“PART 5ADesignated activities

71KDesignated activities

(1)

The Treasury may by regulations provide for an activity of a specified description to be a designated activity for the purposes of this Act.

(2)

Regulations under this section are referred to in this Act as designated activity regulations.

(3)

Designated activity regulations may provide for an activity to be a designated activity only if the activity relates or is connected to—

(a)

the financial markets or exchanges of the United Kingdom, or

(b)

financial instruments, financial products or financial investments that are (or are proposed to be) issued or sold to, or by, persons in the United Kingdom.

(4)

The description of an activity as a designated activity may be framed by reference to—

(a)

the way in which the activity is carried on, or

(b)

the description of persons who carry on the activity.

(5)

Schedule 6B contains examples of activities that may be specified as designated activities.

(6)

Nothing in Schedule 6B limits the powers conferred by subsection (1).

(7)

The financial instruments, financial products and financial investments mentioned in subsection (3)(b) may include cryptoassets.

71LRestrictions on carrying on of designated activities

(1)

A person must not carry on a designated activity if, or to the extent that, designated activity regulations prohibit the carrying on of that activity.

(2)

A person carrying on a designated activity that is not prohibited by virtue of subsection (1) must comply with—

(a)

designated activity rules relating to that activity, and

(b)

any other requirements imposed in relation to that activity by designated activity regulations.

(3)

For the purposes of this Act designated activity rules are rules made under section 71N.

71MDesignated activity regulations: general

(1)

Designated activity regulations may make provision generally in relation to the carrying on of designated activities.

(2)

The following are examples of provision that may be made by designated activity regulations—

(a)

provision about cases in which the restrictions imposed by section 71L are to apply to persons carrying on a designated activity outside the United Kingdom;

(b)

provision supplementing, or in connection with, any requirements relating to a designated activity under designated activity rules.

(3)

Designated activity regulations may—

(a)

provide for exemptions (including exemptions that are subject to specified conditions);

(b)

confer powers on the Treasury or the FCA.

71NDesignated activities: rules

(1)

The FCA may make rules relating to designated activities.

(2)

The power under subsection (1) is only exercisable in so far as designated activity regulations provide for the FCA to make rules—

(a)

relating to the designated activity, or

(b)

relating to specified matters relating to designated activities.

(3)

The FCA may by notice suspend any rules made under subsection (1) for such period as it considers appropriate.

(4)

Rules under subsection (1) may include provision enabling requirements imposed by the rules to be dispensed with, or modified, in such cases or circumstances as may be determined by the FCA under the rules (subject to subsection (5)).

(5)

The powers under subsections (3) and (4) are only exercisable in such circumstances as may be specified in designated activity regulations.

(6)

Before suspending any rules in accordance with subsection (3), the FCA must consult the PRA.

(7)

A notice under subsection (3) must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of persons likely to be affected by it.

(8)

The reference in section 137T(a) (supplementary powers) to “authorised persons” includes, in relation to rules made under this section, a reference to any persons to whom the rules under this section apply.

71ODesignated activities: directions

(1)

The FCA may by directions impose such requirements on a person, or such description of persons, relating to the carrying on of designated activities as the FCA considers appropriate.

(2)

The power under subsection (1) is only exercisable in so far as designated activity regulations provide for the FCA to make directions relating to the designated activity.

(3)

A requirement may, in particular, be imposed so as to require the person concerned—

(a)

to take specified action, or

(b)

to refrain from taking specified action.

(4)

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

(5)

A direction under this section—

(a)

may specify the way in which, and the time by which, a thing is to be done;

(b)

may be varied;

(c)

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

(6)

The FCA may at any time revoke a direction under this section by notice.

(7)

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

(8)

A direction or notice under this section must be given in writing to the person or persons to whom it applies.

(9)

But if in the circumstances the FCA considers it appropriate, the FCA may, in addition to, or instead of, proceeding under subsection (8), publish the direction or notice in the way appearing to the FCA to be best calculated to bring it to the attention of persons likely to be affected by it.

(10)

Designated activity regulations may make provision for the exercise of the power under subsection (1) to be subject to such conditions as may be specified in the regulations.

(11)

Provision under subsection (10) may (among other things) require, where the exercise of the power relates to a PRA-authorised person, consultation with the PRA.

(12)

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.

71PDesignated activities: liability

(1)

Designated activity regulations may make provision about liability and compensation in connection with this Part.

(2)

A contravention of a requirement under designated activity regulations or designated activity rules—

(a)

does not, except as provided by designated activity regulations under section 71Q or by regulations under section 71R, make a person guilty of an offence;

(b)

does not, except as provided by designated activity regulations—

(i)

make any transaction void or unenforceable, or

(ii)

give rise to any action for breach of statutory duty.

(3)

Designated activity regulations may in particular—

(a)

in cases where the regulations make provision for liability, make provision excluding civil liability (whether generally or to such extent as may be specified),

(b)

make provision for liability to be determined in accordance with designated activity rules,

(c)

make provision so that a person being subject to a liability includes another person being entitled as against that person to rescind or repudiate an agreement, and

(d)

make provision for the purposes of subsection (1) by applying provisions of this Act with or without modifications.

71QDesignated activities: enforcement

(1)

Designated activity regulations may make provision about enforcement in connection with this Part.

(2)

Provision about enforcement includes (among other things) provision—

(a)

requiring the supply of information;

(b)

about investigations (including the making of reports);

(c)

conferring powers of entry;

(d)

conferring powers of inspection, search and seizure;

(e)

conferring powers of censure;

(f)

imposing monetary penalties;

(g)

about appeals;

(h)

conferring functions (including functions involving the exercise of a discretion) on a person.

(3)

Designated activity regulations may in particular make provision for the purposes of subsection (1) by applying provisions of this Act with or without modifications, including any criminal offences created by this Act (and modifications made by virtue of this subsection may widen the scope of any such offences).

(4)

The power under this section includes power to amend or repeal provisions of this Act.

71RDesignated activities and rules: connected amendments

(1)

The Treasury may by regulations make such modifications to provision made by or under this Act or any other enactment as the Treasury consider appropriate for purposes of, or connected with, any designated activity regulations or designated activity rules.

(2)

The power under subsection (1) may in particular be exercised for the purpose of removing or varying any requirement imposed by or under this Act so far as applying to the carrying on of any designated activity.

(3)

The power under subsection (1) includes power to modify any criminal offence created by this Act (including by widening the scope of any such offence).

(4)

In this section—

“enactment” includes—

(a)

an enactment comprised in subordinate legislation (within the meaning given by section 21 of the Interpretation Act 1978),

(b)

an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,

(c)

an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and

(d)

an enactment comprised in, or in an instrument made under, Northern Ireland legislation;

“modify” includes amend, repeal or revoke.

71SDesignated activities regulations: Parliamentary control

(1)

This section applies to regulations which contain provision made under section 71K which provides for an activity of a specified description to be a designated activity.

(2)

A statutory instrument containing regulations to which this section applies, other than regulations to which subsection (3) applies, may not be made unless a draft of the instrument has been laid before Parliament and approved by a resolution of each House.

(3)

This subsection applies to regulations which contain a statement made by the Treasury that they are of the opinion that, by reason of urgency, it is necessary to make the regulations without a draft of the statutory instrument containing the regulations being laid and approved under subsection (2).

(4)

Where subsection (3) applies to regulations, a statutory instrument containing the regulations must be laid before Parliament after being made.

(5)

Regulations contained in a statutory instrument laid before Parliament under subsection (4) cease to have effect at the end of the period of 28 days beginning with the day on which the instrument is made unless, during that period, the instrument is approved by a resolution of each House of Parliament.

(6)

In calculating the period of 28 days, no account is to be taken of any whole days that fall within a period during which—

(a)

Parliament is dissolved or prorogued, or

(b)

either House of Parliament is adjourned for more than four days.

(7)

If regulations cease to have effect as a result of subsection (5), that does not—

(a)

affect the validity of anything previously done under the regulations, or

(b)

prevent the making of new regulations.”

“(ga)

directions under section 71O (designated activities: directions);”.

“(zaa)

rules under Part 5A;”.

““designated activity” has the meaning given in section 71K;”.

“General rule-making powers

300FRules relating to central counterparties and central securities depositories

(1)

The Bank of England may make such rules applying to FMI entities—

(a)

with respect to the carrying on by them of relevant regulated activities, or

(b)

with respect to the carrying on by them of an activity which is not a relevant regulated activity,

as appear to the Bank to be necessary or expedient for the purpose of advancing its Financial Stability Objective.

