Financial Services and Markets Bill - continued        House of Lords

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  PART XX
  PROVISION OF FINANCIAL SERVICES BY MEMBERS OF THE PROFESSIONS
Authority's general duty.     318. - (1) The Authority must keep itself informed about-
 
 
    (a) the way in which designated professional bodies supervise and regulate the carrying on of exempt regulated activities by members of the professions in relation to which they are established;
 
    (b) the way in which such members are carrying on exempt regulated activities.
      (2) In this Part-
 
 
    "exempt regulated activities" means regulated activities which may, as a result of this Part, be carried on by members of a profession which is supervised and regulated by a designated professional body without breaching the general prohibition; and
 
    "members", in relation to a profession, means persons who are entitled to practise the profession in question and, in practising it, are subject to the rules of the body designated in relation to that profession, whether or not they are members of that body.
      (3) The Authority must keep under review the desirability of exercising any of its powers under this Part.
 
      (4) Each designated professional body must co-operate with the Authority, by the sharing of information and in other ways, in order to enable the Authority to perform its functions under this Part.
 
Designation of professional bodies.     319. - (1) The Treasury may by order designate bodies for the purposes of this Part.
 
      (2) A body designated under subsection (1) is referred to in this Part as a designated professional body.
 
      (3) The Treasury may designate a body under subsection (1) only if they are satisfied that-
 
 
    (a) the basic condition, and
 
    (b) one or more of the additional conditions,
       are met in relation to it.
 
      (4) The basic condition is that the body has rules applicable to the carrying on by members of the profession in relation to which it is established of regulated activities which, if the body were to be designated, would be exempt regulated activities.
 
      (5) The additional conditions are that-
 
 
    (a) the body has power under any enactment to regulate the practice of the profession;
 
    (b) being a member of the profession is a requirement under any enactment for the exercise of particular functions or the holding of a particular office;
 
    (c) the body has been recognised for the purpose of any enactment other than this Act and the recognition has not been withdrawn;
 
    (d) the body is established in an EEA State other than the United Kingdom and in that State-
 
      (i) the body has power corresponding to that mentioned in paragraph (a);
 
      (ii) there is a requirement in relation to the body corresponding to that mentioned in paragraph (b); or
 
      (iii) the body is recognised in a manner corresponding to that mentioned in paragraph (c).
      (6) "Enactment" includes an Act of the Scottish Parliament, Northern Ireland legislation and subordinate legislation (whether made under an Act, an Act of the Scottish Parliament or Northern Ireland legislation).
 
      (7) "Recognised" means recognised by-
 
 
    (a) a Minister of the Crown;
 
    (b) the Scottish Ministers;
 
    (c) a Northern Ireland Minister;
 
    (d) a Northern Ireland department or its head.
Exemption from the general prohibition.     320. - (1) The general prohibition does not apply to the carrying on of a regulated activity by a person ("P") if-
 
 
    (a) the conditions set out in subsections (2) to (7) are satisfied; and
 
    (b) there is not in force-
 
      (i) a direction under section 321, or
 
      (ii) an order under section 322,
 
    which prevents this subsection from applying to the carrying on of that activity by him.
      (2) P must be-
 
 
    (a) a member of a profession; or
 
    (b) controlled or managed by one or more such members.
      (3) P must not receive from a person other than his client any pecuniary reward or other advantage, for which he does not account to his client, arising out of his carrying on of any of the activities.
 
      (4) The manner of the provision by P of any service in the course of carrying on the activities must be incidental to the provision by him of professional services.
 
      (5) P must not carry on, or hold himself out as carrying on, a regulated activity other than-
 
 
    (a) one which rules made as a result of section 325(3) allow him to carry on; or
 
    (b) one in relation to which he is an exempt person.
      (6) The activities must not be of a description, or relate to an investment of a description, specified in an order made by the Treasury for the purposes of this subsection.
 
      (7) The activities must be the only regulated activities carried on by P (other than regulated activities in relation to which he is an exempt person).
 
      (8) "Professional services" means services-
 
 
    (a) which do not constitute carrying on a regulated activity, and
 
    (b) the provision of which is supervised and regulated by a designated professional body.
Directions in relation to the general prohibition.     321. - (1) The Authority may direct that section 320(1) is not to apply to the extent specified in the direction.
 
      (2) A direction under subsection (1)-
 
 
    (a) must be in writing;
 
    (b) may be given in relation to different classes of person or different descriptions of regulated activity.
      (3) A direction under subsection (1) must be published in the way appearing to the Authority to be best calculated to bring it to the attention of the public.
 
