms with limited authorisation to provide investment services).

18

Omit Article 96 (own funds requirements for IFPRU 730k firms).

19

Omit Article 97 (own funds based on fixed overheads).

20

Omit Article 98 (own funds for investment firms on a consolidated basis).

21

In Article 100 (additional reporting requirements), in the second subparagraph, for “The FCA or the PRA (as the case may be)” substitute “ The PRA ”.

22

In Article 115(2) (exposures to regional governments or local authorities), in the second subparagraph, omit “and FCA”.

23

In Article 119 (exposures to institutions), after paragraph 5 insert—

“6
For the purposes of paragraph 5, the requirements laid down in Part 9C rules are to be treated as being comparable to those applied to institutions in terms of robustness.”

24 (1)

Article 136 (mapping of ECAI's credit assessments) is amended as follows.

(2)

In paragraph 1, for “The FCA and the PRA may each” substitute “ The PRA may ”.

(3)

In paragraph 2—

(a)

for “the FCA and the PRA”, in each place it occurs, substitute “ the PRA ”, and

(b)

in point (e), for “have” substitute “ has ”.

(4)

In paragraph 3, for “The FCA and the PRA may each” substitute “ The PRA may ”.

25

In Article 162(3) (maturity), in the second subparagraph, in point (a), after “institutions” insert “ or investment firms ”.

26 (1)

Article 197 (eligibility of collateral under all approaches and methods) is amended as follows.

(2)

In paragraph 1(c), after “issued by institutions” insert “ or investment firms ”.

(3)

In paragraph 4, after “other institutions” insert “ or investment firms ”.

27

In Article 199(8) (additional eligibility for collateral under the IRB Approach), omit “and the FCA”.

28

In Article 200 (other funded credit protection), for point (c) substitute—

“(c)
instruments issued by a third party institution, or an investment firm, which will be repurchased by that institution, or that investment firm, on request.”

29

In Article 202 (eligibility of protection providers under the IRB Approach which qualify for Article 153(3) treatment), after “institutions,” insert “ investment firms, ”.

30

In Article 224(6) (supervisory volatility adjustment under Financial Collateral Comprehensive Method), after “institutions”, in the first place it occurs, insert “ or investment firms ”.

31

In Article 227(3) (conditions for applying 0% volatility adjustment under Financial Collateral Comprehensive Method), after point (b) insert—

“(ba)
investment firms;”.

32

In Article 243(1) (criteria for STS securitisations qualifying for differentiated capital treatment), in the second subparagraph, after “an institution,” insert “ an investment firm, ”.

33 (1)

Article 270e (securitisation mapping) is amended as follows.

(2)

For “The FCA and the PRA may each” substitute “ The PRA may ”.

(3)

For the words from “For” to “shall” substitute “ For the purposes of this Article, the PRA shall ”.

34

In Article 290(3) (stress testing), for the words from “the relevant regulatory rules” to the end substitute “ rule 6.1 of the Internal Capital Adequacy Part of the PRA rulebook ”.

35 (1)

Article 304(5) (treatment of clearing members' exposure to clients) is amended as follows.

(2)

In the first subparagraph, for “The FCA and the PRA may each” substitute “ The PRA may ”.

(3)

In the second subparagraph, for “the FCA or the PRA (as the case may be)” substitute “ the PRA ”.

36 (1)

Article 325u(5) (own funds requirements for residual risks) is amended as follows.

(2)

In the first subparagraph, for “The FCA and PRA may each” substitute “ The PRA may ”.

(3)

In the second subparagraph, for “the FCA and PRA” substitute “ the PRA ”.

37 (1)

Article 325az (alternative internal model approach and permission to use alternative internal models) is amended as follows.

(2)

In paragraph 8, for “The FCA and PRA may each” substitute “ The PRA may ”.

(3)

In paragraph 9—

(a)

for “The FCA and the PRA may each” substitute “ The PRA may ”, and

(b)

for “they” substitute “ it ”.

38 (1)

Article 325bk(3) (calculation of stress scenario risk measure) is amended as follows.

(2)

In the first subparagraph, for “The FCA and PRA may each” substitute “ The PRA may ”.

(3)

In the second subparagraph, for “the FCA and PRA” substitute “ the PRA ”.

39

In Article 382(4) (scope of own funds requirements for CVA risk), in point (b), for “institutions” substitute “ entities ”.

40 (1)

Article 441(2) (indicators of global systemic importance) is amended as follows.

(2)

For “The FCA and the PRA may each” substitute “ The PRA may ”.

(3)

For “the FCA or the PRA (as the case may be)” substitute “ the PRA ”.

41

In Article 450(1)(d) (remuneration policy) omit “19A.3.44R to 44DR and”.

42

In Article 456(1) (regulations modifying this Regulation) omit points (f) and (g).

43 (1)

Article 464B (power to make technical standards) is amended as follows.

(2)

Omit paragraph 1.

(3)

In paragraph 2, for “the PRA and FCA may both” substitute “ the PRA may ”.

(4)

In paragraph 3 omit “alone”.

44

In Article 522(1)(b) (savings provisions: pre-exit decisions)—

(a)

omit “and FCA”, and

(b)

omit the words from “in relation to” to “other person”.

45

In Annex 1 (classification of off-balance sheet items), in point 1(d), at the end insert “ or an investment firm ”.

46 (1)

Annex 3 (items subject to supplementary reporting of liquid assets) is amended as follows.

(2)

In point 3(b), for “of an institution or any of its affiliated entities” substitute “ of, or of an affiliated entity of, an institution or an investment firm ”.

(3)

In point 5(b), for “of an institution or any of its affiliated entities” substitute “ of, or of an affiliated entity of, an institution or an investment firm ”.

(4)

In point 6(a), for “on an SSPE, an institution or any of its affiliated entities” substitute “ on, or on an affiliated entity of, an SSPE, an institution or an investment firm ”.

(5)

In point 7, for “on an SSPE, an institution or any of its affiliated entities” substitute “ on, or on an affiliated entity of, an SSPE, an institution or an investment firm ”.

(6)

In point 11, for “by an institution or any of its affiliates” substitute “ by, or by an affiliate of, an institution or an investment firm ”.

47

In the following provisions, for “FCA and PRA may each” or “FCA and the PRA may each” (as appropriate) substitute “ PRA may ”

Article 4(4);
Article 18(9);
Article 26(4);
Article 27(2);
Article 28(5);
Article 29(6);
Article 32(2);
Article 33(4);
Article 36(2), (3) and (4);
Article 41(2);
Article 52(2);
Article 73(7);
Article 76(4);
Article 78(5);
Article 79(2);
Article 83(2);
Article 84(4);
Article 99(5), first subparagraph;
Article 99(6), second subparagraph;
Article 101(4);
Article 105(14);
Article 110(4);
Article 132a(4);
Article 143(5);
Article 144(2);
Article 148(6);
Article 150(3);
Article 152(5);
Article 153(9);
Article 164(8);
Article 173(3);
Article 178(6);
Article 180(3);
Article 181(3);
Article 182(4);
Article 183(6);
Article 194(10);
Article 197(8);
Article 221(9);
Article 248(1), second subparagraph;
Article 255(9);
Article 270a(2);
Article 277(5);
Article 279a(3);
Article 312(4);
Article 314(5);
Article 316(3);
Article 318(3);
Article 325(9);
Article 325w(8);
Article 325ap(3);
Article 325bd(7);
Article 325be(3);
Article 325bf(9);
Article 325bg(4);
Article 325bp(12);
Article 329(3);
Article 341(3);
Article 344(1);
Article 352(6);
Article 354(3);
Article 358(4), first subparagraph;
Article 363(4);
Article 382(5);
Article 383(7);
Article 430b(6);
Article 434a, first subparagraph;
Article 437(2);
Article 440(2);
Article 443;
Article 451(2);
Article 487(3);
Article 492(5).

PART 2Amendments of the Capital Requirements (Country-by-Country Reporting) Regulations 2013

48

The Capital Requirements (Country-by-Country Reporting) Regulations 2013 (S.I. 2013/3118) are amended as follows.

49 (1)

Regulation 1(2) (interpretation) is amended as follows.

(2)

For the definition of “capital requirements regulation” substitute—

““the capital requirements regulation” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012;”.

(3)

After that definition insert—

““FCA investment firm” has the same meaning as in Part 9C of the 2000 Act;
“financial institution” has the meaning given in Article 4(1)(26) of the capital requirements regulation;”.

(4)

After the definition of “period of account” insert—

““Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544);
“relevant FCA investment firm” has the meaning given in paragraph (2A);
“small and non-interconnected firm” has the meaning given in rules made by the Financial Conduct Authority for the purposes of Part 9C of the 2000 Act;”.

50

In regulation 1, after paragraph (2) insert—

“(2A)
For the purposes of these Regulations, an FCA investment firm is “relevant” if—
(a)
it has a branch or subsidiary in a country or territory outside the United Kingdom that is a financial institution, and
(b)
it is not a small and non-interconnected firm,
subject to paragraphs (2B) and (2C).
(2B)
Where an FCA investment firm which has not been a small and non-interconnected firm for a period becomes a small and non-interconnected firm, it only ceases to be a relevant FCA investment firm once—
(a)
it has been a small and non-interconnected firm for a continuous period of six months, and
(b)
it has notified the Financial Conduct Authority.
(2C)
Where an FCA investment firm which has been a small and non-interconnected firm for a period determines that it is no longer a small and non-interconnected firm—
(a)
it must notify the Financial Conduct Authority, and
(b)
it does not become a relevant FCA investment firm until—
(i)
the end of the period of 12 months beginning with the day on which it made the determination, or
(ii)
if the notification specifies an earlier date, that date.”

51

In regulation 1(3) (interpretation of references to EU legislation), for “any EU regulation,” substitute “ any EU regulation other than the capital requirements regulation or to any ”.

52 (1)

Regulation 2 (ongoing reporting obligation) is amended as follows.

(2)

In paragraph (1), after “Institutions” insert “ and relevant FCA investment firms ”.

(3)

In paragraph (2), after “institution” insert “ or relevant FCA investment firm ”.

(4)

In paragraph (3), for “institution's period of account” substitute “ period of account for the institution or relevant FCA investment firm ”.

(5)

In paragraph (4)—

(a)

in the opening words, after “institution” insert “ or relevant FCA investment firm ”, and

(b)

in sub-paragraph (a), after “institution” insert “ or relevant FCA investment firm ”.

(6)

In paragraph (8), after “institution” insert “ or relevant FCA investment firm ”.

53

In regulation 3(1) (interim reporting obligation), after “Institutions” insert “ and relevant FCA investment firms ”.

54 (1)

Regulation 4 (group disclosure) is amended as follows.

(2)

In paragraph (1), after “institution” insert “ or relevant FCA investment firm ”.

(3)

In paragraph (2), after “institution” insert “ or relevant FCA investment firm ”.

55 (1)

Regulation 5 (prior disclosure: prevention of duplication) is amended as follows.

(2)

In paragraph (3)—

(a)

after “an institution” insert “ or relevant FCA investment firm ”, and

(b)

after “the institution” (in both places) insert “ or firm ”.

(3)

In paragraph (4)—

(a)

after “an institution” insert “ or relevant FCA investment firm ”, and

(b)

after “the institution” (in both places) insert “ or firm ”.

56

In regulation 6(2) (enforcement)—

(a)

in sub-paragraph (a) omit “which is a PRA-authorised person within the meaning of section 2B(5) of the 2000 Act”, and

(b)

in sub-paragraph (b), for “any other institution” substitute “ a relevant FCA investment firm ”.

SCHEDULE 2Prudential regulation of FCA investment firms

Section 2

PART 1New Part 9C of the Financial Services and Markets Act 2000

1

In the Financial Services and Markets Act 2000, after Part 9B insert—

“PART 9CPrudential regulation of FCA investment firms
Interpretation
143AFCA investment firms
(1)
In this Part, “FCA investment firm” means an investment firm that—
(a)
is an authorised person within the meaning of section 31(1)(a),
(b)
is not for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556), and
(c)
has its registered office or, if it has no registered office, its head office in the United Kingdom.
(2)
But the following are not FCA investment firms—
(a)
a person excluded from the definition of “investment firm” in Article 3(1) of the Financial Services and Markets 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) by paragraph (a) or (b) of that definition;
(b)
an investment firm which has a Part 4A permission to carry on regulated activities as an exempt investment firm within the meaning of regulation 8 of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701).
143BOther terms used in this Part
(1)
In this Part—
“authorised parent undertaking” means a parent undertaking that—
(a)
is incorporated in the United Kingdom or has its principal place of business in the United Kingdom, and
(b)
is an authorised person;
“on a consolidated basis” means as if all members of an FCA investment firm's group are a single FCA investment firm;
“Directive 2013/36/EU UK law” means the law of the United Kingdom which was relied on immediately before IP completion day to implement the capital requirements directive and its implementing measures as it has effect—
(a)
on IP completion day, in the case of rules made by the FCA or the PRA under this Act, and
(b)
as amended from time to time, in all other cases;
“EU tertiary legislation” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018;
“governance arrangements” includes organisational structure, lines of responsibility and internal control mechanisms;
“integrity”, in relation to the UK financial system, has the meaning given in section 1D;
“investment firm” has the meaning given in Article 4(1)(2) of the capital requirements regulation;
“non-authorised parent undertaking” means a parent undertaking that—
(a)
is incorporated in the United Kingdom or has its principal place of business in the United Kingdom, and
(b)
is not an authorised person.
(2)
The Treasury may by regulations make provision about the meaning of the following terms for the purposes of this Part—
“on a consolidated basis”;
“group”;
“parent undertaking”;
“subsidiary undertaking”.
(3)
Regulations under subsection (2) may, among other things, amend, repeal or otherwise modify provisions of this Act.
(4)
In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of retained EU law.
Rules
143CDuty to make rules applying to FCA investment firms
(1)
In the exercise of its power to make general rules, the FCA must make rules applying to FCA investment firms which impose the following types of prudential requirements—
(a)
requirements relating to the types and amounts of capital and liquid assets that such firms must hold in order to manage the risks specified in or under subsection (2);
(b)
requirements relating to the management of risks arising from the strength or extent of such firms' relationships with, or direct exposure to, a single client or group of connected clients;
(c)
reporting requirements related to requirements described in paragraph (a) or (b);
(d)
public disclosure requirements related to requirements described in paragraph (a) or (b);
(e)
requirements in respect of governance arrangements related to the risks specified in or under subsection (2);
(f)
requirements in respect of remuneration policies and practices related to the risks specified in or under subsection (2).
(2)
The risks referred to in subsection (1)(a), (e) and (f) are—
(a)
the risks to consumers (as defined in section 1G) arising from FCA investment firms,
(b)
the risks to the integrity of the UK financial system arising from FCA investment firms,
(c)
the risks to which FCA investment firms are exposed, and
(d)
any other risks specified by the Treasury by regulations.
(3)
General rules made for the purpose of subsection (1) may, among other things—
(a)
impose requirements to be satisfied on an individual basis or on a consolidated basis;
(b)
impose requirements relating to the processes for consolidation;
(c)
make provision relating to transactions between an FCA investment firm and a member of its group, including provision requiring the disclosure of information;
(d)
provide for exceptions from requirements;
(e)
make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.
(4)
General rules made for the purpose of subsection (1) may, despite section 137A(6), include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke a provision of that regulation or such an instrument).
143DDuty to make rules applying to parent undertakings
(1)
In the exercise of its power to make general rules, the FCA must make rules applying to authorised parent undertakings of FCA investment firms which impose the following types of prudential requirements—
(a)
requirements relating to the types and amounts of capital and liquid assets that such undertakings must hold in order to manage the risks specified in or under subsection (2);
(b)
requirements relating to the management of risks arising from the strength or extent of such undertakings' relationships with, or direct exposure to, a single client or group of connected clients;
(c)
reporting requirements related to requirements described in paragraph (a) or (b);
(d)
public disclosure requirements related to requirements described in paragraph (a) or (b);
(e)
requirements in respect of governance arrangements related to the risks specified in or under subsection (2);
(f)
requirements in respect of remuneration policies and practices related to the risks specified in or under subsection (2).
(2)
The risks referred to in subsection (1)(a), (e) and (f) are—
(a)
the risks to consumers (as defined in section 1G) arising from FCA investment firms, from parent undertakings of FCA investment firms and from FCA investment firms belonging to groups,
(b)
the risks to the integrity of the UK financial system arising from FCA investment firms, from parent undertakings of FCA investment firms and from FCA investment firms belonging to groups,
(c)
the risks to which FCA investment firms are exposed by virtue of their relationship with their parent undertaking, and
(d)
any other risks specified by the Treasury by regulations.
(3)
The FCA must make rules applying to non-authorised parent undertakings of FCA investment firms which impose requirements described in subsection (1), where such rules appear to it to be necessary or expedient for the purpose of advancing one or more of its operational objectives.
(4)
Rules made for the purpose of subsection (1) or under subsection (3) may, among other things—
(a)
impose requirements to be satisfied on an individual basis or on a consolidated basis;
(b)
impose requirements relating to the processes for consolidation;
(c)
make provision relating to transactions between a parent undertaking of an FCA investment firm and a member of its group, including provision requiring the disclosure of information;
(d)
provide for exceptions from requirements;
(e)
make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.
(5)
Section 137A(6) and (7) (restriction on modifying etc retained direct EU legislation) apply to rules made by the FCA under subsection (3) as they apply to general rules made by the FCA.
(6)
Rules made for the purpose of subsection (1) or under subsection (3) may, despite section 137A(6), include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke a provision of that regulation or such an instrument).
(7)
Section 137H (rules about remuneration) applies where the FCA makes rules under subsection (3) prohibiting persons, or persons of a specified description, from being remunerated in a specified way as it applies where the FCA makes general rules imposing such a prohibition.
(8)
Section 137I (Treasury direction to consider compliance with remuneration policies) applies where the FCA makes rules under subsection (3) requiring non-authorised parent undertakings, or non-authorised parent undertakings of a specified description, to act in accordance with a remuneration policy as it applies where the FCA makes general rules imposing such requirements on authorised persons, but as if—
(a)
the references in that section to authorised persons were references to non-authorised parent undertakings of FCA investment firms, and
(b)
subsection (7) of that section were omitted.
(9)
Section 141A (power to make consequential amendments of references to rules etc) applies to the exercise by the FCA of its power to make, alter or revoke rules under subsection (3) as it applies in relation to the exercise by the FCA of its power to make, alter or revoke rules under Part 9A.
(10)
This section is subject to section 143E.
143EPowers to make rules applying to parent undertakings
(1)
Subsections (1) and (3) of section 143D do not require the FCA to make rules applying to parent undertakings of FCA investment firms which belong to a group which includes a relevant body, but the FCA may make rules described in those subsections applying to such parent undertakings.
(2)
In subsection (1), “relevant body” means—
(a)
an undertaking (as defined in section 1161(1) of the Companies Act 2006) that has its head office in the United Kingdom and that has permission under Part 4A to accept deposits, other than—
(i)
an undertaking that also has permission under Part 4A to effect or carry out contracts of insurance, or
(ii)
a credit union within the meaning of section 1 of the Credit Unions Act 1979;
(b)
an investment firm that is for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556).
(3)
The FCA may make rules applying to parent undertakings of FCA investment firms which impose requirements for the disclosure of information about such undertakings' branches and subsidiary undertakings outside the United Kingdom.
(4)
The FCA's powers to make rules under subsections (1) and (3) are powers to do so—
(a)
in relation to authorised parent undertakings, in exercise of its power to make general rules, and
(b)
in relation to non-authorised parent undertakings, where such rules appear to it to be necessary or expedient for the purpose of advancing one or more of its operational objectives.
(5)
Section 143D(4) and (6) apply in relation to rules made by the FCA in exercise of the powers conferred by, or described in, this section as they apply in relation to rules made in the performance of the FCA's duties under that section.
(6)
Section 143D(5), (7), (8) and (9) apply in relation to rules made under this section applying to non-authorised parent undertakings as they apply in relation to rules made under section 143D(3).
143FPart 9C rules
(1)
In this Act, “Part 9C rules” means rules made, or to be made, by the FCA—
(a)
in the performance of its duties under section 143C or 143D, or
(b)
in exercise of the powers conferred by, or described in, section 143E.
(2)
The FCA must publish a list of all Part 9C rules in force in the way appearing to the FCA to be best calculated to bring it to the attention of people likely to be affected by the rules.
(3)
The FCA's opinion as to whether a rule is a Part 9C rule is conclusive for all purposes.
143GMatters to consider when making Part 9C rules
(1)
When making Part 9C rules, the FCA must, among other things, have regard to—
(a)
any relevant standards set by an international standard-setting body,
(b)
the likely effect of the rules on the relative standing of the United Kingdom as a place for internationally active investment firms to be based or to carry on activities,
(c)
the target in section 1 of the Climate Change Act 2008 (carbon target for 2050), and
(d)
any other matter specified by the Treasury by regulations.
(2)
For the purposes of subsection (1)(b), the FCA must consider the United Kingdom's standing in relation to the other countries and territories in which, in its opinion, internationally active investment firms are most likely to choose to be based or carry on activities.
(3)
When making Part 9C rules, the FCA must consider, and consult the Treasury about, the likely effect of the rules on relevant equivalence decisions.
(4)
For the purpose of this section, an equivalence decision is “relevant” if the Treasury have, by notice in writing, informed the FCA that it is relevant for that purpose.
(5)
In this section—
“equivalence decision” means a decision as to whether the law and practice of one country or territory is equivalent to the law and practice of another country or territory, either generally or as it relates to a particular matter;
“territory” includes the European Union and any other international organisation or authority comprising countries or territories.
(6)
This section is subject to section 143I.
143HExplanation to accompany consultation on rules
(1)
A draft of proposed Part 9C rules published in accordance with section 138I(1)(b) must be accompanied by—
(a)
an explanation of the provision that the FCA has considered it appropriate to include in the rules given the risks specified in or under section 143C(2) or 143D(2), and
(b)
an explanation of the ways in which having regard to the matters specified in or under section 143G(1) has affected the proposed rules,
(as well as being accompanied by the information listed in section 138I(2)).
(2)
If the FCA makes the proposed Part 9C rules, it must publish—
(a)
a summary of the purpose of the proposed rules, and
(b)
explanations complying with subsection (1),
(as well as the information required by section 138I(4) and (5)).
(3)
This section is subject to section 143I.
143IExceptions from sections 143G and 143H
(1)
Sections 143G and 143H do not apply where the FCA makes Part 9C rules—
(a)
in order to comply with a direction given by the Financial Policy Committee of the Bank of England under section 9H of the Bank of England Act 1998 (directions requiring macro-prudential measures), or
(b)
in order to act in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of the FCA's functions).
(2)
Section 143H does not apply in relation to Part 9C rules if the FCA considers that the delay involved in complying with that section would be prejudicial to the interests of consumers (as defined in section 425A).
(3)
If the FCA proposes Part 9C rules that change existing Part 9C rules and the changes consist of or include changes which, in the FCA's opinion, are not material—
(a)
the explanations described in section 143H(1) are not required in relation to the rules to the extent that they make those changes, but
(b)
the draft of the rules must be accompanied by a statement of the FCA's opinion.
(4)
If the FCA makes Part 9C rules that change existing Part 9C rules and the changes consist of or include changes which, in the FCA's opinion, are not material—
(a)
the summary and explanations described in section 143H(2) are not required in relation to the rules to the extent that they make those changes, but
(b)
the FCA must publish a statement of its opinion.
(5)
For the purposes of this section, whether a change to Part 9C rules is material is to be determined by the FCA by reference to, among other things, the risks specified in or under section 143C(2) or 143D(2) and the matters specified in or under section 143G(1).
Requirement to have UK parent undertaking
143JRequirement to have UK parent undertaking
(1)
This section applies where—
(a)
two or more FCA investment firms are subsidiary undertakings of the same parent undertaking,
(b)
the parent undertaking's head office is in a country or territory outside the United Kingdom, and
(c)
in the FCA's opinion, the law and practice in the other country or territory does not impose requirements on the parent undertaking which have equivalent effect to requirements imposed by Part 9C rules.
(2)
Where this section applies, the FCA may exercise its power under section 55L(3) to impose a requirement on the FCA investment firms to secure that a parent undertaking with its head office in the United Kingdom is established.
Imposition of requirements on non-authorised parent undertakings
143KImposition of requirements on non-authorised parent undertakings
(1)
The FCA may, on the application of a non-authorised parent undertaking of an FCA investment firm—
(a)
impose a requirement on the parent undertaking,
(b)
vary a requirement imposed on the parent undertaking under this section, or
(c)
cancel such a requirement.
(2)
The FCA may exercise its power under subsection (3) in relation to a non-authorised parent undertaking of an FCA investment firm if it appears to the FCA that—
(a)
it is necessary or expedient to do so in order to manage risks specified in or under section 143D(2), and
(b)
it is desirable to do so in order to advance one or more of its operational objectives.
(3)
The FCA's power under this subsection is a power—
(a)
to impose a requirement,
(b)
to vary a requirement imposed under this section, or
(c)
to cancel such a requirement.
(4)
The FCA may refuse an application under subsection (1) if it appears to the FCA that it is desirable to do so in order to advance one or more of the FCA's operational objectives.
(5)
A requirement may, in particular, be imposed under this section—
(a)
so as to require the parent undertaking to take specified action, or
(b)
so as to require the parent undertaking to refrain from taking specified action.
(6)
A requirement may be imposed by reference to the parent undertaking's relationship with—
(a)
its group, or
(b)
other members of its group.
(7)
A requirement may refer to the past conduct of the parent undertaking (for example, by requiring the parent undertaking to review or take remedial action in respect of past conduct).
(8)
A requirement may be expressed to expire at the end of a specified period, but the imposition of a requirement that expires at the end of a specified period does not affect the FCA's power to impose a new requirement.
(9)
A requirement ceases to be in force if the person on whom it is imposed ceases to be a non-authorised parent undertaking of an FCA investment firm.
(10)
For the purposes of a provision of this section which refers to the FCA's operational objectives, in relation to the exercise of a power in relation to a particular parent undertaking, it does not matter whether there is a relationship between the parent undertaking and the persons whose interests will be protected by the exercise of the power.
143LApplications under section 143K
(1)
An application under section 143K(1) for the imposition or variation of a requirement must contain a statement of the desired requirement or variation.
(2)
An application under section 143K(1)—
(a)
must be made in such manner as the FCA may direct, and
(b)
must contain, or be accompanied by, such other information as the FCA may reasonably require.
(3)
At any time after the application is received and before it is determined, the FCA may require the applicant to provide it with such further information as the FCA reasonably considers necessary to enable it to determine the application.
(4)
The FCA may require an applicant to provide information which the applicant is required to provide the FCA under this section in such form, or to verify it in such a way, as the FCA may direct.
(5)
Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.
143MDetermination of applications under section 143K
(1)
The FCA must determine an application under section 143K(1)—
(a)
if the application is complete, before the end of the period of six months beginning with the day on which the FCA received the application, or
(b)
if the application is incomplete, before the end of the period of 12 months beginning with the day on which the FCA received the application.
(2)
The applicant may withdraw the application, by giving the FCA a written notice, at any time before the FCA determines it.
(3)
If the FCA grants an application under section 143K(1), it must give the applicant a written notice.
(4)
The notice must state the date from which the requirement or variation has effect.
143NRefusal of applications under section 143K
(1)
If the FCA proposes to refuse an application under section 143K(1), it must give the applicant a warning notice.
(2)
If the FCA decides to refuse an application under section 143K(1), it must give the applicant a decision notice.
143OExercise of own-initiative power under section 143K
(1)
The imposition or variation of a requirement by the FCA under section 143K(2) takes effect—
(a)
immediately, if the notice given under subsection (3) states 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.
(2)
The imposition or variation of the requirement may be expressed to take effect immediately, or on a specified date, only if the FCA reasonably considers that it is necessary for it to take effect immediately or on that date, having regard to the ground on which it is exercising its power under section 143K(2).
(3)
If the FCA—
(a)
proposes to exercise its power under section 143K(2) so as to impose a requirement on a parent undertaking or to vary a requirement imposed on a parent undertaking, or
(b)
exercises that power so as to impose a requirement on a parent undertaking, or to vary a requirement imposed on a parent undertaking, with immediate effect,
it must give the parent undertaking a written notice.
(4)
The notice must—
(a)
give details of the requirement or its variation,
(b)
state the FCA's reasons for imposing or varying the requirement,
(c)
inform the parent undertaking that it may make representations to the FCA within the period specified in the notice (whether or not the parent undertaking has referred the matter to the Tribunal),
(d)
inform the parent undertaking of when the imposition or variation of the requirement takes effect, and
(e)
inform the parent undertaking of its right to refer the matter to the Tribunal.
(5)
The FCA may extend the period allowed under the notice for making representations.
(6)
If, having considered any representations made by the parent undertaking, the FCA decides—
(a)
to impose the requirement or vary the requirement in the way proposed, or
(b)
if the requirement has been imposed or varied, not to rescind its imposition or variation,
it must give the parent undertaking a written notice.
(7)
A notice under subsection (6) must inform the parent undertaking of its right to refer the matter to the Tribunal.
(8)
If, having considered any representations made by the parent undertaking, the FCA decides—
(a)
not to impose the requirement or vary the requirement in the way proposed,
(b)
to impose a different requirement or vary the requirement in a different way, or
(c)
to rescind a requirement or variation which has effect,
it must give the parent undertaking a written notice.
(9)
A notice under subsection (8)(b) must comply with subsection (4).
(10)
If a notice under this section informs a person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure for such a reference.
(11)
For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
143PRight to refer matters to the Tribunal
(1)
An applicant who is aggrieved by the determination of an application under section 143K(1) may refer the matter to the Tribunal.
(2)
A parent undertaking aggrieved by the exercise by the FCA of its power under section 143K(2) to impose a requirement on the parent undertaking, or vary a requirement imposed on the parent undertaking, may refer the matter to the Tribunal.
143QAssets requirements
(1)
This section makes provision about a requirement imposed on a non-authorised parent undertaking of an FCA investment firm (“N”) under section 143K—
(a)
prohibiting the disposal of, or other dealing with, any of N's assets (whether in the United Kingdom or elsewhere) or restricting such disposals or dealings, or
(b)
requiring that some or all of N's assets, or some or all assets belonging to consumers (as defined in section 1G) but held by N or to N's order, must be transferred to and held by a trustee approved by the FCA.
(2)
If the FCA—
(a)
imposes a requirement described in subsection (1)(a), and
(b)
gives notice of the requirement to an institution with whom N keeps an account,
the notice has the effects set out in subsection (3).
(3)
Those effects are that—
(a)
the institution does not act in breach of a contract with N if, having been instructed by N (or on N's behalf) to transfer a sum or otherwise make a payment out of N'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 FCA an amount equal to the amount transferred from, or otherwise paid out of, N's account in contravention of the requirement.
(4)
If the FCA imposes a requirement described in subsection (1)(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 FCA.
(5)
If, while a requirement described in subsection (1)(b) is in force, N creates a charge over any assets of N held in accordance with the requirement, the charge is (to the extent that it confers security over the assets) void against the liquidator and N's creditors.
(6)
Assets held by a person as trustee are to be taken to be held by the trustee in accordance with a requirement mentioned in subsection (1)(b) only if—
(a)
N has given the trustee a written notice that those assets are to be held by the trustee in accordance with the requirement, or
(b)
they are assets into which assets to which paragraph (a) applies have been transposed by the trustee on the instruction of N.
(7)
A person who contravenes subsection (4) commits an offence and is liable—
(a)
on summary conviction in England and Wales, to a fine;
(b)
on summary conviction in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.
(8)
In this section, references to imposing a requirement (however expressed) include imposing a requirement by varying an existing requirement.
(9)
In this paragraph, “charge” includes a mortgage (or, in Scotland, a security over property).
(10)
Subsections (4) and (6) 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 described in subsection (1)(b).
Control of managers etc of non-authorised parent undertakings
143RManagers of non-authorised parent undertakings
A non-authorised parent undertaking of an FCA investment firm must take reasonable care to ensure that members of its management body—
(a)
are of sufficiently good repute, and
(b)
possess sufficient knowledge, skills and experience to perform their duties effectively.
143SPart 9C prohibition orders
(1)
Subsection (2) applies where it appears to the FCA that an individual—
(a)
is not of sufficiently good repute, or
(b)
does not possess sufficient knowledge, skills and experience,
to perform a function in relation to an activity carried on by a non-authorised parent undertaking of an FCA investment firm.
(2)
The FCA may make an order (“a Part 9C prohibition order”) prohibiting the individual from performing the function.
(3)
A Part 9C prohibition order may relate to—
(a)
all functions in relation to an activity carried on by a non-authorised parent undertaking of an FCA investment firm, or
(b)
a function specified in the order or of a description specified in the order.
(4)
A Part 9C prohibition order may relate to—
(a)
all activities of a non-authorised parent undertaking of an FCA investment firm, or
(b)
an activity specified in the order or of a description specified in the order.
(5)
A Part 9C prohibition order may relate to—
(a)
all non-authorised parent undertakings of FCA investment firms, or
(b)
an undertaking specified, or within a description specified, in the order.
(6)
A non-authorised parent undertaking of an FCA investment firm must take reasonable care to ensure that none of its functions is performed by a person who is prohibited from performing that function by a Part 9C prohibition order.
143TProcedure for making a Part 9C prohibition order
(1)
If the FCA proposes to make a Part 9C prohibition order it must give the individual to whom the order would apply a warning notice.
(2)
The warning notice must set out the terms of the prohibition.
(3)
If the FCA decides to make a Part 9C prohibition order it must give the individual to whom the order applies a decision notice.
(4)
The decision notice must—
(a)
name the individual to whom the Part 9C prohibition order applies, and
(b)
set out the terms of the order.
(5)
If the FCA decides to make a Part 9C prohibition order, the individual to whom the order applies may refer the matter to the Tribunal.
143UVarying and withdrawing a Part 9C prohibition order
(1)
The FCA may vary or revoke a Part 9C prohibition order on the application of the individual named in the order.
(2)
On an application for the variation or revocation of a Part 9C prohibition order—
(a)
if the FCA decides to grant the application, it must give the applicant written notice of its decision,
(b)
if the FCA proposes to refuse the application, it must give the applicant a warning notice, and
(c)
if the FCA decides to refuse the application, it must give the applicant a decision notice.
(3)
If the FCA gives the applicant a decision notice under subsection (2)(c), the applicant may refer the matter to the Tribunal.
143VOffence of breaching a Part 9C prohibition order
(1)
An individual who performs a function, or agrees to perform a function, in breach of a Part 9C prohibition order commits an offence.
(2)
An individual who commits an offence under this section is liable—
(a)
on summary conviction in England and Wales, to a fine, and
(b)
on summary conviction in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.
(3)
In proceedings for an offence under this section, it is a defence for the individual to show that they took all reasonable precautions and exercised all due diligence to avoid committing the offence.
Disciplinary measures for non-authorised parent undertakings
143WDisciplinary measures
(1)
This section applies if the FCA is satisfied that a non-authorised parent undertaking of an FCA investment firm has contravened—
(a)
a provision of Part 9C rules,
(b)
a requirement imposed under section 143K,
(c)
section 143R, or
(d)
section 143S(6).
(2)
The FCA may impose a penalty of such amount as it considers appropriate on any of the following—
(a)
the non-authorised parent undertaking;
(b)
a person who was knowingly concerned in the contravention.
(3)
The FCA may (instead of or in addition to imposing a penalty under subsection (2)) publish a statement to the effect that the person has contravened, or been knowingly concerned in a contravention of, a provision of Part 9C rules.
(4)
Subsection (5) applies to—
(a)
a member of the management body of the non-authorised parent undertaking, or
(b)
a person not falling within paragraph (a) who is an employee of the non-authorised parent undertaking,
who was, at any time, knowingly concerned in the contravention.
(5)
The FCA may impose, for such period as it considers appropriate, restrictions (including a ban) on the exercise by the person of functions of an FCA investment firm or a parent undertaking of an FCA investment firm.
(6)
The FCA may—
(a)
vary a restriction imposed under subsection (5) so as to reduce the period for which it has effect or otherwise to limit its effect, or
(b)
cancel the restriction.
(7)
The FCA may not take action against a person under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the person under section 143X.
(8)
In subsection (7), “the limitation period” means the period of six years beginning with the first day on which the FCA knew of the contravention.
(9)
For the purpose of subsection (8), the FCA is to be treated as knowing of a contravention if it has information from which the contravention can reasonably be inferred.
(10)
In this section, “management body” means the board of directors or, if there is no such board, the equivalent body responsible for the management of the undertaking concerned.
(11)
The reference in subsection (4) to an employee of a person (“P”) includes a person who—
(a)
personally provides, or is under an obligation personally to provide, services to P under an arrangement made between P and the person providing the services or another person, and
(b)
is subject to (or to the right of) supervision, direction or control by P as to the manner in which those services are provided.
143XProcedure for disciplinary measures
(1)
If the FCA proposes to take action against a person under section 143W(2), (3) or (5) it must give the person 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 to publish a statement must set out the terms of the statement.
(4)
A warning notice about a proposal to impose a restriction under section 143W(5) must state—
(a)
the terms of the restriction, and
(b)
the period for which the restriction is to have effect.
(5)
If the FCA decides to take action against a person under section 143W(2), (3) or (5) it must give the person 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 the publication of a statement must state the terms of the statement.
(8)
After the statement is published, the FCA must send a copy of the statement to—
(a)
the person in respect of whom it is made, and
(b)
any person to whom a copy of the decision notice was given under section 393(4).
(9)
A decision notice about the imposition of a restriction under section 143W(5) must state—
(a)
the terms of the restriction, and
(b)
the period for which the restriction is to have effect.
(10)
If the FCA decides to take action against a person under section 143W(2), (3) or (5), the person may refer the matter to the Tribunal.
(11)
If the FCA decides to vary or cancel a restriction under section 143W(6), it must give written notice of its decision to the applicant.
143YStatement of policy for penalties under section 143W
(1)
The FCA must prepare and issue a statement of policy with respect to—
(a)
the imposition of penalties under section 143W, and
(b)
the amount of penalties under that section.
(2)
The FCA's policy in determining what the amount of a penalty should be must include having regard to—
(a)
the seriousness of the contravention,
(b)
the extent to which the contravention was deliberate or reckless, and
(c)
whether the person on whom the penalty is to be imposed 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, a power under section 143W(2) 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 occurred.
(6)
A statement 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 must, without delay, give the Treasury a copy of any statement which it publishes under this section.
(8)
The FCA may charge a reasonable fee for providing a person with a copy of a statement published under this section.
143ZProcedure for statement of policy
(1)
Before issuing a statement of policy under section 143Y, 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 FCA's opinion, significant, the FCA must publish details of the difference (in addition to complying with subsection (4)).
(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.”