(2)

Each of the following is an “FMI entity” for the purposes of this section—

(a)

a recognised central counterparty;

(b)

a recognised CSD;

(c)

a third country central counterparty;

(d)

a third country CSD.

(3)

The power to make rules under subsection (1), so far as applying to a third country central counterparty or a third country CSD, is subject to section 300G.

(4)

In this section “relevant regulated activity”—

(a)

in relation to a recognised central counterparty, means a regulated activity described in section 285(3A);

(b)

in relation to a recognised CSD, means a regulated activity described in section 285(3D);

(c)

in relation to a third country central counterparty, means a regulated activity described in section 285(3C);

(d)

in relation to a third country CSD, means a regulated activity described in section 285(3G).

(5)

Rules under this section may include—

(a)

provision applying to an FMI entity even though there is no relationship between the entity to which the rules will apply and the persons whose interests will be protected by the rules;

(b)

requirements which take into account, in the case of an FMI entity which is a member of a group, any activity of another member of the group.

300GSection 300F: rules in relation to overseas FMI entities

(1)

The power to make rules under section 300F, so far as applying to an FMI entity of the kind mentioned in subsection (2)(c) or (d) of that section (an “overseas FMI entity”), is exercisable—

(a)

only by the application of corresponding rules, and

(b)

except in the case of systemic third country CCPs (see subsection (6)), only so far as authorised by regulations made by the Treasury.

(2)

The reference in subsection (1)(a) to “corresponding rules” is—

(a)

in relation to rules that would apply to a third country central counterparty, rules under section 300F that apply to a recognised central counterparty;

(b)

in relation to rules that would apply to a third country CSD, rules under section 300F that apply to a recognised CSD.

(3)

Rules may be applied in accordance with subsection (1)(a)—

(a)

by applying all corresponding rules or only such corresponding rules as the Bank considers appropriate;

(b)

with such modifications as the Bank considers appropriate for the purpose of ensuring the effectiveness of the rules in their application to the overseas FMI entities concerned (having regard in particular to the establishment of such entities in countries other than the United Kingdom).

(4)

Regulations under subsection (1)(b) may authorise the making of rules generally in respect of overseas FMI entities or only in respect of overseas FMI entities which—

(a)

are specified or described in the regulations, or

(b)

satisfy conditions specified in the regulations.

(5)

Regulations under subsection (1)(b) may—

(a)

provide for the power to make rules under section 300F, so far as applying to an overseas FMI entity, to be subject to such limitations or conditions as may be specified in the regulations;

(b)

make provision by reference to matters to be determined by the Bank;

(c)

provide for exemptions.

(6)

The restriction imposed by subsection (1)(b) does not apply in the case of systemic third country CCPs (and accordingly references to overseas FMI entities in subsections (4) and (5) do not include references to systemic third country CCPs).

(7)

A “systemic third country CCP” means any third country central counterparty that the Bank has determined is systemically important, or is likely to become systemically important, to the financial stability of the United Kingdom.

(8)

The Bank must publish notice of any determination made under subsection (7).

(9)

A determination under subsection (7) must be made in accordance with such criteria of general application as are set out in regulations made by the Treasury for the purposes of this section.

(10)

In making a determination under subsection (7) the Bank must also have regard to any statement of policy prepared and published by the Bank for the purposes of providing further specification of the criteria of general application mentioned in subsection (9).

(11)

The Bank—

(a)

may alter or replace a statement of policy prepared for the purposes of this section;

(b)

must publish a statement as altered or replaced.

(12)

Publication under this section is to be made in such manner as the Bank considers best designed to bring the publication to the attention of the public.

(13)

The Treasury must consult the Bank before making regulations under subsection (9).

(14)

The Treasury may by regulations provide for other provisions of this Act to apply in relation to third country central counterparties, or third country CSDs, to which rules under section 300F apply, with such modifications as may be specified in the regulations.”

““Financial Stability Objective” means the objective set out in section 2A of the Bank of England Act 1998;”.

“300HRules relating to investment exchanges and data reporting service providers

(1)

The FCA may make such rules applying to recognised UK investment exchanges or data reporting service providers—

(a)

with respect to the carrying on by them of relevant activities, or

(b)

with respect to the carrying on by them of an activity which is not a relevant activity,

as appear to the FCA to be necessary or expedient for the purpose of advancing one or more of its operational objectives.

(2)

In this section “relevant activity”—

(a)

in relation to a recognised UK investment exchange, means a regulated activity described in section 285(2);

(b)

in relation to a data reporting service provider, means providing a data reporting service.

(3)

Rules under this section may include—

(a)

provision applying to a recognised UK investment exchange or data reporting service provider even though there is no relationship between that person and the persons whose interests will be protected by the rules;

(b)

requirements which take into account, in the case of a recognised UK investment exchange or data reporting service provider which is a member of a group, any activity of another member of the group.

(4)

Rules under this section may not modify, amend or revoke any retained direct EU legislation (except retained direct EU legislation which takes the form of FCA rules).

(5)

In this section—

“data reporting service” and “data reporting service provider” have the meanings given by regulation 2 of the Data Reporting Services Regulations 2017 (S.I. 2017/699);

“recognised UK investment exchange” means a recognised investment exchange that is not an overseas investment exchange as defined in section 313(1).”

“(9A)

The powers conferred by this section may also be exercised by the FCA in relation to a recognised investment exchange (and references to an authorised person are to be read accordingly).”

“(c)

the exercise by the Bank of its functions under any enactment in relation to the following bodies—

(i)

recognised central counterparties;

(ii)

recognised CSDs;

(iii)

third country central counterparties;

(iv)

third country CSDs.”

“(2A)

Expressions used in subsection (1)(c) have the same meaning as in section 285 of the Financial Services and Markets Act 2000 (exemption for recognised bodies etc).”

“CHAPTER 3CCritical third parties

312LCritical third parties

(1)

The Treasury may by regulations designate a person who provides services to one or more authorised persons, relevant service providers or FMI entities as a “critical third party”.

(2)

The Treasury may designate a person under subsection (1) only if in the Treasury’s opinion a failure in, or disruption to, the provision of those services (either individually or, where more than one service is provided, taken together) could threaten the stability of, or confidence in, the UK financial system.

(3)

The Treasury must have regard to the following factors when forming an opinion for the purposes of subsection (2)—

(a)

the materiality of the services provided to the delivery, by any person, of essential activities, services or operations (wherever carried out);

(b)

the number and type of authorised persons, relevant service providers or FMI entities to which the person provides services.

(4)

Before making regulations under subsection (1) the Treasury must—

(a)

consult each of the relevant regulators and such other persons as the Treasury consider appropriate,

(b)

give notice in writing to the person to be designated specifying a reasonable period within which that person may make representations in writing about the proposal to the Treasury, and

(c)

have regard to any representations made to them in accordance with paragraph (b).

(5)

The Treasury may not designate the Bank of England under subsection (1).

(6)

Each of the following is a relevant regulator for the purposes of this Chapter—

(a)

the FCA,

(b)

the PRA, and

(c)

the Bank of England.

(7)

Activities, services or operations are “essential” for the purposes of subsection (3) if they are essential to—

(a)

the economy of the United Kingdom, or

(b)

the stability of, or confidence in, the UK financial system.

(8)

In this Chapter—

“critical third party” means a person designated under subsection (1);

“FMI entity” means—

(a)

a recognised clearing house;

(b)

a recognised CSD;

(c)

a recognised investment exchange which is not an overseas investment exchange;

(d)

a recognised payment system under section 184 of the Banking Act 2009;

(e)

a person specified as a service provider in relation to a recognised payment system under section 206A of the Banking Act 2009;

“relevant service provider” means—

(a)

an electronic money institution as defined by regulation 2(1) of the Electronic Money Regulations 2011 (S.I. 2011/99);

(b)

an authorised payment institution, small payment institution or registered account information services provider as defined by regulation 2(1) of the Payment Services Regulations 2017 (S.I. 2017/752);

“service” includes facility.

312MPower to make rules

(1)

A relevant regulator may make such rules imposing duties on critical third parties in connection with the provision of services to authorised persons, relevant service providers and FMI entities as appear to the regulator to be necessary or expedient for the purpose of advancing any of its objectives.

(2)

The reference in subsection (1) to a relevant regulator’s objectives is a reference to—

(a)

where the regulator is the FCA, one or more of its operational objectives;

(b)

where the regulator is the PRA, one or more of its objectives;

(c)

where the regulator is the Bank, the Bank’s Financial Stability Objective.

