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Session 1999-2000
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Financial Services and Markets Bill

This is the text of the Financial Services and Markets Bill, as amended on Report in the House of Lords and printed on 9th May 2000.

 
 
  
Financial Services and Markets Bill
 
 
 
 
ARRANGEMENT OF CLAUSES

PART I
THE REGULATOR
Clause 
1.The Financial Services Authority.
The Authority's general duties
2.The Authority's general duties.

The regulatory objectives
3.Market confidence.
4.Public awareness.
5.The protection of consumers.
6.The reduction of financial crime.

Arrangements for consulting practitioners and consumers
7.The Authority's general duty to consult.
8.The Practitioner Panel.
9.The Consumer Panel.

Reviews
10.Reviews.
11.Right to obtain documents and information.

Inquiries
12.Cases in which the Treasury may arrange independent inquiries.
13.Power to appoint person to hold an inquiry.
14.Powers of appointed person and procedure.
15.Conclusion of inquiry.
16.Obstruction and contempt.

PART II
REGULATED AND PROHIBITED ACTIVITIES
The general prohibition
17.The general prohibition.

Requirement for permission
18.Authorised persons acting without permission.

Financial promotion
19.Restrictions on financial promotion.

Regulated activities
20.The classes of activity and categories of investment.

Offences
21.Contravention of the general prohibition.
22.False claims to be authorised or exempt.
23.Contravention of section 19.

Enforceability of agreements
24.Agreements made by unauthorised persons.
25.Agreements made through unauthorised persons.
26.Agreements made unenforceable by section 24 or 25.
27.Deposit-taking in breach of general prohibition.
28.Enforceability of agreements resulting from unlawful communications.

PART III
AUTHORISATION AND EXEMPTION
Authorisation
29.Authorised persons.
30.Partnerships and unincorporated associations.

Ending of authorisation
31.Withdrawal of authorisation by the Authority.
32.EEA firms.
33.Treaty firms.
34.Persons authorised as a result of paragraph 1(1) of Schedule 5.

Exercise of EEA rights by UK firms
35.Exercise of EEA rights by UK firms.

Exemption
36.Exemption orders.
37.Exemption of appointed representatives.

PART IV
PERMISSION TO CARRY ON REGULATED ACTIVITIES
Application for permission
38.Application for permission.
39.The threshold conditions.

Permission
40.Giving permission.
41.Imposition of requirements.

Variation and cancellation of Part IV permission
42.Variation etc. at request of authorised person.
43.Variation etc. on the Authority's own initiative.
44.Variation of permission on acquisition of control.
45.Exercise of powers in support of overseas regulator.
46.Prohibitions and restrictions.

Connected persons
47.Persons connected with an applicant.

Additional permissions
48.Authority's duty to consider other permissions etc.

Procedure
49.Applications under this Part.
50.Determination of applications.
51.Exercise of own-initiative power: procedure.
52.Cancellation of Part IV permission: procedure.

References to the Tribunal
53.Right to refer matters to the Tribunal.

PART V
PERFORMANCE OF REGULATED ACTIVITIES
Prohibition orders
54.Prohibition orders.
55.Prohibition orders: procedure and right to refer to Tribunal.
56.Applications relating to prohibitions: procedure and right to refer to Tribunal.

Approval
57.Approval for particular arrangements.
58.Applications for approval.
59.Determination of applications.
60.Applications for approval: procedure and right to refer to Tribunal.
61.Withdrawal of approval.

Conduct
62.Conduct: statements and codes.
63.Statements and codes: procedure.
64.Disciplinary powers.
65.Disciplinary measures: procedure and right to refer to Tribunal.
66.Publication.
67.Statement of policy.
68.Statements of policy: procedure.

Breach of statutory duty
69.Actions for damages.

PART VI
OFFICIAL LISTING
The competent authority
70.The competent authority.
71.General duty of the competent authority.

The official list
72.The official list.

Listing
73.Applications for listing.
74.Decision on application.
75.Discontinuance and suspension of listing.
76.Discontinuance or suspension: procedure.

