Financial Services and Markets Bill - continued        House of Lords

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  PART V
  PERFORMANCE OF REGULATED ACTIVITIES
 
Prohibition orders
Prohibition orders.     55. - (1) Subsection (2) applies if it appears to the Authority that an individual is not a fit and proper person to perform functions in relation to a regulated activity carried on by an authorised person.
 
      (2) The Authority may make an order ("a prohibition order") prohibiting the individual from performing a specified function, any function falling within a specified description or any function.
 
      (3) A prohibition order may relate to-
 
 
    (a) a specified regulated activity, any regulated activity falling within a specified description or all regulated activities;
 
    (b) authorised persons generally or to any person within a specified class of authorised person.
      (4) An individual who performs or agrees to perform a function in breach of a prohibition order is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.
 
      (5) An authorised person must take reasonable care to ensure that no function of his, in relation to the carrying on of a regulated activity, is performed by a person who is prohibited from performing that function by a prohibition order.
 
      (6) The Authority may, on the application of the individual named in a prohibition order, vary or revoke it.
 
      (7) This section applies to the performance of functions in relation to a regulated activity carried on by-
 
 
    (a) a person who is an exempt person in relation to that activity, and
 
    (b) a person to whom, as a result of Part XX, the general prohibition does not apply in relation to that activity,
  as it applies to the performance of functions in relation to a regulated activity carried on by an authorised person.
 
      (8) "Specified" means specified in the prohibition order.
 
Prohibition orders: procedure and right to refer to Tribunal.     56. - (1) If the Authority proposes to make a prohibition order it must give the individual concerned a warning notice.
 
      (2) The warning notice must set out the terms of the prohibition.
 
      (3) If the Authority decides to make a prohibition order it must give the individual concerned a decision notice.
 
      (4) The decision notice must-
 
 
    (a) name the individual to whom the prohibition order applies;
 
    (b) set out the terms of the order; and
 
    (c) be given to the individual named in the order.
      (5) A person against whom a decision to make a prohibition order is made may refer the matter to the Tribunal.
 
Applications relating to prohibitions: procedure and right to refer to Tribunal.     57. - (1) This section applies to an application for the variation or revocation of a prohibition order.
 
      (2) If the Authority decides to grant the application, it must give the applicant written notice of its decision.
 
      (3) If the Authority proposes to refuse the application, it must give the applicant a warning notice.
 
      (4) If the Authority refuses the application, it must give the applicant a decision notice.
 
      (5) If the application is refused, the applicant may refer the matter to the Tribunal.
 
 
Approval
Approval for particular arrangements.     58. - (1) An authorised person ("A") must take reasonable care to ensure that no person performs a controlled function under an arrangement entered into by A in relation to the carrying on by A of a regulated activity, unless the Authority approves the performance by that person of the controlled function to which the arrangement relates.
 
      (2) An authorised person ("A") must take reasonable care to ensure that no person performs a controlled function under an arrangement entered into by a contractor of A in relation to the carrying on by A of a regulated activity, unless the Authority approves the performance by that person of the controlled function to which the arrangement relates.
 
      (3) "Controlled function" means a function of a description specified in rules.
 
      (4) The Authority may specify a description of function under subsection (3) only if, in relation to the carrying on of a regulated activity by an authorised person, it is satisfied that the first, second or third condition is met.
 
      (5) The first condition is that the function is likely to enable the person responsible for its performance to exercise a significant influence on the conduct of the authorised person's affairs, so far as relating to the regulated activity.
 
      (6) The second condition is that the function will involve the person performing it in dealing with customers of the authorised person in a manner substantially connected with the carrying on of the regulated activity.
 
      (7) The third condition is that the function will involve the person performing it in dealing with property of customers of the authorised person in a manner substantially connected with the carrying on of the regulated activity.
 
      (8) Neither subsection (1) nor subsection (2) applies to an arrangement which allows a person to perform a function if the question of whether he is a fit and proper person to perform the function is reserved under any of the single market directives to an authority in a country or territory outside the United Kingdom.
 
      (9) In determining whether the first condition is met, the Authority may take into account the likely consequences of a failure to discharge that function properly.
 
      (10) "Arrangement"-
 
 
    (a) means any kind of arrangement for the performance of a function of A which is entered into by A or any contractor of his with another person; and
 
    (b) includes, in particular, that other person's appointment to an office, his becoming a partner or his employment (whether under a contract of service or otherwise).
      (11) "Customer", in relation to an authorised person, means a person who is using, or who is or may be contemplating using, any of the services provided by the authorised person.
 
Applications for approval.     59. - (1) An application for the Authority's approval under section 58 may be made by the authorised person concerned.
 
      (2) The application must-
 
 
    (a) be made in such manner as the Authority may direct; and
 
    (b) contain, or be accompanied by, such information as the Authority may reasonably require.
      (3) At any time after receiving the application and before determining it, the Authority may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application.
 
      (4) The Authority may require an applicant to present information which he is required to give under this section in such form, or to verify it in such a way, as the Authority may direct.
 
      (5) Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.
 
      (6) "The authorised person concerned" includes a person who has applied for permission under Part IV and will be the authorised person concerned if permission is given.
 
Determination of applications.     60. - (1) The Authority may grant an application made under section 59 only if it is satisfied that the person in respect of whom the application is made ("the candidate") is a fit and proper person to perform the function to which the application relates.
 
      (2) In deciding that question, the Authority may have regard (among other things) to whether the candidate, or any person who may perform a function on his behalf-
 
 
    (a) has obtained a qualification,
 
    (b) has undergone, or is undergoing, training, or
 
    (c) possesses a level of competence,
  required by general rules in relation to persons performing functions of the kind to which the application relates.
 
      (3) The Authority must, before the end of the period of three months beginning with the date on which it receives an application made under section 59 ("the period for consideration"), determine whether-
 
 
    (a) to grant the application; or
 
    (b) to give a warning notice under section 61(2).
      (4) If the Authority imposes a requirement under section 59(3), the period for consideration stops running on the day on which the requirement is imposed but starts running again-
 
 
    (a) on the day on which the required information is received by the Authority; or
 
    (b) if the information is not provided on a single day, on the last of the days on which it is received by the Authority.
      (5) A person who makes an application under section 59 may withdraw his application by giving written notice to the Authority at any time before the Authority determines it, but only with the consent of-
 
 
    (a) the candidate; and
 
    (b) the person by whom the candidate is to be retained to perform the function concerned, if not the applicant.
 
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Prepared 31 March 2000