PART 2Minor and consequential amendments

2

The Financial Services and Markets Act 2000 is amended as follows.

3

In section 133(7A) (proceedings before the Tribunal: meaning of “disciplinary reference”), after paragraph (ia) insert—

“(ib)
a decision to take action under section 143W;”.

4

In section 137A (the FCA's general rules), at the end insert—

“(7)
Subsection (6) is subject to sections 143C(4) and 143D(6).”

5

In section 165(7) (regulators' power to require information), after paragraph (d) insert—

“(da)
by the FCA, to impose requirements on a person who provides, or has provided, a service to an FCA investment firm or to a relevant parent undertaking of such a firm;”.

6 (1)

Section 166 (regulators' power to require reports by skilled persons) is amended as follows.

(2)

In subsection (10), after “subsection (11)” insert “ or (12) ”.

(3)

After subsection (11) insert—

“(12)
This subsection applies to a person who provides, or has provided, a service to an FCA investment firm or to a relevant parent undertaking of such a firm.”

7 (1)

Section 167 (regulators' power to appoint investigators) is amended as follows.

(2)

In subsection (1)—

(a)

in paragraph (a), for “a recognised investment exchange or an authorised person or of” substitute “ a person to whom subsection (1A) applies or ”, and

(b)

in paragraph (c), for “a recognised investment exchange or an authorised person” substitute “ a person to whom subsection (1A) applies ”.

(3)

After subsection (1) insert—

“(1A)
This subsection applies to the following persons—
(a)
a recognised investment exchange;
(b)
an authorised person;
(c)
a relevant parent undertaking of an FCA investment firm;
(d)
a person who provides a service to an FCA investment firm or to a relevant parent undertaking of such a firm.”

(4)

For subsection (4) substitute—

“(4A)
The power conferred by this section may be exercised in relation to a person who has at any time been an authorised person or a person described in subsection (1A)(c) or (d) but only in relation to—
(a)
business carried on at any time when the person was an authorised person or a person described in subsection (1A)(c) or (d), or
(b)
the ownership or control of the person at such a time.
(4B)
The power conferred by this section may be exercised in relation to a person who has at any time been an appointed representative but only in relation to business carried on at any time when the person was an appointed representative.”

(5)

In subsection (5A), at the end insert—

“(d)
in relation to a person who is, or has at any time been, a person described in subsection (1A)(c) or (d) who is not an authorised person, the FCA.”

8 (1)

In section 168(4), after paragraph (i) insert—

“(ia)
a person may have failed to comply with section 143R;
(ib)
an individual may have performed or agreed to perform a function in breach of a Part 9C prohibition order;
(ic)
a person may have failed to comply with section 143S(6);”.

(2)

Section 171 (powers of person appointed under section 167) is amended as follows.

(3)

In subsection (1), for the words before paragraph (a) substitute “ An investigator may require a person to whom subsection (1A) applies— ”.

(4)

After subsection (1) insert—

“(1A)
This subsection applies to the following persons—
(a)
the person who is the subject of the investigation (“the person under investigation”);
(b)
any person connected with the person under investigation;
(c)
where the person under investigation is an FCA investment firm, a person who provides, or has provided, a service to the firm or to a relevant parent undertaking of the firm;
(d)
where the person under investigation is a relevant parent undertaking of an FCA investment firm, a person who provides, or has provided, a service to the parent undertaking or to the firm.”

9 (1)

Section 176 (entry of premises under warrant) is amended as follows.

(2)

In subsection (3)(a), for “an authorised person or an appointed representative” substitute “ a person to whom subsection (3A) applies ”.

(3)

After subsection (3) insert—

“(3A)
This subsection applies to the following persons—
(a)
an authorised person;
(b)
an appointed representative;
(c)
a relevant parent undertaking of an FCA investment firm;
(d)
a person who provides a service to an FCA investment firm or to a relevant parent undertaking of such a firm.”

10

After section 177 insert—

“Interpretation
177AInterpretation of Part 11
In this Part—
“FCA investment firm” has the meaning given in section 143A;
“relevant parent undertaking”, in relation to an FCA investment firm, means an authorised parent undertaking or a non-authorised parent undertaking (as defined in section 143B).”

11

In section 347(1)(g) (record of authorised persons etc), after “order” insert “ or Part 9C prohibition order ”.

12

In section 391(1ZB) (publication of warning notices), after paragraph (ia) insert—

“(ib)
section 143T;
(ic)
section 143X;”.

13

In section 392 (application of third party rights to notices)—

(a)

in paragraph (a), after “142T(1),” insert “ 143N(1), 143T(1), 143U(2), 143X(1), ”, and

(b)

in paragraph (b), after “142T(4),” insert “ 143N(2), 143T(3), 143U(2), 143X(5), ”.

14

In section 395(13) (meaning of supervisory notice), after paragraph (bba) insert—

“(bbb)
section 143O(3), (6) or (8)(b);”.

15 (1)

Section 417(1) (definitions) is amended as follows.

(2)

At the appropriate place insert—

““Part 9C prohibition order” has the meaning given in section 143S;
“Part 9C rules” has the meaning given in section 143F;”.

(3)

In the definition of “prohibition order”, after “order”” insert “ (except in the expression “Part 9C prohibition order”) ”.

16

In section 424A(1) (investment firm), after “this Act” insert “ (except as otherwise provided) ”.

17 (1)

Section 429 (parliamentary control of statutory instruments) is amended as follows.

(2)

In subsection (2), after “142W,” insert “ 143C(2), 143D(2), 143G(1), ”.

(3)

In subsection (2B), after paragraph (b) insert—

“(ba)
provision made under section 143B(2) which amends this Act;”.

18

In paragraph 20(4) of Schedule 1ZA (enforcement costs), after paragraph (b) insert—

“(ba)
its powers under section 143S (Part 9C prohibition orders),”.

PART 3Transitional provision

Rules made before Part 1 of this Schedule comes into force

19 (1)

The Financial Conduct Authority may identify general rules made under section 137A of the Financial Services and Markets Act 2000 before Part 1 of this Schedule comes into force and without complying with sections 143G and 143H of that Act (“pre-commencement rules”) that are to be Part 9C rules.

(2)

Where the Financial Conduct Authority identifies such rules, it must, as soon as reasonably practicable after Part 1 of this Schedule comes into force, publish—

(a)

a list of the pre-commencement rules that are to be Part 9C rules, and

(b)

a statement confirming that, in deciding that those pre-commencement rules should be Part 9C rules, the Financial Conduct Authority has—

(i)

considered the risks specified in or under section 143C(2) or 143D(2) and the matters specified in or under section 143G(1), and

(ii)

considered, and consulted the Treasury about, the likely effect of the rules on relevant equivalence decisions (as defined in section 143G).

(3)

Rules included in the list published in accordance with sub-paragraph (2)(a) are to be treated for all purposes as Part 9C rules.

Pre-commencement consultation etc

20 (1)

In relation to Part 9C rules, the requirements of the provisions listed in sub-paragraph (2) may be satisfied by things done before Part 1 of this Schedule comes into force (as well as by things done after that time).

(2)

Those provisions are—

(a)

section 138I of the Financial Services and Markets Act 2000 (consultation);

(b)

sections 143G to 143I of that Act (inserted by Part 1 of this Schedule).

Relevant equivalence decisions

21

For the purposes of section 143G of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), an equivalence decision may be a relevant equivalence decision by virtue of a notice in writing given by the Treasury before Part 1 of this Schedule comes into force (as well as by a notice given after that time).

Carbon target

22

In relation to the making of Part 9C rules that are made on or before 1 January 2022—

(a)

paragraph (c) of section 143G(1) of the Financial Services and Markets Act 2000 (duty to have regard to carbon target for 2050) does not apply, and

(b)

section 143H(1)(b) of that Act does not require an explanation in respect of matters specified in that paragraph.

Interpretation

23

In this Part of this Schedule, “Part 9C rules” has the same meaning as in the Financial Services and Markets Act 2000 (see section 143F of that Act, inserted by Part 1 of this Schedule).

SCHEDULE 3Prudential regulation of credit institutions etc

Section 5

PART 1New Part 9D of the Financial Services and Markets Act 2000

1

In the Financial Services and Markets Act 2000, after Part 9C (inserted by Schedule 2 to this Act) insert—

“PART 9DPrudential regulation of credit institutions etc
Interpretation
144ACRR rules
(1)
In this Act, “CRR rules” means rules of a type described in subsection (2) to the extent that they make provision about a matter described in subsection (3).
(2)
The types of rules are—
(a)
general rules made, or to be made, by the PRA applying to CRR firms or a description of CRR firm;
(b)
rules made, or to be made, under section 192XA.
(3)
The matters are any matter that is the subject of—
(a)
a relevant provision of the capital requirements regulation, or
(b)
a CRR Basel standard.
(4)
For the purposes of subsection (3)(a), a provision is “relevant” if—
(a)
it has been or may be revoked by regulations made under section 3(1) of the Financial Services Act 2021, or
(b)
it has been revoked by regulations made under section 3(3) or (5) of that Act.
(5)
In subsection (3)—
(a)
the reference to a matter that is the subject of a provision of the capital requirements regulation includes a matter that is the subject of an instrument made under the provision, and
(b)
the reference to a matter that is the subject of a CRR Basel standard includes such a matter as it relates to any CRR firm (even where the standard in question does not apply to all CRR firms).
144BTerms used in this Part
(1)
In this Part—
“CRR Basel standard” has the meaning given in section 4 of the Financial Services Act 2021;
“CRR firm” has the same meaning as in the capital requirements regulation;
“EU tertiary legislation” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018.
(2)
In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of retained EU law.
Making CRR rules
144CMatters to consider when making CRR rules
(1)
When making CRR rules, the PRA must, among other things, have regard to—
(a)
relevant standards recommended by the Basel Committee on Banking Supervision from time to time,
(b)
the likely effect of the rules on the relative standing of the United Kingdom as a place for internationally active credit institutions and investment firms to be based or to carry on activities,
(c)
the likely effect of the rules on the ability of CRR firms to continue to provide finance to businesses and consumers in the United Kingdom on a sustainable basis in the medium and long term,
(d)
the target in section 1 of the Climate Change Act 2008 (carbon target for 2050), and
(e)
any other matter specified by the Treasury by regulations.
(2)
For the purposes of subsection (1)(b), the PRA must consider the United Kingdom's standing in relation to the other countries and territories in which, in its opinion, internationally active credit institutions and investment firms are most likely to choose to be based or carry on activities.
(3)
When making CRR rules, the PRA must consider, and consult the Treasury about, the likely effect of the rules on relevant equivalence decisions.
(4)
For the purpose of this section, an equivalence decision is “relevant” if the Treasury have, by notice in writing, informed the PRA that it is relevant for that purpose.
(5)
In this section—
“consumer” means an individual who is acting for purposes outside those of any trade, business or profession carried on by the individual;
“equivalence decision” means a decision as to whether the law and practice of one country or territory is equivalent to the law and practice of another country or territory, either generally or as it relates to a particular matter;
“territory” includes the European Union and any other international organisation or authority comprising countries or territories.
(6)
This section is subject to section 144E.
144DExplanation to accompany consultation on CRR rules
(1)
A draft of proposed CRR rules published in accordance with section 138J(1)(b) must be accompanied by an explanation of the ways in which having regard to the matters specified in or under section 144C(1) has affected the proposed rules (as well as being accompanied by the information listed in section 138J(2)).
(2)
If the PRA makes the proposed CRR rules, it must publish—
(a)
a summary of the purpose of the proposed rules, and
(b)
an explanation complying with subsection (1),
(as well as the information required by section 138J(4) and (5)).
(3)
This section is subject to section 144E.
144EExceptions from sections 144C and 144D etc
(1)
Sections 144C and 144D do not apply where the PRA makes CRR rules—
(a)
in order to comply with a direction given by the Financial Policy Committee of the Bank of England under section 9H of the Bank of England Act 1998 (directions requiring macro-prudential measures), or
(b)
in order to act in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of the PRA's functions).
(2)
Section 144C does not apply where the PRA makes CRR rules to the extent that they make provision (“CRR restatement provision”) reproducing without any changes which, in the PRA's opinion, are material—
(a)
a provision of the capital requirements regulation as it had effect immediately before it was revoked by regulations made under section 3 of the Financial Services Act 2021, or
(b)
a provision of an instrument made under the capital requirements regulation as it had effect immediately before it was revoked by such regulations.
(3)
The following do not apply in relation to CRR rules to the extent that they make CRR restatement provision—
(a)
section 138J, other than subsection (1)(a),
(b)
section 138K, and
(c)
section 144D,
but, if it makes rules making such provision, the PRA must publish a statement of which provisions of the capital requirements regulation, or of the instrument made under that regulation, are reproduced and what changes (if any) are made.
(4)
Section 144D does not apply in relation to CRR rules if the PRA considers that the delay involved in complying with that section would be prejudicial to the safety and soundness of PRA-authorised persons.
(5)
If the PRA proposes CRR rules that change existing CRR rules and the changes consist of or include changes which, in the PRA's opinion, are not material—
(a)
the explanation described in section 144D(1) is not required in relation to the rules to the extent that they make those changes, but
(b)
the draft of the rules must be accompanied by a statement of the PRA's opinion.
(6)
If the PRA makes CRR rules that change existing CRR rules and the changes consist of or include changes which, in the PRA's opinion, are not material—
(a)
the summary and explanation described in section 144D(2) are not required in relation to the rules to the extent that they make those changes, but
(b)
the PRA must publish a statement of its opinion.
(7)
For the purposes of this section, whether a change is material is to be determined by the PRA by reference to, among other things, the matters specified in or under section 144C(1).
144FPower to consequentially amend enactments
(1)
The Treasury may by regulations make provision amending an enactment that is consequential on CRR rules.
(2)
In this section—
“enactment” includes—
(a)
retained direct EU legislation,
(b)
an enactment comprised in subordinate legislation,
(c)
an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,
(d)
an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and
(e)
an enactment comprised in, or in an instrument made under, Northern Ireland legislation;
“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act).
Content of CRR rules
144GDisapplication or modification of CRR rules in individual cases
(1)
This section applies to a CRR rule if, or to the extent that, CRR rules provide for it to apply to the rule.
(2)
The PRA may, on the application of or with the consent of a person who is subject to CRR rules, give the person a permission that enables the person—
(a)
not to apply the CRR rule, or
(b)
to apply the CRR rule with the modifications specified in the permission.
(3)
The PRA may—
(a)
give permission under this section subject to conditions, and
(b)
revoke or vary permission under this section.
144HRelationship with the capital requirements regulation
(1)
CRR rules may make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.
(2)
CRR rules may, despite section 137G(6), include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke a provision of that regulation or such an instrument).
(3)
In this section, “Directive 2013/36/EU UK law” means the law of the United Kingdom which was relied on immediately before IP completion day to implement the capital requirements directive and its implementing measures as it has effect—
(a)
on IP completion day, in the case of rules made by the PRA or the FCA under this Act, and
(b)
as amended from time to time, in all other cases.”

PART 2PRA's powers in relation to certain holding companies

2

Part 12B of the Financial Services and Markets Act 2000 (approval of certain holding companies by the PRA) is amended as follows.

3

Before section 192O insert— “ Interpretation ”.

4 (1)

Section 192O(1) (interpretation) is amended as follows.

(2)

Omit the definition of “section 192V rules”.

(3)

After that definition insert—

““section 192XA rules” means rules made under section 192XA;”.

5

Before section 192P insert— “ Approval ”.

6

Omit section 192V (rules imposing consolidated or sub-consolidated requirements).