(3)

In the application of Part 9A to rules made by the FCA or the PRA under this section, the following provisions apply with the modifications specified in this subsection—

(a)

section 137T (general supplementary powers) applies as if—

(i)

the reference in paragraph (a) to “authorised persons, activity or investment” were a reference to “critical third parties or services”, and

(ii)

in paragraph (b) for the words from “as” to the end there were substituted “or the Bank, or standards issued by any other person, as those rules or standards have effect from time to time,”;

(b)

section 138B (publication of directions) applies as if subsection (4) were omitted;

(c)

section 138F (notification of rules) applies as if subsections (1A) and (2) were omitted;

(d)

section 138I (consultation) applies as if the reference in subsection (1)(a) to the “PRA” were a reference to the “PRA and the Bank”;

(e)

section 138J (consultation) applies as if the reference in subsection (1)(a) to the “FCA” were a reference to the “FCA and the Bank”.

312NPower of direction

(1)

A relevant regulator may, if it appears to the regulator to be necessary or expedient for the purpose of advancing any of its objectives, direct a critical third party to—

(a)

do anything specified in the direction, or

(b)

refrain from doing anything specified in the direction.

(2)

A direction under this section—

(a)

must be given by notice in writing,

(b)

may be expressed to have effect during a specified period or until revoked, and

(c)

may specify the way in which, and the time by which, a thing is to be done.

(3)

Subsection (4) applies if a direction is given to a critical third party for the purpose of resolving or reducing a threat to the stability or integrity of the UK financial system.

(4)

The critical third party (including the critical third party’s officers and staff) has immunity from liability in damages in respect of action or inaction in accordance with the direction.

(5)

A direction given for the purpose mentioned in subsection (3) must—

(a)

include a statement that it is given for that purpose, and

(b)

inform the critical third party of the effect of subsection (4).

(6)

An immunity conferred by this section does not extend to action or inaction—

(a)

in bad faith, or

(b)

in contravention of section 6(1) of the Human Rights Act 1998.

(7)

A relevant regulator may at any time revoke a direction under this section by giving notice in writing to the critical third party to which the direction relates.

(8)

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

(9)

For the purposes of this section the objectives of a relevant regulator are as described in section 312M(2).

312ODirections: procedure

(1)

If a relevant regulator proposes to give a direction under section 312N, or gives such a direction with immediate effect, it must give written notice to the critical third party to which the direction is given (or is to be given) (the “relevant critical third party”).

(2)

A direction under section 312N takes effect—

(a)

immediately, if the notice under subsection (1) states that this is the case,

(b)

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

(c)

if neither paragraph (a) or (b) applies, when the matter to which the notice relates is no longer open to review.

(3)

A direction may be expressed to take effect immediately, or on a specified date, only if the relevant regulator reasonably considers that it is necessary for the direction to take effect immediately or on that date.

(4)

The notice under subsection (1) must—

(a)

give details of the direction,

(b)

state the relevant regulator’s reasons for the direction and for its determination as to when the direction takes effect,

(c)

inform the relevant critical third party that it may make representations to the regulator within such period as may be specified in the notice (whether or not the critical third party has referred the matter to the Tribunal), and

(d)

inform the relevant critical third party of its right to refer the matter to the Tribunal (including giving an indication of the procedure on such a reference).

(5)

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

(6)

If, having considered any representations made by the relevant critical third party, the regulator decides—

(a)

to give the direction proposed, or

(b)

if the direction has been given, not to revoke the direction,

it must give the critical third party written notice.

(7)

If, having considered any representations made by the relevant critical third party, the regulator decides—

(a)

not to give the direction proposed,

(b)

to give a different direction, or

(c)

to revoke a direction which has effect,

it must give the critical third party written notice.

(8)

A notice given under subsection (6) must inform the relevant critical third party of its right to refer the matter to the Tribunal (including giving an indication of the procedure on such a reference).

(9)

A notice under subsection (7)(b) must comply with subsection (4).

(10)

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

312PInformation gathering and investigations

(1)

The provisions of Part 11 (information gathering and investigations) mentioned in this section are to apply in relation to this Chapter in accordance with the provision made by this section.

(2)

In any case where subsection (1) applies—

(a)

any reference in Part 11 to the FCA or PRA which is contained in, or relates to, any of those provisions (however expressed) is to be read as a reference to a relevant regulator, and

(b)

Part 11 has effect with any other necessary modifications.

(3)

The powers conferred by section 165(1) and (3) (power to require information) are exercisable by a relevant regulator or (as the case may be) a relevant regulator’s officers to impose requirements on a critical third party or a person connected with a critical third party.

(4)

The information or documents that a relevant regulator may require to be produced or provided in accordance with subsection (3) are limited to information and documents reasonably required in connection with the exercise by the relevant regulator of functions conferred on it by or under this Chapter (and accordingly section 165(4) does not apply).

(5)

The power conferred by section 166 (reports by skilled person) is exercisable by a relevant regulator in relation to a critical third party or a person connected with a critical third party.

(6)

The power conferred by section 166A (appointment of skilled person) is exercisable by a relevant regulator in relation to a critical third party.

(7)

The power conferred by section 168(5) (appointment of persons to carry out investigations in particular cases) is exercisable by a relevant regulator if it appears to the relevant regulator that there are circumstances suggesting that a person may have contravened any requirement imposed by or under this Chapter.

(8)

In addition to the powers conferred by section 171, a person conducting an investigation under section 168(5) as a result of subsection (7) is to have the powers conferred by sections 172 and 173 (and for this purpose any references in those sections to an investigator are to be read accordingly).

(9)

The power under section 176(1) (entry of premises under warrant) is exercisable on information on oath given by or on behalf of a relevant regulator, or an investigator appointed by a relevant regulator, as if the reference to the third set of conditions were omitted.

(10)

For the purposes of this section a person is connected with a critical third party if that person is or has at any relevant time been—

(a)

a member of the critical third party’s group,

(b)

a controller of the critical third party, or

(c)

in relation to the critical third party, a person mentioned in Part 1 of Schedule 15 (reading references in that Part to the authorised person as references to the critical third party).

312QPower of censure

If a relevant regulator considers that a critical third party has contravened a requirement imposed by or under this Chapter the regulator may publish a statement to that effect.

312RDisciplinary measures

(1)

This section applies if a relevant regulator considers that a critical third party has contravened a requirement imposed by or under this Chapter.

(2)

The relevant regulator may publish a notice—

(a)

prohibiting the critical third party from entering into arrangements, or continuing, to provide services to authorised persons, relevant service providers or FMI entities;

(b)

prohibiting authorised persons, relevant service providers or FMI entities who receive services from the critical third party from continuing to receive those services from that party;

(c)

prohibiting authorised persons, relevant service providers or FMI entities from entering into arrangements for receipt of services from the critical third party;

(d)

providing for the provision of any services by the critical third party to be subject to such conditions or limitations as are specified in the notice;

(e)

providing for any receipt of services by authorised persons, relevant service providers or FMI entities from the critical third party to be subject to such conditions or limitations as are specified in the notice.

(3)

A notice under subsection (2) may make different provision for different cases and may in particular make different provision in respect of different descriptions of services, authorised persons, FMI entities or relevant service providers.

(4)

A relevant regulator may only exercise the powers under subsection (2) if the regulator is satisfied that—

(a)

it is appropriate in the circumstances to take action against the critical third party,

(b)

the exercise of the power will not threaten the stability of, or confidence in, the UK financial system, and

(c)

it is desirable to exercise the power in order to advance one or more of the regulator’s objectives.

(5)

A relevant regulator may either on its own initiative or on an application by the critical third party concerned withdraw or vary a notice given by it under subsection (2) by publishing a further notice.

(6)

Publication under this section is to be made in such manner as the relevant regulator considers best designed to bring the publication to the attention of the public.

(7)

Where a notice includes a prohibition, condition or limitation imposed under subsection (2), publication of a notice under this section must in particular be made in a manner appearing to the relevant regulator to be best designed to bring the notice to the attention of the persons to whom the prohibition, condition or limitation applies.

(8)

A person who breaches a prohibition, condition or limitation imposed by a notice under this section is to be taken to have contravened a requirement imposed on the person under this Act.

(9)

For the purposes of this section the objectives of a relevant regulator are as described in section 312M(2).

312SProcedure and right to refer to Tribunal

(1)

If a relevant regulator proposes to publish a statement or notice under section 312Q or 312R, it must give the critical third party, authorised persons, relevant service providers or FMI entities to whom the statement or notice would relate a warning notice.