Listing particulars
77.Listing particulars and other documents.
78.General duty of disclosure in listing particulars.
79.Supplementary listing particulars.
80.Exemptions from disclosure.
81.Registration of listing particulars.

Prospectuses
82.Prospectuses.
83.Publication of prospectus.
84.Application of this Part to prospectuses.
85.Approval of prospectus where no application for listing.

Sponsors
86.Sponsors.

Compensation
87.Compensation for false or misleading particulars.

Penalties
88.Penalties for breach of listing rules.
89.Warning notices.
90.Statement of policy.
91.Statements of policy: procedure.

Competition
92.Competition scrutiny.

Miscellaneous
93.Obligations of issuers of listed securities.
94.Appointment by competent authority of persons to carry out investigations.
95.Advertisements etc. in connection with listing applications.
96.Fees.
97.Penalties.
98.Listing rules: general provisions.
99.Exemption from liability in damages.
100.Interpretation of this Part.

PART VII
CONTROL OF BUSINESS TRANSFERS
101.Control of business transfers.
102.Insurance business transfer schemes.
103.Banking business transfer scheme.
104.Application for order sanctioning transfer scheme.
105.Requirements on applicants.
106.Scheme reports.
107.Right to participate in proceedings.
108.Sanction of the court for business transfer schemes.
109.Effect of order sanctioning business transfer scheme.
110.Appointment of actuary in relation to reduction of benefits.
111.Rights of certain policyholders.

Business transfers outside the United Kingdom
112.Certificates for purposes of insurance business transfers overseas.
113.Effect of insurance business transfers authorised in other EEA States.

PART VIII
PENALTIES FOR MARKET ABUSE
Market abuse
114.Market abuse.

The Code
115.The Code.
116.Codes: procedure.
117.Effect of the Code.

Power to impose penalties
118.Power to impose penalties in cases of market abuse.

Statement of policy
119.Statement of policy.
120.Statements of policy: procedure.

Procedure
121.Warning notices.
122.Decision notices and right to refer to Tribunal.

Miscellaneous
123.Suspension of investigations.
124.Power of court to impose penalty in cases of market abuse.
125.Guidance.
126.Effect on transactions.

PART IX
HEARINGS AND APPEALS
127.The Financial Services and Markets Tribunal.
128.Proceedings: general provision.

Legal assistance before the Tribunal
129.Legal assistance scheme.
130.Provisions of the legal assistance scheme.
131.Funding of the legal assistance scheme.

Appeals
132.Further appeal on a point of law.

PART X
RULES AND GUIDANCE
CHAPTER I
RULE-MAKING POWERS
133.General rule-making power.
134.Miscellaneous ancillary matters.
135.Restriction on managers of authorised unit trust schemes.
136.Insurance business rules.
137.Insurance business: regulations supplementing Authority's rules.
138.Endorsement of codes etc. issued by other bodies.

Price stabilising and certain other rules
139.Price stabilising rules.
140.Financial promotion rules.
141.Money laundering rules.
142.Control of information.

Modification or waiver
143.Modification or waiver of rules.

Contravention of rules
144.Evidential provisions.
145.Actions for damages.
146.Limits on effect of contravening rules.

Procedural provisions
147.Notification of rules to Treasury.
148.Rule-making instruments.
149.Verification of rules.
150.Consultation.
151.General supplementary powers.

CHAPTER II
GUIDANCE
152.Guidance.
153.Notification of guidance to Treasury.

CHAPTER III
COMPETITION SCRUTINY
154.Interpretation.
155.Reports by Director General of Fair Trading.
156.Power of the Director to request information.
157.Consideration by Competition Commission.
158.Role of the Treasury.
159.The Competition Act 1998.

PART XI
INFORMATION GATHERING AND INVESTIGATIONS
Powers to gather information
160.Authority's power to require information.
161.Reports by skilled persons.

Appointment of investigators
162.Appointment of persons to carry out general investigations.
163.Appointment of persons to carry out investigations in particular cases.