7

After section 192X insert—

“Rules
192XARules applying to holding companies
(1)
The PRA may make rules described in subsection (2) applying to financial holding companies and mixed financial holding companies that are—
(a)
approved under section 192R, or
(b)
designated under section 192T(2)(c),
where it appears to the PRA to be necessary or expedient to make the rules for the purpose of advancing any of its objectives.
(2)
Those rules are—
(a)
rules imposing requirements to be complied with by holding companies on a consolidated or sub-consolidated basis;
(b)
rules imposing requirements which, in the PRA's opinion, are likely to mitigate group risk;
(c)
rules imposing reporting requirements related to requirements described in paragraph (a) or (b);
(d)
rules imposing public disclosure requirements related to requirements described in paragraph (a) or (b);
(e)
rules imposing requirements in respect of governance arrangements;
(f)
rules imposing requirements in respect of remuneration policies and practices.
(3)
Subject to subsection (4), rules made under this section may not modify, amend or revoke any retained direct EU legislation, except retained direct EU legislation which takes the form of PRA rules.
(4)
Rules made under this section may include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke provisions of that regulation or such an instrument).
(5)
Rules made under this section may make provision by reference to the capital requirements regulation, to instruments made under that regulation or to Directive 2013/36/EU UK law, as amended from time to time.
(6)
Section 137H (rules about remuneration) applies where the PRA makes rules under this section prohibiting persons, or persons of a specified description, from being remunerated in a specified way as it applies where the PRA makes general rules imposing such a prohibition.
(7)
Section 137I (Treasury direction to consider compliance with remuneration policies) applies where the PRA makes rules under this section requiring financial holding companies or mixed financial holding companies, or a specified description of such companies, to act in accordance with a remuneration policy as it applies where the PRA makes general rules imposing such requirements on authorised persons, but as if—
(a)
the references in that section to authorised persons were references to financial holding companies or mixed financial holding companies, and
(b)
subsection (7) of that section were omitted.
(8)
Section 141A (power to make consequential amendments of references to rules etc) applies to the exercise by the PRA of its power to make, alter or revoke rules under this section as it applies in relation to the exercise by the PRA of its power to make, alter or revoke rules under Part 9A.
(9)
In this section—
“governance arrangements” includes organisational structure, lines of responsibility and internal control mechanisms;
“group risk” means the risk that the financial position of a financial holding company or mixed financial holding company or of a member of its group may be adversely affected—
(a)
by its relationships, whether financial or non-financial, with other members of the group, or
(b)
by matters which affect the financial position of the group, or of a group which forms part of that group, taken as a whole (including, for example, reputational contagion).
192XBProcedural provision
(1)
For provision about the making of section 192XA rules that are CRR rules, see Part 9D.
(2)
The following provisions of Part 9D apply in relation to section 192XA rules that are not CRR rules as if they were CRR rules—
(a)
section 144C (matters to consider when making rules);
(b)
section 144D (explanation to accompany consultation on rules);
(c)
section 144E(1) and (4) to (7) (exceptions from sections 144C and 144D).
192XCDisapplication or modification of rules in individual cases
(1)
This section applies to a section 192XA rule if, or to the extent that, section 192XA rules provide for it to apply to the rule.
(2)
The PRA may, on the application of or with the consent of a person who is subject to section 192XA rules, give the person a permission that enables the person—
(a)
not to apply the section 192XA rule, or
(b)
to apply the section 192XA rule with the modifications specified in the permission.
(3)
The PRA may—
(a)
give permission under this section subject to conditions, and
(b)
revoke or vary permission under this section.
Disciplinary measures ”.

8

In section 192Y(1) (power to impose penalty or issue censure), for paragraph (d) substitute—

“(d)
the capital requirements regulation or an instrument made under that regulation.””

PART 3Minor and consequential amendments

Bank of England Act 1998 (c. 11)

9 (1)

Section 9H of the Bank of England Act 1998 (directions to FCA or PRA requiring macro-prudential measures) is amended as follows.

(2)

In subsection (2) (definition of “regulated person”), for paragraph (b) substitute—

“(b)
in relation to the PRA—
(i)
a PRA-authorised person within the meaning of that Act, or
(ii)
a financial holding company or mixed financial holding company that is approved under section 192R of that Act or designated under section 192T(2)(c) of that Act.”

(3)

At the end insert—

“(12)
In this section—
“the Capital Requirements Regulation” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms;
“financial holding company” has the meaning given in Article 4(1)(20) of the Capital Requirements Regulation;
“mixed financial holding company” has the meaning given in Article 4(1)(21) of the Capital Requirements Regulation.”

Financial Services and Markets Act 2000 (c. 8)

10

The Financial Services and Markets Act 2000 is amended as follows.

11

In section 137G (the PRA's general rules), at the end insert—

“(7)
Subsection (6) is subject to section 144H(2).”

12

In section 138J(10) (consultation by the PRA), for “section 138L” substitute “ sections 138L and 144E(3). ”

13

In section 138K (consultation: mutual societies), at the end insert—

“(7)
This section is subject to section 144E(3).”

14 (1)

Section 192O (interpretation of Part 12B) is amended as follows.

(2)

In subsection (1)—

(a)

in the definition of “Directive 2013/36/EU UK law”, omit the words following paragraph (b), and

(b)

after that definition insert—

““EU tertiary legislation” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018;”.

(3)

At the end insert—

“(3)
In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of retained EU law.”

15

In section 192R(3) (grant of approval)—

(a)

in paragraph (a) omit “, section 192V rules” and the “and” at the end, and

(b)

after that paragraph insert—

“(aa)
adequate for the purpose of complying with section 192XA rules, and”.

16 (1)

Section 192T (measures) is amended as follows.

(2)

In subsection (1)—

(a)

omit the “and” at the end of paragraph (a),

(b)

in paragraph (b) omit “, section 192V rules”, and

(c)

at the end of paragraph (b) insert“, and

(c)
to ensure that the relevant group complies with section 192XA rules.”

(3)

In subsection (2)(c)—

(a)

omit “, section 192V rules”, and

(b)

at the end insert “ and with section 192XA rules ”.

17

In section 192Y(1) (power to impose penalty or issue censure)—

(a)

omit paragraph (c) (including the “or” at the end), and

(b)

after that paragraph insert—

“(ca)
section 192XA rules; or”.

18

In section 417(1) (definitions), at the appropriate place, insert—

““CRR rules” has the meaning given in section 144A;”.

19

In section 429(2) (parliamentary control of statutory instruments: affirmative procedure), before “214A” insert “ 144C(1), 144F, ”.

Capital Requirements Regulations 2013 (S.I. 2013/3115)

20

The Capital Requirements Regulations 2013 (meaning of “permission” etc) is amended as follows.

21

In regulation 2(1), in the definition of “appropriate regulator”, at the end insert “ , subject to regulation 39(2) ”.

22 (1)

Regulation 39 (meaning of “permission” etc) is amended as follows.

(2)

The existing text becomes paragraph (1).

(3)

In that paragraph, in the definition of “permission”, after paragraph (a) insert—

“(aa)
section 144G of FSMA and CRR rules (as defined in Part 9D of FSMA);
(ab)
section 192XC of FSMA and section 192XA rules (as defined in Part 12B of FSMA);”.

(4)

After that paragraph insert—

“(2)
In this Part, in relation to—
(a)
a decision made under a power conferred by section 144G of FSMA and CRR rules (as defined in Part 9D of FSMA) that are section 192XA rules (as defined in Part 12B of FSMA), or
(b)
a decision made under a power conferred by section 192XC of FSMA and section 192XA rules (as defined in Part 12B of FSMA),
“appropriate regulator” means the PRA.”

PART 4Transitional provision

Pre-commencement consultation etc

23 (1)

In relation to general rules that are CRR rules, the requirements of the provisions listed in sub-paragraph (3) may be satisfied by things done before Part 1 of this Schedule comes into force (as well as by things done after that time).

(2)

In relation to section 192XA rules, the requirements of the provisions listed in sub-paragraph (3) may be satisfied by things done before Part 2 of this Schedule comes into force (as well as by things done after that time).

(3)

Those provisions are—

(a)

sections 138J and 138K of the Financial Services and Markets Act 2000 (consultation);

(b)

sections 144C to 144E of that Act (inserted by Part 1 of this Schedule).

Relevant equivalence decisions

24

For the purposes of section 144C of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), an equivalence decision may be a relevant equivalence decision by virtue of a notice in writing given by the Treasury before Part 1 of this Schedule comes into force (as well as by a notice given after that time).

Carbon target

25

In relation to the making of CRR rules or section 192XA rules that are made on or before 1 January 2022—

(a)

paragraph (d) of section 144C(1) of the Financial Services and Markets Act 2000 (duty to have regard to carbon target for 2050) does not apply, and

(b)

section 144D(1) of that Act does not require an explanation in respect of matters specified in that paragraph.

Section 192V rules

26 (1)

Rules made by the Prudential Regulation Authority under section 192V of the Financial Services and Markets Act 2000 and in force immediately before the day on which the repeal of that section by Part 2 of this Schedule comes into force (“the repeal day”) are to be treated, on and after that day—

(a)

as validly made section 192XA rules, and

(b)

to the extent that they make provision about a matter described in section 144A(3) of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), as validly made CRR rules.

(2)

Sections 192Y, 192Z and 192Z1 of the Financial Services and Markets Act 2000 (disciplinary measures) continue to have effect in relation to a contravention, before the repeal day, of a rule made under section 192V of that Act, despite the repeal of section 192Y(1)(c) of that Act.

Interpretation

27

In this Part of this Schedule—

“CRR rules” has the same meaning as in the Financial Services and Markets Act 2000 (see section 144A of that Act, inserted by Part 1 of this Schedule);

“general rules” has the meaning given in section 137G(2) of that Act;

“section 192XA rules” has the same meaning as in Part 12B of that Act (see section 192O of that Act, as amended by Part 3 of this Schedule).

SCHEDULE 4Amendments of the Capital Requirements Regulation

Section 7

1

The Capital Requirements Regulation is amended as follows.

2

In Article 4A(1)(a) (definitions: references to PRA rulebook), for “as the rulebook has effect on IP completion day” substitute “ as amended from time to time ”.

3

In Article 92(3) (own funds requirements), for points (b) and (c) substitute—

“(b)
the own funds requirements for the trading-book business of an institution for the following—
(i)
market risk as determined in accordance with Title IV of this Part, excluding the approaches set out in Chapters 1a and 1b of that Title;
(ii)
large exposures exceeding the limits specified in Articles 395 to 401, to the extent that an institution is permitted to exceed those limits, as determined in accordance with Part Four;
(c)
the own funds requirements for market risk as determined in accordance with Title IV of this Part, excluding the approaches set out in Chapters 1a and 1b of that Title, for all business activities that are subject to foreign exchange risk or commodity risk;
(ca)
the own funds requirements for settlement risk calculated in accordance with Title V of this Part, with the exception of Article 379;”.

4

In Article 107(3) (approaches to credit risk), for “third-country investment firms and exposures to third country credit institutions and exposures to third country clearing houses and exchanges” substitute “ a third-country investment firm, a third-country credit institution and a third-country exchange ”.

5

In Article 144(1)(g) (competent authorities' assessment of an application to use an IRB Approach), for “Article 99” substitute “ Article 430 ”.

6

In Article 201(1) (eligibility of protection providers under all approaches), for point (h) substitute—

“(h)
qualifying central counterparties.”

7 (1)

Article 223 (Financial Collateral Comprehensive Method) is amended as follows.

(2)

In paragraph 3, in the second subparagraph, for “institutions” substitute “ , institutions using the method laid down in Section 6 of Chapter 6 ”.

(3)

After paragraph 5 insert—

“5A
For the purposes of the calculation under paragraph 5, in the case of OTC derivative transactions, institutions using the methods laid down in Sections 3, 4 and 5 of Chapter 6 shall take into account the risk-mitigating effects of collateral in accordance with the provisions laid down in Sections 3, 4 and 5 of Chapter 6, as applicable.”

8

In Article 283 (permission to use the Internal Model Method), for paragraph 4 substitute—

“4
For all OTC derivative transactions, and for long settlement transactions for which an institution has not received permission under paragraph 1 to use the IMM, the institution shall use the methods set out in Section 3. Those methods may be used in combination on a permanent basis within a group.”

9

For Article 298 substitute—

“Article 298Effects of recognition of netting as risk-reducing
Netting for the purposes of Sections 3 to 6 shall be recognised as set out in those Sections.”

10

In Article 299(2) (items in the trading book), omit point (a).

11

In Article 384(1) (standardised method), in the definition of “EADi^total”—

(a)

for “Title II, Chapter 6” (in the first place those words occur) substitute “ Chapter 6 of Title II ”, and

(b)

omit the words from “An institution using” to the end of the definition.

12 (1)

Article 500d (temporary calculation of exposure value of regular-way purchases and sales awaiting settlement in view of COVID-19 pandemic) is amended as follows.

(2)

In the heading, omit “Temporary”.

(3)

In paragraph 1, omit “until 27 June 2021,”.

13 (1)

Annex 2 (types of derivatives) is amended as follows.

(2)

In point 1, for point (e) substitute—

“(e)
interest-rate options;”.

(3)

In point 2, for point (d) substitute—

“(d)
currency options;”.

(4)

For point 3 substitute—

“3
Contracts of a nature similar to those in points 1(a) to (e) and 2(a) to (d) of this Annex concerning other reference items or indices. This includes as a minimum all instruments specified in paragraphs 4 to 7, 9, 10 and 11 of Part 1 of Schedule 2 to the Regulated Activities Order not otherwise included in point 1 or 2 of this Annex.”

SCHEDULE 5Benchmarks: minor and consequential amendments

Section 21

1

The Benchmarks Regulation is amended as follows.

2 (1)

Article 3(1) (definitions) is amended as follows.

(2)

In point (6) (administrator)—

(a)

after “means” insert—

“(a)”, and

(b)

at the end insert“, or

(b)
in the case of an Article 23A benchmark, a natural or legal person that would have control over the provision of the benchmark but for Article 23D;”.

(3)

After point (25) insert—

“(25A)
‘Article 23A benchmark’ has the meaning given in Article 23A(14);”.

(4)

After point (36) insert—

“(37)
‘working day’ means a day other than—
(a)
Saturday or Sunday,
(b)
Christmas Day or Good Friday, or
(c)
a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in England and Wales.”

3

In Article 3, after paragraph 1 insert—

“1A
References in this Regulation to the capability of a benchmark to measure the underlying market or economic reality are references to both its current capability to do so and its capability to do so in the future.”

4

In Article 11 (input data), after paragraph 4 insert—

“4A
In the case of a critical benchmark, paragraph 4 does not require the administrator to cease providing the benchmark before the end of a period during which the administrator is required to continue publishing the benchmark by Article 21(1) or (2) or by a decision of the FCA under Article 21(3).
4B
In the case of a critical benchmark in respect of which measures adopted under Article 23(6) have effect—
(a)
paragraph 4 does not require the administrator to cease providing the benchmark while those measures have effect, and
(b)
the administrator's duty under paragraph 4 to make changes is a duty to make changes so far as compatible with those measures.”

5

In Article A20(5)(b) (review of critical benchmarks), for “determines” substitute “ determine ”.

6 (1)

Article 20 (critical benchmarks: conditions and other matters) is amended as follows.

(2)

In paragraph 5(b), for “determines” substitute “ determine ”.

(3)

In paragraph 5A(a)—

(a)

for “the values in points (a) and (c)(i) of paragraph 1 (the “thresholds”)” substitute “ the value in point (a) of paragraph 1 (“the paragraph 1(a) value”) ”, and

(b)

for “to the thresholds” substitute “ to the paragraph 1(a) value ”.

(4)

In paragraph 5A(b), for “the thresholds” substitute “ the paragraph 1(a) value ”.

(5)

In paragraph 6(a), for “thresholds” substitute “ values ”.

(6)

In paragraph 6(b), for “the thresholds in points (a) and (c)(i)” substitute “ the value in point (a) ”.

7

In Article 21(3) (mandatory administration of a critical benchmark), in the first subparagraph, in point (b), at the end insert “ (whether by the exercise of the FCA's powers under Article 23D or otherwise) ”.

8

After Article 26 insert—

“CHAPTER 7 COMPLIANCE WITH REQUIREMENTS
Article 26ACompliance with requirements
Supervised entities and supervised third country entities must comply with prohibitions and other requirements imposed on them by the FCA under this Regulation.”

9

In Article 29 (use of a benchmark), after paragraph 1 insert—

“1A
Paragraph 1 does not enable a supervised entity to use a benchmark in the United Kingdom in breach of a prohibition under Article 21A or 23B.
1B
The use of a benchmark by a supervised entity for a financial contract, financial instrument or investment fund in breach of a prohibition under Article 21A or 23B does not affect the validity or enforceability of a contract or other arrangement.”

10

In Article 36(1) (register of administrators and benchmarks), after point (d) insert—

“(e)
any prohibitions under Article 21A or 23B on the use of benchmarks by supervised entities that are in force;
(f)
any benchmarks that are Article 23A benchmarks.”

11

After Article 48 insert—

“TITLE 6APROVISION OF INFORMATION AND PERIODS OF TIME
Article 48AProvision of information and documents
1
The Treasury may by regulations make provision about the procedure to be followed, or rules to be applied, when a provision of or made under this Regulation—
(a)
requires information or a document of any kind to be given, or
(b)
authorises the imposition of a requirement.
2
The regulations may, among other things, make provision—
(a)
requiring information to be given in writing;
(b)
requiring, or allowing, information or a document to be sent electronically;
(c)
requiring, or allowing, information or a document to be given in another manner;
(d)
as to the address to which information or a document must or may be sent;
(e)
requiring a person to provide an address to which information or a document must or may be sent;
(f)
for treating information or a document as having been given, or as having been received, on a date or at a time determined in accordance with the regulations;
(g)
as to what must, or may, be done if the person to whom information or a document is required to be given is not an individual;
(h)
as to what must, or may, be done if the intended recipient of information or a document is outside the United Kingdom.
3
Paragraph 1 applies however the obligation to give information or a document is expressed (and so, among other things, includes a provision which requires a person to be notified of something and a provision which requires a document to be submitted).
4
Section 7 of the Interpretation Act 1978 (service of notice by post) has effect in relation to provisions made by or under this Regulation subject to any provision made by regulations under this Article.
Article 48BPeriods of time
The following provisions of Regulation (EEC, Euratom) No. 1182/71 of the Council of 3 June 1971 determining the rules applicable to periods, dates and time limits do not apply to a reference in this Regulation to a period of time—
(a)
Article 3(2)(c) (periods expressed in weeks, months or years);
(b)
Article 3(4) (periods ending with a weekend or public holiday).”