      (4) The Authority may charge a reasonable fee for providing a person with a copy of the direction.
 
      (5) The Authority must, without delay, give the Treasury a copy of any direction which it gives under this section.
 
      (6) The Authority may exercise the power conferred by subsection (1) only if it is satisfied that it is desirable in order to protect the interests of clients.
 
      (7) In considering whether it is so satisfied, the Authority must have regard amongst other things to the effectiveness of any arrangements made by any designated professional body-
 
 
    (a) for securing compliance with rules made under section 325(1);
 
    (b) for dealing with complaints against its members in relation to the carrying on by them of exempt regulated activities;
 
    (c) in order to offer redress to clients who suffer, or claim to have suffered, loss as a result of misconduct by its members in their carrying on of exempt regulated activities;
 
    (d) for co-operating with the Authority under section 318(4).
      (8) In this Part "clients" means-
 
 
    (a) persons who use, have used or are or may be contemplating using, any of the services provided by a member of a profession in the course of carrying on exempt regulated activities;
 
    (b) persons who have rights which are derived from, or otherwise attributable to, or which may be adversely affected by, the use of such services by other persons.
      (9) If a member of a profession is carrying on an exempt regulated activity in his capacity as a trustee, the persons who are, have been or may be beneficiaries of the trust are to be treated as persons who use, have used or are or may be contemplating using services provided by that person in his carrying on of that activity.
 
Orders in relation to the general prohibition.     322. - (1) Subsection (2) applies if it appears to the Authority that a person to whom, as a result of section 320(1), the general prohibition does not apply is not a fit and proper person to carry on regulated activities in accordance with that section.
 
      (2) The Authority may make an order disapplying section 320(1) in relation to that person to the extent specified in the order.
 
      (3) The Authority may, on the application of the person named in an order under subsection (1), vary or revoke it.
 
      (4) "Specified" means specified in the order.
 
      (5) If a partnership is named in an order under this section, the order is not affected by any change in its membership.
 
      (6) If a partnership named in an order under this section is dissolved, the order continues to have effect in relation to any partnership which succeeds to the business of the dissolved partnership.
 
      (7) For the purposes of subsection (6), a partnership is to be regarded as succeeding to the business of another partnership only if-
 
 
    (a) the members of the resulting partnership are substantially the same as those of the former partnership; and
 
    (b) succession is to the whole or substantially the whole of the business of the former partnership.
Consultation.     323. - (1) Before giving a direction under section 321(1), the Authority must publish a draft of the proposed direction.
 
      (2) The draft must be accompanied by-
 
 
    (a) a cost benefit analysis; and
 
    (b) notice that representations about the proposed direction may be made to the Authority within a specified time.
      (3) Before giving the proposed direction, the Authority must have regard to any representations made to it in accordance with subsection (2)(b).
 
      (4) If the Authority gives the proposed direction it must publish an account, in general terms, of-
 
 
    (a) the representations made to it in accordance with subsection (2)(b); and
 
    (b) its response to them.
      (5) If the direction differs from the draft published under subsection (1) in a way which is, in the opinion of the Authority, significant-
 
 
    (a) the Authority must (in addition to complying with subsection (4)) publish details of the difference; and
 
    (b) those details must be accompanied by a cost benefit analysis.
      (6) Subsections (1) to (5) do not apply if the Authority considers that the delay involved in complying with them would prejudice the interests of consumers.
 
      (7) Neither subsection (2)(a) nor subsection (5)(b) applies if the Authority considers-
 
 
    (a) that, making the appropriate comparison, there will be no increase in costs; or
 
    (b) that, making that comparison, there will be an increase in costs but the increase will be of minimal significance.
      (8) The Authority may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
 
      (9) When the Authority is required to publish a document under this section it must do so in the way appearing to it to be best calculated to bring it to the attention of the public.
 
      (10) "Cost benefit analysis" means an estimate of the costs together with an analysis of the benefits that will arise-
 
 
    (a) if the proposed direction is given; or
 
    (b) if subsection (5)(b) applies, from the direction that has been given.
      (11) "The appropriate comparison" means-
 
 
    (a) in relation to subsection (2)(a), a comparison between the overall position if the direction is given and the overall position if it is not given;
 
    (b) in relation to subsection (5)(b), a comparison between the overall position after the giving of the direction and the overall position before it was given.
 
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