Section 15 and Schedule 2: Amendments to the Financial Services and Markets Act 2000
67.Section 15 introduces Schedule 2, which makes amendments to the Financial Services and Markets Act 2000 (“FSMA”).
68.Paragraph 1 amends the list of activities in Schedule 2 to FSMA to include the activities of a reclaim fund. Schedule 2 to FSMA supplements section 22 of FSMA by describing, non-exhaustively, the sorts of activities which may be specified under section 22 as “regulated activities”. The Treasury intend to specify the activities of paying customer claims under sections 1 and 2 and of the management of dormant account funds in accordance with section 5(1)(b) as “regulated activities” under section 22 of FSMA, by way of an amendment to the Regulated Activities Order 2001 (SI 2001/544), and will consult on this. This is to enable a reclaim fund to be authorised by the FSA.
69.Paragraphs 2 to 5 amend Part 7 of FSMA, which provides for the control of transfers of business. The amendments will enable a reclaim fund to transfer its liabilities (as well as its assets) to another FSA authorised reclaim fund with the approval of the court. Without this provision, liabilities could usually only be transferred with the consent of all the original account holders or by way of an Act of Parliament. Similar provisions already exist in relation to banking and insurance business transfers.
70.Paragraphs 6 and 7 amend Part 24 of FSMA, which enables the FSA to intervene in the event of the insolvency of an FSA authorised person.
71.Paragraph 6 provides that where an authorised reclaim fund defaults on its obligation to repay a customer, following a claim made under sections 1 or 2, this will be treated as an indication that it is unable to pay its debts for the purposes of paragraph 11 of Schedule B1 to the Insolvency Act 1986. This is the ground on which a court may make an administration order.
72.Paragraph 7 inserts a new section into Part 24 of FSMA, which requires that a person other than the FSA who presents a petition to wind up or appoint a provisional liquidator in respect of an authorised reclaim fund must serve a copy of the petition on the FSA. This will ensure that the FSA is made aware of the situation and is given the maximum possible time to intervene to protect dormant account holders’ interests.