SCHEDULE 6Gibraltar-based persons carrying on activities in the UK

Section 22

After Schedule 2 to the Financial Services and Markets Act 2000 insert—

“SCHEDULE 2AGibraltar-based persons carrying on activities in the UK
Section 31
PART 1Interpretation etc
Gibraltar-based person
1
(1)
In this Act, “Gibraltar-based person” means a person listed in sub-paragraph (2) which has its head office and, if it has one, its registered office in Gibraltar (and see also Part 14 of this Schedule).
(2)
Those persons are—
(a)
an individual,
(b)
a body corporate,
(c)
a partnership, or
(d)
an unincorporated association.
Regulators
2
(1)
In this Schedule—
“the Gibraltar regulator” means the Gibraltar Financial Services Commission;
“UK regulator” means the FCA or the PRA.
(2)
The Treasury may by regulations amend the definition of “the Gibraltar regulator” if they consider it appropriate to do so in consequence of a change in the law of Gibraltar.
Activities and branches
3
(1)
In this Schedule, “approved activity” means a regulated activity for the time being approved by regulations under paragraph 5.
(2)
For the purposes of this Schedule—
(a)
“corresponding activity” means an activity corresponding to an approved activity, and
(b)
references (however expressed) to an activity corresponding to an approved activity, or an approved activity corresponding to another activity, are to be interpreted in accordance with regulations under paragraph 6.
(3)
In this Schedule, “branch” means—
(a)
a place where a person carries on an activity for an indefinite period and which does not have legal personality, or
(b)
any other description of place specified in regulations made by the Treasury.
UK regulators' objectives
4
For the purposes of any provision of this Schedule 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.
PART 2Approved activities
Approval of regulated activities
5
(1)
The Treasury may by regulations approve a regulated activity for the purposes of this Schedule.
(2)
The power under this paragraph includes power to approve a regulated activity—
(a)
only so far as it is carried on by a person of a description specified in the regulations,
(b)
only so far as it is carried on through a branch in the United Kingdom,
(c)
only so far as it is carried on in other circumstances specified in the regulations, or
(d)
subject to other limitations.
(3)
In making regulations under this paragraph, the Treasury may have regard to any matter that they consider relevant (and see the restrictions in paragraphs 7, 8 and 9 and the requirement in paragraph 10).
Corresponding activities regulated in Gibraltar
6
(1)
The Treasury must by regulations make provision about how each approved activity corresponds to activities which the Gibraltar regulator has authorised, or may authorise, a person to carry on in Gibraltar.
(2)
The power under this paragraph includes power to make provision about an activity—
(a)
only so far as it is carried on by a person of a description specified in the regulations,
(b)
only so far as it is carried on in other circumstances specified in the regulations, or
(c)
subject to other limitations.
(3)
In making regulations under this paragraph, the Treasury may have regard to any matter that they consider relevant (and see the restrictions in paragraphs 7 and 8 and the requirement in paragraph 10).
Objectives
7
(1)
The Treasury may not make regulations under paragraph 5 or 6 unless they are satisfied that doing so is compatible with each of the following objectives—
(a)
to protect and enhance the soundness, stability and resilience of the UK financial system;
(b)
to protect and enhance public confidence in the UK financial system;
(c)
to prevent the use of the UK financial system for a purpose connected with financial crime;
(d)
to ensure that the relevant markets in the United Kingdom function well;
(e)
to protect consumers;
(f)
to protect the operation of the compensation scheme;
(g)
to protect public funds;
(h)
to maintain and improve relations between the United Kingdom and other countries and territories with significant financial markets or significant markets for financial services.
(2)
In this paragraph—
“consumers” has the meaning given in section 1G;
“financial crime” has the meaning given in section 1H;
“public funds” means the Consolidated Fund and any other account or source of money which cannot be drawn or spent other than by, or with the authority of, the Treasury;
“the relevant markets” means the markets for services provided by persons carrying on the regulated activity or approved activity (as appropriate) to which the regulations relate.
Alignment of law and practice
8
(1)
The Treasury may not approve a regulated activity under paragraph 5, or identify an activity as corresponding to an approved activity under paragraph 6, unless they are satisfied that, having regard to the objectives in paragraph 7(1), the relevant law and practice of the United Kingdom and Gibraltar are sufficiently aligned.
(2)
In this paragraph, “the relevant law and practice” means—
(a)
in relation to the United Kingdom, law and practice under which the carrying on of what is or would be the approved activity is authorised and supervised and other law and practice relevant to the carrying on of that activity,
(b)
in relation to Gibraltar, law and practice under which the carrying on of what would be the corresponding activity is authorised and supervised and other law and practice relevant to the carrying on of that activity, and
(c)
in relation to both the United Kingdom and Gibraltar, law and practice relevant to the objectives in paragraph 7(1).
(3)
The reference to alignment between the law and practice of the United Kingdom and Gibraltar in sub-paragraph (1) includes both alignment as regards the effect of the law and practice and alignment of the text of the law and of any guidance or other documents relating to practice.
Co-operation
9
(1)
The Treasury may not approve a regulated activity under paragraph 5 unless they are satisfied that, having regard to the objectives in paragraph 7(1), there is, or will be, adequate co-operation between—
(a)
the UK entities listed in sub-paragraph (2), and
(b)
the Gibraltar entities listed in sub-paragraph (3).
(2)
The UK entities are—
(a)
the Treasury,
(b)
the FCA,
(c)
the PRA, and
(d)
the scheme manager.
(3)
The Gibraltar entities are—
(a)
the government of Gibraltar, and
(b)
the Gibraltar regulator.
(4)
In determining whether the test in sub-paragraph (1) is satisfied, the Treasury must have regard to—
(a)
memoranda describing how the UK entities and the Gibraltar entities intend to co-operate,
(b)
arrangements for the UK entities to obtain information and documents from the Gibraltar entities,
(c)
arrangements for the verification of such information and documents (whether by, or by a person appointed by, a UK entity or a Gibraltar entity),
(d)
arrangements for the Gibraltar entities to obtain information and documents from the UK entities, and
(e)
anything else that the Treasury consider relevant.
Consultation
10
Before making regulations under paragraph 5 or 6, the Treasury must consult—
(a)
the government of Gibraltar,
(b)
the FCA, and
(c)
if the regulations relate to activities which consist of or include PRA-regulated activities, the PRA.
Withdrawal of approval
11
(1)
The restrictions in paragraphs 7, 8 and 9 do not apply in relation to regulations under paragraph 5 to the extent that the regulations—
(a)
revoke other regulations under paragraph 5, or
(b)
otherwise amend other regulations under paragraph 5 in order to withdraw the Treasury's approval of an activity.
(2)
The restrictions in paragraphs 7 and 8 do not apply in relation to regulations under paragraph 6 to the extent that the regulations—
(a)
revoke other regulations under paragraph 6, or
(b)
otherwise amend other regulations under paragraph 6 in order to provide that an activity which the Gibraltar regulator has authorised, or may authorise, a person to carry on in Gibraltar does not correspond to an approved activity.
PART 3Permission to carry on an approved activity
Obtaining permission to carry on an approved activity
12
(1)
If the appropriate UK regulator receives a notification from the Gibraltar regulator that a Gibraltar-based person wants to be able to carry on an approved activity in the United Kingdom (see paragraph 15), the person obtains permission to do so at the end of the period for considering the notification, as it relates to the activity (see paragraph 16).
(2)
The person does not obtain permission to carry on an activity under sub-paragraph (1) if, during the period for considering the notification—
(a)
the appropriate UK regulator rejects the notification, as it relates to the activity (see paragraph 17), or
(b)
the Gibraltar regulator withdraws the notification, as it relates to the activity.
(3)
References in this Part of this Schedule to a notification are references to a notification for the purposes of this paragraph.
(4)
A permission obtained under this paragraph is referred to in this Act as “a Schedule 2A permission”.
Schedule 2A permission
13
(1)
A Schedule 2A permission for a person to carry on an activity is a permission to do so only if and to the extent that—
(a)
the person is a Gibraltar-based person,
(b)
the activity is an approved activity, and
(c)
the person has permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar,
subject to the transitional arrangements in Parts 9 and 10 of this Schedule.
(2)
A Gibraltar-based person's Schedule 2A permission to carry on an activity is a permission to do so—
(a)
on terms equivalent to the terms of the person's permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar, and
(b)
subject to any limitations specified in the notification (for example, as to the circumstances in which the activity is to be carried on in the United Kingdom) (and see also paragraph 21(3)).
(3)
The reference in sub-paragraph (2)(a) to the terms of the person's permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar includes—
(a)
any restrictions included in the permission, and
(b)
any other restrictions imposed by the Gibraltar regulator on the carrying on by the person of the activity in Gibraltar.
The appropriate UK regulator
14
In relation to a notification, “the appropriate UK regulator” means—
(a)
the PRA, in a case where the approved activities to which the notification relates consist of or include PRA-regulated activities, and
(b)
the FCA, in any other case.
Notifying the appropriate UK regulator
15
(1)
A notification must—
(a)
name the Gibraltar-based person,
(b)
state the address of the person's head office in Gibraltar,
(c)
specify the approved activity which the person wants to be able to carry on in the United Kingdom, including any limitations,
(d)
specify the corresponding activity, including any restrictions,
(e)
state that the person has permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar,
(f)
state that the Gibraltar regulator consents to the person carrying on the approved activity in the United Kingdom,
(g)
identify each person who is responsible for managing an aspect of the Gibraltar-based person's affairs relating to the approved activity and describe that person's responsibilities as regards those affairs,
(h)
state whether the Gibraltar-based person wants to carry on the activity through a branch in the United Kingdom and, if so—
(i)
identify each person who is or will be responsible for managing an aspect of the affairs of the branch, and
(ii)
describe that person's responsibilities as regards those affairs, and
(i)
contain, or be accompanied by, any further information specified in a direction given by the appropriate UK regulator under paragraph 57 and in force when the notification is given.
(2)
A notification may relate to more than one approved activity.
(3)
The Treasury may by regulations change the information that a notification must contain.
(4)
Regulations under sub-paragraph (3) may amend this paragraph, but may not amend or repeal sub-paragraph (1)(i).
(5)
Before making regulations under sub-paragraph (3), the Treasury must consult—
(a)
the government of Gibraltar, and
(b)
the UK regulators.
(6)
In sub-paragraph (1), the references to managing an aspect of a person's affairs or a branch's affairs includes a reference to taking decisions, or participating in the taking of decisions, about how that aspect of the affairs should be carried on.
Considering a notification
16
(1)
Where the appropriate UK regulator receives a notification, it must acknowledge receipt in writing without delay.
(2)
The period for considering a notification is—
(a)
so far as it relates to an activity that is to be carried on through a branch in the United Kingdom, the period of two months beginning with the day on which the appropriate UK regulator receives the notification, and
(b)
so far as it relates to any other activity, the period of one month beginning with that day.
(3)
If, before the end of the period described in sub-paragraph (2), the appropriate UK regulator gives the Gibraltar-based person a confirmation notice in respect of an approved activity specified in the notification, then the period for considering the notification as it relates to the activity ends when the notice is given.
(4)
A “confirmation notice” is a written notice confirming that the person has a Schedule 2A permission in relation to the approved activity.
(5)
A confirmation notice may relate to more than one activity.
Rejecting a notification
17
(1)
The appropriate UK regulator may not reject a notification unless—
(a)
it is required to do so under paragraph 18, or
(b)
it has power to do under paragraph 19 or 20.
(2)
A notification is rejected when the appropriate UK regulator gives a written notice of the rejection to the Gibraltar regulator.
(3)
The rejection of a notification does not prevent the Gibraltar regulator from giving a further notification relating to the same person and the same activity.
Duties to reject
18
(1)
The appropriate UK regulator must reject a notification if satisfied that the notification does not satisfy one or more of the requirements in paragraph 15(1).
(2)
The appropriate UK regulator must reject a notification, so far as it relates to an activity, if the activity ceases to be an approved activity.
(3)
The appropriate UK regulator must reject a notification, so far as it relates to an approved activity, if satisfied that the Gibraltar-based person does not have permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar.
Power to reject: prohibition order in respect of senior manager
19
(1)
The appropriate UK regulator may reject a notification, so far as it relates to an approved activity, if satisfied that a person with responsibility for managing an aspect of the Gibraltar-based person's affairs—
(a)
is prohibited from performing a function by a prohibition order, and
(b)
performs a senior management function in relation to the carrying on of the approved activity by the Gibraltar-based person in the United Kingdom, Gibraltar or elsewhere or is expected to do so if the person obtains a Schedule 2A permission to carry on the approved activity in the United Kingdom.
(2)
In sub-paragraph (1)—
(a)
the reference to managing an aspect of a person's affairs includes a reference to taking decisions, or participating in the taking of decisions, about how that aspect of those affairs should be carried on,
(b)
“prohibition order” means—
(i)
an order under section 56,
(ii)
an order under section 143S, or
(iii)
an order under the law of Gibraltar which the appropriate UK regulator considers to be equivalent to an order under section 56 or 143S, and
(c)
“senior management function”, in relation to the carrying on of an activity by the Gibraltar-based person, means a function which requires a person to manage an aspect of the Gibraltar-based person's affairs which involves, or might involve, a risk of serious consequences—
(i)
for the Gibraltar-based person, or
(ii)
for business or other interests in the United Kingdom, Gibraltar or elsewhere.
Power to reject: loss of access right and serious threat to the UK
20
(1)
The appropriate UK regulator may reject a notification if satisfied that the Gibraltar-based person—
(a)
lost a relevant access right at any time, and
(b)
poses, or is likely to pose, a serious threat to—
(i)
the interests of consumers (as defined in section 1G), or
(ii)
the soundness, stability and resilience of the UK financial system or a part of that system.
(2)
The appropriate UK regulator may reject a notification if satisfied that—
(a)
the Gibraltar-based person—
(i)
is a member of the same group as a person that lost a relevant access right at any time, or
(ii)
has close links with such a person (as defined in paragraph 2C(2) of Schedule 6), and
(b)
given the nature of the relationship between that person and the Gibraltar-based person, the Gibraltar-based person poses, or is likely to pose, a serious threat to—
(i)
the interests of consumers (as defined in section 1G), or
(ii)
the soundness, stability and resilience of the UK financial system or a part of that system.
(3)
For the purposes of this paragraph, a person lost a relevant access right if—
(a)
its Part 4A permission was cancelled,
(b)
its Schedule 2A permission was cancelled, or
(c)
it ceased to qualify for authorisation under Schedule 3 (other than by virtue of the repeal of that Schedule).
(4)
When deciding whether to reject a notification under this paragraph, the appropriate UK regulator must have regard, among other things, to the reasons why the person lost the relevant access right.
PART 4Variation of permission
Variation of permission
21
(1)
A Schedule 2A permission may be varied in accordance with this Part of this Schedule—
(a)
on the initiative of the Gibraltar regulator (see paragraphs 22 to 26), or
(b)
on the initiative of a UK regulator (see paragraphs 27 to 30).
(2)
References in this Part of this Schedule to the variation of a Schedule 2A permission (however expressed) are to its variation by—
(a)
adding an approved activity to those to which the permission relates,
(b)
removing an approved activity from those to which the permission relates, or
(c)
varying the description of an activity to which the permission relates (including by adding, removing or varying a limitation).
(3)
Where a limitation is added, removed or varied under this Part of this Schedule, paragraph 13(2)(b) has effect as if it referred to the limitations (if any) that have effect after that change.
Gibraltar regulator's initiative: notification
22
(1)
If the appropriate UK regulator receives a notification from the Gibraltar regulator requesting the variation of a Gibraltar-based person's Schedule 2A permission (see paragraph 24), the permission is varied—
(a)
if the notification specifies a time for the variation to take effect which falls after the end of the period for considering the notification as it relates to the variation (see paragraph 25), at that time, or
(b)
otherwise, at the end of the period for considering the notification, as it relates to the variation.
(2)
A variation requested in a notification does not take effect under sub-paragraph (1) if, during the period for considering the notification—
(a)
the appropriate UK regulator rejects the notification, as it relates to the variation (see paragraph 26), or
(b)
the Gibraltar regulator withdraws the notification, as it relates to the variation.
(3)
References in this Part of this Schedule to a notification are references to a notification for the purposes of this paragraph.
Gibraltar regulator's initiative: the appropriate UK regulator
23
In relation to a notification, “the appropriate UK regulator” means—
(a)
the PRA, in a case where the approved activities to which the notification relates consist of or include PRA-regulated activities, and
(b)
the FCA, in any other case.
Gibraltar regulator's initiative: notifying the UK regulator
24
(1)
A notification must—
(a)
state the desired variation,
(b)
specify the approved activity or approved activities which the Gibraltar-based person wants to carry on following the variation, including any limitations,
(c)
specify the corresponding activity, including any restrictions,
(d)
state that the person has permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar,
(e)
state that the Gibraltar regulator consents to the variation, and
(f)
contain, or be accompanied by, any further information specified in a direction given by the appropriate UK regulator under paragraph 57 and in force when the notification is given.
(2)
A notification may state when the desired variation is to have effect.
(3)
A notification may relate to more than one variation.
Gibraltar regulator's initiative: considering a notification
25
(1)
Where the appropriate UK regulator receives a notification, it must acknowledge receipt in writing without delay.
(2)
The period for considering a notification is—
(a)
so far as it relates to a variation in respect of an activity carried on through a branch in the United Kingdom, the period of two months beginning with the day on which the appropriate UK regulator receives the notification, and
(b)
so far as it relates to any other variation, the period of one month beginning with that day.
(3)
If, before the end of the period described in sub-paragraph (2), the appropriate UK regulator gives the Gibraltar-based person a confirmation notice in respect of a variation specified in the notification, then the period for considering the notification as it relates to the variation ends when the notice is given.
(4)
A “confirmation notice” is a written notice confirming that the variation has effect as specified in the notification.
(5)
A confirmation notice may relate to more than one variation.
Gibraltar regulator's initiative: rejecting a notification
26
(1)
The appropriate UK regulator may not reject a notification unless—
(a)
it is required to do so under sub-paragraph (3) or (4), or
(b)
it has power to do under sub-paragraph (5).
(2)
A notification is rejected when the appropriate UK regulator gives a written notice of the rejection to the Gibraltar regulator.
(3)
The appropriate UK regulator must reject a notification if satisfied that the notification does not satisfy one or more of the requirements in paragraph 24(1).
(4)
The appropriate UK regulator must reject a notification if it would be required to do so by paragraph 18(2) or (3) if the notification were a notification under Part 3 of this Schedule relating to—
(a)
the Gibraltar-based person, and
(b)
the activities that the person would have a Schedule 2A permission to carry on if the permission were varied as specified in the notification.
(5)
The appropriate UK regulator may reject a notification if it would have power to do so under paragraph 19 or 20 if the notification were a notification under Part 3 of this Schedule relating to—
(a)
the Gibraltar-based person, and
(b)
the activities that the person would have a Schedule 2A permission to carry on if the permission were varied as specified in the notification.
(6)
The rejection of a notification does not prevent the Gibraltar regulator from giving a further notification.
UK regulator's initiative
27
(1)
A UK regulator may exercise a power under this paragraph in relation to a Gibraltar-based person with a Schedule 2A permission where one of the own-initiative conditions is satisfied (see paragraph 28).
(2)
The FCA may vary a Schedule 2A permission.
(3)
The PRA may vary a PRA-authorised person's Schedule 2A permission.
(4)
In the case of a person who is not a PRA-authorised person, the PRA may vary the person's Schedule 2A permission by adding an approved activity that is a PRA-regulated activity to those to which the permission relates.
(5)
Where it adds an approved activity under sub-paragraph (4), the PRA may vary the person's Schedule 2A permission in any of the other ways described in paragraph 21(2).
Own-initiative conditions
28
(1)
For the purposes of this Schedule, “the own-initiative conditions” are—
(a)
in relation to the exercise of a power by the FCA, conditions A to C, and
(b)
in relation to the exercise of a power by the PRA, conditions A to D.
(2)
Condition A is that the UK regulator in question considers that—
(a)
it is desirable to exercise the power in order to advance one or more of its objectives, and
(b)
the Gibraltar regulator—
(i)
is aware, or ought reasonably to be aware, of the reasons why the UK regulator considers that to be the case, and
(ii)
has had time to take steps, or indicate what steps (if any) it is likely to take, in response.
(3)
Condition B is that the UK regulator in question considers that—
(a)
it is desirable to exercise the power in order to advance one or more of its objectives, and
(b)
a delay in exercising the power would be materially detrimental to—
(i)
the interests of consumers (as defined in section 1G), or
(ii)
the soundness, stability and resilience of the UK financial system or a part of that system.
(4)
Condition C is that the UK regulator in question considers that—
(a)
the Gibraltar-based person is contravening, or has contravened, a rule made by the UK regulator or a requirement imposed on it by the UK regulator under Part 6 of this Schedule, and
(b)
the contravention is not minor, having regard to the nature of the contravention or its consequences (or both).
(5)
Condition D is that the PRA considers that—
(a)
it is desirable to exercise the power in order to advance one or more of the PRA's objectives, and
(b)
the Gibraltar-based person poses, or may pose, a risk to the soundness, stability and resilience of the UK financial system, or a part of that system, of a type specified for the purposes of this condition in the policy statement produced by the PRA under paragraph 71.
(6)
In the case of the FCA, references in this paragraph to its objectives are references only to its operational objectives.
UK regulator's initiative: procedure
29
(1)
The variation of a Schedule 2A permission under paragraph 27 takes effect—
(a)
immediately, if the notice given under sub-paragraph (3) states 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.
(2)
The variation of a Schedule 2A permission under paragraph 27 may be expressed to take effect immediately, or on a specified date, only if the UK regulator reasonably considers that it is necessary for the variation to take effect immediately or on that date, having regard to the own-initiative condition on which it is relying for the purposes of paragraph 27(1).
(3)
If a UK regulator—
(a)
proposes to vary a Schedule 2A permission under paragraph 27, or
(b)
varies a Schedule 2A permission under that paragraph with immediate effect,
it must give the Gibraltar-based person a written notice.
(4)
The notice must—
(a)
give details of the variation,
(b)
state the UK regulator's reasons for varying the permission,
(c)
inform the Gibraltar-based person that the person may make representations to the UK regulator within the period specified in the notice (whether or not the Gibraltar-based person has referred the matter to the Tribunal),
(d)
inform the Gibraltar-based person of when the variation of the permission takes effect, and
(e)
inform the Gibraltar-based person of the person's right to refer the matter to the Tribunal.
(5)
The UK regulator may extend the period allowed under the notice for making representations.
(6)
If, having considered any representations made by the Gibraltar-based person, the UK regulator decides—
(a)
to vary the permission in the way proposed, or
(b)
if the permission has been varied, not to rescind its variation,
it must give the Gibraltar-based person a written notice.
(7)
A notice under sub-paragraph (6) must inform the Gibraltar-based person of the person's right to refer the matter to the Tribunal.
(8)
If, having considered any representations made by the Gibraltar-based person, the UK regulator decides—
(a)
not to vary the permission in the way proposed,
(b)
to vary the permission in a different way, or
(c)
to rescind the variation,
it must give the Gibraltar-based person a written notice.
(9)
A notice under sub-paragraph (8)(b) must comply with sub-paragraph (4).
(10)
If a notice under this paragraph informs a person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure for such a reference.
(11)
For the purposes of sub-paragraph (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
Right to refer matters to the Tribunal
30
A Gibraltar-based person who is aggrieved by the exercise by a UK regulator of a power under paragraph 27 in relation to the person may refer the matter to the Tribunal.
PART 5Cancellation of permission
Cancellation of permission
31
A Schedule 2A permission may be cancelled in accordance with this Part of this Schedule—
(a)
on the initiative of the Gibraltar regulator (see paragraphs 32 to 36), or
(b)
on the initiative of a UK regulator (see paragraphs 37 to 39).
Gibraltar regulator's initiative: notification
32
(1)
If the appropriate UK regulator receives a notification from the Gibraltar regulator requesting the cancellation of a Gibraltar-based person's Schedule 2A permission (see paragraph 34), the permission is cancelled when the period for considering the notification ends (see paragraph 35).
(2)
A Schedule 2A permission is not cancelled under sub-paragraph (1) if, during the period for considering the notification—
(a)
the appropriate UK regulator rejects the notification (see paragraph 36), or
(b)
the Gibraltar regulator withdraws the notification.
(3)
References in this Part of this Schedule to a notification are references to a notification for the purposes of this paragraph.
Gibraltar regulator's initiative: the appropriate UK regulator
33
In relation to a notification, “the appropriate UK regulator” means—
(a)
the PRA, in a case where the Gibraltar-based person is a PRA-authorised person, and
(b)
the FCA, in any other case.
Gibraltar regulator's initiative: notifying the UK regulator
34
A notification must—
(a)
state the reason for requesting the cancellation of the permission,
(b)
state that the Gibraltar regulator consents to the cancellation, and
(c)
contain, or be accompanied by, any further information specified in a direction given by the appropriate UK regulator under paragraph 57 and in force when the notification is given.
Gibraltar regulator's initiative: considering a notification
35
(1)
Where the appropriate UK regulator receives a notification, it must acknowledge receipt in writing without delay.
(2)
The period for considering a notification is—
(a)
where the Schedule 2A permission relates to one or more activities carried on through a branch in the United Kingdom, the period of two months beginning with the day on which the appropriate UK regulator receives the notification, and
(b)
otherwise, the period of one month beginning with that day.
(3)
If, before the end of the period described in sub-paragraph (2), the appropriate UK regulator gives the Gibraltar-based person a confirmation notice in respect of the notification, then the period for considering the notification ends when the notice is given.
(4)
A “confirmation notice” is a written notice confirming that the Schedule 2A permission is cancelled.
Gibraltar regulator's initiative: rejecting a notification
36
(1)
The appropriate UK regulator may not reject a notification unless—
(a)
it is required to do so under sub-paragraph (3), or
(b)
it has power to do under sub-paragraph (4) or (5).
(2)
A notification is rejected when the appropriate UK regulator gives a written notice of the rejection to the Gibraltar regulator.
(3)
The appropriate UK regulator must reject a notification if satisfied that the notification does not satisfy a requirement in paragraph 34.
(4)
The FCA may reject a notification if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.
(5)
The PRA may reject a notification if it appears to the PRA that it is desirable to do so in order to advance one or more of its objectives.
(6)
The rejection of a notification does not prevent the Gibraltar regulator from giving a further notification.
UK regulator's initiative
37
(1)
The FCA may cancel a Schedule 2A permission where one of the own-initiative conditions is satisfied (see paragraph 28).
(2)
The PRA may cancel a PRA-authorised person's Schedule 2A permission where one of the own-initiative conditions is satisfied (see paragraph 28).
(3)
The appropriate UK regulator must cancel a Schedule 2A permission where—
(a)
the permission no longer enables the person to carry on an approved activity (whether by virtue of paragraph 13 or otherwise), and
(b)
the UK regulator is satisfied that it is no longer necessary to keep the permission in force.
(4)
In this paragraph, “the appropriate UK regulator” means—
(a)
the PRA, in a case where the Gibraltar-based person is a PRA-authorised person, and
(b)
the FCA, in any other case.
UK regulator's initiative: procedure
38
(1)
If a UK regulator proposes to cancel a Gibraltar-based person's Schedule 2A permission under paragraph 37, it must give the person a warning notice.
(2)
If a UK regulator decides to cancel a Gibraltar-based person's Schedule 2A permission under paragraph 37, it must give the person a decision notice.
Right to refer matters to the Tribunal
39
If a UK regulator gives a Gibraltar-based person a decision notice under paragraph 38, the person may refer the matter to the Tribunal.
PART 6Requirements
Requirements
40
(1)
A requirement may be imposed on a Gibraltar-based person in accordance with this Part of this Schedule—
(a)
by a UK regulator as part of the process of considering a notification under Part 3 or 4 of this Schedule (see paragraphs 41 to 43),
(b)
on the initiative of the Gibraltar regulator (see paragraphs 44 to 48), or
(c)
on the UK regulator's initiative (see paragraphs 49 to 52).
(2)
Requirements imposed on a Gibraltar-based person in accordance with this Part of this Schedule may be varied or cancelled in accordance with this Part of this Schedule—
(a)
on the initiative of the Gibraltar regulator (see paragraphs 44 to 48), or
(b)
on the UK regulator's initiative (see paragraphs 49 to 52).
Imposing requirements in connection with Part 3 or 4 notification
41
(1)
This paragraph applies where a UK regulator has received—
(a)
a notification for the purposes of paragraph 12 in respect of the carrying on of an activity by a Gibraltar-based person, or
(b)
a notification for the purposes of paragraph 22 in respect of the variation of a Gibraltar-based person's Schedule 2A permission.
(2)
A UK regulator may exercise the powers under this paragraph where it considers that it is desirable to do so in order to advance one or more of its objectives.
(3)
The FCA may impose requirements on the Gibraltar-based person.
(4)
The PRA may impose requirements on the Gibraltar-based person if—
(a)
the notification mentioned in sub-paragraph (1) relates to activities which consist of or include PRA-regulated activities, or
(b)
the Gibraltar-based person is a PRA-authorised person.
(5)
A requirement may not be imposed under this paragraph—
(a)
after the end of the period for considering the notification mentioned in sub-paragraph (1), or
(b)
so as to take effect before the end of that period.
(6)
In the case of the FCA, the reference in this paragraph to its objectives is a reference only to its operational objectives.
Imposing requirements in connection with Part 3 or 4 notification: procedure
42
(1)
If a UK regulator proposes to impose a requirement on a Gibraltar-based person under paragraph 41, it must—
(a)
give the person a warning notice,
(b)
give the Gibraltar regulator a written notice of the proposed requirement, stating the UK regulator's reasons for imposing the requirement, and
(c)
consider any representations made by the Gibraltar regulator within the period specified in the notice.
(2)
If a UK regulator decides to impose a requirement on a Gibraltar-based person under paragraph 41, it must give the person a decision notice.
Right to refer matters to the Tribunal
43
If a UK regulator gives a Gibraltar-based person a decision notice under paragraph 42, the person may refer the matter to the Tribunal.
Gibraltar regulator's initiative: notification
44
(1)
If the appropriate UK regulator receives a notification from the Gibraltar regulator (see paragraph 46)—
(a)
asking for a requirement to be imposed on a Gibraltar-based person with a Schedule 2A permission, or
(b)
asking for a requirement imposed on a Gibraltar-based person with a Schedule 2A permission to be varied or cancelled,
the requirement is imposed, varied or cancelled as specified in the notification at the end of the period for considering the notification, as it relates to the requirement (see paragraph 47).
(2)
The requirement is not imposed, varied or cancelled under sub-paragraph (1) if, during the period for considering the notification—
(a)
the appropriate UK regulator rejects the notification, as it relates to the requirement (see paragraph 48), or
(b)
the Gibraltar regulator withdraws the notification, as it relates to the requirement.
(3)
References in this Part of this Schedule to a notification are references to a notification for the purposes of this paragraph, except where otherwise stated.
Gibraltar regulator's initiative: the appropriate UK regulator
45
In relation to a notification, “the appropriate UK regulator” means—
(a)
the PRA, in a case where the approved activities to which the notification relates consist of or include PRA-regulated activities, and
(b)
the FCA, in any other case.
Gibraltar regulator's initiative: notifying the UK regulator
46
A notification must—
(a)
state the requirement to be imposed or the desired variation or cancellation (as appropriate),
(b)
state the reason for asking for the requirement to be imposed, varied or cancelled,
(c)
state that the Gibraltar regulator consents to the requirement being imposed, varied or cancelled, and
(d)
contain, or be accompanied by, any further information specified in a direction given by the appropriate UK regulator under paragraph 57 and in force when the notification is given.
Gibraltar regulator's initiative: considering a notification
47
(1)
Where the appropriate UK regulator receives a notification, it must acknowledge receipt in writing without delay.
(2)
The period for considering a notification is—
(a)
so far as it relates to a requirement to be imposed on a Gibraltar-based person with a branch in the United Kingdom, the period of two months beginning with the day on which the appropriate UK regulator receives the notification, and
(b)
so far as it relates to any other requirement, the period of one month beginning with that day.
(3)
If, before the end of the period described in sub-paragraph (2), the appropriate UK regulator gives the Gibraltar-based person a confirmation notice in respect of a requirement specified in the notification, then the period for considering the notification as it relates to the requirement ends when the notice is given.
(4)
A “confirmation notice” is a written notice confirming that the requirement is imposed, varied or cancelled as requested in the notification.
Gibraltar regulator's initiative: rejecting a notification
48
(1)
The appropriate UK regulator may not reject a notification so far as it relates to a requirement unless—
(a)
it is required to do so under sub-paragraph (3), or
(b)
it has power to do under sub-paragraph (4) or (5).
(2)
A notification is rejected when the appropriate UK regulator gives a written notice of the rejection to the Gibraltar regulator.
(3)
The appropriate UK regulator must reject a notification if satisfied that the notification does not satisfy one or more of the requirements in paragraph 46.
(4)
The FCA may reject a notification, so far as it relates to a requirement, if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.
(5)
The PRA may reject a notification, so far as it relates to a requirement, if it appears to the PRA that it is desirable to do so in order to advance one or more of its objectives.
(6)
The rejection of a notification does not prevent the Gibraltar regulator from giving a further notification in respect of the same requirement.
UK regulator's initiative: imposing, varying and cancelling requirements
49
(1)
A UK regulator may exercise the powers under this paragraph in relation to a Gibraltar-based person only where one of the own-initiative conditions is satisfied (see paragraph 28).
(2)
The FCA may—
(a)
impose a requirement on a Gibraltar-based person with a Schedule 2A permission,
(b)
vary a requirement imposed by the FCA under this Part of this Schedule, or
(c)
cancel such a requirement.
(3)
The PRA may—
(a)
impose a requirement on a Gibraltar-based person with a Schedule 2A permission where the person is a PRA-authorised person,
(b)
vary a requirement imposed by the PRA under this Part of this Schedule, or
(c)
cancel such a requirement.
UK regulator's initiative: procedure for imposing or varying requirements
50
(1)
The imposition or variation of a requirement under paragraph 49 takes effect—
(a)
immediately, if the notice given under sub-paragraph (3) states 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.
(2)
The imposition or variation of a requirement under paragraph 49 may be expressed to take effect immediately, or on a specified date, only if the UK regulator reasonably considers that it is necessary for the imposition or variation of the requirement to take effect immediately or on that date, having regard to the own-initiative condition on which it is relying for the purposes of paragraph 49(1).