Assistance to overseas regulators
164.Investigations etc. in support of overseas regulator.

Conduct of investigations
165.Investigations: general.
166.Powers of persons appointed under section 162.
167.Additional power of persons appointed as a result of section 163(1) or (4).
168.Powers of person appointed to investigate as a result of section 163(2).
169.Admissibility of statements made to investigators.
170.Information and documents: supplemental provisions.
171.Entry of premises under warrant.

Offences
172.Offences.

PART XII
CONTROL OVER AUTHORISED PERSONS
Notice of control
173.Obligation to notify the Authority.

Acquiring, increasing and reducing control
174.Acquiring control.
175.Increasing control.
176.Reducing control.

Acquiring or increasing control: procedure
177.Notification.
178.Duty of Authority in relation to notice of control.
179.Approval of acquisition of control.
180.Conditions attached to approval.
181.Objection to acquisition of control.
182.Objection to existing control.
183.Notices of objection under section 182: procedure.

Improperly acquired shares
184.Improperly acquired shares.

Reducing control: procedure
185.Notification.

Offences
186.Offences under this Part.

Miscellaneous
187.Power to change definitions of control etc.

PART XIII
INCOMING FIRMS: INTERVENTION BY AUTHORITY
Interpretation
188.Interpretation of this Part.
189.General grounds on which powers of intervention are exercisable.
190.Exercise of powers in support of overseas regulator.
191.The power of intervention.

Exercise of powers of intervention
192.Procedure on exercise of power of intervention.
193.Power to apply to court for injunction in respect of certain overseas insurance companies.
194.Additional procedure for EEA firms in certain cases.

Supplemental
195.Rescission and variation of requirements.
196.Effect of certain requirements on other persons.
197.Actions for damages.

Powers of Director General of Fair Trading
198.Power to prohibit the carrying on of Consumer Credit Act business.
199.Power to restrict the carrying on of Consumer Credit Act business.

PART XIV
DISCIPLINARY MEASURES
200.Public censure.
201.Financial penalties.
202.Proposal to take disciplinary measures.
203.Decision notice.
204.Publication.
205.Statements of policy.
206.Statements of policy: procedure.

PART XV
THE FINANCIAL SERVICES COMPENSATION SCHEME
The scheme manager
207.The scheme manager.

The scheme
208.The compensation scheme.

Provisions of the scheme
209.General.
210.Rights of the scheme in relevant person's insolvency.
211.Continuity of long-term insurance policies.
212.Insurers in financial difficulties.

Annual report
213.Annual report.

Information and documents
214.Scheme manager's power to require information.
215.Scheme manager's power to inspect information held by liquidator etc.
216.Powers of court where information required.

Miscellaneous
217.Statutory immunity.
218.Management expenses.
219.Scheme manager's power to inspect documents held by Official Receiver etc.

PART XVI
THE OMBUDSMAN SCHEME
The scheme
220.The scheme and the scheme operator.
221.Compulsory jurisdiction.
222.Voluntary jurisdiction.

Determination of complaints
223.Determination under the compulsory jurisdiction.
224.Awards.
225.Costs.

Information
226.Ombudsman's power to require information.
227.Powers of court where information required.
228.Data protection.

Funding
229.Industry funding.

PART XVII
COLLECTIVE INVESTMENT SCHEMES
CHAPTER I
INTERPRETATION
230.Collective investment schemes.
231.Open-ended investment companies.
232.Other definitions.

CHAPTER II
RESTRICTIONS ON PROMOTION
233.Restrictions on promotion.
234.Single property schemes.
235.Restriction on approval of promotion.
236.Actions for damages.

CHAPTER III
AUTHORISED UNIT TRUST SCHEMES
Applications for authorisation
237.Applications for authorisation of unit trust schemes.
238.Authorisation orders.
239.Determination of applications.

Applications refused
240.Procedure when refusing an application.

Certificates
241.Certificates.

Rules
242.Rules.
243.Scheme particulars rules.
244.Disqualification of auditor for breach of trust scheme rules.
245.Modification or waiver of rules.

