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U.K.

Financial Services Act 2021

2021 CHAPTER 22

An Act to make provision about financial services and markets; to make provision about debt respite schemes; to make provision about Help-to-Save accounts; and for connected purposes.

[29th April 2021]

Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Prospective

Prudential regulation of credit institutions and investment firmsU.K.

1Exclusion of certain investment firms from the Capital Requirements RegulationU.K.

(1)Article 4(1) of the Capital Requirements Regulation (definitions) is amended in accordance with subsections (2) to (6).

(2)In point (2) (definition of “investment firm”), for the words from “excluding” to the end substitute “ other than a credit institution ”.

(3)In point (2A) (definition of “CRR firm”), in paragraph (a)(ii), for “an investment firm” substitute “ a designated investment firm ”.

(4)After point (2A) insert—

(2AA)designated investment firm’ means an investment firm that is for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556), but is not—

(a)a commodity and emission allowance dealer,

(b)a collective investment undertaking, or

(c)an insurance undertaking;

(2AB)FCA investment firm’ means an investment firm that—

(a)is an authorised person within the meaning of section 31(1)(a) of FSMA, and

(b)is not a designated investment firm;.

(5)In point (3) (definition of “institution”), for “an investment firm” substitute “ a designated investment firm ”.

(6)At the end insert—

(150)commodity and emission allowance dealer’ means an undertaking the main business of which consists exclusively of the provision of investment services or activities in relation to—

(a)commodity derivatives or commodity derivative contracts referred to in paragraphs 5, 6, 7, 9 and 10 of Part 1 of Schedule 2 to the Regulated Activities Order,

(b)derivatives of emission allowances referred to in paragraph 4 of that Part of that Schedule, or

(c)emission allowances referred to in paragraph 11 of that Part of that Schedule.

(7)In Schedule 1—

(a)Part 1 contains consequential amendments of the Capital Requirements Regulation, and

(b)Part 2 contains consequential amendments of the Capital Requirements (Country-by-Country Reporting) Regulations 2013 (S.I. 2013/3118).

2Prudential regulation of certain investment firms by FCA rulesU.K.

In Schedule 2—

(a)Part 1 inserts Part 9C of the Financial Services and Markets Act 2000 (prudential regulation of FCA investment firms),

(b)Part 2 contains minor and consequential amendments of the Financial Services and Markets Act 2000, and

(c)Part 3 contains transitional provision.

3Transfer of certain prudential regulation matters into PRA rulesU.K.

(1)The Treasury may by regulations revoke provisions of the Capital Requirements Regulation relating to the matters listed in subsection (2).

(2)The matters are—

(a)deductions from Common Equity Tier 1 items;

(b)the following aspects of the standardised approach to credit risk—

(i)exposure value;

(ii)risk weights for exposures to institutions;

(iii)exposures to corporates;

(iv)exposures secured by mortgages on immovable property;

(v)retail exposures;

(vi)subordinated debt and equity exposures;

(vii)the use of credit assessments;

(viii)exposures with particularly high risk;

(ix)exposures in the form of units or shares in collective investment undertakings;

(c)classification of off-balance sheet items;

(d)the following aspects of the internal ratings based approach to credit risk—

(i)the advanced internal ratings based approach for asset classes that cannot be modelled in a robust and prudent manner;

(ii)input parameters;

(iii)the requirement to use the internal ratings based approach for all significant exposure classes;

(iv)the 1.06 scaling factor for estimating risk-weighted assets;

(v)exposures in the form of units or shares in collective investment undertakings;

(vi)risk-weighted exposure amounts for equity exposures;

(vii)the treatment of expected loss amounts by exposure types;

(e)the use of credit risk mitigation techniques for exposures risk-weighted under the standardised approach to credit risk or the internal ratings based approach to credit risk;

(f)the following aspects of own funds requirements for counterparty credit risk—

(i)requirements to use particular methods for calculating the exposure value;

(ii)the mark-to-market method;

(iii)the original exposure method;

(iv)the standardised method;

(v)own funds requirements for exposures to a central counterparty;

(g)own funds requirements for operational risk;

(h)the following aspects of own funds requirements for market risk—

(i)the approaches for calculating the own funds requirements for market risk;

(ii)the scope and structure of the alternative standardised approach;

(iii)foreign exchange risk factors in the alternative standardised approach;

(iv)the scope and structure of the alternative internal model approach, including the use of alternative internal models;

(v)regulatory back-testing requirements and multiplication factors in the alternative internal model approach;

(vi)requirements relating to risk measurement in the alternative internal model approach;

(i)own funds requirements relating to—

(i)derogations for small trading book business;

(ii)the trading book;

(j)own funds requirements for credit valuation adjustment risk;

(k)large exposures;

(l)liquidity requirements;

(m)the leverage ratio;

(n)reporting requirements;

(o)disclosure requirements;

(p)any other matter which is the subject of a CRR Basel standard.

(3)The Treasury may by regulations revoke a provision of the Capital Requirements Regulation where—

(a)the provision is connected with provision relating to a matter listed in subsection (2), and

(b)the Treasury consider the revocation necessary or desirable in order to maintain or improve the coherence of the prudential regime comprised in, and in provision made under, the Capital Requirements Regulation and in general rules made by the Prudential Regulation Authority.

(4)The Treasury may only make regulations under subsection (1) or (3) revoking a provision if they consider that—

(a)the provision has been, or will be, adequately replaced by general rules made, or to be made, by the Prudential Regulation Authority, or

(b)it is appropriate for the provision not to be replaced.

(5)The Treasury may by regulations make consequential, supplementary, incidental, transitional, transitory and saving provision in connection with the revocation of provisions under subsection (1) or (3), including provision amending, repealing or revoking provisions of the Capital Requirements Regulation or another enactment.

(6)Regulations under this section may make different provision for different purposes.

(7)Regulations under this section are subject to the affirmative procedure.

(8)Where the Treasury make regulations in reliance on subsection (2)(p), the Treasury must, when laying a draft of the regulations before Parliament, also lay before Parliament a statement explaining which provisions are made in reliance on that paragraph and identifying the relevant CRR Basel standard.

(9)The reference in subsection (2)(p) to a matter that is the subject of a CRR Basel standard includes such a matter as it relates to any CRR firm (even where the standard in question does not apply to all CRR firms).

(10)In this section—

  • CRR Basel standard” has the meaning given in section 4;

  • general rules” has the same meaning as in the Financial Services and Markets Act 2000 (see section 417 of that Act).

(11)Terms used in this section and in the Capital Requirements Regulation have the same meaning in this section as they have in that Regulation (or any part of it).

4CRR Basel standardsU.K.

(1)For the purposes of section 3, “CRR Basel standard” means—

(a)a standard recommended in a document issued by the Basel Committee on Banking Supervision listed in subsection (2), or

(b)a standard recommended in another document issued by that Committee where the recommended date for implementation of the standard falls on or before the date described in subsection (3),

subject to subsection (4).

(2)The documents referred to in subsection (1)(a) are the documents entitled (and issued) as follows—

(a)Capital requirements for banks' equity investments in funds (December 2013);

(b)The standardised approach for measuring counterparty credit risk exposures (March 2014);

(c)Capital requirements for bank exposures to central counterparties (April 2014);

(d)Supervisory framework for measuring and controlling large exposures (April 2014);

(e)Basel III: the net stable funding ratio (October 2014);

(f)Revised Pillar 3 disclosure requirements (January 2015);

(g)Pillar 3 disclosure requirements — consolidated and enhanced framework (March 2017);

(h)Implementation of net stable funding ratio and treatment of derivative liabilities (October 2017);

(i)Basel III: Finalising post-crisis reforms (December 2017);

(j)Technical Amendment — Basel III: Treatment of extraordinary monetary policy operations in the Net Stable Funding Ratio (June 2018);

(k)Pillar 3 disclosure requirements — regulatory treatment of accounting provisions (August 2018);

(l)Pillar 3 disclosure requirements — updated framework (December 2018);

(m)Minimum capital requirements for market risk (January 2019);

(n)Targeted revisions to the credit valuation adjustment risk framework (July 2020).

(3)The date referred to in subsection (1)(b) is whichever is the latest of the dates recommended by the Basel Committee on Banking Supervision in a document listed in subsection (2) for the implementation of a standard (or, where implementation is recommended to take place in phases, for the full implementation of a standard).

(4)A recommended standard is not a CRR Basel standard to the extent that, immediately before the day on which this section comes into force, provision giving effect to the recommendation is included in an enactment.

(5)References in this section to a document issued by the Basel Committee on Banking Supervision are to such a document as it has effect from time to time.

5Prudential regulation of credit institutions etc by PRA rulesU.K.