(3)
If a UK regulator—
(a)
proposes to exercise the power under paragraph 49 to impose a requirement on a Gibraltar-based person, or vary a requirement imposed on a Gibraltar-based person, or
(b)
exercises that power so as to impose a requirement on a Gibraltar-based person, or vary a requirement imposed on a Gibraltar-based person, with immediate effect,
it must give the person a written notice.
(4)
The notice must—
(a)
give details of the requirement or its variation,
(b)
state the UK regulator's reasons for imposing or varying the requirement,
(c)
inform the Gibraltar-based person that the person may make representations to the UK regulator within the period specified in the notice (whether or not the Gibraltar-based person has referred the matter to the Tribunal),
(d)
inform the Gibraltar-based person of when the imposition or variation of the requirement takes effect, and
(e)
inform the Gibraltar-based person of the person's right to refer the matter to the Tribunal.
(5)
The UK regulator may extend the period allowed under the notice for making representations.
(6)
If, having considered any representations made by the Gibraltar-based person, the UK regulator decides—
(a)
to impose the requirement or vary the requirement in the way proposed, or
(b)
if the requirement has been imposed or varied, not to rescind its imposition or variation,
it must give the Gibraltar-based person a written notice.
(7)
A notice under sub-paragraph (6) must inform the Gibraltar-based person of the person's right to refer the matter to the Tribunal.
(8)
If, having considered any representations made by the Gibraltar-based person, the UK regulator decides—
(a)
not to impose the requirement or vary the requirement in the way proposed,
(b)
to impose a different requirement or vary the requirement in a different way, or
(c)
to rescind a requirement or variation which has effect,
it must give the Gibraltar-based person a written notice.
(9)
A notice under sub-paragraph (8)(b) must comply with sub-paragraph (4).
(10)
If a notice under this paragraph informs a person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure for such a reference.
(11)
For the purposes of sub-paragraph (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
UK regulator's initiative: procedure for cancellation
51
(1)
If a UK regulator proposes to exercise a power under paragraph 49 to cancel a requirement imposed on a Gibraltar-based person, it must give the person a written notice.
(2)
The notice must specify the date on which the cancellation takes effect.
Right to refer matters to the Tribunal
52
A Gibraltar-based person who is aggrieved by the exercise by a UK regulator of a power under paragraph 49 to impose a requirement on the person, or vary a requirement imposed on the person, may refer the matter to the Tribunal.
Assets requirements
53
(1)
This paragraph makes provision about a requirement imposed on a Gibraltar-based person (“G”) by a UK regulator under this Part of this Schedule—
(a)
prohibiting the disposal of, or other dealing with, any of G's assets (whether in the United Kingdom, Gibraltar or elsewhere) or restricting such disposals or dealings, or
(b)
requiring that some or all of G's assets, or some or all assets belonging to consumers (as defined in section 1G) but held by G or to G's order, must be transferred to and held by a trustee approved by the UK regulator.
(2)
If a UK regulator—
(a)
imposes a requirement described in sub-paragraph (1)(a), and
(b)
gives notice of the requirement to an institution with whom G keeps an account,
the notice has the effects set out in sub-paragraph (3).
(3)
Those effects are that—
(a)
the institution does not act in breach of a contract with G if, having been instructed by G (or on G's behalf) to transfer a sum or otherwise make a payment out of G'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 UK regulator an amount equal to the amount transferred from, or otherwise paid out of, G's account in contravention of the requirement.
(4)
If a UK regulator imposes a requirement described in sub-paragraph (1)(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 UK regulator.
(5)
If, while a requirement described in sub-paragraph (1)(b) is in force, G creates a charge over any assets of G held in accordance with the requirement, the charge is (to the extent that it confers security over the assets) void against the liquidator and G's creditors.
(6)
Assets held by a person as trustee are to be taken to be held by the trustee in accordance with a requirement mentioned in sub-paragraph (1)(b) only if—
(a)
G has given the trustee a written notice that those assets are to be held by the trustee in accordance with the requirement, or
(b)
they are assets into which assets to which paragraph (a) applies have been transposed by the trustee on the instruction of G.
(7)
A person who contravenes sub-paragraph (4) commits an offence and is liable—
(a)
on summary conviction in England and Wales, to a fine;
(b)
on summary conviction in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.
(8)
In this paragraph, references to imposing a requirement (however expressed) include imposing a requirement by varying an existing requirement.
(9)
In this paragraph, “charge” includes a mortgage (or, in Scotland, a security over property).
(10)
Sub-paragraphs (4) and (6) 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 described in sub-paragraph (1)(b).
Further provision about requirements
54
(1)
A requirement imposed on a Gibraltar-based person under this Part of this Schedule may, among other things, be imposed so as to require the person—
(a)
to take specified action, or
(b)
to refrain from taking specified action.
(2)
A requirement imposed under this Part of this Schedule may extend to activities which are not approved activities.
(3)
A requirement imposed on a Gibraltar-based person under this Part of this Schedule 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 imposed under this Part of this Schedule may be expressed to expire at the end of a specified period (but the imposition of such a requirement does not affect the UK regulator's powers to impose a new requirement).
(5)
A requirement imposed on a Gibraltar-based person under this Part of this Schedule may refer to the past conduct of the person (for example, by requiring the person concerned to review or take remedial action in respect of past conduct).
Contravention of requirement imposed under this Part
55
(1)
Contravention of a requirement imposed under this Part of this Schedule does not—
(a)
make a person guilty of an offence,
(b)
make a transaction void or unenforceable, or
(c)
give rise to a right of action for breach of statutory duty, subject to sub-paragraph (2).
(2)
A contravention of a requirement imposed under this Part of this Schedule is actionable at the suit of a person who suffers loss as a result of the contravention where—
(a)
the action would be brought at the suit of a private person, or
(b)
the conditions in sub-paragraph (3) are met,
subject to the defences and other incidents applying to actions for breach of statutory duty.
(3)
The conditions mentioned in sub-paragraph (2)(b) are that—
(a)
the action would be brought by a person acting in a fiduciary or representative capacity on behalf of a private person, and
(b)
any remedy would be exclusively for the benefit of that private person and could not be obtained through an action brought otherwise than at the suit of the person acting in a fiduciary or representative capacity.
(4)
Sub-paragraph (2) does not apply where the requirement contravened is a requirement to have or maintain financial resources.
(5)
In this paragraph, “private person” has such meaning as may be prescribed.
PART 7Changes
Duty to notify UK regulators of changes
56
(1)
A UK regulator may direct that a change relating to a Gibraltar-based person with a Schedule 2A permission is subject to the requirements in this paragraph.
(2)
A direction under sub-paragraph (1) may only be given in relation to a change relating to a matter about which information must be provided in a notification given to the UK regulator for the purposes of paragraph 12 or 22 (see paragraphs 15 and 24).
(3)
Where, by virtue of a direction under sub-paragraph (1), a change is subject to the requirements in this paragraph, a Gibraltar-based person with a Schedule 2A permission must notify the following of the change—
(a)
the Gibraltar regulator;
(b)
the UK regulator that gave the direction.
(4)
A direction under sub-paragraph (1) in respect of a change may specify when the action described in sub-paragraph (3) must be taken in connection with the change.
(5)
If a direction in respect of a change does not specify when the action described in sub-paragraph (3) must be taken in connection with the change, the action must be taken—
(a)
before the change is made, where that is reasonably practicable, or
(b)
otherwise, as soon as reasonably practicable after the change is made.
(6)
A direction under this paragraph—
(a)
may make different provision for different purposes, but
(b)
may not make provision in relation to a specific Gibraltar-based person.
(7)
A UK regulator that gives a direction under this paragraph may, by a further direction, vary or revoke the direction.
(8)
The FCA must consult the Treasury before giving a direction under this paragraph.
(9)
The PRA must consult the Treasury and the FCA before giving a direction under this paragraph.
(10)
After giving a direction under this paragraph, a UK regulator must—
(a)
publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and
(b)
give a copy of the direction to the Treasury and the other UK regulator without delay.
PART 8UK regulators' directions about information
Directions about information to be included in notifications
57
(1)
A UK regulator may direct that a notification for the purposes of paragraph 12, 22, 32 or 44 in relation to which it is the appropriate UK regulator must include information specified in the direction.
(2)
In a direction, a UK regulator may only specify information which it reasonably considers necessary to enable it to discharge functions conferred on it by or under this Act in relation to persons with a Schedule 2A permission.
(3)
A UK regulator that gives a direction under this paragraph may, by a further direction, vary or revoke the direction.
(4)
A direction under this paragraph—
(a)
may make different provision for different purposes, but
(b)
may not make provision in relation to a specific person.
(5)
The FCA must consult the Treasury before giving a direction under this paragraph.
(6)
The PRA must consult the Treasury and the FCA before giving a direction under this paragraph.
(7)
After giving a direction under this paragraph, a UK regulator must—
(a)
publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and
(b)
give a copy of the direction to the Treasury and the other UK regulator without delay.
PART 9Transition on withdrawal of approval of regulated activity etc
Transition on withdrawal of approval of regulated activity
58
(1)
Sub-paragraph (2) applies where—
(a)
the Treasury withdraw their approval of a regulated activity for the purposes of this Schedule (by revoking or amending regulations under paragraph 5), and
(b)
immediately before approval is withdrawn, a person had a Schedule 2A permission to carry on the activity.
(2)
The regulated activity is to be treated as approved under this Schedule but—
(a)
only so far as carried on by the person,
(b)
subject to the time limit in sub-paragraph (3), and
(c)
subject to any restriction under paragraph 60.
(3)
The regulated activity ceases to be treated as approved under this Schedule by virtue of sub-paragraph (2)—
(a)
at the end of the period specified by the Treasury by regulations, or
(b)
if earlier, when an event listed in sub-paragraph (4) first occurs.
(4)
Those events are—
(a)
the person ceases to carry on the regulated activity in the United Kingdom;
(b)
the person ceases to have permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar;
(c)
the person ceases to have a Schedule 2A permission in respect of the activity;
(d)
the person is given permission under Part 4A of this Act in respect of the activity;
(e)
the Treasury approve the activity for the purposes of this Schedule (by making regulations under paragraph 5).
(5)
Where the approval of the regulated activity referred to in sub-paragraph (1)(a) is subject to limitations, references in this Part of this Schedule to that activity are to that activity subject to those limitations.
(6)
Where the withdrawal of the approval of the regulated activity referred to in sub-paragraph (1)(a) is subject to limitations, references in this Part of this Schedule to that activity are to that activity subject to those limitations.
(7)
For the purposes of sub-paragraph (4)(b) and (c), a person does not cease to have permission in respect of an activity while it has permission to carry on the activity by virtue of, and subject to the restrictions in, Part 10 of this Schedule.
Transition on Gibraltar activity ceasing to be corresponding activity
59
(1)
Sub-paragraph (2) applies where—
(a)
the Treasury provide that an activity which the Gibraltar regulator has authorised, or may authorise, a person to carry on in Gibraltar (a “Gibraltar activity”) does not correspond to an approved activity (by revoking or amending regulations under paragraph 6), and
(b)
immediately before they do so, a person had a Schedule 2A permission to carry on the approved activity by virtue of having permission from the Gibraltar regulator to carry the Gibraltar activity.
(2)
For the purposes of this Schedule, the Gibraltar activity is to be treated as corresponding to the approved activity but—
(a)
only so far as the approved activity is carried on by the person in the United Kingdom,
(b)
subject to the time limit in sub-paragraph (3), and
(c)
subject to any restriction under paragraph 60.
(3)
The Gibraltar activity ceases to be treated as corresponding to the approved activity by virtue of sub-paragraph (2)—
(a)
at the end of the period specified by the Treasury by regulations, or
(b)
if earlier, when an event listed in sub-paragraph (4) first occurs.
(4)
Those events are—
(a)
the person ceases to carry on the approved activity in the United Kingdom;
(b)
the person ceases to have permission from the Gibraltar regulator to carry on the Gibraltar activity;
(c)
the person ceases to have a Schedule 2A permission in respect of the approved activity;
(d)
the person is given permission under Part 4A of this Act in respect of the approved activity;
(e)
the Treasury provide that the Gibraltar activity corresponds to the approved activity (by making regulations under paragraph 6).
(5)
Where the provision made about the Gibraltar activity in regulations under paragraph 6 immediately before the Treasury make the provision described in sub-paragraph (1)(a) is subject to limitations, references in this Part of this Schedule to the Gibraltar activity are to that activity subject to those limitations.
(6)
Where the provision made about the Gibraltar activity in the regulations under paragraph 6 referred to in sub-paragraph (1)(a) is subject to limitations, references in this Part of this Schedule to the Gibraltar activity are to that activity subject to those limitations.
(7)
For the purposes of sub-paragraph (4)(b) and (c), a person does not cease to have permission in respect of an activity while it has permission to carry on the activity by virtue of, and subject to the restrictions in, Part 10 of this Schedule.
Restricting transitional permission
60
(1)
Sub-paragraph (2) applies where—
(a)
by virtue of paragraph 58(1), a regulated activity is treated as approved under this Schedule so far as carried on by a person, or
(b)
by virtue of paragraph 59(1), an activity which the Gibraltar regulator has authorised, or may authorise, a person to carry on in Gibraltar is treated as corresponding to an approved activity so far as the approved activity is carried on by a person.
(2)
The appropriate UK regulator may decide that the person may only carry on the regulated activity or approved activity (as appropriate) in the United Kingdom so far as is necessary for one or more of the following purposes—
(a)
for the performance of a protected contract;
(b)
in order to reduce the financial risk of a party to a protected contract or a third party affected by the performance of a protected contract;
(c)
in order to transfer the property, rights or liabilities under a protected contract to a person authorised to carry on a regulated activity by virtue of section 31(1)(a);
(d)
in order to comply with a requirement imposed by or under an enactment.
(3)
If it proposes to make a decision under sub-paragraph (2), the appropriate UK regulator must give the person a written notice.
(4)
The notice must—
(a)
give details of the proposed decision, and
(b)
inform the person that the person may make representations to the appropriate UK regulator within the period specified in the notice.
(5)
The appropriate UK regulator may extend the period allowed under the notice for making representations.
(6)
If, having considered any representations made by the person, the appropriate UK regulator decides to restrict the person's activities as described in sub-paragraph (2), it must—
(a)
give the person a written notice (“a restriction notice”), and
(b)
inform the Gibraltar regulator in writing without delay.
(7)
A restriction notice must—
(a)
specify the date on which it takes effect,
(b)
inform the person of the person's right to refer the matter to the Tribunal (see paragraph 62), and
(c)
indicate the procedure on a reference to the Tribunal.
(8)
The Treasury may by regulations provide that a restriction notice may not specify a date falling before the end of a period specified or described in the regulations.
(9)
In this paragraph—
“the appropriate UK regulator” means—
(a)
in the case of a PRA-authorised person, the PRA, and
(b)
in any other case, the FCA;
“enactment” includes—
(a)
retained direct EU legislation,
(b)
an enactment comprised in subordinate legislation,
(c)
an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,
(d)
an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and
(e)
an enactment comprised in, or in an instrument made under, Northern Ireland legislation;
“protected contract” means a contract specified or described in a direction by the appropriate UK regulator under paragraph 61;
“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act).
(10)
In this paragraph, references to the performance of a protected contract include the performance of an obligation under the contract which is contingent or conditional.
Directions about protected contracts
61
(1)
A UK regulator may direct that a contract specified or described in the direction is a protected contract for the purposes of this Part of this Schedule.
(2)
A UK regulator that gives a direction under this paragraph may, by a further direction, vary or revoke the direction.
(3)
A direction under this paragraph may make different provision for different purposes, including different provision in connection with—
(a)
different activities,
(b)
different contracts or descriptions of contract, or
(c)
different Gibraltar-based persons or descriptions of Gibraltar-based person.
(4)
After giving a direction under this paragraph, a UK regulator must—
(a)
publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and
(b)
give a copy of the direction to the Treasury and the other UK regulator without delay.
Right to refer matters to the Tribunal
62
Where a person in respect of whom a decision under paragraph 60(2) is made is aggrieved by the decision, the person may refer the matter to the Tribunal.
Further powers
63
(1)
The Treasury may by regulations extend the period under section 55V(1) or (2) for determining an application which—
(a)
is for a Part 4A permission or a variation of a Part 4A permission, and
(b)
relates only to the carrying on of an activity which the applicant is carrying on in the United Kingdom by virtue of this Part of this Schedule.
(2)
The power under sub-paragraph (1) includes power to amend section 55V.
(3)
The Treasury may by regulations extend the period for consideration of an application which—
(a)
is for approval under section 59 or variation of approval under section 59, and
(b)
relates only to performance of a function in relation to the carrying on of an activity which the applicant is carrying on in the United Kingdom by virtue of this Part of this Schedule.
(4)
The power under sub-paragraph (3) includes power to amend sections 61 and 63ZA.
PART 10Transition on cancellation of UK or Gibraltar permission
Transition on cancellation of Schedule 2A permission
64
(1)
Sub-paragraphs (2), (4) and (5) apply where—
(a)
a person's Schedule 2A permission is cancelled under Part 5 of this Schedule, or
(b)
a person's Schedule 2A permission is varied under Part 4 of this Schedule so as to remove permission to carry on an activity (including by adding or varying a limitation).
(2)
The person is to be treated as continuing to have the Schedule 2A permission, or the permission to carry on the activity, but—
(a)
only so far as is necessary for one or more of the purposes described in sub-paragraph (3), and
(b)
subject to the time limit in paragraph 68.
(3)
The purposes are—
(a)
for the performance of a protected contract;
(b)
to reduce the financial risk of a party to a protected contract or a third party affected by the performance of a protected contract;
(c)
to transfer the property, rights or liabilities under a protected contract to a person authorised to carry on a regulated activity by virtue of section 31(1)(a);
(d)
to comply with a requirement imposed by or under an enactment.
(4)
A UK regulator may exercise the powers under paragraph 49(1) (UK regulator's initiative: imposing, varying and cancelling requirements) in relation to the person if it appears to the UK regulator that it is desirable to do so in order to advance—
(a)
in the case of the FCA, one or more of its operational objectives, or
(b)
in the case of the PRA, one of its objectives.
(5)
For the purposes of section 33 (withdrawal of authorisation) a person's Schedule 2A permission is to be treated as being cancelled when the person ceases to be treated as having a Schedule 2A permission by virtue of this paragraph.
(6)
In this paragraph—
“enactment” has the same meaning as in paragraph 60;
“protected contract” means—
(a)
an existing contract, or
(b)
a contract specified or described in a direction by the appropriate UK regulator under paragraph 67(1).
(7)
In sub-paragraph (6), “existing contract”, in relation to a person referred to in sub-paragraph (1), means a contract entered into before the person's permission is cancelled or varied as described in that sub-paragraph, but—
(a)
does not include a contract specified or described in a direction under paragraph 67(2), and
(b)
except as otherwise provided in such a direction, does not include—
(i)
a variation of a contract agreed on or after that day, or
(ii)
a contract renewed on or after that day.
(8)
In this paragraph, references to the performance of a protected contract include the performance of an obligation under the contract which is contingent or conditional.
Transition on cancellation of Gibraltar permission
65
(1)
Sub-paragraphs (2) and (4) apply where the Gibraltar regulator—
(a)
cancels a Gibraltar-based person's permission to carry on in Gibraltar an activity in relation to which the person has a Schedule 2A permission, or
(b)
varies such a permission so as to remove permission to carry on such an activity (including by adding or varying a restriction).
(2)
For the purposes of this Schedule, the person is to be treated as continuing to have the permission from the Gibraltar regulator but—
(a)
only so far as is necessary for one or more of the purposes described in sub-paragraph (3), and
(b)
subject to the time limit in paragraph 68.
(3)
The purposes are—
(a)
for the performance of a protected contract;
(b)
to reduce the financial risk of a party to a protected contract or a third party affected by the performance of a protected contract;
(c)
to transfer the property, rights or liabilities under a protected contract to a person authorised to carry on a regulated activity by virtue of section 31(1)(a);
(d)
to comply with a requirement imposed by or under an enactment.
(4)
A UK regulator may exercise the powers under paragraph 49(1) (UK regulator's initiative: imposing, varying and cancelling requirements) in relation to the person if it appears to the UK regulator that it is desirable to do so in order to advance—
(a)
in the case of the FCA, one or more of its operational objectives, or
(b)
in the case of the PRA, one of its objectives.
(5)
In this paragraph—
“enactment” has the same meaning as in paragraph 60;
“protected contract” means—
(a)
an existing contract, or
(b)
a contract specified or described in a direction by the appropriate UK regulator under paragraph 67(1).
(6)
In sub-paragraph (5), “existing contract”, in relation to a person referred to in sub-paragraph (1), means a contract entered into before the person's permission is cancelled or varied as described in that sub-paragraph, but—
(a)
does not include a contract specified or described in a direction under paragraph 67(2), and
(b)
except as otherwise provided in such a direction, does not include—
(i)
a variation of a contract agreed on or after that day, or
(ii)
a contract renewed on or after that day.
(7)
In this paragraph, references to the performance of a protected contract include the performance of an obligation under the contract which is contingent or conditional.
The appropriate UK regulator
66
(1)
In this Part of this Schedule, “the appropriate UK regulator” means—
(a)
the PRA, in a case in which the Gibraltar-based person is a PRA-authorised person but not a paragraph 37(1) person, or
(b)
the FCA, in any other case.
(2)
In this paragraph, “a paragraph 37(1) person” means a person who is treated as having a Schedule 2A permission by virtue of paragraph 64 following the cancellation of that permission by the FCA under paragraph 37(1).
Directions about protected contracts
67
(1)
A UK regulator may direct that a contract specified or described in the direction is a protected contract for the purposes of paragraph 64 or 65 (or both).
(2)
A UK regulator may, by giving a direction, modify the definition of “existing contract” for the purposes of paragraph 64 or 65 (or both) in the ways provided for in the definitions of that term in those paragraphs.
(3)
A UK regulator that gives a direction under this paragraph may, by a further direction, vary or revoke the direction.
(4)
A UK regulator may give different directions under this paragraph in connection with—
(a)
different activities,
(b)
different contracts or descriptions of contract, or
(c)
different Gibraltar-based persons or descriptions of Gibraltar-based person.
(5)
After giving a direction under this paragraph, a UK regulator must—
(a)
publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and
(b)
give a copy of the direction to the Treasury and the other UK regulator without delay.
End of transition
68
(1)
A Gibraltar-based person ceases to be treated as having a permission by virtue of paragraph 64 or 65—
(a)
when an event listed in sub-paragraph (2) first occurs, or
(b)
if the appropriate UK regulator specifies an earlier date, on that date.
(2)
Those events are—
(a)
the person ceases to carry on the regulated activity in the United Kingdom;
(b)
the person is given permission under Part 4A of this Act in respect of the regulated activity;
(c)
the regulated activity ceases to be an approved activity;
(d)
the person obtains (as appropriate)—
(i)
a new Schedule 2A permission to carry on the activity referred to in paragraph 64(1), or
(ii)
a new permission from the Gibraltar regulator to carry on the activity referred to in paragraph 65(1).
(3)
If the appropriate UK regulator specifies a date for the purposes of sub-paragraph (1)(b), it may vary the date but only by specifying a later date.
(4)
In sub-paragraph (2), references to “the regulated activity” are references (as appropriate) to—
(a)
the regulated activity in respect of which the Gibraltar-based person is treated as having a Schedule 2A permission by virtue of paragraph 64, or
(b)
the regulated activity corresponding to the activity in respect of which the Gibraltar-based person is treated as having permission from the Gibraltar regulator by virtue of paragraph 65.
(5)
For the purposes of sub-paragraph (2)(c), a regulated activity does not cease to be an approved activity while it is treated as approved in relation to the Gibraltar-based person under Part 9 of this Schedule (with or without the restrictions under that Part).
End of transition: procedure
69
(1)
If a UK regulator proposes to specify or vary a date in relation to a person under paragraph 68(1)(b) or (3), it must give the person a warning notice.
(2)
If a UK regulator decides to specify or vary a date in relation to a person under paragraph 68(1)(b) or (3), it must give the person a decision notice.
Right to refer matters to the Tribunal
70
If a UK regulator gives a Gibraltar-based person a decision notice under paragraph 69, the person may refer the matter to the Tribunal.
PART 11Policy statements
Policy statements
71
(1)
Each UK regulator must prepare and issue a statement of its policy with respect to—
(a)
its powers to vary or cancel a Schedule 2A permission under Part 4 or 5 of this Schedule other than on a notification by the Gibraltar regulator,
(b)
its powers to impose, vary or cancel requirements under Part 6 of this Schedule, other than on a notification by the Gibraltar regulator, and
(c)
its power to give directions under Part 7 of this Schedule.
(2)
Where a UK regulator has issued a statement under sub-paragraph (1), it may prepare and issue a revised statement.
(3)
In exercising a power described in sub-paragraph (1), a UK regulator must have regard to any relevant statement of policy issued under this paragraph and in force at the time.
Policy statements: procedure
72
(1)
Before issuing a statement under paragraph 71(1) or (2), a UK regulator must—
(a)
publish a draft of the proposed statement in the way appearing to it to be best calculated to bring it to the attention of the public,
(b)
publish a notice stating that representations may be made to the UK regulator within the period specified in the notice, and
(c)
have regard to any representations made to it in accordance with the notice.
(2)
If the UK regulator issues the proposed statement, it must publish—
(a)
the statement, and
(b)
an account in general terms of—
(i)
the representations made to it in accordance with the notice, and
(ii)
its response to them.
(3)
If the statement issued differs from the draft published under sub-paragraph (1) in a way which, in the opinion of the UK regulator, is significant, the UK regulator must publish details of the differences (as well as complying with sub-paragraph (2)).
(4)
A UK regulator—
(a)
must give a copy of a statement issued under paragraph 71(1) or (2) to the Treasury before publishing it, and
(b)
may charge a reasonable fee for providing a person with a copy of such a statement or a draft statement published under this paragraph.
(5)
Anything published by a UK regulator under this paragraph must be published in the way appearing to the UK regulator to be best calculated to bring it to the attention of the public.
PART 12Consultation etc by UK regulators
FCA's duties to consult the PRA
73
(1)
The FCA must consult the PRA before—
(a)
rejecting a notification under paragraph 19 in a case in which the person with responsibility for managing an aspect of the Gibraltar-based person's affairs is prohibited by an order under section 56 from performing a function in relation to an activity carried on by a PRA-authorised person, or
(b)
rejecting a notification under paragraph 20 in a case in which a relevant access right that was lost related to a PRA-regulated activity.
(2)
The FCA must consult the PRA before doing any of the following in a case in which the Gibraltar-based person is a PRA-authorised person or a member of a group that includes a PRA-authorised person—
(a)
rejecting a notification under paragraph 26(5);
(b)
varying a Schedule 2A permission under paragraph 27;
(c)
rejecting a notification under paragraph 36(4);
(d)
cancelling a Schedule 2A permission under paragraph 37(1);
(e)
imposing a requirement under paragraph 41(3);
(f)
rejecting a notification under paragraph 48(4);
(g)
imposing, varying or cancelling a requirement under paragraph 49(2).
FCA's duties to obtain consent from the PRA
74
(1)
The FCA must obtain the PRA's consent before exercising its power under paragraph 27 in relation to a PRA-authorised person so as to—
(a)
add an activity to those to which the person's Schedule 2A permission relates, or
(b)
widen the description of an activity to which the person's Schedule 2A permission relates.
(2)
Sub-paragraph (1) does not apply in relation to the regulated activity specified in article 63S of the Financial Services and Markets 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (administering a benchmark).
(3)
Consent given by the PRA for the purposes of this paragraph may be conditional on the way in which the FCA exercises its power.
FCA's duties to inform the PRA
75
(1)
The FCA must inform the PRA in writing without delay after rejecting a notification under—
(a)
paragraph 18(2) or (3), 19 or 20;
(b)
paragraph 26(4) or (5);
(c)
paragraph 36(4);
(d)
paragraph 48(4).
(2)
The FCA must inform the PRA in writing without delay after imposing, varying or cancelling a requirement under paragraph 41(3) or 49(2).
PRA's duties to consult the FCA
76
(1)
The PRA must consult the FCA before—
(a)
giving a confirmation notice under paragraph 16;
(b)
rejecting a notification under paragraph 19 or 20;
(c)
giving a confirmation notice under paragraph 25;
(d)
rejecting a notification under paragraph 26(5);
(e)
varying a Schedule 2A permission under paragraph 27;
(f)
giving a confirmation notice under paragraph 35;
(g)
rejecting a notification under paragraph 36(5);
(h)
cancelling a Schedule 2A permission under paragraph 37(2);
(i)
imposing a requirement under paragraph 41(4);
(j)
giving a confirmation notice under paragraph 47;
(k)
rejecting a notification under paragraph 48(5);
(l)
imposing, varying or cancelling a requirement under paragraph 49(3);
(m)
giving a notice under paragraph 60;
(n)
giving a direction under paragraph 61;
(o)
giving a direction under paragraph 67.
(2)
The PRA must—
(a)
consult the FCA before publishing a draft statement under paragraph 72, and
(b)
if the final version of the statement is to differ from the draft in a way which, in the opinion of the PRA, is significant, consult the FCA again before issuing it.
PRA's duty to obtain consent from the FCA
77
(1)
The PRA must obtain the FCA's consent before exercising its power under paragraph 27 so as to—
(a)
add an activity to those to which a Schedule 2A permission relates, or
(b)
widen the description of an activity to which a Schedule 2A permission relates.
(2)
Consent given by the FCA for the purposes of this paragraph may be conditional on the way in which the PRA exercises its power.
PRA's duties to inform the FCA
78
(1)
When the PRA receives a notification for the purposes of a provision listed in the first column of the following table, it must give a copy to the FCA without delay, except where it rejects the notification under the provision listed in the second column (notification incomplete)—
Notification for the purposes of
Rejection under
paragraph 12
paragraph 18(1)
paragraph 22
paragraph 26(3)
paragraph 32
paragraph 36(3)
paragraph 44
paragraph 48(3).
(2)
The PRA must inform the FCA in writing without delay after rejecting a notification under—
(a)
paragraph 18(2) or (3), 19 or 20;
(b)
paragraph 26(4) or (5);
(c)
paragraph 36(5);
(d)
paragraph 48(5).
(3)
The PRA must inform the FCA in writing without delay after imposing, varying or cancelling a requirement under paragraph 41(4) or 49(3).
UK regulators' duties to inform the Gibraltar regulator
79
(1)
A UK regulator must inform the Gibraltar regulator in writing before giving a confirmation notice under—
(a)
paragraph 16,
(b)
paragraph 25,
(c)
paragraph 35, or
(d)
paragraph 47.
(2)
A UK regulator must inform the Gibraltar regulator in writing without delay after—
(a)
varying a Schedule 2A permission under paragraph 27,
(b)
cancelling a Schedule 2A permission under paragraph 37,
(c)
imposing a requirement under paragraph 41, or
(d)
imposing, varying or cancelling a requirement under paragraph 49.
PART 13Co-operation and Assistance
Duties to co-operate
80
(1)
Each of the FCA, the PRA and the scheme manager must take such steps as they consider appropriate, for the purposes in sub-paragraph (2), to co-operate—
(a)
with each other and the Treasury (“the UK entities”), and
(b)
with the government of Gibraltar and the Gibraltar regulator (“the Gibraltar entities”).
(2)
Those purposes are—
(a)
to secure that they, and the Treasury, are able to perform their functions under this Schedule and section 32A, and
(b)
to secure that, so far as is reasonably possible, there is co-operation between the UK entities and the Gibraltar entities which the Treasury, having regard to the objectives in paragraph 7(1), consider adequate.
(3)
For the purposes of sub-paragraph (2), the FCA, the PRA and the scheme manager must, among other things, have regard to—
(a)
the memoranda and arrangements described in paragraph 9(4)(a) to (d),
(b)
reports laid before Parliament by the Treasury under section 32A, and
(c)
any guidance published by the Treasury.
(4)
Each of the FCA, the PRA and the scheme manager must ensure that one or more memoranda describing how it intends to comply with sub-paragraph (1) are prepared and maintained.
(5)
The steps taken for the purposes of sub-paragraph (1) may include arrangements for the sharing of information which the FCA, the PRA or the scheme manager is not prevented from disclosing.
(6)
When carrying out functions under this Schedule, the FCA and the PRA must, among other things, have regard to any relevant arrangements in force at the time for co-operation between the UK entities or for co-operation between those entities and the Gibraltar entities.
Publication and review of arrangements for co-operation
81
(1)
Each of the FCA, the PRA and the scheme manager must—
(a)
ensure that a copy of each memorandum describing how it intends to comply with paragraph 80(1), and of any other document recording arrangements that it enters into for the purpose of complying with paragraph 80(1), is given to the Treasury (unless the Treasury also entered into the arrangement),
(b)
ensure that each memorandum is published in the way appearing to it to be best calculated to bring it to the attention of the public, and
(c)
review the memoranda that it has in place for the purpose of complying with paragraph 80(1) at least once in each of the reporting periods described in section 32A.
(2)
Where the Treasury enter into arrangements with the FCA, the PRA, the scheme manager, the government of Gibraltar or the Gibraltar regulator for a purpose described in paragraph 80(2), they must—
(a)
ensure that any memorandum recording the arrangements is published in the way appearing to the Treasury to be best calculated to bring it to the attention of the public, and
(b)
review the memoranda that the Treasury have in place for a purpose described in paragraph 80(2) at least once in each of the reporting periods described in section 32A.
(3)
The Treasury must lay before Parliament a copy of any memorandum—
(a)
given to them under sub-paragraph (1), or
(b)
published in accordance with sub-paragraph (2)(a).
Provision of reports to assist the Treasury
82
(1)
A UK regulator or the scheme manager must, on a request from the Treasury, prepare and send to the Treasury a report on a matter specified in the request.
(2)
The Treasury may only make a request under this paragraph for a report that they reasonably require in connection with the exercise of their functions under—
(a)
this Schedule, or
(b)
section 32A.
(3)
A request for a report under this paragraph—
(a)
must be made in writing, and
(b)
may require the UK regulator or scheme manager to send the report to the Treasury before a date specified in the request.
PART 14Special cases
Gibraltar-based individuals carrying on insurance distribution activities
83
(1)
For the purposes of paragraph 1, an individual without a head office in Gibraltar is to be treated as having a head office there if the individual—
(a)
is normally resident in Gibraltar, and
(b)
has permission from the Gibraltar regulator to carry on an insurance distribution activity in Gibraltar.
(2)
A notification for the purposes of paragraph 12 in respect of an individual who is a Gibraltar-based person by virtue of this paragraph satisfies paragraph 15(1)(b) if it states the main address where the individual carries on an insurance distribution activity in Gibraltar.
(3)
The Treasury may by regulations replace the requirement in sub-paragraph (1)(a) with a different requirement relating to residence in Gibraltar.
(4)
In this paragraph, “insurance distribution activity” has the meaning given in paragraph 2B(5) and (6) of Schedule 6.”

