Financial Services and Markets Act 2000

Part III Exercise of Passport Rights by UK Firms

Establishment

19 (1) A UK firm may not exercise an EEA right to establish a branch unless three conditions are satisfied.

(2) The first is that the firm has given the Authority, in the specified way, notice of its intention to establish a branch (“a notice of intention”) which—

(a) identifies the activities which it seeks to carry on through the branch; and

(b) includes such other information as may be specified.

(3) The activities identified in a notice of intention may include activities which are not regulated activities.

(4) The second is that the Authority has given notice in specified terms (“a consent notice”) to the host state regulator.

(5) The third is that—

(a) the host state regulator has notified the firm (or, where the EEA right in question derives from any of the insurance directives, the Authority) of the applicable provisions; or

(b) two months have elapsed beginning with the date on which the Authority gave the consent notice.

(6) If the firm’s EEA right derives from the investment services directive or the second banking coordination directive and the first condition is satisfied, the Authority must give a consent notice to the host state regulator unless it has reason to doubt the adequacy of the firm’s resources or its administrative structure.

(7) If the firm’s EEA right derives from any of the insurance directives and the first condition is satisfied, the Authority must give a consent notice unless it has reason—

(a) to doubt the adequacy of the firm’s resources or its administrative structure, or

(b) to question the reputation, qualifications or experience of the directors or managers of the firm or the person proposed as the branch’s authorised agent for the purposes of those directives,

in relation to the business to be conducted through the proposed branch.

(8) If the Authority proposes to refuse to give a consent notice it must give the firm concerned a warning notice.

(9) If the firm’s EEA right derives from any of the insurance directives and the host state regulator has notified it of the applicable provisions, the Authority must inform the firm of those provisions.

(10) Rules may specify the procedure to be followed by the Authority in exercising its functions under this paragraph.

(11) If the Authority gives a consent notice it must give written notice that it has done so to the firm concerned.

(12) If the Authority decides to refuse to give a consent notice—

(a) it must, within three months beginning with the date when it received the notice of intention, give the person who gave that notice a decision notice to that effect; and

(b) that person may refer the matter to the Tribunal.

(13) In this paragraph, “applicable provisions” means the host state rules with which the firm will be required to comply when conducting business through the proposed branch in the EEA State concerned.

(14) In sub-paragraph (13), “host state rules” means rules—

(a) made in accordance with the relevant single market directive; and

(b) which are the responsibility of the EEA State concerned (both as to implementation and as to supervision of compliance) in accordance with that directive.

(15) “Specified” means specified in rules.

Services

20 (1) A UK firm may not exercise an EEA right to provide services unless the firm has given the Authority, in the specified way, notice of its intention to provide services (“a notice of intention”) which—

(a) identifies the activities which it seeks to carry out by way of provision of services; and

(b) includes such other information as may be specified.

(2) The activities identified in a notice of intention may include activities which are not regulated activities.

(3) If the firm’s EEA right derives from the investment services directive or a banking co-ordination directive, the Authority must, within one month of receiving a notice of intention, send a copy of it to the host state regulator.

(4) When the Authority sends the copy under sub-paragraph (3), it must give written notice to the firm concerned.

(5) If the firm concerned’s EEA right derives from the investment services directive, it must not provide the services to which its notice of intention relates until it has received written notice from the Authority under sub-paragraph (4).

(6) “Specified” means specified in rules.

Offence relating to exercise of passport rights

21 (1) If a UK firm which is not an authorised person contravenes the prohibition imposed by—

(a) sub-paragraph (1) of paragraph 19, or

(b) sub-paragraph (1) or (5) of paragraph 20,

it is guilty of an offence.

(2) A firm guilty of an offence under sub-paragraph (1) is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum; or

(b) on conviction on indictment, to a fine.

(3) In proceedings for an offence under sub-paragraph (1), it is a defence for the firm to show that it took all reasonable precautions and exercised all due diligence to avoid committing the offence.

Continuing regulation of UK firms

22 (1) Regulations may make such provision as the Treasury consider appropriate in relation to a UK firm’s exercise of EEA rights, and may in particular provide for the application (with or without modification) of any provision of, or made under, this Act in relation to an activity of a UK firm.

(2) Regulations may—

(a) make provision as to any change (or proposed change) of a prescribed kind relating to a UK firm or to an activity that it carries on and as to the procedure to be followed in relation to such cases;

(b) make provision with respect to the consequences of the firm’s failure to comply with a provision of the regulations.

(3) Where a provision of the kind mentioned in sub-paragraph (2) requires the Authority’s consent to a change (or proposed change)—

(a) consent may be refused only on prescribed grounds; and

(b) if the Authority decides to refuse consent, the firm concerned may refer the matter to the Tribunal.

23 (1) Sub-paragraph (2) applies if a UK firm—

(a) has a Part IV permission; and

(b) is exercising an EEA right to carry on any Consumer Credit Act business in an EEA State other than the United Kingdom.

(2) The Authority may exercise its power under section 45 in respect of the firm if the Director of Fair Trading has informed the Authority that—

(a) the firm,

(b) any of the firm’s employees, agents or associates (whether past or present), or

(c) if the firm is a body corporate, a controller of the firm or an associate of such a controller,

has done any of the things specified in paragraphs (a) to (d) of section 25(2) of the [1974 c. 39.] Consumer Credit Act 1974.

(3) “Associate”, “Consumer Credit Act business” and “controller” have the same meaning as in section 203.

24 (1) Sub-paragraph (2) applies if a UK firm—

(a) is not required to have a Part IV permission in relation to the business which it is carrying on; and

(b) is exercising the right conferred by Article 18.2 of the second banking co-ordination directive to carry on that business in an EEA State other than the United Kingdom.

(2) If requested to do so by the host state regulator in the EEA State in which the UK firm’s business is being carried on, the Authority may impose any requirement in relation to the firm which it could impose if—

(a) the firm had a Part IV permission in relation to the business which it is carrying on; and

(b) the Authority was entitled to exercise its power under that Part to vary that permission.