(This note does not form part of the Order)
This Order specifies the kinds of activities and investments which are controlled activities and controlled investments for the purposes of section 21 of the Financial Services and Markets Act 2000 (c. 8) (“the Act”). Any invitation or inducement which is made in the course of business and which invites or induces someone either to enter into an agreement the making of which constitutes a controlled activity or to exercise rights conferred by a controlled investment is subject to the restriction imposed by section 21(1). Section 21(1) precludes anyone from communicating such an invitation or inducement unless either he is an authorised person within the meaning of the Act or the content of the communication is approved by an authorised person. Contravention of that prohibition is a criminal offence.
The Order also sets out, pursuant to the power in section 21(6) of the Act, a number of exemptions from the restriction on financial promotions. Some of these exemptions apply in relation to all kinds of controlled activities and some relate to some activities only.
Part I of the Order makes provision for the citation and commencement of the Order and sets out the definitions of some terms used in the Order. The Order comes into force for most purposes on the date when section 19 of the Act comes into force but it comes into force at later dates in relation to the provision of funeral plan contracts and qualifying credit. Provisions in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) address the application of certain provisions of the Consumer Credit Act 1974 (c. 39) to communications relating to qualifying credit.
Article 4 in Part II defines the terms “controlled activities” and “controlled investment” for the purposes of section 21 of the Act, by referring to the activities and investments set out in Schedule 1 to the Order.
Part III of the Order provides further definitions of terms that are used in the subsequent provisions conferring exemptions on certain kinds of communications. Article 10 provides that none of the exemptions set out in the Order applies where the communication invites or induces a person to enter into certain contracts of insurance with an insurer other than one falling within the categories listed. Article 11 provides that different combinations of exemptions can be relied on in relation to a single communication.
Part IV of the Order sets out some exemptions which apply to communications relating to all kinds of controlled activity.
Part V sets out exemptions which apply only to communications which invite or induce people to enter into an agreement with a deposit taker or with an insurer (in relation to general insurance and certain kinds of long term insurance contracts). These exemptions and the exemptions in Part IV are the only ones which are conferred in respect of these controlled activities.
Part VI of the Order sets out exemptions which apply to communications relating to some or all investments other than deposits and those insurance contracts covered by Part V. Some of these exemptions depend on whether the communicator and the recipient are present in the United Kingdom. Some depend on the kind of business in the course of which the communicator makes the communication and some depend on the identity of the recipient of the communication.
Part VII of the Order contains transitional provision for cases where the content of the communication was approved prior to commencement of the Order but the communication is made after article 74 comes into force.
Schedule 1 to the Order lists the controlled activities and controlled investments which set the scope of what is meant by “engaging in investment activity” for the purposes of the restriction imposed by section 21 of the Act.
Schedule 2 lists the countries or territories in which an insurer may be established in order for the exemptions relating to insurance business to apply to invitations or inducements to do business with him.
Schedule 3 lists certain investment exchanges in Europe and elsewhere in the world for the purpose of the exemptions which relate to communications by such markets or in relation to investments traded on such markets.
Schedule 4 sets out information which must be made available to recipients of communications arising in the course of the takeover of an unlisted company for the purposes of articles 63 and 64 of the Order.