(1)In Schedule 3—

(a)Part 1 inserts Part 9D of the Financial Services and Markets Act 2000 (prudential regulation of credit institutions etc),

(b)Part 2 amends the Prudential Regulation Authority's powers under Part 12B of that Act (approval of certain holding companies),

(c)Part 3 contains minor and consequential amendments, and

(d)Part 4 contains transitional provision.

(2)Subsections (3) to (5) apply where a provision of the Capital Requirements Regulation, or of an instrument made under that Regulation, has been revoked by regulations under section 3.

(3)In the Capital Requirements Regulation and in other enactments, except as otherwise provided—

(a)pre-revocation references to the revoked provision are to be treated as references to the corresponding CRR rule, and

(b)pre-revocation references to the Capital Requirements Regulation or the instrument, or to a division of that Regulation or instrument that included the revoked provision, are to be treated as including the corresponding CRR rule.

(4)The Prudential Regulation Authority must—

(a)prepare a document setting out whether and, if so, how CRR rules correspond to the revoked provision,

(b)update the document from time to time, and

(c)publish the document, and any update, in the manner best calculated to bring it to the attention of those likely to be affected by the Capital Requirements Regulation and CRR rules.

(5)For the purposes of subsection (3), whether a CRR rule corresponds to a revoked provision is to be determined by reference to the document published under subsection (4), as updated from time to time.

(6)In this section, references to instruments made under the Capital Requirements Regulation include EU tertiary legislation made under that Regulation which forms part of retained EU law.

(7)In this section—

  • CRR rules” has the same meaning as in the Financial Services and Markets Act 2000 (see section 144A of that Act, inserted by Schedule 3 to this Act);

  • EU tertiary legislation” has the same meaning as in the European Union (Withdrawal) Act 2018 (see section 20 of that Act);

  • pre-revocation reference” means, in connection with the revocation of a provision described in subsection (2), a reference contained in an enactment immediately before the revocation (whether or not the reference is in force at that time).

6Power to amend the Credit Rating Agencies RegulationU.K.

(1)The Treasury may by regulations amend the Credit Rating Agencies Regulation by making provision related to the issuing and use of credit ratings which it considers necessary or desirable having regard to a CRR Basel standard.

(2)Regulations under this section may—

(a)make different provision for different purposes, and

(b)make consequential, supplemental, incidental, transitional, transitory and saving provision.

(3)Regulations under this section are subject to the affirmative procedure.

(4)The power under subsection (1) includes power to make provision in relation to any CRR firm (even where the CRR Basel standard to which the Treasury have regard does not apply to all CRR firms).

(5)In this section—

  • CRR Basel standard” has the meaning given in section 4;

  • CRR firm” has the same meaning as in the Capital Requirements Regulation;

  • the Credit Rating Agencies Regulation” means Regulation (EC) No. 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies;

  • credit rating” has the same meaning as in the Credit Rating Agencies Regulation (see Article 3(1)(a) of that Regulation).

7Amendments of the Capital Requirements RegulationU.K.

Schedule 4 contains amendments of the Capital Requirements Regulation.

Prospective

BenchmarksU.K.

8Review of which benchmarks are critical benchmarksU.K.

(1)Article A20 of the Benchmarks Regulation (review of critical benchmarks) is amended in accordance with subsections (2) to (5).

(2)In paragraph 2, for point (a) (but not the “and” at the end) substitute—

(a)whether an administrator located in the United Kingdom provides a benchmark that satisfies one or more of conditions (a), (b), (c) or (d) of paragraph 1 of Article 20;.

(3)In paragraph 2(b), for “point (a)(i) or (ii)” substitute “ point (a) ”.

(4)In paragraph 3(b), for “point (a)(i) or (ii)” substitute “ point (a) ”.

(5)In paragraph 6, for point (b) substitute—

(b)the Treasury consider that the benchmark satisfies one or more of conditions (a), (b), (c) or (d) of paragraph 1 of Article 20.

(6)In Article 20(1) of the Benchmarks Regulation (critical benchmarks: conditions and other matters)—

(a)in the opening words of point (c), for “all” substitute “ both ”,

(b)omit point (c)(i), and

(c)after point (c) insert—

(d)the benchmark has a sufficient number of appropriate market-led substitutes that it does not fulfil the criterion in point (c)(ii), but:

(i)it is not reasonably practicable for one or more users of the benchmark to switch to one of those substitutes, and

(ii)the benchmark fulfils the criterion in point (c)(iii).

9Mandatory administration of a critical benchmarkU.K.

(1)Article 21 of the Benchmarks Regulation (mandatory administration of a critical benchmark) is amended as follows.

(2)In paragraph 3, for “five years” substitute “ 10 years ”.

(3)After paragraph 3 insert—

If the FCA decides to compel the administrator to continue publishing the benchmark under paragraph 3, the FCA must assess the capability of the benchmark to measure the underlying market or economic reality, taking into account, among other things, the procedure established by the administrator in accordance with Article 28(1).

After making its assessment under paragraph 3A, the FCA must give the administrator—

(a)a written notice stating that it considers that the benchmark is not representative of the market or economic reality that it is intended to measure or that the representativeness of the benchmark is at risk, or

(b)a written notice stating that it considers that the representativeness of the benchmark is not at risk.

The FCA must make its assessment under paragraph 3A, and give the notice under paragraph 3B, before the end of the period of 28 days beginning with the day on which the FCA notifies the administrator of its decision to compel the administrator to continue publishing the benchmark.

10Prohibition on new use where administrator to cease providing critical benchmarkU.K.

In the Benchmarks Regulation, after Article 21 insert—

Article 21A U.K.Prohibition on new use where administrator to cease providing critical benchmark

1

Where the FCA has completed an assessment of a critical benchmark under Article 21(2), the FCA may, by publishing a notice, prohibit some or all new use of the benchmark by supervised entities.

2

In paragraph 1, the reference to new use of a benchmark is to doing the following on or after the day on which the prohibition takes effect (“the prohibition day”)—

(a)issuing a financial instrument which references the benchmark, or amending the terms of a financial instrument so as to include a reference to the benchmark where the instrument did not reference the benchmark immediately before the prohibition day;

(b)determining the amount payable under a financial instrument or a financial contract by referencing the benchmark, where the instrument or contract did not reference the benchmark immediately before the prohibition day;

(c)being a party to a financial contract which references the benchmark—

(i)where the contract is formed on or after the prohibition day, or

(ii)where the contract was formed before the prohibition day but did not reference the benchmark immediately before that day;

(d)providing a borrowing rate as described in point (7)(d) of Article 3(1) calculated by reference to the benchmark for the purposes of a financial contract—

(i)where the contract is formed on or after the prohibition day, or

(ii)where the contract was formed before the prohibition day but did not use the borrowing rate immediately before that day;

(e)measuring the performance of an investment fund through the benchmark for a purpose described in point (7)(e) of Article 3(1), where the fund's constitutional documents or prospectus did not provide for its performance to be measured through the benchmark immediately before the prohibition day.

3

The FCA may only exercise the power under paragraph 1 if it considers it desirable to do so in order to advance either or both of the following—

(a)its consumer protection objective (see section 1C of FSMA);

(b)its integrity objective (see section 1D of that Act).

4

In exercising the power under paragraph 1 in relation to a benchmark that is used outside the United Kingdom, the FCA may, among other things, have regard to the likely effect outside the United Kingdom of the exercise of the power.

5

A notice under this Article may—

(a)make different provision for different purposes;

(b)make provision by reference to any aspect of the new use, including the persons involved in the use;

(c)provide that the prohibition has effect only during a period specified in the notice;

(d)make such transitional provision as the FCA considers appropriate.

6

A notice under this Article must—

(a)give reasons for the prohibition,

(b)specify when the prohibition is to take effect,

(c)explain how the FCA has taken account of the relevant policy statement (see Article 23F), and

(d)provide any further information that the FCA considers appropriate for assisting supervised entities to understand the prohibition.

7

A notice under this Article must be published in the manner that appears to the FCA to be best calculated to bring it to the attention of—

(a)supervised entities, and

(b)the public.

8

The FCA—

(a)must give a copy of a notice under this Article to the Treasury before publishing it, and

(b)may charge a reasonable fee for providing a person with a copy of a notice published under this Article.

9

In paragraph 2(a) to (e), references to referencing, or measuring performance through, the benchmark (however expressed) include referencing, or measuring performance through, a combination of indices that include the benchmark.

11Assessment of representativeness of critical benchmarksU.K.

(1)In Article 3(1) of the Benchmarks Regulation (definitions)—

(a)after point (10) insert—

(10A)supervised third country contributor’ means a supervised third country entity that contributes input data to an administrator located in the United Kingdom;, and

(b)after point (17) insert—

(17A)supervised third country entity’ means an entity that would be a supervised entity by virtue of point (a) of the definition of that term (CRR firm that is a credit institution) but for the fact that it does not have its head office or registered office in the United Kingdom;.