Notification for the purposes of	Rejection under
paragraph 12	paragraph 18(1)
paragraph 22	paragraph 26(3)
paragraph 32	paragraph 36(3)
paragraph 44	paragraph 48(3).

SCHEDULE 7UK-based persons carrying on activities in Gibraltar

Section 22

After Schedule 2A to the Financial Services and Markets Act 2000 (inserted by Schedule 6 to this Act) insert—

“SCHEDULE 2BUK-based persons carrying on activities in Gibraltar
Section 36A
PART 1Interpretation etc
UK-based person
1
(1)
In this Schedule, “UK-based person” means a person listed in sub-paragraph (2) whose head office or registered office is in the United Kingdom (and see also Part 6 of this Schedule).
(2)
Those persons are—
(a)
an individual,
(b)
a body corporate,
(c)
a partnership, or
(d)
an unincorporated association.
Regulators
2
(1)
In this Schedule—
“the Gibraltar regulator” has the same meaning as in Schedule 2A (see paragraph 2 of that Schedule);
“UK regulator” means the FCA or the PRA.
(2)
In this Schedule, “the appropriate UK regulator” means—
(a)
the PRA, in a case where the UK-based person is a PRA-authorised person, and
(b)
the FCA, in any other case.
Restricted activity
3
(1)
In this Schedule, “restricted activity” means—
(a)
an activity which, when carried on in the United Kingdom, is a regulated activity,
(b)
marketing a UCITS, or
(c)
marketing an AIF.
(2)
For the purposes of this Schedule, “marketing”, in relation to a UCITS, means, in the course of business, communicating an invitation or inducement to a person to participate in the UCITS (and related expressions are to be interpreted accordingly).
(3)
In sub-paragraph (2), “communicating” includes causing a communication to be made.
(4)
Regulations under section 21(4) (circumstances in which a person is to be regarded as carrying on a business) apply for the purposes of sub-paragraph (2) as they apply for the purposes of section 21(1).
(5)
For the purposes of this Schedule—
(a)
an AIFM markets an AIF when the AIFM makes a direct or indirect offering or placement of units or shares of an AIF managed by it to or with an investor or when another person makes such an offering or placement at the initiative of, or on behalf of, the AIFM, and
(b)
an investment firm markets an AIF when it makes a direct or indirect offering or placement of units or shares of the AIF to or with an investor at the initiative of, or on behalf of, the AIFM of the AIF.
(6)
For the purposes of this Schedule, a person markets a UCITS or an AIF in Gibraltar only if the marketing is capable of having an effect in Gibraltar.
Other definitions
4
In this Schedule—
“AIFM” has the meaning given in regulation 4 of the Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773);
“branch” has the same meaning as in Schedule 2A (see paragraph 3 of that Schedule);
“consent notice” has the meaning given in paragraph 7;
“consent to variation notice” has the meaning given in paragraph 13;
“Gibraltar notice” has the meaning given in paragraph 7;
“variation notice” has the meaning given in paragraph 13.
UK regulators' objectives
5
For the purposes of any provision of this Schedule 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.
PART 2Permission required to carry on activities in Gibraltar
Prohibition
6
(1)
A UK-based person may not carry on a restricted activity in Gibraltar unless it has permission to do so under this Schedule.
(2)
A UK-based person who is not an authorised person and who contravenes the prohibition in sub-paragraph (1) commits an offence and is liable—
(a)
on summary conviction in England and Wales, to a fine;
(b)
on summary conviction in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum;
(c)
on conviction on indictment, to a fine.
Obtaining permission to carry on a restricted activity in Gibraltar
7
(1)
A UK-based person obtains permission to carry on a restricted activity in Gibraltar when the following three conditions are satisfied.
(2)
The first condition is that the UK-based person has given the appropriate UK regulator notice that it wants to carry on the restricted activity in Gibraltar (a “Gibraltar notice”) (see paragraph 9).
(3)
The second condition is that the appropriate UK regulator has given notice to the Gibraltar regulator consenting to the UK-based person carrying on the restricted activity in Gibraltar (a “consent notice”) (see paragraph 10).
(4)
The third condition is that the waiting period has ended.
(5)
In sub-paragraph (4), “the waiting period” means—
(a)
in relation to an activity that is to be carried on through a branch in Gibraltar, the period of two months beginning with the day on which the appropriate UK regulator gave the Gibraltar regulator the consent notice, and
(b)
in relation to any other activity, the period of one month beginning with that day,
unless the appropriate UK regulator specifies a shorter waiting period in the consent notice.
(6)
A permission under this paragraph is referred to in this Act as “a Schedule 2B permission”.
Schedule 2B permission
8
(1)
A Schedule 2B permission for a person to carry on a restricted activity is a permission to do so only while the person has a relevant Part 4A permission.
(2)
In this paragraph, “relevant Part 4A permission” means—
(a)
if the restricted activity is an activity which, when carried on in the United Kingdom, is a regulated activity, a Part 4A permission in respect of that regulated activity, and
(b)
if the restricted activity is marketing a UCITS or an AIF, a Part 4A permission in respect of any regulated activity.
Gibraltar notice
9
(1)
A Gibraltar notice must—
(a)
name the UK-based person giving the notice,
(b)
state the address of the person's head office or registered office in the United Kingdom,
(c)
identify the activity that the UK-based person wants to carry on,
(d)
state whether the UK-based person wants to carry on the activity through a branch in Gibraltar,
(e)
contain, or be accompanied by, such other information as the appropriate UK regulator may direct, and
(f)
be given in such form and manner as the appropriate UK regulator may direct.
(2)
A Gibraltar notice may relate to more than one activity.
(3)
A Gibraltar notice may ask the appropriate UK regulator to specify a shorter waiting period for the purpose of paragraph 7(4).
(4)
A UK regulator that gives a direction under sub-paragraph (1)(e) or (f) may, by a further direction, vary or revoke the direction.
(5)
A direction under this paragraph may make different provision for different purposes, including different provision in relation to different persons.
(6)
After giving a direction under this paragraph, a UK regulator must—
(a)
publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and
(b)
give a copy of the direction to the Treasury and the other UK regulator without delay.
Consent and confirmation
10
(1)
After receiving a Gibraltar notice, the appropriate UK regulator must without delay—
(a)
give a consent notice, and
(b)
give a written notice to the UK-based person confirming that it has given the consent notice,
unless it intends to refuse to give a consent notice in accordance with paragraph 11.
(2)
A consent notice—
(a)
may specify a shorter waiting period for the purpose of paragraph 7(4), and
(b)
must contain, or be accompanied by, the Gibraltar notice.
(3)
A notice under sub-paragraph (1)(b) must—
(a)
state the date on which the consent notice was given to the Gibraltar regulator, and
(b)
if the consent notice specified a shorter waiting period for the purpose of paragraph 7(4), specify that period.
(4)
Where a Gibraltar notice relates to more than one activity, the appropriate UK regulator may give a consent notice in relation to one activity and refuse to do so in relation to another.
Refusing consent
11
(1)
The appropriate UK regulator may refuse to give a consent notice in relation to a regulated activity only if—
(a)
it is satisfied that the Gibraltar notice does not satisfy one or more of the requirements in paragraph 9, or
(b)
it appears to the regulator that it is desirable to refuse to do so in order to advance one or more of its objectives.
(2)
In the case of the FCA, the reference in sub-paragraph (1)(b) to its objectives is a reference only to its operational objectives.
(3)
If the appropriate UK regulator proposes to refuse to give a consent notice, it must give the UK-based person a warning notice.
(4)
If the appropriate UK regulator decides to refuse to give a consent notice, it must give the UK-based person a decision notice.
(5)
If the appropriate UK regulator gives the UK-based person a decision notice under sub-paragraph (4), the UK-based person may refer the matter to the Tribunal.
PART 3Variation of permission
Variation of permission
12
(1)
A UK-based person's Schedule 2B permission may be varied in accordance with this Part of this Schedule—
(a)
on the initiative of the UK-based person (see paragraphs 13 to 16), or
(b)
on the initiative of a UK regulator (see paragraphs 17 to 19).
(2)
In this Part of this Schedule, references to the variation of a Schedule 2B permission (however expressed) are to its variation by—
(a)
adding an activity,
(b)
removing an activity, or
(c)
varying the description of an activity.
UK-based person's initiative
13
(1)
A Schedule 2B permission is varied in accordance with this paragraph when the following four conditions are satisfied in connection with the variation.
(2)
The first condition is that the UK-based person has given the appropriate UK regulator notice of the proposed variation (a “variation notice”) (see paragraph 14).
(3)
The second condition is that the appropriate UK regulator has given notice to the Gibraltar regulator consenting to the variation (a “consent to variation notice”) (see paragraph 15).
(4)
The third condition is that the waiting period has ended.
(5)
In sub-paragraph (4), “the waiting period” means—
(a)
in relation to a variation in respect of an activity carried on through a branch in Gibraltar, the period of two months beginning with the day on which the appropriate UK regulator gave the Gibraltar regulator the consent to variation notice, and
(b)
in relation to any other variation, the period of one month beginning with that day,
unless the appropriate UK regulator specifies a shorter waiting period in the consent to variation notice.
(6)
The fourth condition is that the appropriate UK regulator has not cancelled the permission (see Part 4 of this Schedule).
UK-based person's initiative: variation notice
14
(1)
A variation notice must—
(a)
name the UK-based person giving the notice,
(b)
state the address of the person's head office or registered office in the United Kingdom,
(c)
specify the proposed variation,
(d)
where relevant, state whether the UK-based person wants to carry on an activity through a branch in Gibraltar,
(e)
contain, or be accompanied by, such other information as the appropriate UK regulator may direct, and
(f)
be given in such form and manner as the appropriate UK regulator may direct.
(2)
A variation notice may ask the appropriate UK regulator to specify a shorter waiting period for the purpose of paragraph 13(4).
(3)
A UK regulator that gives a direction under sub-paragraph (1)(e) or (f) may, by a further direction, vary or revoke the direction.
(4)
A direction under this paragraph may make different provision for different purposes, including different provision in relation to different persons.
(5)
After giving a direction under this paragraph, a UK regulator must—
(a)
publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and
(b)
give a copy of the direction to the Treasury and the other UK regulator without delay.
UK-based person's initiative: consent and confirmation
15
(1)
After receiving a variation notice, the appropriate UK regulator must without delay—
(a)
give a consent to variation notice, and
(b)
give a written notice to the UK-based person confirming that it has given the consent to variation notice,
unless it intends to refuse to give a consent to variation notice in accordance with paragraph 16.
(2)
A consent to variation notice—
(a)
may specify a shorter waiting period for the purpose of paragraph 13(4), and
(b)
must contain, or be accompanied by, the variation notice.
(3)
A notice under sub-paragraph (1)(b) must—
(a)
state the date on which the consent to variation notice was given to the Gibraltar regulator, and
(b)
if the consent notice specified a shorter waiting period for the purpose of paragraph 13(4), specify that period.
(4)
Where a variation notice relates to more than one variation, the appropriate UK regulator may give a consent notice in relation to one variation and refuse to do so in relation to another.
UK-based person's initiative: refusing consent to variation
16
(1)
The appropriate UK regulator may refuse to give a consent to variation notice in relation to a proposed variation only if—
(a)
it is satisfied that the variation notice does not satisfy one or more of the requirements in paragraph 14, or
(b)
it appears to the regulator that it is desirable to refuse to do so in order to advance one or more of its objectives.
(2)
In the case of the FCA, the reference in sub-paragraph (1)(b) to its objectives is a reference only to its operational objectives.
(3)
If the appropriate UK regulator proposes to refuse to give a consent to variation notice, it must give the UK-based person a warning notice.
(4)
If the appropriate UK regulator decides to refuse to give a consent to variation notice, it must give the UK-based person a decision notice.
(5)
If the appropriate UK regulator gives the UK-based person a decision notice under sub-paragraph (4), the UK-based person may refer the matter to the Tribunal.
UK regulator's initiative
17
(1)
The FCA may exercise a power under sub-paragraph (2) in relation to a Schedule 2B permission if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.
(2)
The FCA may vary a Schedule 2B permission by—
(a)
adding to the activities to which the permission relates a restricted activity which, when carried on in the United Kingdom, is not a PRA-regulated activity,
(b)
removing a restricted activity from those to which the permission relates,
(c)
varying the description of a restricted activity which, when carried on in the United Kingdom, is not a PRA-regulated activity, or
(d)
varying the description of a restricted activity which, when carried on in the United Kingdom, is a PRA-regulated activity in a way which does not, in the opinion of the FCA, widen the description.
(3)
The PRA may exercise a power under sub-paragraph (4), (5) or (6) in relation to a Schedule 2B permission if it appears to the PRA that it is desirable to do so in order to advance one or more of its objectives.
(4)
In the case of a PRA-authorised person, the PRA may vary the person's Schedule 2B permission.
(5)
In the case of a person who is not a PRA-authorised person, the PRA may vary the person's Schedule 2B permission by adding to the activities to which the permission relates a restricted activity which, when carried on in the United Kingdom, is a PRA-regulated activity.
(6)
Where it adds an activity under sub-paragraph (5), the PRA may vary the person's Schedule 2B permission in any of the other ways described in paragraph 12(2).
UK regulator's initiative: procedure
18
(1)
The variation of a Schedule 2B permission under paragraph 17 takes effect—
(a)
immediately, if the notice given under sub-paragraph (3) states 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.
(2)
The variation of a Schedule 2B permission under paragraph 17 may be expressed to take effect immediately, or on a specified date, only if the UK regulator reasonably considers that it is necessary for the variation to take effect immediately or on that date, having regard to the ground on which the UK regulator is exercising its power to vary.
(3)
If a UK regulator—
(a)
proposes to vary a Schedule 2B permission under paragraph 17, or
(b)
varies a Schedule 2B permission under that paragraph with immediate effect,
it must give the UK-based person a written notice.
(4)
The notice must—
(a)
give details of the variation,
(b)
state the UK regulator's reasons for varying the permission,
(c)
inform the UK-based person that the person may make representations to the UK regulator within the period specified in the notice (whether or not the UK-based person has referred the matter to the Tribunal),
(d)
inform the UK-based person of when the variation of the permission takes effect, and
(e)
inform the UK-based person of the person's right to refer the matter to the Tribunal.
(5)
The UK regulator may extend the period allowed under the notice for making representations.
(6)
If, having considered any representations made by the UK-based person, the UK regulator decides—
(a)
to vary the permission in the way proposed, or
(b)
if the permission has been varied, not to rescind its variation,
it must give the UK-based person a written notice.
(7)
A notice under sub-paragraph (6) must inform the UK-based person of the person's right to refer the matter to the Tribunal.
(8)
If, having considered any representations made by the UK-based person, the UK regulator decides—
(a)
not to vary the permission in the way proposed,
(b)
to vary the permission in a different way, or
(c)
to rescind the variation,
it must give the UK-based person a written notice.
(9)
A notice under sub-paragraph (8)(b) must comply with sub-paragraph (4).
(10)
If a notice under this paragraph informs a person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure for such a reference.
(11)
For the purposes of sub-paragraph (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
Right to refer matters to the Tribunal
19
A UK-based person who is aggrieved by the exercise by a UK regulator of a power under paragraph 17 in relation to the person may refer the matter to the Tribunal.
PART 4Cancellation of permission
Cancellation of permission
20
(1)
The FCA may cancel a Schedule 2B permission if—
(a)
it receives a written request from the UK-based person to do so, or
(b)
it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.
(2)
The PRA may cancel a PRA-authorised person's Schedule 2B permission if—
(a)
it receives a written request from the UK-based person to do so, or
(b)
it appears to the PRA that it is desirable to do so in order to advance one or more of its objectives.
(3)
If a UK regulator proposes to cancel a UK-based person's Schedule 2B permission under sub-paragraph (1)(b) or (2)(b), it must give the UK-based person a warning notice.
(4)
If a UK regulator decides to cancel a UK-based person's Schedule 2B permission under sub-paragraph (1)(b) or (2)(b), it must give the UK-based person a decision notice.
(5)
If a UK regulator gives the UK-based person a decision notice under sub-paragraph (4), the UK-based person may refer the matter to the Tribunal.
(6)
If a UK regulator cancels a Schedule 2B permission under this paragraph, it must notify the Gibraltar regulator in writing without delay.
PART 5Public record, consultation and consent
Information to be included in public record
21
The FCA must include in the record that it maintains under section 347 in relation to a UK-based person information about the restricted activities that the person has a Schedule 2B permission to carry on in Gibraltar, including whether the person has a branch in Gibraltar.
FCA's duties to consult or obtain consent from the PRA
22
(1)
The FCA must consult the PRA—
(a)
before deciding to refuse to give a consent notice in relation to a UK-based person who is a PRA-authorised person or whose immediate group includes a PRA-authorised person;
(b)
before deciding to refuse to give a consent to variation notice in relation to a UK-based person who is a PRA-authorised person or whose immediate group includes a PRA-authorised person;
(c)
before varying a permission under paragraph 17 in the case of a UK-based person who is a PRA-authorised person or whose immediate group includes a PRA-authorised person;
(d)
before cancelling a permission under paragraph 20(1)(b) in the case of a UK-based person who is a PRA-authorised person or whose immediate group includes a PRA-authorised person.
(2)
The FCA must obtain the PRA's consent before exercising its power under paragraph 17 in relation to a PRA-authorised person so as to—
(a)
add an activity to those to which the person's Schedule 2B permission relates, or
(b)
widen the description of an activity to which the person's Schedule 2B permission relates.
(3)
Sub-paragraph (2) does not apply in relation to an activity which, when carried on in the United Kingdom, is the regulated activity specified in article 63S of the Financial Services and Markets 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (administering a benchmark).
(4)
Consent given by the PRA for the purposes of sub-paragraph (2) may be conditional on the way in which the FCA exercises its power.
PRA's duties to consult or obtain consent from the FCA
23
(1)
The PRA must consult the FCA—
(a)
before giving a direction under paragraph 9;
(b)
before deciding to refuse to give a consent notice;
(c)
before giving a direction under paragraph 14;
(d)
before deciding to refuse to give a consent to variation notice;
(e)
before varying a permission under paragraph 17;
(f)
before cancelling a permission under paragraph 20(2)(b).
(2)
The PRA must obtain the FCA's consent before exercising its power under paragraph 17 so as to—
(a)
add an activity to those to which the Schedule 2B permission relates, or
(b)
widen the description of an activity to which the Schedule 2B permission relates.
(3)
Consent given by the FCA for the purposes of sub-paragraph (2) may be conditional on the way in which the PRA exercises its power.
PART 6Special cases
UK-based individuals carrying on insurance distribution activities
24
(1)
For the purposes of paragraph 1, an individual without a head office in the United Kingdom is to be treated as having a head office there if the individual has a Part 4A permission to carry on an insurance distribution activity in the United Kingdom.
(2)
A Gibraltar notice in respect of an individual who is a UK-based person by virtue of this paragraph satisfies paragraph 9(1)(b) if it states the main address where the individual carries on an insurance distribution activity in the United Kingdom.
(3)
A variation notice in respect of an individual who is a UK-based person by virtue of this paragraph satisfies paragraph 14(1)(b) if it states the main address where the person carries on business in the United Kingdom.
(4)
In this paragraph, “insurance distribution activity” has the meaning given in paragraph 2B(5) and (6) of Schedule 6.”

SCHEDULE 8Gibraltar: minor and consequential amendments

Section 22

Financial Services and Markets Act 2000 (c. 8)

1

The Financial Services and Markets Act 2000 is amended as follows.

2

In section 3A(3)(a) (expressions in which general definition of “regulator” does not apply), at the end insert—

““Gibraltar regulator”;”.

3

In section 33(1)(a) (withdrawal of authorisation), after “permission” insert “ or Schedule 2A permission ”.

4

In Part 5 (performance of regulated activities), after section 71I insert—

“Application of this Part to Gibraltar-based persons
71JApplication of this Part to Gibraltar-based persons
(1)
This section applies to an authorised person that—
(a)
has a Schedule 2A permission, but
(b)
does not have a Part 4A permission.
(2)
The person is only required to comply with the provisions listed in subsection (3) if the person has a branch in the United Kingdom.
(3)
Those provisions are—
(a)
section 59(1) or (2) (approval for particular arrangements), or
(b)
section 63E(1) (certification of employees).
(4)
In this section, “branch” has the same meaning as in Schedule 2A (see paragraph 3 of that Schedule).”

5

After section 137A insert—

“137AAThe FCA's general rules: Gibraltar
(1)
The FCA's general rules may not make provision prohibiting a Gibraltar-based person from carrying on, or holding itself out as carrying on, an activity which it has a Schedule 2A permission to carry on in the United Kingdom.
(2)
Subsection (1) does not apply to rules described in section 137C, 137D or 137FD.
(3)
The Treasury may by regulations impose other limitations on what provision applying to Gibraltar-based persons with a Schedule 2A permission to carry on a regulated activity may be made in the FCA's general rules, but may not impose limitations relating to rules described in section 137C, 137D or 137FD.
(4)
Before making regulations under subsection (3), the Treasury must consult the FCA.”

6

After section 137G insert—

“137GAThe PRA's general rules: Gibraltar
(1)
The PRA's general rules may not make provision prohibiting a Gibraltar-based person from carrying on, or holding itself out as carrying on, an activity which it has a Schedule 2A permission to carry on in the United Kingdom.
(2)
The Treasury may by regulations impose other limitations on what provision applying to Gibraltar-based persons with a Schedule 2A permission to carry on a regulated activity may be made in the PRA's general rules.
(3)
Before making regulations under subsection (2), the Treasury must consult the PRA.”

7

In section 213 (the compensation scheme), after subsection (9) insert—

“(10A)
But a person is not to be regarded as a relevant person in relation to a regulated activity if, at that time, the person—
(a)
was a Gibraltar-based person with a Schedule 2A permission to carry on the activity, and
(b)
fell within a prescribed category, either generally or in relation to the activity.
(10B)
Regulations prescribing a category of person for the purposes of subsection (10A) may, among other things, make provision by reference to—
(a)
whether the activity is carried on through a branch in the United Kingdom;
(b)
the level of protection provided by the compensation scheme and by any comparable scheme operating in Gibraltar.”

8

In section 214 (provisions of the compensation scheme: general), before subsection (6) insert—

“(5A)
The scheme may make different provision according to whether or not a relevant person is a member of both the compensation scheme and another comparable scheme.”

9

In section 224 (scheme manager's power to inspect documents held by Official Receiver etc), before subsection (4A) insert—

“(4ZA)
But a person is not to be regarded as a relevant person in relation to a regulated activity if, at that time, the person—
(a)
was a Gibraltar-based person with a Schedule 2A permission to carry on the activity, and
(b)
fell within a prescribed category, either generally or in relation to the activity.
(4ZB)
Regulations prescribing a category of person for the purposes of subsection (4ZA) may, among other things, make provision by reference to—
(a)
whether the activity is carried on through a branch in the United Kingdom;
(b)
the level of protection provided by the compensation scheme and by any comparable scheme operating in Gibraltar.”

10

After section 367 insert—

“367AWinding-up petitions: Gibraltar-based persons
(1)
A regulator may not present a petition to the court under section 367 for the winding up of a Gibraltar-based person who has a Schedule 2A permission unless either regulator has been asked to do so by the Gibraltar regulator.
(2)
If a regulator receives a request from the Gibraltar regulator to present a petition to the court under section 367 for the winding up of a Gibraltar-based person who has a Schedule 2A permission, it must—
(a)
notify the other regulator of the request, and
(b)
provide the other regulator with such information relating to the request as it thinks fit.
(3)
In this section, “the Gibraltar regulator” has the meaning given in Schedule 2A (see paragraph 2 of that Schedule).”

11 (1)

Section 392 (application of sections 393 and 394: warning notices and decision notices) is amended as follows.

(2)

In paragraph (a), after “412B(4) or (8)” insert “ or paragraph 38, 42 or 69 of Schedule 2A or paragraph 11, 16 or 20 of Schedule 2B ”.

(3)

In paragraph (b), after “412B(5) or (9)” insert “ or paragraph 38, 42 or 69 of Schedule 2A or paragraph 11, 16 or 20 of Schedule 2B ”.

12 (1)

Section 395 (the FCA's and PRA's procedures) is amended as follows.

(2)

In subsection (13) (meaning of “supervisory notice”)—

(a)

for “section” (in the first place it occurs) substitute “ any of the following ”,

(b)

at the beginning of each of paragraphs (za) to (g), other than paragraphs (bzb), (bzc), (bbzb) and (bba), paragraph (bbb) (inserted by Schedule 2 to this Act) and paragraph (ea) (inserted by Schedule 9 to this Act), insert “ section ”, and

(c)

at the end insert—

“(h)
a provision of Schedule 2A listed in subsection (14);
(i)
paragraph 18(3), (6) or (8)(b) of Schedule 2B.”

(3)

After subsection (13) insert—

“(14)
The provisions of Schedule 2A mentioned in subsection (13)(h) are—
(a)
paragraph 29(3), (6) or (8)(b);
(b)
paragraph 50(3), (6) or (8)(b);
(c)
paragraph 60(3) or (6).”

13

Omit section 409 (Gibraltar).

14

In section 417(1) (definitions), at the appropriate places insert—

““Gibraltar-based person” has the meaning given in paragraph 1 of Schedule 2A (read with Part 14 of that Schedule);”,

““Schedule 2A permission” has the meaning given in paragraph 12(4) of Schedule 2A;”, and

““Schedule 2B permission” has the meaning given in paragraph 7(6) of Schedule 2B;”.

