Part III Authorisation and Exemption

Exemption

38 Exemption orders.

1

The Treasury may by order (“an exemption order”) provide for—

a

specified persons, or

b

persons falling within a specified class,

to be exempt from the general prohibition.

C1C2C3C4C5C6C12C132

But a person cannot be an exempt person as a result of an exemption order if he has a F6Part 4A permission.

3

An exemption order may provide for an exemption to have effect—

a

in respect of all regulated activities;

b

in respect of one or more specified regulated activities;

c

only in specified circumstances;

d

only in relation to specified functions;

e

subject to conditions.

4

“Specified” means specified by the exemption order.

I1C1439 Exemption of appointed representatives.

1

If a person (other than an authorised person)—

a

is a party to a contract with an authorised person (“his principal”) which—

i

permits or requires him to carry on business of a prescribed description, and

ii

complies with such requirements as may be prescribed, and

b

is someone for whose activities in carrying on the whole or part of that business his principal has accepted responsibility in writing,

he is exempt from the general prohibition in relation to any regulated activity comprised in the carrying on of that business for which his principal has accepted responsibility.

F11A

But a person is not exempt as a result of subsection (1)—

a

if his principal is an investment firm or a credit institution, and

b

so far as the business for which his principal has accepted responsibility is investment services business,

unless he is entered on the applicable register.

1B

The “applicable register” is—

a

in the case of a person established in an EEA State (other than the United Kingdom) which permits investment firms authorised by the competent authority of that State to appoint tied agents, the register of tied agents maintained in that State pursuant to Article 23 of the markets in financial instruments directive;

b

in the case of a person established in an EEA State which does not permit investment firms authorised as mentioned in paragraph (a) to appoint tied agents—

i

if his principal has his relevant office in the United Kingdom, the record maintained by the F4FCA by virtue of section 347(1)(ha), and

ii

if his principal is established in an EEA State (other than the United Kingdom) which permits investment firms authorised by the competent authority of the State to appoint tied agents, the register of tied agents maintained by that State pursuant to Article 23 of the markets in financial instruments directive; and

c

in any other case, the record maintained by the F4FCA by virtue of section 347(1)(ha).

F71C

Subsection (1D) applies where an authorised person (“A”)—

a

has permission under Part 4A, or permission resulting from any other provision of this Act, only in relation to one or more qualifying activities,

b

is a party to a contract with another authorised person (A's “principal”) which—

i

permits or requires A to carry on business of a prescribed description (“the relevant business”), and

ii

complies with such requirements as may be prescribed, and

c

is someone for whose activities in carrying on the whole or part of the relevant business A's principal has accepted responsibility in writing.

1D

Sections 20(1) and (1A) and 23(1A) do not apply in relation to the carrying on by A of a relevant additional activity.

1E

In subsections (1C) and (1D)—

a

“qualifying activity” means a regulated activity which is of a prescribed kind and relates—

i

to rights under a contract of the kind mentioned in paragraph 23 of Schedule 2, other than one under which the obligation of the borrower to repay is secured on land, or

ii

to rights under a contract of the kind mentioned in paragraph 23B of that Schedule;

b

“relevant additional activity” means a regulated activity which—

i

is not one to which A's permission relates, and

ii

is comprised in the carrying on of the business for which A's principal has accepted responsibility.

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In this Act “appointed representative” means—

a

a person who is exempt as a result of subsection (1), or

b

a person carrying on a regulated activity in circumstances where, as a result of subsection (1D), sections 20(1) and (1A) and 23(1A) do not apply.

3

The principal of an appointed representative is responsible, to the same extent as if he had expressly permitted it, for anything done or omitted by the representative in carrying on the business for which he has accepted responsibility.

F54

In determining whether an authorised person has complied with—

a

a provision contained in or made under this Act, or

b

a qualifying EU provision that is specified, or of a description specified, for the purposes of this subsection by the Treasury by order,

anything which a relevant person has done or omitted as respects business for which the authorised person has accepted responsibility is to be treated as having been done or omitted by the authorised person.

5

“Relevant person” means a person who at the material time is or was an appointed representative by virtue of being a party to a contract with the authorised person.

6

Nothing in subsection (4) is to cause the knowledge or intentions of an appointed representative to be attributed to his principal for the purpose of determining whether the principal has committed an offence, unless in all the circumstances it is reasonable for them to be attributed to him.

F27

A person carries on “investment services business” if—

a

the business includes providing services or carrying on activities of the kind mentioned in Article 4.1.25 of the markets in financial instruments directive, and

b

as a result of providing such services or carrying on such activities he is a tied agent or would be if he were established in an EEA State.

8

In this section—

  • “competent authority” has the meaning given in Article 4.1.22 of the markets in financial instruments directive;

  • “credit institution” means—

    1. a

      a credit institution authorised under the banking consolidation directive, or

    2. b

      an institution which would satisfy the requirements for authorisation as a credit institution under that directive if it had its relevant office in an EEA State;

  • “relevant office” means—

    1. a

      in relation to a body corporate, its registered office or, if it has no registered office, its head office, and

    2. b

      in relation to a person other than a body corporate, the person's head office.

39AF3Certain tied agents operating outside United Kingdom

1

This section applies to an authorised person whose relevant office is in the United Kingdom if—

a

he is a party to a contract with a person (other than an authorised person) who is established—

i

in the United Kingdom, or

ii

in an EEA State which does not permit investment firms authorised by the competent authority of the State to appoint tied agents; and

b

the contract is a relevant contract.

2

A contract is a “relevant contract” if it satisfies conditions A to C.

3

Condition A is that the contract permits or requires the person mentioned in subsection (1)(a) (the “agent”) to carry on investment services business.

4

Condition B is that either—

a

it is a condition of the contract that such business may only be carried on by the agent in an EEA State other than the United Kingdom; or

b

in a case not falling within paragraph (a), the F9FCA is satisfied that no such business is, or is likely to be, carried on by the agent in the United Kingdom.

5

Condition C is that the business is of a description that, if carried on in the United Kingdom, would be prescribed for the purposes of section 39(1)(a)(i).

6

An authorised person to whom this section applies who—

a

enters into or continues to perform a relevant contract with an agent which does not comply with the applicable requirements,

b

enters into or continues to perform a relevant contract without accepting or having accepted responsibility in writing for the agent's activities in carrying on investment services business,

c

enters into a relevant contract with an agent who is not entered on the record maintained by the F9FCA by virtue of section 347(1)(ha), or

d

continues to perform a relevant contract with an agent when he knows or ought to know that the agent is not entered on that record,

is to be taken for the purposes of this Act to have contravened a requirement imposed on him by or under this Act.

7

The “applicable requirements” are the requirements prescribed for the purposes of subsection (1)(a)(ii) of section 39 which have effect in the case of a person to whom subsection (1A) of that section applies.

8

A person carries on “investment services business” if—

a

his business includes providing services or carrying on activities of the kind mentioned in Article 4.1.25 of the markets in financial instruments directive, and

b

as a result of providing such services or carrying on such activities he is a tied agent.

9

In this section—

  • “competent authority” has the meaning given in Article 4.1.22 of the markets in financial instruments directive;

  • “relevant office” means—

    1. a

      in relation to a body corporate, its registered office or, if it has no registered office, its head office, and

    2. b

      in relation to a person other than a body corporate, the person's head office.