(2)After Article 22 of the Benchmarks Regulation insert—

Article 22A U.K.Assessment of representativeness of critical benchmarks: administrator

1

This Article applies to a critical benchmark that—

(a)is based on submissions by contributors the majority of which are supervised entities or supervised third country entities, and

(b)is not an Article 23A benchmark.

2

An administrator of a critical benchmark must submit to the FCA an assessment of the capability of the benchmark to measure the underlying market or economic reality—

(a)at the end of the period of two years beginning with the day on which the benchmark became a critical benchmark, and

(b)at the end of each subsequent two year period.

3

The FCA may, by written notice, require an administrator of a critical benchmark to submit to the FCA an assessment of the capability of the benchmark to measure the underlying market or economic reality.

4

The FCA may only impose a requirement under paragraph 3 if it considers that—

(a)the benchmark does not, or may not, represent the underlying market or economic reality, or

(b)the representativeness of the benchmark is or may be at risk.

5

A notice under paragraph 3 may require the administrator to submit the assessment before a date specified in the notice, provided that date falls after the end of the period of two weeks beginning with the day on which the notice was given.

6

If a supervised contributor or a supervised third country contributor intends to cease contributing input data to a critical benchmark—

(a)the contributor must notify the benchmark administrator promptly in writing, and

(b)the notification must state the date on which it intends to cease contributing, which must be after the end of the period of 15 weeks beginning with the first working day after the day on which it gives the notification.

7

If an administrator of a benchmark is notified under paragraph 6, it must—

(a)inform the FCA promptly, stating the date on which the notification was given, and

(b)submit to the FCA an assessment of the implications of the contributor's withdrawal for the capability of the benchmark to measure the underlying market or economic reality.

8

An assessment under paragraph 7(b) must be submitted to the FCA before the end of the period of 14 days beginning with the first working day after the day on which the notification under paragraph 6 was given.

9

An administrator of a critical benchmark that is required to provide an assessment under this Article must not change the market or economic reality intended to be measured by the benchmark (as defined in the benchmark statement referred to in Article 27) during the assessment period, unless the FCA gives it written permission to do so.

10

For the purposes of paragraph 9, the assessment period begins—

(a)in the case of an assessment under paragraph 2, with the day falling one month before the end of the relevant two year period described in that paragraph;

(b)in the case of an assessment under paragraph 3, when the administrator receives the FCA's notice requiring the assessment;

(c)in the case of an assessment under paragraph 7(b), when the contributor notifies the administrator under paragraph 6.

11

For the purposes of paragraph 9, the assessment period ends—

(a)when the FCA notifies the administrator that it considers that the representativeness of the benchmark is not at risk, whether by giving a notice under Article 22B(3)(b) or otherwise, or

(b)when the benchmark becomes an Article 23A benchmark.

Article 22B U.K.Assessment of representativeness of critical benchmarks: FCA

1

Where the FCA receives an assessment by a benchmark administrator under Article 22A within the period specified by or under that Article, the FCA must make its own assessment of the capability of the benchmark to measure the underlying market or economic reality, taking into account, among other things—

(a)the procedure established by the administrator in accordance with Article 28(1), and

(b)the administrator's assessment.

2

If a benchmark administrator does not submit an assessment under Article 22A within the period specified by or under that Article, the FCA may make its own assessment of the capability of the benchmark to measure the underlying market or economic reality and, if it does so—

(a)must take into account the procedure established by the administrator in accordance with Article 28(1), and

(b)may take into account, among other things, an assessment submitted by the administrator after the end of the specified period.

3

After making its assessment under this Article, the FCA must give the benchmark administrator—

(a)a written notice stating that it considers that the benchmark is not representative of the market or economic reality that it is intended to measure or that the representativeness of the benchmark is at risk, or

(b)a written notice stating that it considers that the representativeness of the benchmark is not at risk.

4

Where the administrator's assessment was made under Article 22A(7)(b) (contributor intends to cease contributing input data), the FCA must make its assessment under paragraph 1 or 2, and give the notice under paragraph 3, before the end of the period of 28 days beginning with the first working day after the day on which the administrator was notified under Article 22A(6).

(3)Paragraph 2 of Article 22A of the Benchmarks Regulation (inserted by this section) applies in the case of a benchmark which became a critical benchmark before the day on which this section comes into force, but as if it only required the administrator to submit an assessment at the end of each two year period described in that paragraph which ends after that day.

12Mandatory contribution to critical benchmarksU.K.

(1)Article 23 of the Benchmarks Regulation (mandatory contribution to a critical benchmark) is amended as follows.

(2)Omit paragraphs 1 to 4.

(3)For paragraph 5 substitute—

If a supervised contributor or supervised third country contributor gives a notification under Article 22A(6), the contributor may not cease contributing input data before the date specified in the notification as the date on which it intends to cease contributing, unless the FCA gives it written permission to do so.

Paragraph 5A does not require a contributor to trade or commit to trade.

(4)In paragraph 6, for the opening words substitute “ If the FCA gives the administrator of a critical benchmark a notice under Article 21(3B)(a) or Article 22B(3)(a) (benchmark unrepresentative or representativeness at risk), it has the power to— ”.

(5)In paragraph 6(a)—

(a)after “supervised entities” insert “ and supervised third country entities ”, and

(b)omit “from the date” to the end.

(6)In paragraph 6(c), after “supervised entities” insert “ and supervised third country entities ”.

(7)After paragraph 6 insert—

The FCA may only exercise the powers under paragraph 6 so far as it considers it appropriate to do so for the purpose of maintaining, restoring or improving the representativeness of the benchmark.

(8)In paragraph 7—

(a)after “supervised entities” insert “ and supervised third country entities ”, and

(b)omit “supervised” (in the second place it occurs).

(9)In paragraph 9(d), for “relevant supervised entities” substitute “ contributors mandated to contribute input data ”.

(10)After paragraph 9 insert—

In the case of an Article 23A benchmark, any measures adopted under paragraph 6 in relation to the benchmark are to be treated as being revoked when the designation of the benchmark under Article 23A takes effect.

(11)In paragraph 10—

(a)after “supervised contributor” insert “ and supervised third country contributor ”, and

(b)for “exceeding the maximum five year period laid down in the second subparagraph of paragraph 6” substitute “ extending beyond the end of the period of five years beginning with the day on which the administrator notified the FCA of its intention to cease providing the benchmark under Article 21(1) ”.

(12)Omit paragraph 12.

13Designation of certain critical benchmarksU.K.

In the Benchmarks Regulation, after Article 23 insert—

Article 23A U.K.Designation of certain critical benchmarks

1

If the FCA gives the administrator of a critical benchmark a notice under Article 21(3B)(a) or Article 22B(3)(a) (benchmark unrepresentative or representativeness at risk), the FCA must, before the end of the period of 21 days beginning with the day on which it gave the notice—

(a)consider whether it is appropriate for the FCA to designate the benchmark under this Article, and

(b)if it proposes to do so, inform the benchmark administrator by written notice.

2

The FCA may not designate a benchmark under this Article if it considers that it is, and is likely to continue to be, the case that—

(a)the representativeness of the benchmark can reasonably be restored and maintained by the administrator or by the FCA exercising its powers under Article 23(6), and

(b)there are good reasons to restore and maintain its representativeness.

3

A notice under paragraph 1(b) must—

(a)explain when the FCA proposes that the designation of the benchmark should take effect,

(b)give reasons for the FCA's proposed decision, and

(c)state that the administrator may make written representations to the FCA during the period of 14 days beginning with the day on which the notice is given.

4

If, after considering any representations made in accordance with paragraph 3(c), the FCA decides to designate the benchmark under this Article, it must give the administrator a written notice of its decision.

5

A notice under paragraph 4 must—

(a)state when the designation of the benchmark takes effect,

(b)give reasons for the FCA's decision,

(c)explain how the FCA has taken account of the relevant policy statement (see Article 23F),

(d)state that the prohibition on use of the benchmark under Article 23B will take effect when the designation of the benchmark takes effect, unless the FCA exercises its powers under Article 23B(2) or 23C,

(e)inform the administrator of its right to refer the decision to the Upper Tribunal and of the procedure for doing so, and

(f)provide any further information that the FCA considers appropriate for assisting supervised entities to understand the effects of the designation of the benchmark.

6

The FCA may, before a designation under this Article takes effect, decide to change when it takes effect to a later time.

7

If it decides to make such a change—

(a)the FCA must give the benchmark administrator a written notice of its decision, and

(b)the notice must satisfy the requirements in paragraph 5(a) to (d) and (f).

8

The FCA may withdraw a designation of a benchmark under this Article if—

(a)the designation has not taken effect,

(b)paragraph 1 applies again in relation to the benchmark, and

(c)the FCA designates the benchmark again under this Article with effect from an earlier date.

