The Financial Services and Markets Act 2000 (Transitional Provisions) (Authorised Persons etc. ) Order 2001

Explanatory Note

(This note does not form part of the Order)

This Order sets out the transitional arrangements for ensuring that people who have been authorised to carry on particular business under the various regulatory regimes replaced by the Financial Services and Markets Act 2000 (c. 8) (“the Act”) are treated as authorised persons with the appropriate permission for the purposes of that Act. The current regulatory regimes covered by this Order are the Financial Services Act 1986 (c. 60), the Banking Act 1987 (c. 22), the Insurance Companies Act 1982 (c. 50), the Friendly Societies Act 1992 (c. 40), the Building Societies Act 1986 (c. 53), the Banking Coordination (Second Council Directive) Regulations 1992 (S.I. 1992/3218) and the Investment Services Regulations 1995 (S.I. 1995/3275).

Part I of the Order specifies the commencement dates for different provisions of the Order and defines certain terms used in the Order.

Part II provides that people who are authorised or exempted from the need for authorisation under certain provisions of the current regulatory regimes are treated, on the commencement of the Act, has having permission to carry on the activities they were able lawfully to carry on immediately before commencement by reason of that authorisation or exemption. Chapter II of this Part provides that EEA firms who have complied with the procedure for exercising their passporting rights into the United Kingdom are treated as having complied with the procedures in Schedule 3 to the Act.

Part III provides that prohibitions and restrictions imposed under certain provisions in the current regulatory regimes on authorised people are carried forward after commencement as if they were requirements imposed under section 43 of the Act (in relation to people with a Part IV permission) or under section 196 of the Act (in relation to people with a permission under Schedule 3 or 4 to the Act).

Part IV of the Order sets out the procedure to be undergone before commencement to clarify the scope of any permission conferred on a person by the transitional provisions and to determine any disputes over that scope between the authorised person and the Financial Services Authority. The Authority has a duty to issue notices of scope to each authorised person setting out its view of what permission the person has at commencement. A person who disagrees with the Authority’s view set out in the notice may make representations and, if the issue is not resolved, may refer the matter to the Financial Services and Markets Tribunal. Once the notice of scope is settled either by agreement or by the Tribunal, the content of that notice is conclusive as to the scope of permission at commencement.

Part V covers the status after commencement of collective investment schemes which were authorised or recognised under Chapter VIII of Part I of the Financial Services Act. The authorised or recognised status of such schemes is carried forward as if it had been conferred under the corresponding provision in Part XVII of the Act.

Part VI makes transitional provisions for people working for authorised persons who will be covered by the regime for approved persons in Part V of the Act after commencement. Where someone is working for an authorised person before commencement in a post for which they would need to be approved under Part V after commencement, that person is treated has having been approved for the purpose of working in that post. This deemed approval applies unless the person was working before commencement in contravention of certain provisions of the current regulatory rules or of rules made by a self-regulating organisation. The articles also carry forward approvals given under the Insurance Companies Act 1982 and the Banking Act 1987 where the person approved did not take up the appointment before commencement.

Part VII covers the status of other people covered by the Act. Article 77 concerns firms established in the United Kingdom who have, before commencement, exercised their rights under one of the single market directives to establish a branch or provide services in another EEA member State. Firms who have exercised these rights are treated as if they had exercised rights under the corresponding provisions in Schedule 3 to the Act. Article 78 provides that an auditor who was disqualified from acting under previous legislation is treated as having been disqualified under the Act and similarly, article 51 provides that a person prohibited from working for an authorised person under previous legislation is treated as subject to a prohibition order under section 56 of the Act. Article 80 carries forward the status of international securities self-regulating organisations.