The Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) (Electronic Commerce Directive) Order 2002

Explanatory Note

(This note is not part of the Order)

This Order amends the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (S.I. 2001/1335) (“the Financial Promotion Order”), and the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 (S.I. 2001/1060) (“the Scheme Promotion Order”) to take account of the European Parliament and Council Directive of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal market (No. 2000/31/EC) (“the Directive”).

This Order should be read with the Financial Services and Markets Act 2000 (Electronic Commerce Directive) Regulations 2002 (S.I. 2002/1775) and the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No. 2) Order 2002 (S.I. 2002/1776), which make additional provisions in connection with the Directive. The Order should also be read with forthcoming regulations to be made by the Secretary of State for Trade and Industry, which make general provision giving effect to the Directive.

Article 3 of the Directive provides for the regulation of information society services (defined in Article 2(a)) (“ISS”) on a “country of origin” basis, Member States are required to ensure that providers of ISS established on their territories comply with national legal requirements falling within the “coordinated field”, as defined in Article 2(h) of the Directive. They are also prohibited from restricting, for reasons falling within the co-ordinated field, the freedom to provide ISS from other Member States. Article 3.3 of the Directive excludes certain matters (listed in the Annex to the Directive) from the “country of origin” approach, including the advertising of their units by collective investment undertakings falling within Council Directive 85/611/EEC, contractual obligations concerning consumer contracts, and the permissibility of unsolicited commercial communications by electronic mail.

Part 2 of this Order amends the Financial Promotion Order so that the general exemption from the financial promotion restriction in section 21(1) of the Financial Services and Markets Act 2000 (c. 8) contained in article 12 does not apply in respect of communications made from a place of establishment in the United Kingdom to persons in other States in the European Economic Area, and which constitute the provision of an information society service (“outgoing electronic commerce communications”). A new article 8A makes consequential provisions for the application of other exemptions in the Financial Promotion Order to such communications. Article 6 inserts a new article (20B) into the Financial Promotion Order, which creates a new general exemption in respect of communications made from places of establishment in States in the European Economic Area other than the United Kingdom, and which constitute the provision of ISS. Consistently with Article 3.3 of the Directive, this exemption does not apply in respect of communications which constitute an advertisement by the operator of a collective investment undertaking falling within Council Directive 85/611/EEC (a “UCITS Directive scheme”) of units in that scheme, communications concerning insurance, or an unsolicited commercial communication made by electronic mail.

Article 5 of this Order modifies the application of the “mere conduit” exemption in article 18 of the Financial Promotion Order. The effect of the amendment is that the financial promotion restriction will not apply in circumstances falling within the relevant provisions of the Directive.

Part 3 of this Order makes parallel amendments to the Scheme Promotion Order.