9

If the FCA decides to withdraw the designation of a benchmark under paragraph 8—

(a)the FCA must include notice of the withdrawal in the notice under paragraph 4 of the further designation of the benchmark, and

(b)the notice must satisfy the requirements in paragraph 5(b), (c) and (f) in relation to the decision to withdraw.

10

A notice under paragraph 4 or 7—

(a)may identify when the designation takes effect in any manner that the FCA considers appropriate, including by specifying a day or by describing a day by reference to the process for a reference to the Upper Tribunal or another process or event, and

(b)must be published by the FCA—

(i)before the day on which the notice provides for the designation to take effect, and

(ii)in the manner that appears to the FCA to be best calculated to bring it to the attention of the public.

11

The FCA—

(a)must give a copy of a notice under this Article to the Treasury before publishing it, and

(b)may charge a reasonable fee for providing a person with a copy of a notice under this Article.

12

If the FCA decides to designate a benchmark under this Article and gives the administrator a notice under paragraph 4, the benchmark administrator may refer the matter to the Upper Tribunal.

13

Part 9 of FSMA (hearings and appeals) applies in relation to references to the Upper Tribunal made under this Article as it applies in relation to references made to that Tribunal under that Act.

14

In this Regulation, references to an “Article 23A benchmark” are to a benchmark in relation to which a designation under this Article has effect.

14Use of Article 23A benchmarksU.K.

In the Benchmarks Regulation, after Article 23A (inserted by section 13) insert—

Article 23B U.K.Prohibition on use of Article 23A benchmark

1

Supervised entities must not use an Article 23A benchmark, except where permitted to do so under paragraph 2 or Article 23C.

2

The FCA may, by publishing a notice before the day on which the designation of the benchmark under Article 23A takes effect, provide that the prohibition in paragraph 1 does not take effect until a date specified in the notice.

3

The date specified in a notice under paragraph 2 must fall before the end of the period of four months beginning with the day on which the designation of the benchmark under Article 23A takes effect.

4

A notice published under this Article must be published in the way appearing to the FCA to be best calculated to bring it to the attention of—

(a)supervised entities, and

(b)the public.

5

The FCA may charge a reasonable fee for providing a person with a copy of a notice published under this Article.

Article 23C U.K.Exception from the prohibition for legacy use of Article 23A benchmark

1

This Article applies to an Article 23A benchmark.

2

The FCA may, by publishing a notice, permit some or all legacy use of the benchmark by supervised entities.

3

The FCA may, by publishing a notice, alter or withdraw a permission under paragraph 2.

4

The FCA may only exercise a power under paragraph 2 or 3 if it considers it desirable to do so in order to advance either or both of the following—

(a)its consumer protection objective (see section 1C of FSMA);

(b)its integrity objective (see section 1D of that Act).

5

In exercising a power under paragraph 2 or 3 in relation to a benchmark that is used outside the United Kingdom, the FCA may, among other things, have regard to the likely effect outside the United Kingdom of the exercise of the power.

6

A notice under this Article may—

(a)make provision by reference to any aspect of the legacy use of the benchmark, including the persons involved in the use;

(b)provide that the permission has effect only during a period specified in the notice;

(c)make different provision for different purposes;

(d)make such transitional provision as the FCA considers appropriate.

7

A notice under this Article must—

(a)give reasons for the permission, or the alteration or withdrawal of permission,

(b)specify when the permission, or the alteration or withdrawal, is to take effect,

(c)explain how the FCA has taken account of the relevant policy statement (see Article 23F), and

(d)provide any further information that the FCA considers appropriate for assisting supervised entities to understand the permission or the alteration or withdrawal of permission.

8

A notice under this Article must be published in the manner that appears to the FCA to be best calculated to bring it to the attention of—

(a)supervised entities, and

(b)the public.

9

The FCA—

(a)must give a copy of a notice under this Article to the Treasury before publishing it, and

(b)may charge a reasonable fee for providing a person with a copy of a notice published under this Article.

10

In this Article—

(a)references to legacy use of a benchmark are to use that is not new use, and

(b)“new use” has the same meaning, in connection with the prohibition under Article 23B, as it has in connection with a prohibition under Article 21A (see Article 21A(2) and (9)).

15Orderly cessation of Article 23A benchmarksU.K.

(1)In the Benchmarks Regulation, after Article 23C (inserted by section 14) insert—

Article 23D U.K.Orderly cessation of Article 23A benchmarks

1

This Article applies to an Article 23A benchmark.

2

The FCA may by written notice impose requirements on the benchmark administrator relating to any of the following—

(a)the way in which the benchmark is determined, including the input data,

(b)rules of the benchmark, and

(c)where the benchmark is based on submissions by contributors, the code of conduct referred to in Article 15.

3

The FCA may only exercise the powers under paragraph 2 if—

(a)it considers it appropriate to do so having regard to the desirability of securing that the cessation of the benchmark takes place in an orderly fashion, and

(b)it considers it desirable to do so in order to advance either or both of the following—

(i)its consumer protection objective (see section 1C of FSMA);

(ii)its integrity objective (see section 1D of that Act).

4

In exercising a power under paragraph 2 in relation to a benchmark that is used outside the United Kingdom, the FCA may, among other things, have regard to the likely effect outside the United Kingdom of the exercise of the power.

5

The powers under paragraph 2—

(a)may be exercised so as to confer a discretion on the administrator,

(b)include power to specify when a requirement must be satisfied, and

(c)include power to vary or withdraw a requirement from time to time.

6

The powers under paragraph 2 are not limited by the market or economic reality that was intended to be measured by the benchmark immediately before it became an Article 23A benchmark (as defined in the benchmark statement referred to in Article 27), although the FCA may have regard to that when exercising those powers.

7

A notice under paragraph 2 must—

(a)explain the exercise of the power,

(b)give reasons for the decision to exercise the power,

(c)specify when the requirement (or variation or withdrawal of a requirement) is to take effect,

(d)explain how the FCA has taken account of the relevant policy statement (see Article 23F), and

(e)provide any further information that the FCA considers appropriate for assisting supervised entities to understand the effects of the exercise of the power.

8

The benchmark administrator may not change anything described in paragraph 2 unless—

(a)the FCA requires it to do so, or gives it a discretion to do so, under paragraph 2, or

(b)the FCA has given a written notice permitting it to do so and has not given a written notice withdrawing the permission.

9

A notice under paragraph 2 or 8(b) must be published as soon as reasonably practicable in the way appearing to the FCA to be best calculated to bring it to the attention of the public.

10

The FCA—

(a)must give a copy of a notice under paragraph 2 or 8(b) to the Treasury before publishing it, and

(b)may charge a reasonable fee for providing a person with a copy of a notice under paragraph 2 or 8(b).

11

In relation to an Article 23A benchmark, this Regulation applies with the modifications specified in or under Annex 4 (and see also Articles 22A(1)(b) and 23(9A)).

(2)In the Benchmarks Regulation, after Annex 3 insert—

ANNEX 4U.K.ARTICLE 23A BENCHMARKS

1This Regulation applies in relation to an Article 23A benchmark with—

(a)the modifications listed in paragraph 2, and

(b)any modifications specified in a notice given by the FCA to the benchmark administrator under paragraph 6.

2The modifications referred to in paragraph 1(a) are the following—

(a)Article 11(1) has effect as if—

(i)point (a) were omitted, and

(ii)in point (d), the words “and representative” (in the first place they occur) and “and representative of the market or economic reality that the benchmark is intended to measure” were omitted;

(b)point (a) in Article 27(1) has effect as if for “and the circumstances in which such measurement may become unreliable” there were substituted “ immediately before it became an Article 23A benchmark ”.

3The FCA may, in accordance with paragraphs 4 to 9, provide that this Regulation applies to an Article 23A benchmark with modifications, where it considers it appropriate to do so having regard to the effects of the designation under Article 23A or the FCA's exercise of its powers under Article 23D(2) (or both).

4If the FCA proposes that this Regulation should apply to an Article 23A benchmark with modifications, or that existing modifications applied by a notice under paragraph 6 should be varied, it must inform the benchmark administrator by written notice.

5A notice under paragraph 4 must—

(a)explain the proposed modifications or variations,

(b)give reasons for the FCA's proposed decision, and

(c)state that the administrator may make written representations to the FCA during the period of 14 days beginning with the day on which the notice is given.

6If, after considering any representations made in accordance with paragraph 5(c), the FCA decides to make the proposed modifications or variations, it must give the administrator a written notice of its decision.

7A notice under paragraph 6 must—

(a)specify the modifications or variations,

(b)give reasons for the FCA's decision, and

(c)provide any further information that the FCA considers appropriate for assisting supervised entities to understand the effects of the modifications or variations.

8A notice under paragraph 6 must be published as soon as reasonably practicable in the way appearing to the FCA to be best calculated to bring it to the attention of the public.