Alterations of schemes
246.Alteration of schemes and changes of manager or trustee.
247.Procedure when refusing approval of change of manager or trustee.

Exclusion clauses
248.Avoidance of exclusion clauses.

Ending of authorisation
249.Revocation of authorisation order otherwise than by consent.
250.Procedure.
251.Requests for revocation of authorisation order.

Powers of intervention
252.Directions.
253.Applications to the court.
254.Procedure on giving directions under section 252 and varying them on Authority's own initiative.
255.Procedure: refusal to revoke or vary direction.
256.Procedure: revocation of direction and grant of request for variation.

CHAPTER IV
OPEN-ENDED INVESTMENT COMPANIES
257.Open-ended investment companies.
258.Amendment of section 716 Companies Act 1985.

CHAPTER V
RECOGNISED OVERSEAS SCHEMES
Schemes constituted in other EEA States
259.Schemes constituted in other EEA States.
260.Representations and references to the Tribunal.
261.Disapplication of rules.
262.Power of Authority to suspend promotion of scheme.
263.Procedure on giving directions under section 262 and varying them on Authority's own initiative.
264.Procedure on application for variation or revocation of direction.

Schemes authorised in designated countries or territories
265.Schemes authorised in designated countries or territories.
266.Procedure.

Individually recognised overseas schemes
267.Individually recognised overseas schemes.
268.Matters that may be taken into account.
269.Applications for recognition of individual schemes.
270.Determination of applications.
271.Procedure when refusing an application.
272.Alteration of schemes and changes of operator, trustee or depositary.

Rules and information gathering: schemes recognised under sections 265 and 267
273.Rules as to scheme particulars.

Revocation of recognition under sections 265 and 267
274.Revocation of recognition.
275.Procedure.

Powers of intervention: schemes recognised under sections 265 and 267
276.Directions.
277.Procedure on giving directions under section 276 and varying them otherwise than as requested.

Facilities and information in UK
278.Facilities and information in UK.

CHAPTER VI
INVESTIGATIONS
279.Power to investigate.

PART XVIII
RECOGNISED INVESTMENT EXCHANGES AND CLEARING HOUSES
CHAPTER I
EXEMPTION
General
280.Exemption for recognised investment exchanges and clearing houses.
281.Qualification for recognition.

Applications for recognition
282.Application by an investment exchange.
283.Application by a clearing house.
284.Applications: supplementary.
285.Recognition orders.
286.Liability in relation to recognised body's regulatory functions.
287.Overseas investment exchanges and clearing houses.

Supervision
288.Notification requirements.
289.Modification or waiver of rules.
290.Notification: overseas investment exchanges and overseas clearing houses.
291.Authority's power to give directions.
292.Revoking recognition.
293.Directions and revocation: procedure.
294.Complaints about recognised bodies.

Other matters
295.Supervision of certain contracts.

CHAPTER II
COMPETITION SCRUTINY
296.Interpretation.
297.Initial report by Director General of Fair Trading.
298.Further reports by Director General of Fair Trading.
299.Investigations by Director General of Fair Trading.

Role of the Competition Commission
300.Consideration by Competition Commission.

Role of the Treasury
301.Recognition orders: role of the Treasury.
302.Directions by the Treasury.
303.Statements by the Treasury.
304.Procedure on exercise of certain powers by Treasury.

CHAPTER III
EXCLUSION FROM THE COMPETITION ACT 1998
305.The Chapter I prohibition.
306.The Chapter II prohibition.

CHAPTER IV
Interpretation
307.Interpretation of Part XVIII.

PART XIX
LLOYD'S
General
308.Authority's general duty.

The Society
309.The Society: authorisation and permission.

Power to apply Act to Lloyd's underwriting
310.Direction by Authority.
311.The core provisions.
312.Exercise of powers through Council.
313.Consultation.

Former underwriting members
314.Former underwriting members.
315.Requirements imposed under section 314.
316.Rules applicable to former underwriting members.

Supplemental
317.Interpretation of this Part.

