The Financial Services and Markets Act 2000 (Transitional Provisions and Savings) (Civil Remedies, Discipline, Criminal Offences etc.) (No. 2) Order 2001

Explanatory Note

(This note is not part of the Order)

This Order revokes and re-enacts with certain modifications the Financial Services and Markets Act 2000 (Transitional Provisions and Savings) (Civil Remedies, Discipline, Criminal Offences etc.) Order 2001 (S.I. 2001/2657).

This Order relates to the civil, prosecutorial and disciplinary powers of the Financial Services Authority (“the Authority”) in relation to conduct that took place before the commencement of section 19 (the general prohibition) (“commencement”) of the Financial Services and Markets Act 2000 (“the Act”) and related matters. Generally, these powers reflect the powers of Authority before commencement under the Insurance Companies Act 1982 (“the 1982 Act”), the Financial Services Act 1986 (“the 1986 Act”), the Banking Act 1987 (“the 1987 Act”), and related enactments and the powers of the self-regulating organisations and self-regulating organisations for friendly societies (within the meaning of the 1986 Act).

Articles 2 and 4 modify Part XXV of the Act (injunctions and restitutions) to enable the Authority to apply to the court for an order under section 380(2) (remedial orders), section 380(3)(a) (orders preventing disposal of assets) or section 382(1) (restitutionary orders) where a person has, before commencement, contravened certain enactments or provisions.

Article 3 modifies section 384 of the Act (restitution by the Authority) to enable the Authority to require an authorised person who was, immediately before commencement, a member of a recognised self-regulating organisation or a self-regulating organisation for friendly societies to make restitution where that organisation had a corresponding power.

Article 5 applies sections 26 to 28 of the Act (unenforceability of agreements) to certain agreements entered into in contravention of the 1986 Act or the 1982 Act.

Articles 6 and 7 modify section 205 of the Act (public censure) so that where a self-regulating organisation or self-regulating organisation for friendly societies could have exercised a corresponding power, or in certain other circumstances (which equate broadly to those set out in section 60 of, and paragraph 21 of Schedule 11 to, the 1986 Act) the Authority may exercise the power conferred by section 205 of the Act in relation to an authorised person.

Article 8 modifies section 206 of the Act (financial penalties) to enable the Authority to impose a financial penalty on an authorised person who was, immediately before commencement, a member of a self-regulating organisation of self-regulating organisation for friendly societies where that organisation had a corresponding power.

Article 9 enables the Authority to take disciplinary action under section 66 of the Act (approved persons) in relation to persons who were formerly registered individuals (or registered persons) under the rules of a self-regulating organisation where that organisation had a corresponding power.

Articles 10 and 11 save sections 19 and 20 of the 1987 Act and sections 43A and 43B of the Building Societies Act 1986 respectively for certain purposes. Under these provisions, the Authority may give formerly authorised institutions under the 1987 Act or former authorised building societies a direction where this appears desirable in the interests of depositors. Any such directions in force in relation to such a person immediately before commencement continue to have effect after commencement.

Article 12 applies section 367 of the Act (winding-up petitions) to those who were formerly an authorised institution under the 1987 Act or who, before commencement, contravened section 3 of that Act.

Article 13 applies section 401 of the Act (proceedings for offences) to offences committed before commencement under the 1982 Act, the 1986 Act, the 1987 Act and certain related provisions.

Articles 15 to 17 modify sections 165 (power to require information), 166 (reports by a skilled person) and 167 (general investigations) of the Act so that the powers conferred by those sections are exercisable in respect of former regulated persons (as defined in article 14). The powers are only exercisable where reasonably required in connection with the exercise by the Authority of functions conferred on it by, or exercisable by virtue of, this Order. Article 18 modifies section 168 of the Act (investigations in particular cases) so as to apply where there are circumstances suggesting that a person has contravened, or committed an offence under, certain enactments, provisions or rules before commencement.

Article 19 modifies section 345 of the Act (disqualification of auditors) so that failure to comply with certain duties imposed by the 1982 Act, the 1986 Act, the 1987 Act and certain enactments relating to mutual societies may be a basis on which to disqualify a person from being an auditor of an authorised person under the Act.

Article 20 saves certain provisions of Schedule 3 to the 1986 Act (recognised professional bodies) so far as they relate to investment business carried on before commencement. Article 21 provides that the Authority may require a person who was, immediately before commencement, a recognised professional body within the meaning of the 1986 Act to furnish it with certain information. The Authority may only require the production of information that relates to investment business carried on before commencement by a person who held a certificate issued pursuant to the 1986 Act by that body which the Authority reasonably requires for the exercise of functions conferred by or under the Act.

Article 22 provides that in any proceedings before the Tribunal, in any subsequent appeal or proceedings under Part XXV of the Act, the validity of certain rules (including those of a self-regulating organisation or recognised professional body) may be raised.

A copy of the rules of The Securities and Futures Authority Limited, the Personal Investment Authority Limited and the Investment Management Regulatory Organisation Limited may be obtained from the Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.