15

In section 418 (carrying on regulated activities in the United Kingdom), after subsection (5B) insert—

“(5C)
The eighth case is where—
(a)
the person's head office or registered office is in the United Kingdom, and
(b)
the person is carrying on a restricted activity (as defined in paragraph 3 of Schedule 2B) in Gibraltar.”

16 (1)

Section 429 (parliamentary control of statutory instruments) is amended as follows.

(2)

In subsection (2) (affirmative procedure)—

(a)

after “90B” insert “ , 137AA(3), 137GA(2) ”, and

(b)

after “333T” insert “ or paragraph 5, 6, 58(3)(a), 59(3)(a) or 60(8) of Schedule 2A ”.

(3)

At the end insert—

“(9)
Any provision that may be made in a statutory instrument under this Act subject to annulment in pursuance of a resolution of either House of Parliament may be made in a statutory instrument which includes regulations under Schedule 2A a draft of which has been laid before Parliament and approved by a resolution of each House.”

17

In paragraph 24 of Schedule 1ZA (services for which the FCA may not charge fees), after paragraph (b) insert“, or

(c)
a fee to be charged in respect of the discharge of the FCA's functions under paragraph 16 of Schedule 2A or paragraph 10 or 11 of Schedule 2B.”

18

In paragraph 32 of Schedule 1ZB (services for which the PRA may not charge fees), after paragraph (b) insert“, or

(c)
a fee to be charged in respect of the discharge of any of the PRA's functions under paragraph 16 of Schedule 2A or paragraph 10 or 11 of Schedule 2B.”

Financial Services and Markets Act 2000 (Gibraltar) Order 2001 (S.I. 2001/3084)

19

The Financial Services and Markets Act 2000 (Gibraltar) Order 2001 is revoked.

SCHEDULE 9Collective investment schemes authorised in approved countries

Section 24

PART 1Provisions to be inserted in Chapter 5 of Part 17 of the Financial Services and Markets Act 2000

1

In Chapter 5 of Part 17 of the Financial Services and Markets Act 2000 (recognised overseas schemes), before section 272 (and the italic heading before that section) insert—

“Schemes authorised in approved countries
271ASchemes authorised in approved countries
(1)
A collective investment scheme which is authorised under the law of a country or territory outside the United Kingdom is a recognised scheme if—
(a)
regulations made by the Treasury approving the country or territory for the purposes of this section are in force,
(b)
the scheme is of a description specified in the regulations in relation to which the country or territory is approved,
(c)
the operator of the scheme has applied to the FCA for recognition of the scheme,
(d)
the FCA has made (and has not revoked) an order granting the application, and
(e)
no direction under section 271L (suspension of recognition) has effect in relation to the scheme.
(2)
In making regulations under this section, the Treasury may have regard to any matter that they consider relevant (and see the restrictions in sections 271B and 271C).
271BApproval of country: equivalent protection afforded to participants
(1)
The Treasury may not make regulations under section 271A approving a country or territory and specifying a description of collective investment scheme unless satisfied that the equivalent protection test is met.
(2)
The equivalent protection test is met if the protection afforded to participants or potential participants in the schemes by the law and practice of the country or territory is at least equivalent to that afforded to participants or potential participants in comparable authorised schemes by the law and practice of the United Kingdom under which such schemes are authorised and supervised.
(3)
In this section—
“comparable authorised schemes” means whichever of the following the Treasury consider to be the most appropriate—
(a)
authorised unit trust schemes;
(b)
authorised contractual schemes which are co-ownership schemes;
(c)
authorised contractual schemes which are partnership schemes;
(d)
authorised open-ended investment companies;
(e)
any two or more of the kinds of collective investment scheme mentioned in paragraphs (a) to (d);
“participants” means participants in the United Kingdom.
271CApproval of country: regulatory co-operation
(1)
The Treasury may not make regulations under section 271A approving a country or territory and specifying a description of collective investment scheme unless satisfied that adequate arrangements exist, or will exist, for co-operation between the FCA and the overseas regulator.
(2)
In this section, “the overseas regulator” means the authority responsible for the authorisation and supervision of schemes of that description in the country or territory.
271DReport by the FCA in relation to approval
(1)
When considering whether to make, vary or revoke regulations under section 271A approving a country or territory and specifying a description of collective investment scheme, the Treasury may ask the FCA to prepare a report on—
(a)
the law and practice of the country or territory under which such schemes are authorised and supervised, or particular aspects of such law and practice, and
(b)
any existing or proposed arrangements for co-operation between the FCA and the overseas regulator.
(2)
A request for a report under subsection (1) must be made in writing.
(3)
If the Treasury ask for a report under subsection (1), the FCA must provide the Treasury with the report.
(4)
In this section, “the overseas regulator” has the same meaning as in section 271C.
271EPower to impose requirements on schemes
(1)
The Treasury may by regulations—
(a)
provide that a section 271A scheme of a description specified in the regulations must comply with requirements specified in the regulations, and
(b)
impose requirements on the operator of such a scheme.
(2)
In making regulations under this section in relation to a description of section 271A scheme, the Treasury must have regard to any requirements imposed in relation to comparable authorised schemes by or under this Act.
(3)
Regulations under this section may describe requirements by reference to—
(a)
rules made or to be made by the FCA, or
(b)
other enactments.
(4)
The power under subsection (3) includes power to make provision by reference to rules or other enactments as amended from time to time.
(5)
The FCA may make, amend or revoke a rule if it considers it necessary or appropriate to do so for the purposes of a requirement imposed (or varied or withdrawn) by regulations under this section which is described by reference to a rule made or to be made by the FCA.
(6)
If, for the purposes of a requirement imposed (or varied or withdrawn) by regulations under this section which is described by reference to a rule made or to be made by the FCA, the Treasury consider that it is necessary or appropriate for the FCA to make, amend or revoke a rule, they may direct the FCA to do so.
(7)
If the Treasury give a direction under subsection (6), the FCA must comply with the direction within such time as the Treasury may specify in the direction.
(8)
The references in paragraphs (5) and (6) to the amendment or revocation of rules are to the amendment or revocation of rules made by the FCA.
(9)
Section 141A (power to make consequential amendments of references to rules) applies in relation to the FCA's power to make, amend or revoke rules under this section as it applies in relation to its power to make, amend or revoke rules under Part 9A.
(10)
In this section—
“comparable authorised schemes” has the same meaning as in section 271B;
“enactment” includes—
(a)
retained direct EU legislation,
(b)
an enactment comprised in subordinate legislation,
(c)
an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,
(d)
an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and
(e)
an enactment comprised in, or in an instrument made under, Northern Ireland legislation;
“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act).
271FApplication for recognition to the FCA
(1)
An application for recognition of a collective investment scheme under section 271A—
(a)
must be made in such manner as the FCA may direct,
(b)
must contain the address of a place in the United Kingdom for service of notices, or other documents, required or authorised to be served on the operator under this Act, and
(c)
must contain or be accompanied by such information as the FCA may reasonably require for the purpose of determining the application.
(2)
Where requirements imposed by regulations under section 271E would apply to the scheme or its operator if the application were granted, the application must contain an explanation of how each requirement would be satisfied.
(3)
At any time after the application is received and before it is determined, the FCA may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application.
(4)
The FCA may require the applicant to present information provided under this section in such form, or to verify the information in such a way, as the FCA may direct.
(5)
Different directions may be given, and different requirements imposed, in relation to different applications.
271GDetermination of applications
(1)
The FCA—
(a)
may only make an order under section 271A granting an application under that section if it is satisfied that the conditions in subsection (2) are met, and
(b)
if it is so satisfied, must make such an order unless it is permitted to refuse the application under subsection (3) or required to do so under subsection (4).
(2)
Those conditions are—
(a)
that the scheme is authorised in a country or territory which is approved by the Treasury in regulations under section 271A,
(b)
that the scheme is of a description of scheme specified in the regulations,
(c)
that adequate arrangements exist for co-operation between the FCA and the overseas regulator, and
(d)
that, where requirements imposed by regulations under section 271E would apply to the scheme or its operator if the application were granted, each such requirement would be satisfied.
(3)
The FCA may refuse an application under section 271A if it appears to the FCA that the operator of the scheme—
(a)
has contravened a requirement imposed on them by or under this Act, or would contravene such a requirement if the application were granted, or
(b)
has, in purported compliance with such a requirement, knowingly or recklessly given the FCA information which is false or misleading in a material particular.
(4)
The FCA must refuse an application under section 271A if it considers it desirable to do so in order to protect the interests of participants or potential participants in the scheme in the United Kingdom.
(5)
Where the FCA receives an application under section 271A which is complete, it must give the applicant a notice under section 271H(1) or (2) before the end of the period of two months beginning with the day on which the FCA receives the application.
(6)
An application under section 271A is complete if the FCA considers that the application satisfies section 271F(1) and (2).
(7)
Where the FCA receives an application under section 271A which is not complete, it must—
(a)
notify the operator of the scheme that it does not consider that the application satisfies section 271F(1) or (2) (as applicable), and
(b)
identify the information needed to complete the application.
(8)
In this section, “the overseas regulator” has the same meaning as in section 271C.
271HProcedure when determining an application
(1)
If the FCA decides to make an order under section 271A granting an application under that section, it must give written notice of its decision to the applicant.
(2)
If the FCA proposes to refuse an application under section 271A, it must give the applicant a warning notice.
(3)
If the FCA decides to refuse the application, it must give the applicant a decision notice.
(4)
If the FCA gives the applicant a decision notice under subsection (3), the applicant may refer the matter to the Tribunal, except where the FCA refuses the application on the ground that it is not satisfied that a condition in section 271G(2)(a) or (c) is met.
271IObligations on operator of a section 271A scheme
(1)
The operator of a section 271A scheme must notify the FCA if the operator becomes aware that it has contravened, or expects to contravene, a requirement imposed on it by or under this Act.
(2)
The operator of a section 271A scheme must notify the FCA of any change to—
(a)
the name or address of the operator of the scheme,
(b)
the name or address of any trustee or depositary of the scheme,
(c)
the name or address of any representative of the operator in the United Kingdom, and
(d)
the address of the place in the United Kingdom for service of notices, or other documents, required or authorised to be served on the operator under this Act.
(3)
A notification under subsection (1) or (2) must be made in writing as soon as reasonably practicable.
271JProvision of information to the FCA
(1)
The operator of a section 271A scheme must provide to the FCA such information as the FCA may direct, at such times as the FCA may direct, for the purpose of determining whether—
(a)
the conditions set out in section 271G(2)(a) to (c) are met, and
(b)
any requirements relating to the scheme or its operator imposed by or under this Act are satisfied.
(2)
The FCA may require the operator to present information provided under this section in such form, or to verify the information in such a way, as the FCA may direct.
(3)
Different directions may be given in relation to different schemes or different descriptions of scheme.
271KRules as to scheme particulars
(1)
The FCA may make rules in relation to section 271A schemes for purposes corresponding to those for which rules may be made under section 248 in relation to authorised unit trust schemes.
(2)
For the purposes of subsection (1), a reference in section 248 to the manager of an authorised unit trust scheme is to be read as a reference to the operator of a section 271A scheme.
(3)
Rules made under this section do not affect any liability which a person may incur apart from the rules.
271LSuspension of recognition
(1)
The FCA may direct that a section 271A scheme is not to be a recognised scheme—
(a)
for a specified period,
(b)
until the occurrence of a specified event, or
(c)
until specified conditions are complied with.
(2)
The FCA may give a direction under subsection (1) only if—
(a)
the FCA is no longer satisfied that the conditions set out in section 271G(2)(a) to (c) are met,
(b)
it appears to the FCA that a requirement relating to the scheme or its operator imposed by or under this Act has not been satisfied, or is likely not to be satisfied,
(c)
it appears to the FCA that the operator of the scheme has, in purported compliance with any such requirement, knowingly or recklessly given the FCA information which is false or misleading in a material particular, or
(d)
although none of paragraphs (a) to (c) applies, the FCA considers it desirable to do so in order to protect the interests of participants or potential participants in the United Kingdom.
271MProcedure when suspending recognition
(1)
A direction under section 271L takes effect—
(a)
immediately, if the notice given under subsection (3) states that to be the case,
(b)
on a day specified in the notice, or
(c)
if no day is specified in the notice, when the matter to which it relates is no longer open to review.
(2)
A direction under section 271L may be expressed to take effect immediately or on a specified day only if the FCA, having regard to its reason for giving the direction, reasonably considers that it is necessary for the direction to take effect immediately or on that day (as appropriate).
(3)
If the FCA proposes to give a direction under section 271L, or gives such a direction with immediate effect, it must give written notice to—
(a)
the operator of the scheme, and
(b)
the trustee or depositary of the scheme (if any).
(4)
The notice must—
(a)
set out details of the direction,
(b)
set out when the direction takes effect,
(c)
state the FCA's reasons for giving the direction and for its determination as to when the direction takes effect,
(d)
state that the recipient of the notice 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), and
(e)
set out the recipient's right to refer the matter to the Tribunal.
(5)
The FCA may extend the period allowed under the notice for making representations.
(6)
The FCA must give written notice to the operator and (if any) the trustee or depositary of the scheme concerned if, having considered any representations made, the FCA decides—
(a)
to give the direction in the way proposed, or
(b)
if it has been given, not to revoke the direction.
(7)
The FCA must give written notice to the operator and (if any) the trustee or depositary of the scheme concerned if, having considered any representations made, the FCA decides—
(a)
not to give the direction in the way proposed,
(b)
to give the direction in a way other than that proposed, or
(c)
where the direction has been given, to revoke it.
(8)
A notice under subsection (6) must set out the recipient's right to refer the matter to the Tribunal.
(9)
A notice under subsection (7)(b) must comply with subsection (4).
(10)
Where a notice sets out the right of the recipient to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.
(11)
This section applies to the variation of a direction as it applies to the giving of a direction.
(12)
For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
271NRevocation of recognition on the FCA's initiative
(1)
The FCA may revoke an order made under section 271A in relation to a collective investment scheme if—
(a)
the FCA is no longer satisfied that the conditions set out in section 271G(2)(a) to (c) are met,
(b)
it appears to the FCA that a requirement relating to the scheme or its operator imposed by or under this Act has not been satisfied,
(c)
it appears to the FCA that the operator of the scheme has, in purported compliance with any such requirement, knowingly or recklessly given the FCA information which is false or misleading in a material particular, or
(d)
although none of paragraphs (a) to (c) applies, the FCA considers it desirable to revoke the order to protect the interests of participants or potential participants in the United Kingdom.
(2)
If the FCA proposes to revoke an order made under section 271A, it must give a warning notice to—
(a)
the operator of the scheme, and
(b)
the trustee or depositary of the scheme (if any).
(3)
If the FCA decides to revoke the order—
(a)
it must without delay give a decision notice to the operator and (if any) the trustee or depositary of the scheme, and
(b)
the operator, trustee or depository may refer the matter to the Tribunal.
271ORequests for revocation of recognition
(1)
The FCA may revoke an order made under section 271A in relation to a collective investment scheme at the request of the scheme's operator.
(2)
If the FCA decides to do so, it must give written notice to the operator and (if any) the trustee or depositary of the scheme.
(3)
The FCA may refuse a request under this section if it considers that—
(a)
the public interest requires that any matter concerning the scheme should be investigated before a decision is taken as to whether the order should be revoked, or
(b)
revocation would not be in the interests of participants in the scheme.
(4)
If the FCA proposes to refuse a request under this section, it must give a warning notice to the operator and (if any) the trustee or depositary of the scheme.
(5)
If the FCA decides to refuse the request—
(a)
it must without delay give a decision notice to the operator and (if any) the trustee or depositary of the scheme, and
(b)
the operator, trustee or depositary may refer the matter to the Tribunal.
271PObligations on operator where recognition is revoked or suspended
(1)
This section applies where—
(a)
the FCA gives a decision notice under section 271N(3), or a written notice under section 271O(2), in relation to a section 271A scheme, or
(b)
a direction given by the FCA under section 271L(1) in relation to a section 271A scheme takes effect.
(2)
The operator of the scheme must notify such persons as the FCA may direct that the FCA has revoked an order under section 271A for recognition of the scheme or given a direction under section 271L in relation to the scheme (as applicable).
(3)
A notification under subsection (2) that relates to a direction under section 271L must set out the terms of the direction.
(4)
A notification under subsection (2) must—
(a)
contain such information as the FCA may direct, and
(b)
be made in such form and manner as the FCA may direct.
(5)
Different directions may be given under subsection (2) or (4) in relation to—
(a)
different schemes or different descriptions of scheme;
(b)
different persons or descriptions of persons to whom a notification under subsection (2) must be given.
271QEffect of variation or revocation of Treasury regulations
(1)
This section applies, in relation to a section 271A scheme, where the Treasury vary or revoke regulations under section 271A and, as a result, the scheme ceases to be a recognised scheme because—
(a)
the country or territory in which the scheme is authorised is no longer approved for the purposes of that section, or
(b)
the scheme is no longer of a description of scheme specified in regulations under that section.
(2)
Where this section applies, the order given by the FCA under section 271A in relation to the scheme is revoked.
(3)
The Treasury may by regulations make provision, in relation to a scheme which has ceased to be recognised under section 271A by virtue of this section—
(a)
requiring an application under section 272 by such a scheme to be made during a period specified in the regulations or in a direction given by the FCA, and
(b)
modifying or disapplying section 275(1) and (2) (time limits for determining applications under section 272) for the purposes of an application under section 272 relating to such a scheme.
271RPublic censure
(1)
This section applies where the FCA considers that—
(a)
a requirement imposed by regulations under section 271E has been contravened,
(b)
rules made under section 271K have been contravened,
(c)
the operator of a section 271A scheme has contravened section 271I, 271J or 271P, or
(d)
the operator of a section 271A scheme has contravened a rule made, or a requirement imposed, under section 283.
(2)
The FCA may publish a statement to that effect.
(3)
Where the FCA proposes to publish a statement under subsection (2) relating to a scheme or the operator of a scheme, it must give the operator a warning notice setting out the terms of the statement.
(4)
If the FCA decides to publish the statement—
(a)
it must give the operator, without delay, a decision notice setting out the terms of the statement, and
(b)
the operator may refer the matter to the Tribunal.
(5)
After a statement under subsection (2) is published, the FCA must send a copy of it to the operator and to any person to whom a copy of the decision notice was given under section 393(4).
271SRecognition of parts of schemes under section 271A
(1)
Section 271A(1) applies in relation to a part of a collective investment scheme as it applies in relation to such a scheme.
(2)
Accordingly, the following include a part of a scheme recognised under section 271A—
(a)
the reference to a scheme recognised under section 271A in the definition of “section 271A scheme” in section 237(3), and
(b)
other references to such a scheme (however expressed) in or in provision made under this Part of this Act (unless the contrary intention appears).
(3)
Provisions of or made under this Part of this Act have effect in relation to parts of schemes recognised, or seeking recognition, under section 271A with appropriate modifications.
(4)
The Treasury may by regulations—
(a)
make provision about what are, or are not, appropriate modifications for the purposes of subsection (3);
(b)
make provision so that a relevant enactment has effect in relation to parts of schemes recognised, or seeking recognition, under section 271A with such modifications as the Treasury consider appropriate;
(c)
make provision so that a relevant enactment does not have effect in relation to such parts of schemes.
(5)
Regulations under subsection (4)(b) or (c) may amend, repeal or revoke an enactment.
(6)
In this section—
“enactment” has the same meaning as in section 271E;
“relevant enactment” means an enactment passed or made before the day on which subsection (1) comes into force that makes provision in relation to collective investment schemes recognised, or seeking recognition, under section 271A.”

PART 2Minor and consequential amendments

Financial Services and Markets Act 2000 (c. 8)

2

The Financial Services and Markets Act 2000 is amended as follows.

3

In section 138I (consultation by the FCA), after subsection (9) insert—

“(9A)
This section does not apply to rules made by the FCA under section 271E.”

4 (1)

Section 165 (regulators' powers to require information) is amended as follows.

(2)

In subsection (7)(b), after “section” insert “ 271A or ”.

(3)

At the end insert—

“(12)
In subsection (7)(b), the reference to a scheme that is recognised includes a scheme a part of which is recognised.”

5

In section 237(2) (Part 17 definitions), in the definition of “the operator”—

(a)

in paragraph (ab) omit “and”, and

(b)

after paragraph (b) insert“, and

(ba)
in relation to a recognised scheme, means the legal entity with overall responsibility for the management and performance of the functions of the scheme.”

6

In section 392 (application of third party rights to notices)—

(a)

in paragraph (a), before “280(1)” insert “ 271N(2), 271R(3), ”, and

(b)

in paragraph (b), before “280(2)” insert “ 271N(3), 271R(4), ”.

7

In section 395(13) (meaning of supervisory notice), before paragraph (f) insert—

“(ea)
section 271M(3), (6) or (7)(b);”.

8

In section 429(2) (regulations subject to affirmative procedure), after “262,” insert “ 271S, ”.

The Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773)

9

Part 6 of the Alternative Investment Fund Managers Regulations 2013 (marketing of alternative investment funds) is amended as follows.

10

In regulation 57 (marketing of third country AIFs by full-scope UK AIFMs), after paragraph (1) insert—

“(1A)
An AIF does not fall within paragraph (1) if it is recognised under section 271A of the Act.”

11

In regulation 58(1) (marketing of AIFs managed by small third country AIFMs), at the end insert “ , except where the AIF is recognised under section 271A of the Act ”.

12

In regulation 59 (marketing of AIFs managed by other third country AIFMs)—

(a)

in paragraph (1), at the end insert “ , except where the AIF is recognised under section 271A of the Act ”, and

(b)

in paragraph (4A), for “collective investment scheme” substitute “ AIF ”.

The Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/325)

13

Part 6 of the Collective Investment Schemes (Amendment etc.) (EU Exit) Regulations 2019 (temporary recognition of collective investment schemes) is amended as follows.

14

In regulation 62(3) (end of temporary recognition)—

(a)

in sub-paragraph (a)(i)—

(i)

before “275(3)” insert “ 271H(1) or ”, and

(ii)

for “section 272 of that Act” substitute “ section 271A or 272 of that Act (as applicable) ”,

(b)

in sub-paragraph (a)(ii)—

(i)

before “276(2)(a)” insert “ 271H(3) or ”, and

(ii)

for “section 272 of that Act” substitute “ section 271A or 272 of that Act (as applicable) ”,

(c)

in sub-paragraph (b)(ii), after “section” insert “ 271A or ”,

(d)

in sub-paragraph (c)(i), after “section” insert “ 271A or ”,

(e)

in sub-paragraph (c)(ii), for “that section” substitute “ either of those sections ”, and

(f)

in sub-paragraph (d), for “3” substitute “ 5 ”.

15

In regulation 67 (power to extend the period for temporary recognition), omit paragraph (2).

16

After regulation 67 insert—

“Applications under section 271A of the 2000 Act
67A
(1)
In relation to—
(a)
an application under section 271A of the 2000 Act relating to a stand-alone scheme that is a recognised scheme by virtue of regulation 62, or
(b)
an application under that section relating to the umbrella scheme of one or more sub-funds that are recognised schemes by virtue of that regulation, whether or not relating to those sub-funds,
sections 271F and 271G of the 2000 Act are subject to paragraphs (2) and (3).
(2)
The FCA may direct that the application must be made during a period specified in the direction.
(3)
Section 271G(5) of the 2000 Act does not apply in relation to the application, but the application must be determined by the FCA before the end of the period for the time being specified in regulation 62(3)(d).”

SCHEDULE 10Amendments of the Markets in Financial Instruments Regulation

Section 27

Introduction

1

The Markets in Financial Instruments Regulation is amended as follows.

Scope

2

In Article 1 (subject matter and scope), after paragraph 4 insert—

“4A
Chapter 1 of Title 7 of this Regulation also applies to third-country firms providing investment services or performing investment activities in the United Kingdom.”

Definitions

3

In Article 2(1) (definitions), after point (61) insert—

“(61A)
“Directive 2013/36/EU” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms;”.

Provision of services by third-country firms following equivalence determination

4

In the heading of Title 8, for “DECISION” substitute “ DETERMINATION ”.

5 (1)

Article 46 (general provision about provision of services etc by third-country firms following an equivalence decision) is amended as follows.

(2)

In paragraph 1, for “Article 47” substitute “ Article 48 ”.

(3)

In paragraph 2—

(a)

for point (a) substitute—

“(a)
the Treasury has made a determination under Article 47(1) in respect of the third country;
(aa)
the firm, and the services or activities, fall within the scope of the determination;”, and

(b)

after point (c) insert—

“(d)
the firm has established the necessary arrangements and procedures to provide the information required by rules made under paragraph 6B of this Article;
(e)
the firm has established the necessary arrangements and procedures to comply with requirements imposed under Article 48A.”

(4)

Omit paragraph 2A.

(5)

In paragraph 4—

(a)

in the first subparagraph, for the words from “adoption” to the end substitute “ making of a determination by the Treasury under Article 47(1) that the legal and supervisory arrangements of the third country in which the third-country firm is authorised satisfy the requirements described in Article 47(1). ”,

(b)

after the first subparagraph insert—

“An application for registration must—
(a)
be made in such form and manner as the FCA may direct, and
(b)
contain, or be accompanied by, such information as the FCA may direct.”, and

(c)

in the following subparagraph, after “all” insert “ further ”.

(6)

In paragraph 5, in the second subparagraph, for “in writing and in a prominent way” substitute “ in writing, in a prominent way and in such form as the FCA may direct ”.

(7)

After paragraph 5 insert—

“5A
For the purposes of paragraph 5, where a third-country firm or a person acting on behalf of a third-country firm solicits a person, the provision of an investment service or activity by the third-country firm to the person is not initiated at the person's own exclusive initiative.”

(8)

After paragraph 6 insert—

“6A
Third-country firms providing services or performing activities in accordance with this Article must—
(a)
keep the data relating to all orders and transactions in the United Kingdom in financial instruments which they have carried out, whether on own account or on behalf of a client, for a period of five years, and
(b)
make that data available to the FCA on request.
6B
The FCA may make rules requiring third-country firms providing services or performing activities in accordance with this Article to provide information specified in the rules to the FCA at intervals specified in the rules.”

(9)

Omit paragraph 7.

Equivalence determination

6 (1)

Article 47 (equivalence determination) is amended as follows.

(2)

For paragraph 1 substitute—

“1
The Treasury may by regulations determine that the legal and supervisory arrangements of a third country ensure all of the following—
(a)
that firms authorised in that third country to provide investment services or perform investment activities comply with legally binding prudential, organisational and business conduct requirements which have equivalent effect to the relevant UK requirements,
(b)
that such firms are subject to effective supervision and enforcement ensuring compliance with the applicable legally binding prudential, organisational and business conduct requirements, and
(c)
that the legal framework of that third country provides for an effective equivalent system for the recognition of investment firms authorised under third country legal regimes.
1A
For the purposes of paragraph 1(a), the relevant UK requirements are the following, as they apply on the day on which the Treasury makes the regulations—
(a)
the requirements set out in this Regulation;
(b)
the requirements set out in Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms;
(c)
the requirements set out in CRR rules (as defined in section 144A of FSMA);
(d)
the requirements set out in Part 9C rules (as defined in section 143F of FSMA);
(e)
the requirements set out in Directive 2013/36/EU UK law and Directive 2014/65/EU UK law.
1B
The prudential, organisational and business conduct framework of a third country may be considered to have equivalent effect where that framework fulfils all of the following conditions—
(a)
firms providing investment services or performing investment activities in that third country are subject to authorisation and to effective supervision and enforcement on an on-going basis;
(b)
such firms are subject to sufficient capital requirements and, in particular, where they provide services or carry out the activities referred to in paragraph 3 or 6 of Part 3 of Schedule 2 to the Regulated Activities Order they are subject to comparable capital requirements to those that would apply if they were established in the United Kingdom;
(c)
such firms are subject to appropriate requirements applicable to shareholders and members of their management body;
(d)
such firms are subject to adequate business conduct and organisational requirements;
(e)
market transparency and integrity is ensured by preventing market abuse in the form of insider dealing and market manipulation.
1C
When making regulations under paragraph 1, the Treasury must take into account whether the third country is a high-risk third country within the meaning of regulation 33 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692).”