PART XX
PROVISION OF FINANCIAL SERVICES BY MEMBERS OF THE PROFESSIONS
318.Authority's general duty.
319.Designation of professional bodies.
320.Exemption from the general prohibition.
321.Directions in relation to the general prohibition.
322.Orders in relation to the general prohibition.
323.Consultation.
324.Procedure on making or varying orders under section 322.
325.Rules in relation to persons to whom the general prohibition does not apply.
326.False claims to be a person to whom the general prohibition does not apply.

PART XXI
MUTUAL SOCIETIES
Friendly societies
327.The Friendly Societies Commission.
328.The Registry of Friendly Societies.

Building societies
329.The Building Societies Commission.
330.The Building Societies Investor Protection Board.

Industrial and provident societies and credit unions
331.Industrial and provident societies and credit unions.

Supplemental
332.Supplemental provisions.

PART XXII
AUDITORS AND ACTUARIES
Appointment
333.Appointment.

Information
334.Auditor or actuary's access to books etc.
335.Information given by auditor or actuary to the Authority.
336.Information given by auditor or actuary to the Authority: persons with close links.
337.Duty of auditor or actuary resigning etc. to give notice.

Disqualification
338.Disqualification.

Offence
339.Provision of false or misleading information to auditor or actuary.

PART XXIII
PUBLIC RECORD, DISCLOSURE OF INFORMATION AND CO-OPERATION
The public record
340.The record of authorised persons etc.

Disclosure of information
341.Restrictions on disclosure of confidential information by Authority etc.
342.Exceptions from section 341.
343.Disclosure of information by the Inland Revenue.
344.Competition information.
345.Offences.
346.Removal of other restrictions on disclosure.

Co-operation
347.Authority's duty to co-operate with others.

PART XXIV
INSOLVENCY
Interpretation
348.Interpretation of this Part.

Voluntary arrangements
349.Authority's powers to participate in proceedings: company voluntary arrangements.
350.Authority's powers to participate in proceedings: individual voluntary arrangements.
351.Authority's powers to participate in proceedings: trust deeds for creditors in Scotland.

Administration orders
352.Petitions.
353.Insurance companies.
354.Administrator's duty to report to Authority.
355.Authority's powers to participate in proceedings.

Receivership
356.Authority's powers to participate in proceedings.
357.Receiver's duty to report to Authority.

Voluntary winding up
358.Authority's powers to participate in proceedings.
359.Insurance companies carrying on long-term business.

Winding up by the court
360.Winding-up petitions.
361.Winding-up petitions: EEA and Treaty firms.
362.Insurance companies: service of petition etc. on Authority.
363.Liquidator's duty to report to Authority.
364.Authority's powers to participate in proceedings.

Bankruptcy
365.Petitions.
366.Insolvency practitioner's duty to report to Authority.
367.Authority's powers to participate in proceedings.

Provisions against debt avoidance
368.Authority's right to apply for an order.

Supplemental provisions concerning insurance companies
369.Continuation of long term business while in liquidation.
370.Reducing the value of contracts instead of winding up.
371.Treatment of assets on winding up.
372.Winding- up rules.

PART XXV
INJUNCTIONS AND RESTITUTION
Injunctions
373.Injunctions.
374.Injunctions in cases of market abuse.

Restitution orders
375.Restitution orders.
376.Restitution orders in cases of market abuse.

Restitution required by Authority
377.Power of Authority to require restitution.
378.Warning notices.
379.Decision notices.

PART XXVI
NOTICES
Warning notices
380.Warning notices.

Decision notice
381.Decision notices.
382.Notice of discontinuance.
383.Final notice.
384.Publication.

Third party rights and access to evidence
385.Application of sections 386 and 387.
386.Third party rights.
387.Access to Authority material.

The Authority's procedures
388.The Authority's procedures.
389.Statements under section 388: consultation.

PART XXVII
OFFENCES
Miscellaneous offences
390.Misleading statements and practices.
391.Misleading the Authority: residual cases.
392.Misleading the Director General of Fair Trading.