(2)

A warning notice must set out the terms of the proposed statement or notice.

(3)

If a relevant regulator decides to publish a statement or notice under section 312Q or 312R it must give the critical third party, authorised persons, relevant service providers or FMI entities to whom the statement or notice relates a decision notice.

(4)

A decision notice must set out the terms of the statement or notice.

(5)

If a relevant regulator decides to act under section 312N or 312Q a critical third party who is aggrieved may refer the matter to the Tribunal.

(6)

If a relevant regulator decides to act under section 312R a critical third party, authorised person, relevant service provider or FMI entity who is aggrieved may refer the matter to the Tribunal.

312TStatement of policy relating to disciplinary measures

(1)

The relevant regulators must prepare and publish a statement of policy with respect to the exercise of powers under section 312Q and section 312R.

(2)

The relevant regulators may alter or replace a statement published under this section.

(3)

The relevant regulators must publish a statement as altered or replaced under subsection (2).

(4)

Publication under this section is to be made in such manner as the relevant regulators consider best designed to bring the publication to the attention of the public.

312UDuty to ensure co-ordinated exercise of functions etc

(1)

The relevant regulators must co-ordinate the exercise of their respective functions conferred by or under this Chapter.

(2)

In complying with the duty in subsection (1) each relevant regulator must obtain information and advice from any of the other relevant regulators who may be expected to have relevant information or relevant expertise.

(3)

The duty in subsection (1) applies only to the extent that compliance with the duty does not impose a burden on the relevant regulators that is disproportionate to the benefits of compliance.

(4)

Before exercising any power conferred by or under this Chapter a relevant regulator must consult each of the other relevant regulators (where not otherwise required to do so).

312VMemorandum of understanding

(1)

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

(a)

the role of the relevant regulators in relation to the exercise of functions conferred by or under this Chapter, and

(b)

how they intend to comply with section 312U in relation to the exercise of such functions.

(2)

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

(3)

The relevant regulators may revise a memorandum under this section.

(4)

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

(5)

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

(6)

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

(7)

The memorandum need not relate to any aspect of compliance with section 312U if the relevant regulators consider—

(a)

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

(b)

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

312WApplication of provisions of this Act to this Chapter

The following provisions do not apply for the purposes of this Chapter—

(a)

section 3D (duty to ensure co-ordinated exercise of functions);

(b)

section 3E (memorandum of understanding);

(c)

section 138D (actions for damages).”

““critical third party” has the same meaning as in Chapter 3C (see section 312L(8);”.

“(la)

section 312S;”.

“(4A)

Sub-paragraphs (1) to (4) do not apply in relation to rules made by the Bank under section 312M (in relation to which see paragraph 10A).”

“10A

The following provisions of Part 9A of this Act are to apply in relation to rules made by the Bank under section 312M, subject to the modifications specified in this subsection—

(a)

section 137T (general supplementary powers) as if—

(i)

the reference in paragraph (a) to “authorised persons, activity or investment” were a reference to “critical third parties or services”, and

(ii)

for paragraph (b) there were substituted—

“(b)

may make provision by reference to rules made by the FCA or PRA or standards issued by any other person, as those rules or standards have effect from time to time,”;

(b)

sections 138A and 138B (modification or waiver of rules) as if—

(i)

the reference in subsection (4)(b) of section 138A to any of regulator’s objectives were a reference to the Bank’s Financial Stability Objective,

(ii)

subsection (5) of section 138A were omitted, and

(iii)

subsection (4) of section 138B were omitted;

(c)

section 138BA (disapplication or modification of rules in individual cases) as if subsection (3)(b) and (c) were omitted;

d

(d)

section 138C (evidential provisions);

(e)

section 138E (limits on effect of contravening rules);

(f)

section 138EA (matters to consider when making rules) as if, for paragraphs (a) and (b) of subsection (5), there were substituted “complying with a recommendation of the Financial Policy Committee of the Bank of England under section 9O of the Bank of England Act 1998 (making of recommendations within the Bank).”;

(g)

section 138F (notification of rules) as if subsections (1A) and (2) were omitted;

(h)

section 138G (rule-making instruments);

(i)

section 138H (verification of rules);

(j)

section 138J (consultation) as if—

(i)

the reference in subsection (1)(a) to the “FCA” were a reference to the “FCA and the PRA”;

(ii)

the reference in subsection (2)(d) to the compatibility of the proposed rules with the provisions mentioned in that subsection were a reference to their compatibility with the Bank’s Financial Stability Objective; and

(iii)

in subsection (8A), in paragraph (a), for sub-paragraphs (i) and (ii) there were substituted “be prejudicial to advancing the Financial Stability Objective, or”;

(k)

section 138JA(2), (3) (4), (10) and (11) (duty to consult PRA Cost Benefit Analysis Panel);

(l)

section 138JB (statement of policy in relation to cost benefit analyses);

(m)

section 138L (consultation: general exemptions) as if—

(i)

subsection (1) were omitted, and

(ii)

in subsection (2) for paragraphs (a) and (b) there were substituted “be prejudicial to financial stability.”;

(n)

section 141A (power to make consequential amendments of references to rules);

(o)

section 141B (power to consequentially amend enactments).”

“(aa)

a requirement that is imposed on a critical third party by the Bank by or under any provision of Chapter 3C of this Part of this Act;”.

“(aa)

a requirement that is imposed by or under any provision of Chapter 3C of Part 18 of this Act that relates to critical third parties;”.

“(2A)

The content of a communication may be approved for the purposes of this section by an authorised person only if the giving of the approval—

(a)

is permitted under section 55NA (which enables approval to be given with FCA permission), or

(b)

falls within an exemption conferred by regulations under section 55NB.”

“55NAGeneral requirement relating to financial promotion approval

(1)

An authorised person must not approve the content of a communication for the purposes of section 21 unless the person has permission to do so given by the FCA under this section.

(2)

An authorised person who approves the content of a communication for the purposes of section 21 otherwise than in accordance with permission granted under this section is to be taken to have contravened a requirement imposed on the person by the FCA under this Act.

(3)

Permission may be granted by the FCA under this section on the application of—

(a)

an authorised person, or

(b)

an applicant for Part 4A permission that has yet to be determined.

(4)

The FCA may grant a person permission under this section—

(a)

on the terms sought in the application (which may include the grant of permission to give approvals generally for the purposes of section 21), or

(b)

subject to any other terms the FCA considers appropriate (which may in particular provide for the giving of permission in a narrower description of case than that sought in the application).

(5)

Where the FCA grants permission to a person under this section, the FCA may vary or cancel the permission—

(a)

on the application of the person to whom it was given, or

(b)

of its own initiative,

and subsection (4)(b) applies to the variation of permission as it applies to its grant.

(6)

If the FCA grants or varies permission under this section it must set out the terms on which the permission is given, described in such way as it considers appropriate.

(7)

The FCA may refuse to grant an application for permission under this section, or for its variation or cancellation under subsection (5)(a), if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.

(8)

The FCA may vary or cancel a person’s permission under subsection (5)(b) if it appears to the FCA that—

(a)

the person has failed, during a period of at least 12 months, to give, or to refuse to give, any approvals for the purposes of section 21 in accordance with the permission, or

(b)

it is desirable to vary or cancel the permission in order to advance one or more of its operational objectives.

(9)

The FCA must consult—

(a)

the PRA before giving permission under this section to, or before varying or cancelling permission under this section given to—

(i)

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

(ii)

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

(b)

the Gibraltar regulator (within the meaning of Schedule 2A) before giving permission under this section to, or before varying or cancelling permission under this section given to, a Gibraltar-based person.

(10)

Subsection (9)(b) does not apply in a case where the FCA varies or cancels permission of a Gibraltar-based person in exercise of its power under subsection (5)(b), but the FCA must inform the Gibraltar regulator in writing of the variation or cancellation.

(11)

Subsections (1) and (2) do not apply if the giving of approval falls within an exemption conferred by regulations made under section 55NB.

(12)

Nothing in this section limits any other power under this Act to impose requirements in relation to approvals given for the purposes of section 21 so far as those requirements are additional to the requirement imposed by subsection (1) of this section (but any such other requirement that is inconsistent with the requirement imposed by that subsection is of no effect to the extent of that inconsistency).

55NBSection 55NA: power to provide for exemptions

(1)

The Treasury may by regulations provide for exemptions from the requirement imposed by section 55NA(1) not to give approvals for the purposes of section 21 without permission.