9The FCA—

(a)must give a copy of a notice under paragraph 6 to the Treasury before publishing it, and

(b)may charge a reasonable fee for providing a person with a copy of a notice published under this Annex.

10Paragraphs 11 to 13 apply where the FCA gives the administrator of an Article 23A benchmark a notice under Article 23D(2) or (8)(b).

11The FCA must, before the end of the period of three months beginning with the day on which it gave the notice referred to in paragraph 10, consider whether to exercise its power under paragraph 3 in relation to the benchmark.

12During the interim period, the benchmark administrator is only required to comply with this Regulation to the extent that, taking account of the changes made by the notice referred to in paragraph 10, it remains reasonably practicable to do so.

13In paragraph 12, “interim period” means a period beginning when the notice referred to in paragraph 10 is given and ending—

(a)at the end of the three month period referred to in paragraph 11, if that period ends without the FCA giving a notice under paragraph 4, or

(b)when the FCA, having given the administrator a notice under paragraph 4, gives the administrator —

(i)a written notice that it has decided not to make the proposed modifications or variations, or

(ii)a notice under paragraph 6.

14References in this Annex to varying modifications (however expressed) include removing or replacing some or all modifications.

16Review of exercise of powers under Article 23DU.K.

In the Benchmarks Regulation, after Article 23D (inserted by section 15) insert—

Article 23E U.K.Review of exercise of powers under Article 23D

1

Where the FCA has exercised a power under Article 23D(2) in relation to a benchmark, the FCA must, for each review period—

(a)review its exercise of its powers under Article 23D(2) in relation to that benchmark during the period, and

(b)publish a report setting out the outcome of the review.

2

For the purposes of paragraph 1, the review periods are—

(a)the period of two years beginning with the day on which the first notice under Article 23D(2) relating to the benchmark is published, and

(b)each subsequent period of two years, excluding the period in which the benchmark ceases to be provided and subsequent periods.

3

The FCA must publish a report under paragraph 1(b) as soon as reasonably practicable after the end of the review period.

4

Where the FCA, having exercised a power under Article 23D(2) in relation to a benchmark, exercises a power under Article 23D(2) again in relation to the benchmark, it must—

(a)carry out a review of the most recent previous exercise of that power in relation to that benchmark, and

(b)publish a report setting out the outcome of the review.

5

The FCA must take the action described in paragraph 4—

(a)before its subsequent exercise of a power under Article 23D(2), where that is reasonably practicable, or

(b)otherwise, as soon as reasonably practicable afterwards.

6

The FCA may fulfil the duty in paragraph 1 and satisfy paragraph 4 by means of the same review and report.

7

In a review under this Article, the FCA must—

(a)consider whether the exercise of the power has advanced, or is likely to advance, the objectives mentioned in Article 23D(3)(b), and

(b)have regard to the policy statement with respect to the exercise of its powers under Article 23D (see Article 23F).

8

A report published under this Article must be published in the way appearing to the FCA to be best calculated to bring it to the attention of the public.

9

The FCA—

(a)must give a copy of a report of a review under this Article to the Treasury before publishing it, and

(b)may charge a reasonable fee for providing a person with a copy of a report published in accordance with this Article.

17Policy statements relating to critical benchmarksU.K.

(1)In the Benchmarks Regulation, after Article 23E (inserted by section 16) insert—

Article 23F U.K.Policy statements

1

The FCA must prepare and publish a statement of its policy with respect to—

(a)the exercise of its power under Article 21A,

(b)the designation of benchmarks under Article 23A,

(c)the exercise of its powers under Article 23C, and

(d)the exercise of its powers under Article 23D.

2

The FCA—

(a)may alter or replace a statement published under this Article, and

(b)if it does so, must publish the altered or replacement statement.

3

A statement published under this Article must be published in the way appearing to the FCA to be best calculated to bring it to the attention of the public.

4

The FCA—

(a)must give a copy of a statement under this Article to the Treasury before publishing it, and

(b)may charge a reasonable fee for providing a person with a copy of a statement published under this Article.

5

In making a decision under Article 23A, or exercising its powers under any of Article 21A, 23C or 23D, the FCA must have regard to any relevant statement of policy published under this Article and in force at the time.

(2)The FCA's duty under Article 23F(1) of the Benchmarks Regulation (inserted by subsection (1)) to prepare and publish a statement may be satisfied by things done by the FCA before subsection (1) comes into force (as well as by things done after that time).

18Critical benchmarks provided for different currencies etcU.K.

(1)In the Benchmarks Regulation, after Article 23F (inserted by section 17) insert—

Article 23G U.K.Critical benchmarks provided for different currencies etc

1

This Article makes provision about critical benchmarks provided for different currencies, maturities or tenors (“umbrella benchmarks”).

2

References in this Article to a “version” of an umbrella benchmark are to the benchmark as provided for a particular currency, maturity or tenor or, where the benchmark is provided for a combination of two or more of those factors, the benchmark as provided for each combination.

3

Articles 11(4), (4A) and (4B), 21, 21A, 22A, 22B, 23 and 23A to 23E and Annex 4 apply in relation to an umbrella benchmark as if each version of the umbrella benchmark were—

(a)a separate critical benchmark, and

(b)intended to measure the market or economic reality defined in the benchmark statement for the umbrella benchmark (whether defined there separately for different versions of the benchmark or for the umbrella benchmark taken as a whole),

subject to the modifications in paragraph 4.

4

The modifications are as follows—

(a)the reference in point (c) of Article 21(3) to the benchmark ceasing to be critical is a reference to the umbrella benchmark ceasing to be critical;

(b)the reference in Article 22A(1)(a) to a benchmark being based on particular submissions is a reference to the umbrella benchmark, taken as a whole but disregarding any versions that are Article 23A benchmarks, being based on such submissions;

(c)the benchmark administrator's duty under Article 22A(2) is a duty to submit an assessment dealing separately with each version of the umbrella benchmark;

(d)the FCA's duty under Article 23E(1) is a duty to carry out a review of its exercise of its powers under Article 23D(2) in relation to each version of the umbrella benchmark (and the first review period begins when the first notice under Article 23D(2) relating to any version of the benchmark is published).

5

Notices given under the provisions listed in paragraph 3 may relate to one version, several versions or all versions of the umbrella benchmark.

6

The FCA may exercise its functions under Articles 21, 21A, 22A, 22B, 23 and 23A to 23E and paragraph 3 of Annex 4 in different ways in relation to different versions of the umbrella benchmark.

7

Nothing in this Article is to be interpreted as implying anything about the operation, in relation to umbrella benchmarks, of provisions of this Regulation not mentioned in this Article.

8

The Treasury may by regulations make provision about the operation of this Regulation in relation to umbrella benchmarks, including provision amending or revoking provisions of this Article (other than this paragraph).

(2)In Article 49 of the Benchmarks Regulation (regulations made by the Treasury)—

(a)after paragraph 2 insert—

Regulations made under Article 23G may not be made unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of each House of Parliament., and

(b)in paragraph 3, at the beginning insert “ Subject to paragraph 2A, ”.

19Changes to and cessation of a benchmarkU.K.

(1)Article 28 of the Benchmarks Regulation (changes to and cessation of a benchmark) is amended as follows.

(2)In paragraph 1—

(a)omit “, together with the benchmark statement referred to in Article 27,”,

(b)for “a procedure” substitute “ a robust procedure ”, and

(c)omit “and shall be updated and published whenever a material change occurs”.

(3)After paragraph 1 insert—

The procedure described in paragraph 1—

(a)must be published with the benchmark statement for the benchmark when that statement is published in accordance with the first or second subparagraph of Article 27(1), and

(b)must be updated and published whenever a material change occurs.

In the case of a critical benchmark—

(a)on the day on which a procedure described in paragraph 1 is published in accordance with paragraph 1A(a), the administrator must give the FCA an assessment of the matters described in paragraph 1C,

(b)the FCA must, before the end of the consideration period, consider whether a procedure published in accordance with paragraph 1A(a) satisfies paragraph 1,

(c)before publishing an update of a procedure described in paragraph 1 (whether in accordance with paragraph 1A(b) or otherwise), an administrator must give the update to the FCA, together with an assessment of the matters described in paragraph 1C,

(d)where the FCA is given an update of a procedure described in paragraph 1 by an administrator, it must, before the end of the consideration period, consider whether the update satisfies paragraph 1, and

(e)an administrator must not publish an update of a procedure described in paragraph 1 unless—

(i)the FCA has given a written notice to the administrator confirming that the update satisfies paragraph 1, or

(ii)the consideration period has expired without the FCA giving a written notice to the administrator stating that the update does not satisfy that paragraph.

An assessment provided by an administrator for the purposes of paragraph 1B(a) or (c) must assess the following matters—

(a)the nature and extent of the current use of the benchmark,

(b)the availability of suitable alternatives to the benchmark, and

(c)how prepared users of the benchmark are for changes to, or the cessation of, the benchmark.