Bodies corporate and partnerships
393.Offences by bodies corporate etc.

Institution of proceedings
394.Proceedings for offences.
395.Power of the Authority to institute proceedings for certain other offences.
396.Jurisdiction and procedure in respect of offences.

PART XXVIII
MISCELLANEOUS
Schemes for reviewing past business
397.Schemes for reviewing past business.

Third countries: Community measures
398.Directions.
399.Interpretation of section 398.
400.Consequences of a direction under section 398.
401.EFTA firms.
402.Gibraltar.

International obligations
403.International obligations.

Tax treatment of levies and repayments
404.Tax treatment of levies and repayments.

Gaming contracts
405.Gaming contracts.

Limitation on powers to require documents
406.Protected items.

Service of notices
407.Service of notices.

Jurisdiction
408.Jurisdiction in civil proceedings.

PART XXIX
INTERPRETATION
409.Definitions.
410.Carrying on activities in the United Kingdom.
411.Carrying on regulated activities by way of business.
412.Parent and subsidiary undertaking.
413.Group.
414.Controller.
415.Manager.
416.Expressions relating to insurance.
417.Expressions relating to authorisation elsewhere in the single market.

PART XXX
SUPPLEMENTAL
418.Consequential and supplementary provision.
419.Transitional provisions.
420.Regulations and orders.
421.Parliamentary control of statutory instruments.
422.Northern Ireland.
423.Commencement.
424.Minor and consequential amendments, transitional provisions and repeals.
425.Short title.
 

SCHEDULES:
    Schedule 1-The Financial Services Authority.
    Part I-General.
    Part II-Status.
    Part III-Penalties and Fees.
    Part IV-Miscellaneous.
    Schedule 2-Regulated Activities.
    Part I-Regulated Activities.
    Part II-Investments.
    Part III-Supplemental Provisions.
    Schedule 3-EEA Passport Rights.
    Part I-Defined terms.
    Part II-Exercise of Passport Rights by EEA Firms.
    Part III-Exercise of Passport Rights by UK Firms.
    Schedule 4-Treaty Rights.
    Schedule 5-Persons Concerned in Collective Investment Schemes.
    Schedule 6-Threshold Conditions.
    Part I-Part IV Permission.
    Part II-Authorisation.
    Part III-Additional Conditions.
    Schedule 7-The Authority as Competent Authority for Part VI.
    Schedule 8-Transfer of functions under Part VI.
    Schedule 9-Non-listing Prospectuses.
    Schedule 10-Compensation: Exemptions.
    Schedule 11-Offers of Securities.
    Schedule 12-Transfer schemes: certificates.
    Part I-Insurance Business Transfer Schemes.
    Part II-Banking Business Transfer Schemes.
    Part III-Insurance business transfers effected outside the United Kingdom.
    Schedule 13-The Financial Services and Markets Tribunal.
    Part I-General.
    Part II-The Tribunal.
    Part III-Constitution of Tribunal.
    Part IV-Tribunal Procedure.
    Schedule 14-Role of the Competition Commission.
    Schedule 15-Information and Investigations: Connected Persons.
    Part I-Rules for Specific Bodies.
    Part II-Additional Rules.
    Schedule 16-Prohibitions and Restrictions imposed by Director General of Fair Trading.
    Schedule 17-The Ombudsman Scheme.
    Part I-General.
    Part II-The Scheme Operator.
    Part III-The Compulsory Jurisdiction.
    Part IV-The Voluntary Jurisdiction.
    Schedule 18-Mutuals.
    Part I-Friendly Societies.
    Part II-Friendly Societies: Subsidiaries and Controlled Bodies.
    Part III-Building Societies.
    Part IV-Industrial and Provident Societies.
    Part V-Credit Unions.
    Schedule 19-Competition Information.
    Part I-Persons and functions for the purposes of section 344.
    Part II-The enactments.
    Schedule 20-Minor and Consequential Amendments.
    Schedule 21-Transitional Provisions and Savings.
    Schedule 22-Repeals.
 


 
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