(2)

Regulations under subsection (1) may provide for an exemption to have effect—

(a)

in respect of specified persons;

(b)

in respect of persons falling within a specified class;

(c)

in respect of approval given in relation to activities of a specified description;

(d)

only in specified circumstances;

(e)

subject to specified conditions.

(3)

In this section “specified” means specified in regulations under this section.”

“Sustainability disclosure requirements

416ASDR policy statement

(1)

The Treasury may prepare an SDR policy statement.

(2)

An “SDR policy statement” is a statement of the policies of His Majesty’s Government concerning disclosure requirements in connection with matters relating to sustainability.

(3)

In preparing an SDR policy statement, the Treasury must consult the regulators.

(4)

The Treasury must publish any SDR policy statement in such manner as they consider appropriate.

(5)

The Treasury—

(a)

must keep any SDR policy statement under review;

(b)

may prepare a revised statement (and subsections (3) and (4) apply in relation to any revised statement);

(c)

may withdraw any SDR policy statement.

(6)

The Treasury may request a regulator to provide them with a report on any matter that the Treasury require in connection with the preparation of an SDR policy statement.

(7)

A request for a report under subsection (6)—

(a)

must be made in writing, and

(b)

may require a regulator to send the report to the Treasury within such reasonable period as may be specified in the request (or such other period as may be agreed).

(8)

A regulator must comply with a request under subsection (6).

(9)

Nothing in section 348, or in regulations made under section 349, is to be taken as preventing or restricting the ability of a regulator to disclose information to the Treasury for the purposes of this section.

(10)

Subsection (9) does not apply in relation to information provided to a regulator by a regulatory authority outside the United Kingdom.

416BFCA and PRA rules etc

(1)

When making rules or issuing guidance in connection with disclosure concerning matters relating to sustainability, a regulator must have regard to any SDR policy statement (within the meaning of section 416A) that the Treasury have published and not withdrawn.

(2)

For the purposes of this section, matters relating to sustainability include matters relating to—

(a)

the environment, including climate change,

(b)

social, community and human rights issues,

(c)

tackling corruption and bribery, and

(d)

governance, so far as relevant to matters within paragraphs (a) to (c).”

“(4A)

When discharging its general functions in the way mentioned in subsection (1) the FCA must, so far as reasonably possible, act in a way which, as a secondary objective, advances the competitiveness and growth objective (see section 1EB).”

“1EBCompetitiveness and growth objective

The competitiveness and growth objective is: facilitating, subject to aligning with relevant international standards—

(a)

the international competitiveness of the economy of the United Kingdom (including in particular the financial services sector), and

(b)

its growth in the medium to long term.”

“(ca)

how to discharge the duty in section 1B(4A) (duty to advance competitiveness and growth objective),”.

“(1A)

The reference in subsection (1) to the FCA’s operational objectives includes, in its application as a secondary objective, the competitiveness and growth objective (see section 1EB).”

“(1A)

The reference in subsection (1) to the PRA’s objectives includes, in their application as secondary objectives, the competition objective and competitiveness and growth objective (see section 2H).”

“(3)

“Objectives”—

(a)

in relation to the FCA means—

(i)

operational objectives, and

(ii)

in its application as a secondary objective, the competitiveness and growth objective (see section 1EB), and

(b)

in relation to the PRA means—

(i)

the PRA’s objectives, and

(ii)

in their application as secondary objectives, the competition objective and competitiveness and growth objective (see section 2H).”

“(4)

In this section, “objectives”—

(a)

in relation to the FCA means—

(i)

operational objectives, and

(ii)

in its application as a secondary objective, the competitiveness and growth objective (see section 1EB), and

(b)

in relation to the PRA means—

(i)

the PRA’s objectives, and

(ii)

in their application as secondary objectives, the competition objective and competitiveness and growth objective (see section 2H).

(5)

Where a regulator is proposing to exercise a function that is not one of its general functions, the reference to “objectives” in subsection (1)(a) does not include the secondary objectives mentioned in subsection (4)(a)(ii) and (b)(ii).

(6)

In this section, “general functions”—

(a)

in relation to the FCA, has the same meaning as in section 1B(6), and

(b)

in relation to the PRA, has the same meaning as in section 2J(1).”

“(da)

how, in its opinion, it has complied with the duty in section 1B(4A),”.

“Rules

3RADuty of FCA and PRA to review rules

(1)

Each regulator must keep under review generally any rules made by the regulator under this Act or any other enactment (whenever passed or made).

(2)

Subsection (1) does not apply to rules made for the purpose of complying with a direction or recommendation of the Financial Policy Committee of the Bank of England under—

(a)

section 9H of the Bank of England Act 1998 (directions to FCA or PRA requiring macro-prudential measures), or

(b)

section 9Q of that Act (recommendations to FCA and PRA).

3RBStatement of policy relating to review of rules

(1)

Each regulator must prepare and publish a statement of its policy with respect to its review of rules under section 3RA.

(2)

The statement must provide information about—

(a)

how representations (including by a statutory panel) can be made to each regulator with respect to its review of rules under section 3RA, and

(b)

the arrangements to ensure that those representations are considered.

(3)

In this section “statutory panel” has the meaning given by section 1RB(5).

(4)

If a statement published under this section is altered or replaced by a regulator, the regulator must publish the altered or replaced statement.

(5)

A statement prepared under this section must be published by the regulator in the way appearing to that regulator to be best designed to bring it to the attention of the public.

3RCRequirement to review specified rules

(1)

The Treasury may by direction require a regulator to carry out a review of specified rules if—

(a)

the rules have been in force for at least 12 months,

(b)

the Treasury consider that it is in the public interest that the rules are reviewed, and

(c)

it does not appear to the Treasury that—

(i)

the regulator is carrying out, or proposes to carry out, a review of those rules, or

(ii)

if the regulator proposes to carry out a review, the proposals are appropriate for the purposes of carrying out an effective review.

(2)

Subsection (1) only applies to rules falling within section 3RA(1).

(3)

The Treasury must consult the regulator concerned before giving a direction under subsection (1).

(4)

In exercising the power under this section, the Treasury must have regard to the desirability of minimising any adverse effect that the carrying out of the review may have on the exercise by the regulator of any of its other functions.

(5)

A direction under subsection (1) may—

(a)

specify the period within which a review must be carried out;

(b)

determine the scope and conduct of a review;

(c)

require the provision of interim reports during the carrying out of a review.

(6)

Provision made in a direction under subsection (5)(b) may include a requirement—

(a)

for a review to be carried out by a person appointed by the regulator who is independent of the regulator;

(b)

for any such appointment to be made only with the approval of the Treasury.

(7)

As soon as practicable after giving a direction under subsection (1) the Treasury must—

(a)

lay before Parliament a copy of the direction, and

(b)

publish the direction in such manner as the Treasury think fit.

(8)

Subsection (7) does not apply where the Treasury consider that publication of the direction would be against the public interest.

(9)

A direction under subsection (1) may be varied or revoked by the giving of a further direction.

3RDReport on certain reviews

(1)

This section applies where the Treasury have given a direction to a regulator under section 3RC(1) to carry out a review.

(2)

The regulator must make a written report to the Treasury as to the opinion of the regulator in relation to the following matters—

(a)

if the regulator is the FCA, whether the rules under review—

(i)

are compatible with the FCA’s strategic objective,

(ii)

advance one or more of the FCA’s operational objectives, and

(iii)

advance the competitiveness and growth objective;

(b)

if the regulator is the PRA, whether the rules under review—

(i)

advance one or more of the PRA’s objectives, and

(ii)

advance the PRA’s competition objective and the PRA’s competitiveness and growth objective;

(c)

whether and to what extent the rules are functioning effectively and achieving their intended purpose;

(d)

whether any amendments should be made to the rules and, if so, what those amendments should be;

(e)

whether any rules should be revoked (with or without replacement);

(f)

whether any other action should be taken and, if so, what that action should be.

(3)

As soon as practicable after receiving the report the Treasury must—

(a)

lay before Parliament a copy of the report, and

(b)

publish the report in such manner as the Treasury think fit.

(4)

When complying with subsection (3) the Treasury may withhold material from the report if the Treasury consider that publication of the material would be against the public interest.”

“3REPower of Treasury to require making of rules by regulations

(1)

The Treasury may by regulations require a regulator to exercise a power under this Act to make rules in relation to a specified activity or a specified description of person.

(2)

Regulations under this section may—

(a)

specify matters that the rules must cover;

(b)

specify a period within which the rules must be made.

