The Financial Services Act 1986 (Restriction of Scope of Act and Meaning of Collective Investment Scheme) Order 1997

Citation and commencement

1.—(1) This Order may be cited as the Financial Services Act 1986 (Restriction of Scope of Act and Meaning of Collective Investment Scheme) Order 1997.

(2) This Order shall come into force on 6th February 1997.

2.—(1) In section 75(6)(l) of the Financial Services Act 1986(1), for “paragraphs 34 to 36” there shall be substituted “paragraphs 34 to 37”.

(2) In Schedule 1 to that Act, after paragraph 36(2) there shall be inserted—

“37.   For the purposes of this Schedule, arrangements are not a collective investment scheme if—

(a) the purpose of the arrangements is that participants should receive, by way of reward, payments or other benefits in respect of the introduction by any person of other persons who become participants;

(b) the arrangements are such that the payments or other benefits referred to in paragraph (a) above are to be wholly or mainly funded out of the contributions of other participants; and

(c) the only reason why the arrangements have either or both of the characteristics mentioned in section 75(3) of this Act is because, pending their being used to fund those payments or other benefits, contributions of participants are managed as a whole by or on behalf of the operator of the scheme.”

Bowen Wells

Roger Knapman

Two of the Lords Commissioners of Her Majesty’s Treasury

13th January 1997