Financial Services Act 2010

Financial Services Act 2010

2010 CHAPTER 28

Commentary on Sections and Schedules

Objectives of FSA etc

Section 3: Meeting FSA’s regulatory objectives

52. This section amends four sections of FSMA so as to broaden the ends towards which the FSA can use its rule-making, permission-varying and intervention powers. As a result of this section, these powers will be exercisable for the purpose of meeting any of the FSA’s regulatory objectives and not just the consumer protection objective.

53. Subsection (2) amends section 44 of FSMA, which deals with the FSA’s power to vary or cancel an authorised person’s permission (to undertake a regulated activity) at their request. The amendment to section 44(3) provides that the FSA may refuse an application if this is desirable to meet any of its regulatory objectives.

54. Subsection (3) amends section 45 of FSMA, which concerns the FSA’s power, on its own initiative, to modify or cancel an authorised person’s permission. Subsection (3)(a) substitutes a new subsection (1)(c) which enables the FSA to use this power in pursuit of any of its regulatory objectives. Subsection (3)(b) inserts a provision making clear that the consumers being protected by the exercise of the power need not be consumers of services of the authorised person whose permission is being varied.

55. Subsection (4) amends section 138 of FSMA to enable the FSA to use its general rule-making power in pursuit of any of its regulatory objectives.

56. Subsection (5) amends section 194 of FSMA, which concerns the FSA’s power to intervene in relation to an incoming firm from another EEA state. Subsection (5)(a) substitutes a new subsection (1)(c) enabling the FSA to use this power in pursuit of any of its regulatory objectives. Subsection (5)(b) makes an amendment to clarify that the power may be exercised to protect consumers who need not be consumers of the services of the firm in respect of which the FSA is intervening.

57. Schedule 2 makes consequential amendments to FSMA. These include paragraph 32 which inserts new sections 425A and 425B into FSMA, which contain definitions of “consumers” and paragraphs 11 and 35(3), which remove the existing definitions of “consumers” from section 138 of, and Schedule 4 to, FSMA respectively. Paragraphs 4, 5, 6(3), 28 and 35(4) of this Schedule insert provisions applying the definitions in new sections 425A and 425B of FSMA (as appropriate) for the purposes of sections 5, 10, 14, 391 of, and Schedule 4 to, FSMA respectively.