(3)

But except so far as permitted by subsection (2), regulations under this section may not require rules to be made—

(a)

in a specified form or with specified content, or

(b)

to achieve or advance a specified outcome.

(4)

If no period is specified under subsection (2)(b) the rules must be made as soon as reasonably practicable after the coming into force of the regulations.”

“138EAMatters to consider when making rules

(1)

This section applies where either regulator proposes to make rules.

(2)

The regulator must have regard to any specified matters that are relevant to the making of the rules in question.

(3)

“Specified” means specified in regulations made by the Treasury for the purposes of this section.

(4)

The specification of a matter for the purposes of this section may apply generally to the making of rules or be limited in whatever way the Treasury consider appropriate, including by reference to—

(a)

the power under which the rules are made;

(b)

the persons to whom the rules apply;

(c)

the activities or subject-matter to which the rules relate.

(5)

The requirement imposed by subsection (2) does not apply in respect of any rules if, or to the extent that, the rules are made for the purposes of—

(a)

complying 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)

acting in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of the FCA and PRA functions).

(6)

The requirement to have regard to specified matters under this section when making rules is in addition to any other requirements to have regard to matters when making such rules imposed by another provision of this Act or by any other enactment.”

“409AConsultation in relation to deference decisions

(1)

This section applies where a regulator is proposing to take a relevant action.

(2)

The regulator—

(a)

must consider the effect of the relevant action on notified deference decisions, and

(b)

if having done so it appears to the regulator that there is a material risk that the relevant action would be incompatible with a notified deference decision, must consult the Treasury about the likely effect of the action on the decision.

(3)

Subsection (2) applies only if a duty to consult applies in respect of the taking of the relevant action.

(4)

For the purposes of subsection (1) a regulator proposes to take a “relevant action” if—

(a)

it proposes to make rules under this Act or any other enactment, or

(b)

it proposes to make changes to its general policies and practices so far as relating to its supervisory functions under section 1L (FCA supervisory functions) or (as the case may be) section 2K (PRA supervisory functions).

(5)

For the purposes of subsection (2)—

(a)

“deference decision” means a decision of the Treasury that the law and practice of another country or territory is, so far as relating to financial services and markets, equivalent to the law and practice of the United Kingdom (either generally or as it relates to a particular matter);

(b)

a deference decision is a “notified deference decision” if the Treasury have, by notice in writing, informed the regulator that it is relevant for the purposes of this section;

(c)

a relevant action is “incompatible” with a notified deference decision if the action would result in the law and practice of the United Kingdom ceasing to be equivalent to the law and practice of the other country or territory to which the deference decision relates.

(6)

For the purposes of subsection (3) a duty to consult applies in respect of a relevant action if—

(a)

the duty imposed by section 138I or 138J to publish a draft of proposed rules applies in respect of the action, or

(b)

any other duty (whether or not imposed by a provision of this Act) to publish the proposal to take the action in question applies.

(7)

Section 138M(1) (consultation: exemptions for temporary product intervention rules) is to be ignored for the purposes of subsection (6) in determining whether a duty to consult applies in respect of a relevant action.

(8)

The requirement imposed by subsection (2)(b) must be carried out before the duty to consult in respect of the relevant action is carried out.

(9)

The requirements imposed by subsection (2) do not apply to the extent that the regulator takes a relevant action—

(a)

by the making of product intervention rules under section 137D if the condition in subsection (10) is met,

(b)

by the making of rules under Part 9C (see instead section 143G(3)),

(c)

by the making of rules under Part 9D (see instead section 144C(3)),

(d)

by the making of rules under Part 12B (see instead section 192XB(2)),

(e)

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 required macro-prudential measures), or

(f)

in order to act in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of functions).

(10)

The condition referred to in subsection (9)(a) is that the FCA considers it necessary not to comply with the requirement imposed by subsection (2) for the purpose of advancing—

(a)

the consumer protection objective, or

(b)

if an order under section 137D(1)(b) is in force, the integrity objective.”

“138BADisapplication or modification of rules in individual cases

(1)

This section applies to rules made by a regulator if, or to the extent that, regulations made by the Treasury provide for it to apply.

(2)

The regulator may, on the application or with the consent of a person who is subject to the rules, give the person a permission that enables the person—

(a)

not to apply the rules, or

(b)

to apply the rules with the modifications specified in the permission.

(3)

Subsections (1) and (2) do not apply to—

(a)

rules made by either regulator under section 64A (rules of conduct);

(b)

rules made by either regulator under section 137O (threshold condition code);

(c)

rules made by the FCA under section 247 (trust scheme rules), section 248 (scheme particular rules), section 261I (contractual scheme rules) or section 261J (contractual scheme particulars rules);

(d)

rules made by the FCA under section 309Z(1) (rules of conduct).

(4)

The regulator may—

(a)

give permission under this section subject to conditions, and

(b)

revoke or vary permission given under this section.

(5)

Regulations under subsection (1) may make provision about procedural matters in relation to the giving of permission under this section.

(6)

Provision under subsection (5) may (among other things) include provision about—

(a)

the making of applications;

(b)

the determination of applications (including matters to be taken into account in doing so);

(c)

the giving and withdrawal of consent;

(d)

requirements as to notification or publication of decisions of a regulator under this section;

(e)

appeals in respect of decisions of a regulator under this section.

(7)

Before making regulations under this section in relation to rules made by a regulator the Treasury must consult the regulator.”

“(2A)

The FCA must respond to each recommendation made to it under subsection (1) by notifying the Treasury in writing of—

(a)

action that the FCA has taken or intends to take in accordance with the recommendation, or

(b)

the reasons why the FCA has not acted or does not intend to act in accordance with the recommendation.

(2B)

The notice under subsection (2A) must be given before the end of 12 months beginning with the date the notice containing the recommendation was given under subsection (1).

(2C)

Where the FCA has given notice under subsection (2A) in relation to a recommendation, the FCA must by notice in writing update the Treasury on the matters mentioned in subsection (2A)(a) and (b) before the end of each subsequent period of 12 months.

(2D)

Subsection (2C) does not apply if the Treasury have notified the FCA in writing that no update (or further update) is required.

(2E)

The FCA is not required under subsection (2A) or (2C) to provide any information whose publication would in the opinion of the FCA be against the public interest.”

“(2A)

The Prudential Regulation Committee must respond to each recommendation made to it under subsection (1) by notifying the Treasury in writing of—

(a)

action that the Prudential Regulation Committee has taken or intends to take in accordance with the recommendation, or

(b)

the reasons why the Prudential Regulation Committee has not acted or does not intend to act in accordance with the recommendation.

(2B)

The notice under subsection (2A) must be given before the end of 12 months beginning with the date the notice containing the recommendation was given under subsection (1).

(2C)

Where the Prudential Regulation Committee has given notice under subsection (2A) in relation to a recommendation, it must by notice in writing update the Treasury on the matters mentioned in subsection (2A)(a) and (b) before the end of each subsequent period of 12 months.

(2D)

Subsection (2C) does not apply if the Treasury have notified the Prudential Regulation Committee in writing that no update (or further update) is required.

(2E)

The Prudential Regulation Committee is not required under subsection (2A) or (2C) to provide any information whose publication would in the opinion of the Committee be against the public interest.”

“Requirements for public consultation

1RBRequirements in connection with public consultations

(1)

This section applies where the FCA issues a public consultation.

(2)

The FCA must include information in the consultation about any engagement by the FCA with the statutory panels of the FCA, the PRA or the Payment Systems Regulator in relation to the matters being consulted on.

(3)

The FCA is not required under subsection (2) to include any information whose publication would in the opinion of the FCA be against the public interest.

(4)

For the purposes of this section, the FCA issues a public consultation if it publishes the draft of any proposals for the purpose of bringing them to the attention of the public (whether or not under a duty to do so imposed by an enactment).

(5)

In this section “statutory panel”—

(a)

in relation to the FCA, has the meaning given by section 1RA(8),

(b)

in relation to the PRA, has the meaning given by section 2NA(8), and

(c)

in relation to the Payment Systems Regulator, means a panel established under section 103(3) of the Financial Services (Banking Reform) Act 2013.”

“Requirements for public consultation

2NBRequirements in connection with public consultations

(1)

This section applies where the PRA issues a public consultation.

(2)

The PRA must include information in the consultation about any engagement by the PRA with the statutory panels of the FCA, the PRA or the Payment Systems Regulator in relation to the matters being consulted on.

(3)

The PRA is not required under subsection (2) to include any information whose publication would in the opinion of the PRA be against the public interest.

