The Financial Services and Markets Act 2000 (Interim Permissions) Order 2001

Explanatory Note

(This note does not form part of the Order)

This Order confers an interim permission on certain applicants who have applied to the Financial Services Authority (“the Authority”) for permission under Part IV of the Financial Services and Markets Act 2000 (c. 8) (“the Act”) and whose application is still pending on the date when the main provisions of the Act come into force. Sections 40 and 44 of the Act provide for the making of applications to the Authority for permission to carry on regulated activities within the meaning of section 22 of the Act. 3 September 2001 was the day appointed for the commencement of sections 40 and 44 for the purposes of making such applications by the Financial Services and Markets Act 2000 (Commencement No. 5) Order (S.I. 2001/2632 (C. 87)).

The scope of the Order is limited by articles 3, 4 and 5 to those applicants who are currently lawfully carrying on the activity which will be regulated for the first time under the Act. In order to ensure that their business is not disrupted by the fact that the activity becomes a regulated activity whilst their application for permission is still pending, an applicant who applies for permission before 31 October 2001 and who opts to benefit from the provisions of the Order has an interim permission to enable him to continue to carry on that activity until his application is determined. The Order does not apply to those who are carrying on an activity which is regulated under existing legislation since they will benefit from a Part IV permission conferred by the Financial Services and Markets Act 2000 (Transitional Provisions) (Authorised Persons etc.) Order 2001. According to article 10 of the Order, interim permission cannot be conferred on a person whose business was subject to a serious restriction or prohibition imposed under an existing regulatory regime.

Article 7 makes provision for a subsidiary undertaking of a person who has a permission under paragraph 23 of Schedule 1 to the Financial Services Act 1986 (c. 60). Where the subsidiary applies for a Part IV permission to carry on that activity instead of the person who currently has the permission under paragraph 23, that subsidiary may also choose to have an interim permission pending the outcome of its application.

Article 8 provides that the interim permission lapses at the time when it is superseded by the grant of the application or when the application is withdrawn or refused. Article 9 confers interim approval on people who are working for a person who benefits from interim permission if those people would need approval under Part V of the Act and article 12 confers a power on the Authority to modify the rules and guidance it makes under the Act as it applies to persons with interim permission.

Article 13 and the Schedule to the Order provide for the application of provisions in the Act, and in instruments made under the Act, which refer to “authorised persons”, indicating the instances where such provisions are to be treated as not including a person who has interim permission under this Order.