Financial Services (Banking Reform) Act 2013

Financial Services (Banking Reform) Act 2013

2013 CHAPTER 33

Commentary

Part 4 – Conduct of Persons Working in Financial Services Sector

Amendments of FSMA

Section 26: Variation of approval

184. Section 26 inserts new sections 63ZA, 63ZB and 63ZC into FSMA. These sections provide for the variation of a senior manager’s approval at the request of a relevant authorised person or on the regulator’s own initiative, and deal with the procedure to be followed in those cases.

185. Section 63ZA provides that, if an approval to perform a designated senior management function in relation to a relevant authorised person has been granted subject to conditions, the firm that made the application may apply for the permission to be varied by adding, removing or varying the conditions. Subsections (4) and (5) provides that the regulators have a fixed 3-month period within which to grant the application or, if they propose to refuse it, to give a warning notice. Subsections (6) and (7) provide that the regulators may refuse such an application if desirable to advance their regulatory objectives. Subsection (8) applies procedural provisions about an application for approval to perform a controlled function, about how the regulators must determine an application and about the giving of warning and decision notices.

186. Section 63ZB allows a regulator to vary an approval where it considers this is desirable in order to advance its operational objectives (in the case of the FCA), and any of its objectives (in the case of the PRA). Subsection (1) provides that the FCA may vary an approval it, or the PRA, has given in relation to a designated senior management function being performed in relation to a relevant authorised person. Subsection (2) provides that the PRA may vary an approval it gave itself, or an approval given by the FCA in relation to a PRA-authorised person. Subsection (3) provides that an approval can be varied by imposing, varying or removing a condition, or by the imposition of time limits on an approval.

187. Section 63ZC sets out the procedure a regulator must follow when varying an approval. Subsections (2) and (3) provide that a proposed variation will take effect on the date specified in the first notice sent by the regulator to the interested parties or when the matter is no longer open for review, but that, if a regulator reasonably considers it is necessary, the variation may take immediate effect. Subsections (4) and (5) require a regulator proposing to vary an approval to give a written notice setting out prescribed information to the interested parties listed in subsection (6). Subsections (8) and (9) require a regulator to give written notices to the interested parties when, after considering their representations, it has decided whether or not to proceed with a proposed variation, or to vary an approval in a different way from that initially proposed. Subsection (10) provide that a notice confirming that a variation will be made, or maintained, must let the interested parties know about their right to refer the matter to the Tribunal. Subsection (11) provide that, if a regulator proposes to vary an approval in a different way, it must set out in the written notice the information required to be set out for the initially proposed variation (so the process of entertaining representations is repeated for the new proposal to vary). Subsection (13) provides that whether a matter is open to review is be determined in accordance with the standard FSMA provisions in section 391(8). (A matter remains open to review until either it is too late to refer it to the Tribunal, or it has been referred to the Tribunal and dealt with, and the period for an appeal against the Tribunal’s decision has elapsed.)