(4)

For the purposes of this section, the PRA issues a public consultation if it publishes the draft of any proposals for the purpose of bringing them to the attention of the public (whether or not under a duty to do so imposed by an enactment).

(5)

In this section “statutory panel” has the meaning given by section 1RB(5).”

“(5)

In this paragraph “statutory panel” has the meaning given in section 1RB(5).”

“(6)

In this paragraph “statutory panel” has the meaning given in section 1RB(5).”

“Engagement with Parliamentary Committees

28

(1)

This paragraph applies where the FCA issues a relevant consultation.

(2)

For the purposes of this paragraph the FCA issues a relevant consultation if it—

(a)

publishes a draft of proposed rules under section 138I,

(b)

publishes a proposal under a duty imposed by another provision of this Act or by any other enactment, or

(c)

publishes other proposals about the exercise of any of its general functions.

(3)

The FCA must, as soon as reasonably practicable after issuing the consultation, notify in writing the chair of each relevant Parliamentary Committee that the consultation has been issued.

(4)

The notification must specify the parts of the consultation (if any) that address the ways in which the proposals subject to consultation—

(a)

advance the FCA’s operational objectives,

(b)

are compatible with the FCA’s strategic objective,

(c)

demonstrate that the FCA has had regard to the regulatory principles in section 3B when preparing the proposals, and

(d)

engage with matters to which the FCA must have regard under regulations made under section 138EA.

(5)

The reference in sub-paragraph (4)(a) to the FCA’s operational objectives includes, in its application as a secondary objective, the competitiveness and growth objective (see section 1EB).

(6)

The notification must also specify any other part of the consultation which the FCA considers should be drawn to the attention of the relevant Parliamentary Committees.

(7)

References in this paragraph to the relevant Parliamentary Committees are references to—

(a)

the Treasury Committee of the House of Commons,

(b)

the Committee of the House of Lords which—

(i)

is charged with responsibility by that House for the purposes of this paragraph, and

(ii)

has notified the FCA that it is a relevant Parliamentary Committee for those purposes, and

(c)

the Joint Committee of both Houses which—

(i)

is charged with responsibility by those Houses for the purposes of this paragraph, and

(ii)

has notified the FCA that it is a relevant Parliamentary Committee for those purposes.

(8)

References in this paragraph to the Treasury Committee of the House of Commons—

(a)

if the name of that Committee is changed, are references to that Committee by its new name, and

(b)

if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, are to be treated as references to the Committee by which the functions are exercisable.

(9)

Any question arising under sub-paragraph (8) is to be determined by the Speaker of the House of Commons.

29

(1)

This paragraph applies where—

(a)

the FCA issues a public consultation, and

(b)

a Committee of the House of Commons or the House of Lords, or a joint Committee of both Houses, has provided to the FCA representations in response to the consultation.

(2)

For the purposes of this paragraph, the FCA issues a public consultation if it publishes the draft of any proposals for the purpose of bringing them to the attention of the public (whether or not under a duty to do so imposed by an enactment).

(3)

The FCA must give to the chair of the Committee concerned a written response to the representations.

(4)

The duty to respond imposed by sub-paragraph (3) applies only so far as the FCA would not be under a corresponding duty to do so imposed by another enactment.

(5)

The FCA is not required under sub-paragraph (3) to provide any information whose publication would in the opinion of the FCA be against the public interest.”

“Engagement with Parliamentary Committees

36

(1)

This paragraph applies where the PRA issues a relevant consultation.

(2)

For the purposes of this paragraph the PRA issues a relevant consultation if it—

(a)

publishes a draft of proposed rules under section 138J,

(b)

publishes a proposal under a duty imposed by another provision of this Act or by any other enactment, or

(c)

publishes other proposals about the exercise of any of its general functions.

(3)

The PRA must, as soon as reasonably practicable after issuing the consultation, notify in writing the chair of each relevant Parliamentary Committee that the consultation has been issued.

(4)

The notification must specify the parts of the consultation (if any) that address the ways in which the proposals subject to consultation—

(a)

advance the PRA’s objectives,

(b)

demonstrate that the PRA has had regard to the regulatory principles in section 3B when preparing the proposals, and

(c)

engage with matters to which the PRA must have regard under regulations made under section 138EA.

(5)

The reference in sub-paragraph (4)(a) to the PRA’s objectives includes, in their application as secondary objectives, the competition objective and the competitiveness and growth objective (see section 2H).

(6)

The notification must also specify any other part of the consultation which the PRA considers should be drawn to the attention of the relevant Parliamentary Committees.

(7)

References in this paragraph to the relevant Parliamentary Committees are references to—

(a)

the Treasury Committee of the House of Commons,

(b)

the Committee of the House of Lords which—

(i)

is charged with responsibility by that House for the purposes of this paragraph, and

(ii)

has notified the PRA that it is a relevant Parliamentary Committee for those purposes, and

(c)

the Joint Committee of both Houses which—

(i)

is charged with responsibility by those Houses for the purposes of this paragraph, and

(ii)

has notified the PRA that it is a relevant Parliamentary Committee for those purposes.

(8)

References in this paragraph to the Treasury Committee of the House of Commons—

(a)

if the name of that Committee is changed, are references to that Committee by its new name, and

(b)

if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, are to be treated as references to the Committee by which the functions are exercisable.

(9)

Any question arising under sub-paragraph (8) is to be determined by the Speaker of the House of Commons.

37

(1)

This paragraph applies where—

(a)

the PRA issues a public consultation, and

(b)

a Committee of the House of Commons or the House of Lords, or a joint Committee of both Houses, has provided to the PRA representations in response to the consultation.

(2)

For the purposes of this paragraph, the PRA issues a public consultation if it publishes the draft of any proposals for the purpose of bringing the proposals to the attention of the public (whether or not under a duty to do so imposed by an enactment).

(3)

The PRA must give to the chair of the Committee concerned a written response to the representations.

(4)

The duty to respond imposed by sub-paragraph (3) applies only so far as the PRA would not be under a corresponding duty to do so imposed by another enactment.

(5)

The PRA is not required under sub-paragraph (3) to provide any information whose publication would in the opinion of the PRA be against the public interest.”

“415CCo-operation and consultation in relation to exercise of functions

(1)

In exercising its functions under this Act a relevant organisation (“R”) must—

(a)

take such steps as R considers appropriate to co-operate with each of the other relevant organisations in relation to matters of interest to that organisation, and

(b)

consult such other persons as R considers appropriate in relation to any matters that R considers to be of interest to those persons.

(2)

A matter is of interest to another relevant organisation for the purposes of subsection (1) if it appears to R that it has, or is likely to have, significant implications in relation to—

(a)

the exercise by that other relevant organisation of functions under this Act, or

(b)

the functioning generally of relevant markets within the meaning of section 1F.

(3)

The relevant organisations must prepare and publish a statement of policy with respect to compliance with the duty under subsection (1).

(4)

The relevant organisations may alter or replace a statement published under subsection (3).

(5)

The relevant organisations must publish a statement as altered or replaced under subsection (4).

(6)

The relevant organisations—

(a)

must, at least once a year, prepare and publish a report on their compliance with the duty under subsection (1), and

(b)

must put in place arrangements enabling representations to be made about their compliance with that duty (whether by seeking representations in response to the report or otherwise).

(7)

Except in the case of the first report to be prepared under this section, a report prepared under subsection (6)(a) must include a summary of representations received in the preceding year in accordance with arrangements made under subsection (6)(b).

(8)

Publication under this section is to be made in such manner as the relevant organisations consider best designed to bring the publication to the attention of the public.

(9)

In this section “relevant organisation” means—

(a)

the FCA;

(b)

the scheme operator of the ombudsman scheme within the meaning of section 225(2);

(c)

the scheme manager of the Financial Services Compensation Scheme within the meaning of section 212.”

“138IAFCA Cost Benefit Analysis Panel

(1)

The FCA must establish and maintain a panel of persons (to be known as the “FCA Cost Benefit Analysis Panel”) to provide advice in relation to cost benefit analyses for the purposes of section 138I.

(2)

Except as provided by subsection (3), the FCA must consult the FCA Cost Benefit Analysis Panel about the following matters—

(a)

the preparation of a cost benefit analysis under section 138I(2)(a) or (5)(a);

(b)

the preparation of its statement of policy under section 138IB.

(3)

The requirement to consult under subsection (2)(a) does not apply in such cases as may be set out in the statement of policy maintained under section 138IB.