For the purposes of paragraph 1B, “the consideration period”, in relation to a procedure or an update of a procedure, means the period of 60 days beginning with the day on which the procedure is published or the update of the procedure is given to the FCA (as appropriate) (“the relevant day”), subject to any extension under paragraph 1E.

The FCA may extend the consideration period by giving a written notice to the administrator before its expiry but may not extend the period beyond the end of the period of six months beginning with the relevant day.

20Extension of transitional period for benchmarks with non-UK administratorsU.K.

(1)Article 51(5) of the Benchmarks Regulation (transitional provision for benchmarks with administrators located in a country outside the UK) is amended as follows.

(2)In point (a), for “31 December 2022” substitute “ 31 December 2025 ”.

(3)In point (b)—

(a)for “1 January 2023” substitute “ 1 January 2026 ”, and

(b)for “31 December 2022” substitute “ 31 December 2025 ”.

21Benchmarks: minor and consequential amendmentsU.K.

Schedule 5 contains minor and consequential amendments of the Benchmarks Regulation.

Prospective

Access to financial services marketsU.K.

22Regulated activities and GibraltarU.K.

(1)Part 3 of the Financial Services and Markets Act 2000 (authorisation and exemption) is amended in accordance with subsections (2) to (4).

(2)In section 31(1) (authorised persons), after paragraph (a) insert—

(aa)a Gibraltar-based person who has a Schedule 2A permission to carry on one or more regulated activities;.

(3)After section 32 insert—

32AGibraltar-based persons

(1)The Treasury must, for each reporting period, prepare a report about the operation of Schedule 2A during the period.

(2)The report must, among other things, consider whether the conditions in paragraphs 7, 8 and 9 of Schedule 2A continue to be satisfied in connection with each regulated activity which is an approved activity for the purposes of that Schedule.

(3)The Treasury must consult the FCA and the PRA during the preparation of the report.

(4)The Treasury must lay a copy of the report before Parliament as soon as reasonably practicable after the end of the reporting period.

(5)The reporting periods are—

(a)the period of two years beginning with the day on which Schedule 2A comes fully into force, and

(b)each subsequent period of two years.

(4)After section 36 insert—

UK-based persons carrying on activities in GibraltarU.K.

36AUK-based persons carrying on activities in Gibraltar

Schedule 2B makes provision about the carrying on of activities corresponding to regulated activities in Gibraltar by UK-based persons.

(5)Schedule 6 inserts Schedule 2A to the Financial Services and Markets Act 2000 (Gibraltar-based persons carrying on activities in the UK).

(6)Schedule 7 inserts Schedule 2B to the Financial Services and Markets Act 2000 (UK-based persons carrying on activities in Gibraltar).

(7)Schedule 8 contains minor and consequential amendments.

(8)The Treasury may by regulations—

(a)amend Part 7 of the Financial Services and Markets Act 2000 (control of business transfers) to make provision about the operation of that Part in relation to cases involving a Gibraltar-based person;

(b)amend Part 18A of the Financial Services and Markets Act 2000 (suspension and removal of financial instruments from trading) to make provision about the operation of that Part in relation to cases involving a Gibraltar-based person;

(c)make provision relating to a Gibraltar-based person equivalent to provision in an enactment in force immediately before IP completion day relating to an EEA firm of a kind mentioned in Schedule 3 to the Financial Services and Markets Act 2000, with such modifications as the Treasury consider appropriate.

(9)The powers to make regulations under subsection (8) do not restrict the Treasury's power to make consequential provision under section 45.

(10)Section 45(3) to (5) apply in relation to regulations under subsection (8) as they apply to regulations under that section.

(11)In this section, “Gibraltar-based person” has the same meaning as in Schedule 2A to the Financial Services and Markets Act 2000 (inserted by Schedule 6 to this Act) (see paragraph 1 of that Schedule).

23Power to make provision about GibraltarU.K.

(1)The Treasury may by regulations—

(a)repeal or revoke relevant Gibraltar provision and make changes described in subsection (5),

(b)make provision with the same effect as relevant Gibraltar provision repealed or revoked under paragraph (a),

(c)amend relevant Gibraltar provision so as to restore any aspect of the effect the provision had immediately before IP completion day, and

(d)replace or supplement relevant Gibraltar provision with provision substantially similar to, or to a provision of, section 32A of, or Schedule 2A or 2B to, the Financial Services and Markets Act 2000 (inserted by section 22 of, and Schedules 6 and 7 to, this Act).

(2)In this section—

(a)Gibraltar provision” means a provision or set of provisions in an enactment so far as it relates to—

(i)the carrying on of activities in the United Kingdom by persons based in Gibraltar,

(ii)the carrying on of activities in Gibraltar by persons based in the United Kingdom, or

(iii)interaction of any other kind between the United Kingdom and Gibraltar, whether relating to persons, activities, financial instruments, other property or other matters,

(b)Gibraltar provision is “relevant” if—

(i)it is a provision of, or applied or modified by, regulations listed in subsection (3),

(ii)it was inserted, amended or otherwise modified by regulations listed in subsection (4),

(iii)it is, or is the subject of, saving provision included in regulations listed in subsection (4), or

(iv)in the case of a set of provisions, it includes provision falling within sub-paragraph (ii) or (iii), and

(c)Gibraltar provision is also “relevant” if it was made by regulations under subsection (1)(b), (c) or (d) or, in the case of a set of provisions, it includes provision made by such regulations.

(3)The regulations referred to in subsection (2)(b)(i) are the following, as amended from time to time—

(a)the Electronic Money Regulations 2011 (S.I. 2011/99);

(b)the Payment Services Regulations 2017 (S.I. 2017/752);

(c)the Data Reporting Services Regulations 2017 (S.I. 2017/699).

(4)The regulations referred to in subsection (2)(b)(ii) and (iii) are the following, as amended from time to time—

(a)regulation 3 of the Building Societies Legislation (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1187);

(b)Parts 2 and 3 of the Credit Transfers and Direct Debits in Euro (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1199);

(c)Part 2 of the Greenhouse Gas Emissions Trading Scheme (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/107);

(d)Chapters 1 and 2 of Part 2 of the Alternative Investment Fund Managers (Amendment etc) (EU Exit) Regulations 2019 (S.I. 2019/328);

(e)the Gibraltar (Miscellaneous Amendments) (EU Exit) Regulations 2019 (S.I. 2019/680).

(5)The changes referred to in subsection (1)(a) are changes that the Treasury consider appropriate to secure that, after the repeal or revocation of the relevant Gibraltar provision, the same provision is made in connection with Gibraltar as is made in connection with most or all other countries or territories outside the United Kingdom.

(6)The Treasury may not make regulations under subsection (1)(b), (c) or (d) unless they are satisfied that doing so is compatible with each of the following objectives—

(a)to protect and enhance the soundness, stability and resilience of the UK financial system;

(b)to protect and enhance public confidence in the UK financial system;

(c)to prevent the use of the UK financial system for a purpose connected with financial crime;

(d)to ensure that, in the United Kingdom, financial markets and significant markets for financial services function well;

(e)to protect consumers;

(f)to protect the operation of the Financial Services Compensation Scheme;

(g)to protect public funds;

(h)to maintain and improve relations between the United Kingdom and other countries and territories with significant financial markets or significant markets for financial services.

(7)Before making regulations under subsection (1)(d), the Treasury must consult—

(a)the government of Gibraltar,

(b)the Financial Conduct Authority, and

(c)the Prudential Regulation Authority.

(8)The powers under subsection (1)(b), (c) and (d) include—

(a)power to make such modifications as the Treasury consider appropriate having regard to changes in the law of any part of the United Kingdom since the relevant regulations listed in subsection (3) or (4) were made, and

(b)power to restate relevant Gibraltar provision in a clearer or more accessible way.

(9)Where provision saving or modifying a provision is repealed or revoked under subsection (1)(a), the power under subsection (1)(b) includes power to make provision with the same effect as the provision that was the subject of the saving or modification, read with the saving or modification.

(10)The power under subsection (1)(d) includes power to make provision applying provisions of section 32A of, or Schedule 2A or 2B to, the Financial Services and Markets Act 2000, with or without modifications.

(11)Regulations under this section may—

(a)make different provision for different purposes;

(b)confer functions on a person, including functions involving the exercise of a discretion;

(c)amend, revoke, repeal or otherwise modify an enactment;

(d)make consequential, incidental, supplementary, transitional, transitory or saving provision.

(12)Regulations under this section are subject to the affirmative procedure.

(13)For the purposes of this section, provision that is saved or modified by regulations listed in subsection (3) or (4) is Gibraltar provision if, when read with the saving or modification, it relates to a matter described in subsection (2)(a).