(3)

In paragraph 2—

(a)

omit point (c), and

(b)

at the end insert—

“(d)
the procedures concerning the coordination of investigations and on-site inspections that the FCA considers necessary for the purposes of carrying out its functions under this Regulation, which must include a requirement for the FCA to give prior notice to the competent authority of the third country;
(e)
the procedures concerning the coordination of other supervisory activities;
(f)
the procedures concerning a request for data by the FCA under Article 46(6A)(b);
(g)
the mechanism for the FCA to obtain from a third-country firm providing services or performing activities in accordance with Article 46 further information in respect of the firm's operations by making a request to the competent authority of the third country concerned.”

(4)

At the end insert—

“5
The FCA must—
(a)
monitor the regulatory and supervisory developments, the enforcement practices and other relevant market developments in third countries for which determinations made by the Treasury in accordance with paragraph 1 are in force in order to verify that the conditions on the basis of which those determinations were made are still fulfilled, and
(b)
provide a report of its findings to the Treasury on request.
6
In this Article, “Directive 2013/36/EU UK law” and “Directive 2014/65/EU UK law” mean the law of the United Kingdom which was relied on by the United Kingdom before IP completion day to implement Directive 2013/36/EU or Directive 2014/65/EU (as appropriate), as amended from time to time.”

Requirements

7

After Article 48 insert—

“Article 48ARequirements
1
The Treasury may by regulations impose requirements on third-country firms providing investment services, or performing investment activities, in accordance with Article 46 or on a description of such firms specified in the regulations.
2
In making regulations under this Article, the Treasury must have regard to the requirements imposed on UK firms by or under this Regulation.
3
Regulations under this Article may describe requirements by reference to—
(a)
rules made or to be made by the FCA, or
(b)
other enactments.
4
The power under paragraph 3 includes power to make provision by reference to rules or other enactments as amended from time to time.
5
The FCA may make, amend or revoke a rule if it considers it necessary or appropriate to do so for the purposes of a requirement imposed (or varied or withdrawn) by regulations under this Article which is described by reference to a rule made or to be made by the FCA.
6
If, for the purposes of a requirement imposed (or varied or withdrawn) by regulations under this Article which is described by reference to a rule made or to be made by the FCA, the Treasury consider that it is necessary or appropriate for the FCA to make, amend or revoke a rule, they may direct the FCA to do so.
7
If the Treasury give a direction under paragraph 6, the FCA must comply with the direction within such time as the Treasury may specify in the direction.
8
The references in paragraphs 5 and 6 to the amendment or revocation of rules are to the amendment or revocation of rules made by the FCA.
9
In this Article—
“enactment” includes—
(a)
retained direct EU legislation,
(b)
an enactment comprised in subordinate legislation,
(c)
an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,
(d)
an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and
(e)
an enactment comprised in, or in an instrument made under, Northern Ireland legislation;
“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act);
“UK firm” means—
(a)
a credit institution providing investment services or performing investment activities, or
(b)
an investment firm,
whose registered office or (if it has no registered office) head office is located in the United Kingdom.”

Temporary prohibitions and restrictions and withdrawal of registration

8 (1)

Article 49 (withdrawal of registration) is amended as follows.

(2)

For the heading substitute— “ Temporary prohibitions and restrictions and withdrawal of registration ”.

(3)

Before paragraph 1 insert—

“A1
The FCA may temporarily prohibit a third-country firm from providing investment services, or performing investment activities, in the United Kingdom, or place temporary restrictions on a third-country firm's provision of such services or performance of such activities in the United Kingdom, where the third-country firm—
(a)
has failed to comply with a prohibition or restriction imposed on it by the FCA under Article 42,
(b)
has failed to comply with a request for data made by the FCA under Article 46(6A)(b) in accordance with the cooperation arrangements established under Article 47(2),
(c)
has failed to provide information in accordance with rules made under Article 46(6B),
(d)
has failed to provide information requested by the FCA in accordance with the cooperation arrangements established under Article 47(2),
(e)
has failed to cooperate with an investigation or on-site inspection carried out in accordance with the cooperation arrangements established under Article 47(2), or
(f)
has failed to comply with a requirement imposed by regulations under Article 48A.
A2
The FCA may impose more than one temporary prohibition or restriction under paragraph A1 in respect of the same failure.”

(4)

In paragraph 1—

(a)

in the opening words, for “shall” substitute “ may ”,

(b)

for points (a) and (b) substitute—

“(a)
the FCA has well-founded reasons based on documented evidence to believe that—
(i)
in the provision of investment services and the performance of investment activities in the United Kingdom, the third-country firm is acting in a manner which is clearly prejudicial to the interests of investors or the orderly functioning of markets,
(ii)
in the provision of such services and activities in the United Kingdom, the third-country firm has seriously infringed a provision applicable to it in the third country and on the basis of which the Treasury made regulations under Article 47(1),
(iii)
in the provision of such services and activities in the United Kingdom, the third-country firm has seriously infringed a requirement imposed under Article 48A, or
(iv)
the third-country firm is not maintaining the necessary arrangements and procedures to provide the information required by rules made under Article 46(6B) or to comply with requirements under Article 48A, and”, and

(c)

omit point (d) (and the “and” before it).

(5)

After paragraph 1 insert—

“1A
In deciding the appropriate action to take under this Article, the FCA must, among other things, take into account the nature and seriousness of the risk posed to the interests of investors and the orderly functioning of markets in the United Kingdom, having regard to—
(a)
the duration and frequency of the risk arising,
(b)
whether the risk has revealed serious or systemic weaknesses in the third-country firm's procedures,
(c)
whether financial crime has been occasioned or facilitated by, or is otherwise attributable to, the risk, and
(d)
whether the risk has arisen intentionally or negligently.
1B
The FCA must inform the competent authority of the third country in due course of its intention to take action in accordance with paragraph A1 or 1.”

(6)

At the end insert—

“4
In this Article, “documented evidence” includes, but is not limited to, information provided in accordance with rules made under Article 46(6B).”

Temporary prohibitions and restrictions and withdrawal of registration: procedure

9

After Article 49 insert—

“Article 49ATemporary prohibitions and restrictions: procedure
1
A temporary prohibition or restriction under Article 49(A1) takes effect—
(a)
immediately, if the notice given under paragraph 3 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 it relates is no longer open to review.
2
A temporary prohibition or restriction under Article 49(A1) may be expressed to take effect immediately, or on a specified date, only if the FCA, having regard to the ground on which it is taking that action, reasonably considers that it is necessary for it to take effect immediately or (as appropriate) on that date.
3
The FCA must give written notice to a third-country firm if—
(a)
it proposes to take action in relation to the firm under Article 49(A1), or
(b)
it takes action in relation to the firm under Article 49(A1) with immediate effect.
4
The notice must—
(a)
give details of the temporary prohibition or restriction,
(b)
inform the firm when the prohibition or restriction takes effect,
(c)
state the FCA's reasons for taking the action and for its determination of when the prohibition or restriction takes effect,
(d)
inform the firm that it may make representations to the FCA within such period as may be specified in the notice (whether or not the firm has referred the matter to the Upper Tribunal), and
(e)
inform the firm of its right to refer the matter to the Upper Tribunal.
5
The FCA may extend the period allowed under the notice for making representations.
6
The FCA must give the third-country firm written notice if, having considered any representations made by the firm, the FCA decides—
(a)
to impose the proposed prohibition or restriction, or
(b)
if the prohibition or restriction has been imposed, not to rescind it.
7
The FCA must give the third-country firm written notice if, having considered any representations made by the firm, the FCA decides—
(a)
not to impose the proposed prohibition or restriction,
(b)
to impose a different prohibition or restriction, or
(c)
to rescind a prohibition or restriction that has been imposed.
8
A notice under paragraph 6 must inform the third-country firm of its right to refer the matter to the Upper Tribunal.
9
A notice under paragraph 7(b) must comply with paragraph 4.
10
If a notice informs a third-country firm of its right to refer a matter to the Upper Tribunal, it must give an indication of the procedure on such a reference.
11
A third-country firm that is aggrieved by action taken by the FCA under Article 49(A1) may refer the matter to the Upper Tribunal.
12
Part 9 of FSMA (hearings and appeals) applies in relation to references to the Upper Tribunal made under this Article as it applies in relation to references made to that Tribunal under that Act.
13
For the purposes of paragraph 1(c), section 391(8) of FSMA (matters open to review) applies as if the notice under paragraph 3 were a supervisory notice (as defined in section 395 of that Act).
Article 49BWithdrawal of registration: procedure
1
If the FCA proposes to withdraw the registration of a third-country firm in the register established in accordance with Article 48, it must give the firm a warning notice.
2
If the FCA decides to withdraw the registration of a third-country firm in that register, it must give the firm a decision notice.
3
If the FCA gives a third-country firm a decision notice under paragraph 2, the firm may refer the matter to the Upper Tribunal.
4
Part 9 of FSMA (hearings and appeals) applies in relation to references to the Upper Tribunal made under this Article as it applies in relation to references made to that Tribunal under that Act.
5
Section 387 of FSMA (warning notices) applies in relation to a warning notice given under this Article as it applies to a warning notice given by the FCA under that Act.
6
Section 388 of FSMA (decision notices) applies in relation to a decision notice given under this Article as it applies to a decision notice given by the FCA under that Act, but as if—
(a)
in subsection (1)(e)(i), for “this Act” there were substituted “ Article 49B of the markets in financial instruments regulation ”, and
(b)
subsection (2) were omitted.
7
Section 389 of FSMA (notices of discontinuance) applies in relation to a warning notice or decision notice given under this Article as it applies in relation to a warning notice or decision notice given by the FCA under that Act, but as if subsection (2) were omitted.
8
Section 390 of FSMA (final notices) applies in relation to a decision notice given under this Article as it applies in relation to a decision notice given by the FCA under that Act.
9
Sections 393 and 394 of FSMA (third party rights and access to FCA material) apply in relation to a warning notice or decision notice given under this Article as they apply in relation to a warning notice or decision notice given by the FCA under a provision listed in section 392 of that Act.
Article 49CNotices under Articles 49A and 49B
1
The Treasury may by regulations make provision about the procedure to be followed, or rules to be applied, in connection with the giving of notices by the FCA under Article 49A or 49B.
2
The regulations may, among other things, make provision—
(a)
requiring, or allowing, a notice to be sent electronically;
(b)
requiring, or allowing, a notice to be given in another manner;
(c)
as to the address to which a notice must or may be sent;
(d)
requiring a person to provide an address to which a notice must or may be sent;
(e)
for treating a notice as having been given, or as having been received, on a date or at a time determined in accordance with the regulations;
(f)
as to what must, or may, be done if the person to whom a notice is required to be given is not an individual;
(g)
as to what must, or may, be done if the intended recipient of a notice is outside the United Kingdom.
3
Section 7 of the Interpretation Act 1978 (service of notice by post) has effect in relation to notices under Article 49A or 49B subject to any provision made by regulations under this Article.”

FCA directions and rules

10

In the heading of Title 9, after “DIRECTIONS” insert “ , RULES ”.

11

In the heading of Article 50B (FCA Directions), at the end insert “ identifying relevant area of the UK ”.

12

After that Article insert—

“Article 50COther FCA directions
1
A direction by the FCA under Article 46(4) may make different provision in relation to different applications or categories of application.
2
A direction by the FCA under Article 46(5) may make different provision for different cases or categories of case.
3
A direction by the FCA under Article 46 may be varied or revoked by a further direction under that provision.
4
A direction by the FCA under Article 46 must—
(a)
be in writing, and
(b)
be published by the FCA in a manner suitable to bring it to the attention of persons likely to be affected by it.
Article 50DFCA rules
1
The provisions of Part 9A of FSMA (rules and guidance) listed in paragraph 2 apply in relation to rules made by the FCA under Article 46(6B) or 48A as they apply in relation to rules made by the FCA under that Part of that Act, subject to the modification in paragraph 3.
2
The provisions are—
(a)
section 137T (general supplementary powers);
(b)
Chapter 2 (modification, waiver, contravention and procedural provisions), with the exception of section 138D (actions for damages);
(c)
section 141A (power to make consequential amendments of references to rules etc).
3
Section 137T applies as if the reference to authorised persons were a reference to third-country firms providing services or performing activities in accordance with Article 46.”

13

The requirements of section 138I of the Financial Services and Markets Act 2000, in so far as they apply in connection with rules made under Article 46(6B) or 48A of the Markets in Financial Instruments Regulation, may be satisfied by things done before paragraph 12 of this Schedule comes into force (as well as by things done after that time).

Transitional provisions

14

Omit Article 54 (transitional provisions).

SCHEDULE 11Variation or cancellation of Part 4A permission on initiative of FCA: additional power

Section 28

1

The Financial Services and Markets Act 2000 is amended as follows.

2

After section 55J insert—

“55JAVariation or cancellation on initiative of FCA: additional power
(1)
Schedule 6A confers an additional power on the FCA to vary or cancel an FCA-authorised person's Part 4A permission.
(2)
In this section and that Schedule “FCA-authorised person” means an authorised person who is not a PRA-authorised person.”

3

After Schedule 6 insert—

“SCHEDULE 6AVariation or cancellation of Part 4A permission on initiative of FCA: additional power
Section 55JA
Additional power
1
(1)
If it appears to the FCA that an FCA-authorised person with a Part 4A permission is carrying on no regulated activity to which the permission relates, the FCA may exercise its power under this paragraph.
(2)
The FCA's power under this paragraph is the power—
(a)
to vary the Part 4A permission by—
(i)
removing a regulated activity from those to which the permission relates, or
(ii)
varying the description of a regulated activity to which the permission relates, or
(b)
to cancel the Part 4A permission.
(3)
The circumstances in which the FCA may form the view that an authorised person is carrying on no regulated activity include (but are not limited to) circumstances where the person fails—
(a)
to pay any periodic fee or levy as is required by the FCA Handbook, or
(b)
to provide such information to the FCA as is required by the FCA Handbook.
(4)
“The FCA Handbook” means the Handbook made by the FCA under this Act (as that Handbook is amended from time to time).
(5)
If, as a result of a variation of a permission under this paragraph, there are no longer any regulated activities for which the person has permission, the FCA must, once it is satisfied that it is no longer necessary to keep the permission in force, cancel it.
(6)
The power to vary a permission under this paragraph 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 the FCA under section 55A.
(7)
The FCA's power under this paragraph must be exercised in accordance with paragraph 2.
Procedure etc
2
(1)
The FCA may exercise its power under paragraph 1 in relation to an authorised person with a Part 4A permission only if the following conditions are met.
(2)
The first condition is that the FCA has given a notice in writing to the person—
(a)
stating that it appears to the FCA that the person is carrying on no regulated activity to which the permission relates,
(b)
inviting the person to respond in a specified manner, and
(c)
warning of the potential consequences that may arise under this Schedule of a failure to do so.
(3)
The second condition is that—
(a)
at least 14 days beginning with the date on which the notice was given have elapsed, and
(b)
the person has failed to respond in the specified manner.
(4)
The third condition is that the FCA has given a further notice in writing to the person setting out—
(a)
in a case where the FCA proposes to vary the permission—
(i)
the proposed variation,
(ii)
the date on which the FCA proposes to vary the permission (and, if different, the date on which the variation is to take effect), and
(iii)
any specified steps the person may take that would (if taken) result in the FCA deciding not to vary the permission as proposed;
(b)
in a case where the FCA proposes to cancel the permission—
(i)
the date on which the FCA proposes to cancel the permission (and, if different, the date on which the cancellation is to take effect), and
(ii)
any specified steps the person may take that would (if taken) result in the FCA deciding not to cancel the permission.
(5)
The fourth condition is that the date specified in the notice under sub-paragraph (4) is not earlier than the end of the period of 14 days beginning with the date on which the notice is given.
(6)
Where the FCA decides to publicise a notice given under this paragraph (or any details relating to it), it may do so in such manner as it considers appropriate.
Notice of decision
3
(1)
Where the FCA decides to vary or cancel an authorised person's Part 4A permission under paragraph 1, the FCA must give the person a notice in writing setting out—
(a)
in a case where the FCA varies the permission, the variation,
(b)
the date on which the variation or cancellation takes effect, and
(c)
the person's power to make an application under paragraph 4.
(2)
Where the FCA—
(a)
has given the person a notice under paragraph 2(4), but
(b)
decides not to vary or cancel the permission (whether or not because the specified steps referred to in that notice have been taken),
the FCA must give the person a notice in writing of that decision.
(3)
A notice given under this paragraph may include such other information as the FCA considers appropriate.
(4)
Where the FCA decides to publicise a notice given under this paragraph (or any details relating to it), it may do so in such manner as it considers appropriate.
Application for decision to be annulled
4
(1)
This paragraph applies where the FCA decides to vary or cancel an authorised person's Part 4A permission under paragraph 1.
(2)
If the person is aggrieved by the FCA's decision, the person may apply to the FCA to have the decision annulled.
(3)
An application under this paragraph must be made before the end of the period of 12 months beginning with the day on which the variation or cancellation took effect.
(4)
An application under this paragraph must be determined before the end of the period of 6 months beginning with the date on which the FCA received the completed application.
(5)
The applicant may withdraw the application, by giving the FCA written notice, at any time before the FCA determines it.
(6)
The FCA may direct that an application under this paragraph must—
(a)
contain specified information, or
(b)
take a specified form.
Annulment etc
5
(1)
This paragraph applies where the FCA receives an application under paragraph 4 in relation to a decision to vary or cancel an authorised person's Part 4A permission under paragraph 1.
(2)
The FCA may—
(a)
annul the decision unconditionally,
(b)
annul the decision subject to such conditions as it considers appropriate, or
(c)
refuse to annul the decision.
(3)
The FCA may annul the decision (unconditionally or subject to conditions) only if satisfied that, in all the circumstances, it is just and reasonable to do so.
(4)
The FCA's power under sub-paragraph (2)(b) includes the power—
(a)
to remove or describe differently a regulated activity specified in the permission, and
(b)
to withdraw or vary an approval given under section 59 that has effect in relation to the carrying on of a regulated activity specified in the permission,
provided that the activity in question was one to which the permission related immediately before the decision was taken.
(5)
Where the FCA annuls the decision it must give the person a notice in writing setting out—
(a)
where the annulment is subject to conditions, the conditions, and
(b)
the date on which the annulment takes effect.
(6)
If the FCA proposes to refuse to annul the decision it must give the person a warning notice.
(7)
If the FCA decides to refuse to annul the decision it must give the person a decision notice.
Effect
6
(1)
Where the FCA—
(a)
varies or cancels an authorised person's Part 4A permission under paragraph 1, but
(b)
that decision is subsequently annulled under paragraph 5,
the variation or cancellation is treated as if it had not taken place, subject as follows.
(2)
The FCA does not become subject to any statutory obligation by virtue of sub-paragraph (1).
(3)
Where, by virtue of sub-paragraph (1)—
(a)
a person becomes subject to a statutory obligation, and
(b)
the FCA has functions in relation to the obligation,
the FCA may, in exercising those functions, treat the person as if the person had not become subject to the obligation.
(4)
If the FCA treats a person as not having become subject to an obligation, it must notify the person of that fact in such manner as it considers appropriate.
(5)
In a case where paragraph 5(4)(a) applies—
(a)
the permission is treated as if it had been varied in accordance with the FCA's own-initiative variation power, and
(b)
that variation is treated as if it took effect on the date on which the annulment took effect.
(6)
In a case where paragraph 5(4)(b) applies—
(a)
the approval is treated as if it had been withdrawn in accordance with section 63 or varied in accordance with section 63ZB (as the case may be), and
(b)
that withdrawal or variation is treated as if it took effect on the date on which the annulment took effect.
(7)
In this paragraph “statutory obligation” means any obligation arising under or by virtue of this Act or any other enactment.
(8)
In sub-paragraph (7) “enactment” includes—
(a)
the enactments listed in section 3T, and
(b)
any retained direct EU legislation.
Right to refer matter to Tribunal
7
(1)
This paragraph applies where the FCA—
(a)
decides to vary or cancel an authorised person's Part 4A permission under paragraph 1,
(b)
receives an application from the person under paragraph 4 in respect of that decision, and
(c)
has disposed of that application under paragraph 5(2).
(2)
Either party may refer the matter to the Tribunal.
(3)
In determining a reference made under this paragraph, the Tribunal may give such directions, and may make such provision, as it considers reasonable for placing the person and other persons in the same position (as nearly as may be) as if the permission had not been varied or cancelled.
Supplementary
8
(1)
Nothing in this Schedule affects the generality of any other provision made under or by virtue of this Act that confers power on the FCA to vary or cancel an authorised person's Part 4A permission.
(2)
Nothing in paragraph 6(5) and (6) gives rise to a right to make a reference to the Tribunal.
(3)
Sections 55U to 55X (applications made under Part 4A: procedure) do not apply in relation to an application made under paragraph 4.
(4)
Section 55Z (cancellation of Part 4A permission: procedure) does not apply in relation to a proposal, or decision, to cancel an authorised person's Part 4A permission under paragraph 1.
(5)
Section 55Z3(1) (right to refer matters to the Tribunal) does not apply in relation to the determination of an application under paragraph 4.
(6)
In this Schedule “specified” means specified in a direction given by the FCA under this Schedule.
(7)
A direction made by the FCA under this Schedule may make different provision for different cases.
(8)
The FCA may revoke or amend a direction it makes under this Schedule.”

4

In section 133 (proceedings before Tribunal: general provision), after subsection (5) insert—

“(5A)
In the case of a reference under paragraph 7 of Schedule 6A, the Tribunal—
(a)
must determine what (if any) is the appropriate action that must be taken in relation to the matter, and
(b)
on determining the reference, must give such directions (if any) to such persons as the Tribunal considers appropriate for giving effect to its determination.”

5

In section 392 (application of sections 393 and 394)—

(a)

in paragraph (a), at the end insert “ or paragraph 5(6) of Schedule 6A ”, and

(b)

in paragraph (b), at the end insert “ or paragraph 5(7) of Schedule 6A ”.

SCHEDULE 12Forfeiture of money: electronic money institutions and payment institutions

Section 33

Anti-terrorism, Crime and Security Act 2001 (c. 24)

1

Schedule 1 to the Anti-terrorism, Crime and Security Act 2001 (forfeiture of terrorist property) is amended as follows.

2

Part 4B (forfeiture of terrorist money held in bank and building society accounts) is amended in accordance with paragraphs 3 to 8.

3

In the Part heading, for “bank and building society” substitute “ certain ”.

4 (1)

Paragraph 10Q (application for account freezing order) is amended as follows.

(2)

In sub-paragraph (1), for “bank or building society” substitute “ relevant financial institution ”.

(3)

After that sub-paragraph insert—

“(1A)
In this Part of this Schedule, “relevant financial institution” means—
(a)
a bank,
(b)
a building society,
(c)
an electronic money institution, or
(d)
a payment institution.”

(4)

In sub-paragraph (7), at the appropriate places insert—

““electronic money institution” has the same meaning as in the Electronic Money Regulations 2011 (S.I. 2011/99) (see regulation 2 of those Regulations);””, and

““payment institution” means an authorised payment institution or a small payment institution (each as defined in regulation 2 of the Payment Services Regulations 2017 (S.I. 2017/752));”.

5

In paragraph 10V(1) (restriction on proceedings and remedies), for “bank or building society” substitute “ relevant financial institution ”.

6

In paragraph 10W(6)(b) (account forfeiture notice), for “bank or building society” substitute “ relevant financial institution ”.

7 (1)

Paragraph 10Y (lapse of account forfeiture notice) is amended as follows.

(2)

In sub-paragraph (6), for “bank or building society” substitute “ relevant financial institution ”.

(3)

In sub-paragraph (7)—

(a)

for “If the bank or building society” substitute “ If the relevant financial institution ”, and

(b)

for “on the bank or building society” substitute “ on the institution ”.

8

In paragraph 10Z2(7)(a) (forfeiture order), for “bank or building society” substitute “ relevant financial institution ”.

9

In Part 6 (interpretation), in paragraph 19(1), at the appropriate places insert—

““electronic money institution” (in Part 4B) has the meaning given by paragraph 10Q(7),”,

““payment institution” (in Part 4B) has the meaning given by paragraph 10Q(7),”, and

““relevant financial institution” (in Part 4B) has the meaning given by paragraph 10Q(1A),”.

Proceeds of Crime Act 2002 (c. 29)

10

Part 5 of the Proceeds of Crime Act 2002 (civil recovery of the proceeds etc of unlawful conduct) is amended as follows.

11

Chapter 3B (forfeiture of money held in bank and building society accounts) is amended in accordance with paragraphs 12 to 20.

12

In the Chapter heading, for “bank and building society” substitute “ certain ”.

13

In the italic heading before section 303Z1, for “bank and building society” substitute “ certain ”.

14 (1)

Section 303Z1 (application for account freezing order) is amended as follows.

(2)

In subsection (1), for “bank or building society” substitute “ relevant financial institution ”.

(3)

After subsection (5) insert—

“(5A)
In this Chapter as it extends to England and Wales and Scotland, “relevant financial institution” means—
(a)
a bank,
(b)
a building society,
(c)
an electronic money institution, or
(d)
a payment institution.”

(4)

After subsection (5A) insert—

“(5B)
In this Chapter as it extends to Northern Ireland, “relevant financial institution” means—
(a)
a bank, or
(b)
a building society.”

(5)

In subsection (6), at the appropriate places insert—

““electronic money institution” has the same meaning as in the Electronic Money Regulations 2011 (S.I. 2011/99) (see regulation 2 of those Regulations);”, and

““payment institution” means an authorised payment institution or a small payment institution (each as defined in regulation 2 of the Payment Services Regulations 2017 (S.I. 2017/752));”.

15

In section 303Z2(3) (restrictions on making of application under section 303Z1), for “bank or building society” substitute “ relevant financial institution ”.

16

In section 303Z6(1), for “bank or building society” substitute “ relevant financial institution ”.

17

In section 303Z8(4), for “bank or building society” substitute “ relevant financial institution ”.

18

In section 303Z9(6)(b) (account forfeiture notice: England and Wales and Northern Ireland), for “bank or building society” substitute “ relevant financial institution ”.

19 (1)

Section 303Z11 (lapse of account forfeiture notice) is amended as follows.

(2)

In subsection (6), for “bank or building society” substitute “ relevant financial institution ”.

(3)

In subsection (7)—

(a)

for “If the bank or building society” substitute “ If the relevant financial institution ”, and

(b)

for “on the bank or building society” substitute “ on the institution ”.

20

In section 303Z14(7)(a) (forfeiture order), for “bank or building society” substitute “ relevant financial institution ”.

21

In section 316(1) (general interpretation of Part 5), at the appropriate places insert—

““electronic money institution” (in Chapter 3B) has the meaning given by section 303Z1(6),”,

““payment institution” (in Chapter 3B) has the meaning given by section 303Z1(6),”, and

““relevant financial institution” (in Chapter 3B) has the meaning given by section 303Z1,”.

SCHEDULE 1Exclusion of certain investment firms from the Capital Requirements Regulation: consequential amendments

PART 1Amendments of the Capital Requirements Regulation

1

2

(1)

(2)

(3)

“(22A)

(a)

(b)

(4)

(a)

(b)

(5)

“29a

(6)

“(51)

(7)

3

(1)

(2)

(3)

“3

4

“Article 4BThe consolidating supervisor

5

“Article 10AApplication of prudential requirements on a consolidated basis where FCA investment firms are parent undertakings

6

7

8

9

10

11

(1)

(2)

“(iia)

(iib)

(iic)

(3)

(a)

(b)

(c)

12

(1)

(2)

“(iia)

(iib)

(iic)

(3)

(a)

(b)

(c)

13

(1)

(2)

“(i)

(A)

(B)

(3)

(a)

(b)

(4)

“3A

14

(1)

(2)

“(i)

(A)

(B)

(3)

(4)

“3A

15

(1)

(2)

“(i)

(A)

(B)

(3)

(4)