(4)

Arrangements made by the FCA under subsection (1) for the establishment and maintenance of the FCA Cost Benefit Analysis Panel must include arrangements for the Panel to—

(a)

keep under review how the FCA is performing generally in carrying out its duties under section 138I(2)(a) and (5)(a), and

(b)

provide to the FCA whatever recommendations the Panel thinks appropriate as a result of such review.

(5)

The FCA must appoint one of the members of the FCA Cost Benefit Analysis Panel to be the chair of the Panel.

(6)

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

(7)

The FCA must appoint to the FCA Cost Benefit Analysis Panel such persons with knowledge or experience of the preparation of cost benefit analyses as it considers appropriate.

(8)

The FCA must appoint to the FCA Cost Benefit Analysis Panel at least two individuals who are employed by persons authorised for the purposes of this Act by the FCA, with each one being employed by a different person.

(9)

The FCA may appoint to the FCA Cost Benefit Analysis Panel such other persons as it considers appropriate.

(10)

Subsections (7) to (9) are subject to section 1MA.

(11)

The FCA must consider representations that are made to it by the FCA Cost Benefit Analysis Panel.

(12)

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

“138JAPRA Cost Benefit Analysis Panel

(1)

The PRA must establish and maintain a panel of persons (to be known as the “PRA Cost Benefit Analysis Panel”) to provide advice in relation to cost benefit analyses for the purposes of section 138J.

(2)

Except as provided by subsection (3), the PRA must consult the PRA Cost Benefit Analysis Panel about the following matters—

(a)

the preparation of a cost benefit analysis under section 138J(2)(a) or (5)(a);

(b)

the preparation of its statement of policy under section 138JB.

(3)

The requirement to consult under subsection (2)(a) does not apply in such cases as may be set out in the statement of policy maintained under section 138JB.

(4)

Arrangements made by the PRA under subsection (1) for the establishment and maintenance of the PRA Cost Benefit Analysis Panel must include arrangements for the Panel to—

(a)

keep under review how the PRA is performing generally in carrying out its duties under section 138J(2)(a) and (5)(a), and

(b)

provide to the PRA whatever recommendations the Panel thinks appropriate as a result of such review.

(5)

The PRA must appoint one of the members of the PRA Cost Benefit Analysis Panel to be the chair of the Panel.

(6)

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

(7)

The PRA must appoint to the PRA Cost Benefit Analysis Panel such persons with knowledge or experience of the preparation of cost benefit analyses as it considers appropriate.

(8)

The PRA must appoint to the PRA Cost Benefit Analysis Panel at least two individuals who are employed by PRA-authorised persons, with each one being employed by a different person.

(9)

The PRA may appoint to the PRA Cost Benefit Analysis Panel such other persons as it considers appropriate.

(10)

Subsections (7) to (9) are subject to section 2LA.

(11)

The PRA must consider representations that are made to it by the PRA Cost Benefit Analysis Panel.

(12)

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

(13)

The reference in subsection (1) to section 138J includes a reference to that section as applied in relation to the Bank of England by paragraphs 10(1) and 10A of Schedule 17A.”

“138IBStatement of policy in relation to cost benefit analyses

(1)

The FCA must prepare and publish a statement of policy in relation to the preparation of cost benefit analyses for the purposes of section 138I.

(2)

The statement must provide information about—

(a)

the methodology adopted in preparing cost benefit analyses;

(b)

matters to which the FCA has regard in determining whether section 138I(8) applies;

(c)

matters to which the FCA has regard in determining whether an exemption under section 138L applies in relation to the preparation of a cost benefit analysis;

(d)

arrangements to ensure that representations in connection with a cost benefit analysis that are made in accordance with section 138I(2)(e) are considered;

(e)

cases in which the requirement to consult the FCA Cost Benefit Analysis Panel in relation to the preparation of a cost benefit analysis does not apply;

(f)

arrangements to ensure that any recommendations in connection with cost benefit analyses that are made following a review carried out under section 138IA(4) are considered.

(3)

The statement may include whatever other information in relation to cost benefit analyses that the FCA considers appropriate.

(4)

The FCA may alter or replace a statement published under this section.

(5)

The FCA must publish a statement as altered or replaced under subsection (4).

(6)

Publication under this section is to be made in such manner as the FCA considers best designed to bring the statement to the attention of the public.”

“138JBStatement of policy in relation to cost benefit analyses

(1)

The PRA must prepare and publish a statement of policy in relation to the preparation of cost benefit analyses for the purposes of section 138J.

(2)

The statement must provide information about—

(a)

the methodology adopted in preparing cost benefit analyses;

(b)

matters to which the PRA has regard in determining whether section 138J(8) applies;

(c)

matters to which the PRA has regard in determining whether an exemption under section 138L applies in relation to the preparation of a cost benefit analysis;

(d)

arrangements to ensure that representations in connection with a cost benefit analysis that are made in accordance with section 138J(2)(e) are considered;

(e)

cases in which the requirement to consult the PRA Cost Benefit Analysis Panel in relation to the preparation of a cost benefit analysis does not apply;

(f)

arrangements to ensure that any recommendations in connection with cost benefit analyses that are made following a review carried out under section 138JA(4) are considered.

(3)

The statement may include whatever other information in relation to cost benefit analyses that the PRA considers appropriate.

(4)

The PRA may alter or replace a statement published under this section.

(5)

The PRA must publish a statement as altered or replaced under subsection (4).

(6)

Publication under this section is to be made in such manner as the PRA considers best designed to bring the statement to the attention of the public.”

“1RAStatement of policy on panel appointments

(1)

The FCA must prepare and publish a statement of policy in relation to the appointment of members of its statutory panels.

(2)

The statement must provide information about—

(a)

the process adopted for making appointments;

(b)

matters considered in determining who is appointed.

(3)

The statement may provide whatever other information in relation to the making of appointments that the FCA considers appropriate.

(4)

The FCA may alter or replace a statement published under this section.

(5)

The FCA must publish a statement as altered or replaced under subsection (4).

(6)

Before publishing a statement under this section the FCA must—

(a)

consult the Treasury about the proposed statement, and

(b)

have regard to any representations the Treasury make in response to the consultation.

(7)

Publication under this section is to be made in such manner as the FCA considers best designed to bring the statement to the attention of the public.

(8)

In this section “statutory panel” means a panel established under section 1N, 1O, 1P, 1Q, 1QA or 138IA.”

“2NAStatement of policy on panel appointments

(1)

The PRA must prepare and publish a statement of policy in relation to the appointment of members of its statutory panels.

(2)

The statement must provide information about—

(a)

the process adopted for making appointments;

(b)

matters considered in determining who is appointed.

(3)

The statement may provide whatever other information in relation to the making of appointments that the PRA considers appropriate.

(4)

The PRA may alter or replace a statement published under this section.

(5)

The PRA must publish a statement as altered or replaced under subsection (4).

(6)

Before publishing a statement under this section the PRA must—

(a)

consult the Treasury about the proposed statement, and

(b)

have regard to any representations the Treasury make in response to the consultation.

(7)

Publication under this section is to be made in such manner as the PRA considers best designed to bring the statement to the attention of the public.

(8)

In this section “statutory panel” means a panel established under section 2M, 2MA or 138JA.”

“1MAComposition of Panels

(1)

A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under any of sections 1N to 1QA or 138IA.

(2)

Subsection (1) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.

(3)

Regulations under subsection (2) may make provision in respect of a panel—

(a)

generally, or

(b)

only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).”

“(6)

Subsections (4) and (5) are subject to section 1MA.”

“(6A)

Subsections (5) and (6) are subject to section 1MA.”

“(7)

Subsections (4) to (6) are subject to section 1MA.”

“(4A)

Subsection (4) is subject to section 1MA.”

“2LAComposition of Panels

(1)

A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under any of sections 2M, 2MA or 138JA.

(2)

Subsection (1) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.

(3)

Regulations under subsection (2) may make provision in respect of a panel—

(a)

generally, or

(b)

only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).”

“(6)

Subsections (4) and (5) are subject to section 2LA.”

“(5A)

A person who receives remuneration from the FCA, the PRA, the Payment Systems Regulator, the Bank of England or the Treasury is disqualified from being appointed as a member of a panel established under subsection (3).

(5B)

Subsection (5A) does not apply in respect of a panel mentioned in that subsection if regulations made by the Treasury provide for it not to apply to that panel.

(5C)

Regulations under subsection (5B) may make provision in respect of a panel—

(a)

generally, or

(b)

only in relation to such descriptions of persons or cases as the regulations may specify (but the power to make such regulations may not be exercised so as to specify persons by name).”