(14)In this section—

  • consumers” has the meaning given in section 1G of the Financial Services and Markets Act 2000;

  • financial crime” has the meaning given in section 1H of the Financial Services and Markets Act 2000;

  • public funds” means the Consolidated Fund and any other account or source of money which cannot be drawn or spent other than by, or with the authority of, the Treasury;

  • the UK financial system” has the same meaning as in the Financial Services and Markets Act 2000 (see section 1I of that Act).

24Collective investment schemes authorised in approved countriesU.K.

(1)In Part 17 of the Financial Services and Markets Act 2000 (collective investment schemes), in section 237(3)—

(a)in the definition of “a recognised scheme”, after “means” insert “ a section 271A scheme or ”, and

(b)after that definition insert—

  • a section 271A scheme” means a scheme recognised under section 271A (and see also section 271S);.

(2)In Schedule 9—

(a)Part 1 inserts sections 271A to 271S (collective investment schemes authorised in approved countries or territories) in Chapter 5 of Part 17 of the Financial Services and Markets Act 2000 (recognised overseas schemes), and

(b)Part 2 contains minor and consequential amendments.

25Individually recognised overseas collective investment schemesU.K.

(1)The Financial Services and Markets Act 2000 is amended as follows.

(2)Chapter 5 of Part 17 (recognised overseas schemes) is amended in accordance with subsections (3) to (5).

(3)In section 272 (individually recognised overseas schemes)—

(a)in subsection (1)—

(i)in paragraph (a) omit the “and” at the end,

(ii)before paragraph (d) insert—

(ca)does not have the benefit of section 271A, and, and

(iii)in paragraph (d), for “the following provisions of this section” substitute “ subsections (2) to (15) ”,

(b)after that subsection insert—

(1A)For the purposes of subsection (1)(ca), a collective investment scheme has the benefit of section 271A if—

(a)it is authorised under the law of a country or territory which is for the time being approved by regulations under section 271A, and

(b)it falls within a description of schemes specified in the regulations., and

(c)in subsection (5)(b) omit “, or could be,”.

(4)In section 277 (requirement to notify the FCA of proposed alteration to recognised scheme)—

(a)in subsection (1), at the end insert “ which, if made, would be a material alteration ”,

(b)in subsection (3) omit “At least one month”,

(c)after that subsection insert—

(3A)A notice under subsection (3) must be given—

(a)at least one month before the proposed replacement, or

(b)if that is not reasonably practicable, as soon as is reasonably practicable in the period of one month before the proposed replacement.

(3B)The operator of such a scheme must give written notice to the FCA, as soon as reasonably practicable, of any change to—

(a)the name or address of the operator of the scheme,

(b)the name or address of any trustee or depositary of the scheme,

(c)the name or address of any representative of the operator in the United Kingdom, and

(d)the address of the place in the United Kingdom for service of notices, or other documents, required or authorised to be served on the operator under this Act., and

(d)after subsection (5) insert—

(6)The FCA may make rules specifying when a proposed alteration is a material alteration for the purposes of subsection (1).

(5)After section 282 insert—

282AObligations on operator where recognition is revoked or suspended

(1)This section applies where—

(a)the FCA gives a decision notice under section 280(2) in relation to a scheme recognised under section 272, or

(b)a direction given by the FCA under section 281(2) in relation to such a scheme takes effect.

(2)The operator of the scheme must notify such persons as the FCA may direct that the FCA has revoked an order under section 272 for recognition of the scheme or given a direction under section 281 in relation to the scheme (as applicable).

(3)A notification under subsection (2) that relates to a direction under section 281 must set out the terms of the direction.

(4)A notification under subsection (2) must—

(a)contain such information as the FCA may direct, and

(b)be made in such form and manner as the FCA may direct.

(5)Different directions may be given under subsection (2) or (4) in relation to—

(a)different schemes or different descriptions of schemes;

(b)different persons or descriptions of persons to whom a notification under subsection (2) must be given.

282BPublic censure

(1)This section applies where the FCA considers that—

(a)rules made under section 278 have been contravened,

(b)the operator of a scheme recognised under section 272 has contravened section 277, 277A or 282A, or

(c)the operator of a scheme recognised under section 272 has contravened a rule made, or a requirement imposed, under section 283.

(2)The FCA may publish a statement to that effect.

(3)Where the FCA proposes to publish a statement under subsection (2) in relation to a scheme or the operator of a scheme, it must give the operator a warning notice setting out the terms of the statement.

(4)If the FCA decides to publish the statement—

(a)it must give the operator, without delay, a decision notice setting out the terms of the statement, and

(b)the operator may refer the matter to the Tribunal.

(5)After a statement under subsection (2) is published, the FCA must send a copy of it to the operator and to any person to whom a copy of the decision notice was given under section 393(4).

282CRecognition of parts of schemes under section 272

(1)Section 272(1) applies in relation to a part of a collective investment scheme as it applies in relation to such a scheme.

(2)Accordingly, the following include a part of a scheme recognised under section 272—

(a)the reference to a scheme recognised under section 272 in the definition of “recognised scheme” in section 237(3), and

(b)other references to such a scheme (however expressed) in or in provision made under this Part of this Act (unless the contrary intention appears).

(3)Provisions of or made under this Part of this Act have effect in relation to parts of schemes recognised, or seeking recognition, under section 272 with appropriate modifications.

(4)The Treasury may by regulations—

(a)make provision about what are, or are not, appropriate modifications for the purposes of subsection (3);

(b)make provision so that a relevant enactment has effect in relation to parts of schemes recognised, or seeking recognition, under section 272 with such modifications as the Treasury consider appropriate;

(c)make provision so that a relevant enactment does not have effect in relation to such parts of schemes.

(5)Regulations under subsection (4)(b) or (c) may amend, repeal or revoke an enactment.

(6)In this section—

  • enactment” has the same meaning as in section 271E;

  • relevant enactment” means an enactment passed or made before the day on which subsection (1) comes into force that makes provision in relation to collective investment schemes recognised, or seeking recognition, under section 272.

(6)In section 237(3), in the definition of “a recognised scheme”, at the end insert “ (and see also section 282C) ”.

(7)In section 392 (application of third party rights to notices)—

(a)in paragraph (a), after “280(1),” insert “ 282B(3), ”, and

(b)in paragraph (b), after “280(2),” insert “ 282B(4), ”.

(8)In section 429(2) (regulations subject to affirmative procedure), before “284A” insert “ 282C, ”.

26Money market funds authorised in approved countriesU.K.

(1)Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds is amended as follows.

(2)In Article 4 (authorisation of MMFs)—

(a)in paragraph 1, after point (a) insert—

(aa)it is authorised and supervised in a country or territory approved by regulations under Article 4A and satisfies the condition in paragraph 1ZA;, and

(b)after paragraph 1 insert—

An undertaking satisfies the condition in this paragraph if the FCA has received written notification that the undertaking intends to be marketed in the United Kingdom as an MMF.

A notification under paragraph 1ZA must—

(a)be made by such person, and in such form and manner, as the FCA may direct, and

(b)contain or be accompanied by such information as the FCA may direct.

Different directions may be given under paragraph 1ZB in relation to different undertakings or categories of undertaking.

(3)After Article 4 insert—

Article 4A U.K.Approval of country or territory

1

The Treasury may make regulations for the purposes of Article 4(1)(aa) approving a country or territory in relation to MMFs.

2

The Treasury may not make regulations under paragraph 1 unless satisfied that the law and practice of the country or territory imposes requirements on MMFs which have equivalent effect to the requirements imposed by this Regulation.

3

In making regulations under this Article, the Treasury may have regard to any matter that they consider relevant.

4

When considering whether to make, vary or revoke regulations under this Article, the Treasury may ask the FCA to prepare a report on the law and practice of the country or territory under which MMFs are authorised and supervised, or particular aspects of such law and practice.

5

A request for a report under paragraph 4 must be made in writing.

6

If the Treasury ask for a report under paragraph 4, the FCA must provide the Treasury with the report.

(4)In Article 6(1) (use of designation as MMF), in each subparagraph, after point (a) insert—

(aa)the UCITS or AIF is authorised and supervised in a country or territory approved by regulations under Article 4A and satisfies the condition in Article 4(1ZA); or.

27Provision of investment services etc in the UKU.K.

(1)Schedule 10 contains amendments of the Markets in Financial Instruments Regulation relating to the provision of investment services, and the performance of investment activities, in the United Kingdom by third country firms.

(2)In this section and Schedule 10, “the Markets in Financial Instruments Regulation” means Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments.

Prospective

Variation or cancellation of permission to carry on regulated activityU.K.

28Part 4A permissions: variation or cancellation on initiative of FCAU.K.

Schedule 11 amends Part 4A of the Financial Services and Markets Act 2000 (permission to carry on regulated activities) and other provisions in that Act for connected purposes.

Prospective

Rules about level of care provided by authorised personsU.K.

29FCA rules about level of care provided to consumers by authorised personsU.K.

(1)The Financial Conduct Authority must carry out a public consultation about whether it should make general rules providing that authorised persons owe a duty of care to consumers.

(2)The consultation must include consultation about—

(a)whether the Financial Conduct Authority should make other provision in general rules about the level of care that must be provided to consumers by authorised persons, either instead of or in addition to a duty of care,

(b)whether a duty of care should be owed, or other provision should apply, to all consumers or to particular classes of consumer, and

(c)the extent to which a duty of care, or other provision, would advance the Financial Conduct Authority's consumer protection objective (see section 1C of the Financial Services and Markets Act 2000).

(3)The Financial Conduct Authority—

(a)must carry out the consultation, and publish its analysis of the responses, before 1 January 2022, and

(b)must, before 1 August 2022, make such general rules about the level of care that must be provided to consumers, or particular classes of consumer, by authorised persons as it considers appropriate, having regard to that analysis.

(4)The duties to consult under this section may be satisfied by consultation carried out after 1 January 2021 but before this section comes into force (as well as by consultation carried out after this section comes into force).

(5)In this section—

  • authorised person” has the same meaning as in the Financial Services and Markets Act 2000 (see section 31 of that Act);

  • consumer” has the meaning given in section 1G of that Act;

  • general rules” means rules made under section 137A of that Act.

Insider dealing and money laundering etcU.K.

30Insider lists and managers' transactionsU.K.

(1)Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse is amended as follows.

(2)In Article 18 (insider lists)—

(a)in paragraph 1, in the opening words—

(i)for “or any person” substitute “ , and any person ”, and

(ii)after “shall” insert “ each ”,

(b)in paragraph 2, in the first subparagraph—

(i)for “or any person” substitute “ , and any person ”,

(ii)after “shall” insert “ each ”, and

(iii)for “the insider list” substitute “ their insider list ”,

(c)in paragraph 2, for the second subparagraph substitute—

Where another person is requested by the issuer to draw up and update the issuer's insider list, the issuer shall remain fully responsible for complying with this Article. The issuer shall always retain a right of access to the insider list that the other person is drawing up.,

(d)in paragraph 4—

(i)for “or any person” substitute “ , and any person ”, and

(ii)for “shall update the” substitute “ , shall each update their ”, and

(e)in paragraph 5—

(i)for “or any person” substitute “ , and any person ”, and

(ii)for “shall retain the” substitute “ , shall each retain their ”.

(3)In Article 19 (managers' transactions)—

(a)in paragraph 1, in the second subparagraph, for “business days” substitute “ working days ”,

(b)in paragraph 3, in the first subparagraph, for the words from the beginning to “transaction” substitute “ The issuer or emission allowance market participant must make public the information contained in a notification referred to in paragraph 1 within two working days of receipt of such a notification ”, and

(c)at the end insert—

In this Article, “working day” means a day other than—

(a)Saturday or Sunday,

(b)Christmas Day or Good Friday, or

(c)a day which is a bank holiday in England and Wales under the Banking and Financial Dealings Act 1971.

Prospective

31Maximum sentences for insider dealing and financial services offencesU.K.

(1)In section 61(1)(b) of the Criminal Justice Act 1993 (penalty for conviction on indictment for insider dealing), for “seven years” substitute “ ten years ”.

(2)In section 92(1)(b) of the Financial Services Act 2012 (penalty for conviction on indictment for financial services offences), for “7 years” substitute “ 10 years ”.

(3)The amendment made by subsection (1) or (2) does not apply in relation to offences committed before the subsection comes into force.

(4)Where an offence is found to have been committed over a period of 2 or more days, or at some time during a period of 2 or more days, it must be taken for the purposes of subsection (3) to have been committed on the first of those days.

32Money laundering offences: electronic money institutions, payment institutions and deposit-taking bodiesU.K.

(1)Part 7 of the Proceeds of Crime Act 2002 (money laundering) is amended in accordance with subsections (2) to (6).

(2)In section 327(2C) (conversion or transfer of criminal property: exceptions), after “deposit-taking body” insert “ , electronic money institution or payment institution ”.

(3)In section 328(5) (arrangements: exceptions), after “deposit-taking body” insert “ , electronic money institution or payment institution ”.

(4)In section 329(2C) (acquisition, use and possession: exceptions), after “deposit-taking body” insert “ , electronic money institution or payment institution ”.

(5)In section 339A (threshold amounts)—

(a)in subsection (2), after “deposit-taking body” insert “ , electronic money institution or payment institution ”,

(b)in subsection (3), in the opening words, after “deposit-taking body” insert “ , electronic money institution or payment institution ”,

(c)in subsection (3)(a), for “deposit-taking body's” substitute “body's or institution's”,

(d)in subsection (3)(b), for “deposit-taking body” substitute “ body or institution ”,

(e)in subsection (4), after “deposit-taking body” insert “ , electronic money institution or payment institution ”, and

(f)in subsection (8)—

(i)after “deposit-taking body” insert “ , electronic money institution or payment institution ”, and

(ii)after “the body” insert “ or institution ”.

(6)In section 340 (interpretation)—

(a)in subsection (14)—

(i)omit “or” at the end of paragraph (a), and

(ii)after paragraph (b) insert , or

(c)a person specified, or of a description specified, in regulations made by the Treasury or the Secretary of State.,

(b)after subsection (14) insert—

(14A)In subsection (14)(a)—

(a)the reference to the activity of accepting deposits is a reference to that activity so far as it is, for the time being, a regulated activity for the purposes of the Financial Services and Markets Act 2000 by virtue of an order under section 22 of that Act, but

(b)the reference to a business which engages in that activity does not include a person specified, or of a description specified, in regulations made by the Treasury or the Secretary of State.

(14B)Before making regulations under subsection (14A)(b), the Treasury or the Secretary of State (as appropriate) must consult such persons likely to be affected by the regulations, or such representatives of such persons, as they consider appropriate.

(14C)Electronic money institution” has the same meaning as in the Electronic Money Regulations 2011 (S.I. 2011/99) (see regulation 2 of those Regulations)., and

(c)at the end insert—

(16)Payment institution” means an authorised payment institution or a small payment institution (each as defined in regulation 2 of the Payment Services Regulations 2017 (S.I. 2017/752)).

(7)In section 459 of the Proceeds of Crime Act 2002 (orders and regulations)—

(a)in subsection (4), before paragraph (aa), insert—

(azb)regulations under section 340(14)(c) or (14A)(b),,

(b)before subsection (6A) insert—

(6ZC)No regulations may be made by the Treasury or the Secretary of State under section 340(14)(c) or (14A)(b) unless a draft of the regulations has been laid before Parliament and approved by a resolution of each House., and

(c)in subsection (6A), before “would” insert “ or of regulations under section 340(14)(c) or (14A)(b) ”.

33Forfeiture of money: electronic money institutions and payment institutionsU.K.

(1)Schedule 12 amends provisions in the Anti-terrorism, Crime and Security Act 2001 and the Proceeds of Crime Act 2002 about the forfeiture of money so that they apply to money held in accounts maintained with electronic money institutions and payment institutions.

(2)Subject to subsection (3), the amendments made by that Schedule are to be treated as having come into force at the same time as the provisions they amend.

(3)Subsection (2) does not apply to the amendments of Part 5 of the Proceeds of Crime Act 2002 as they extend to Northern Ireland.

(4)Regulations made, before this section comes into force, under—

(a)paragraph 10X of Schedule 1 to the Anti-Terrorism, Crime and Security Act 2001, or

(b)section 303Z10 of the Proceeds of Crime Act 2002,

apply (and are to be treated as having always applied) for the purposes of notices relating to money held in accounts maintained with electronic money institutions and payment institutions, as well as for the purposes of notices relating to money held in accounts maintained with banks and building societies.

Prospective

34Application of money laundering regulations to overseas trusteesU.K.

(1)Schedule 2 to the Sanctions and Anti-Money Laundering Act 2018 (money laundering and terrorist financing: further provision about section 49 regulations) is amended as follows.

(2)In paragraph 22(2) (extra-territorial application of section 49 regulations: meaning of “United Kingdom person”)—

(a)in paragraph (b), omit the “or” at the end, and

(b)after paragraph (c) insert , or

(d)a person—

(i)who does not fall within any of paragraphs (a) to (c), and

(ii)who is a trustee with links to the United Kingdom (see paragraph 22A).

(3)After paragraph 22 insert—

22A(1)Sub-paragraphs (2) and (3) have effect for the purposes of paragraph 22(2)(d).

(2)A person who is a trustee of a trust has links to the United Kingdom if—

(a)any property subject to the trust is situated in the United Kingdom,

(b)a trustee of the trust enters into a business, professional or commercial relationship with a relevant person, or

(c)the income of the trust includes income which, directly or indirectly, is from a source in the United Kingdom.

(3)A person who is a trustee of a trust also has links to the United Kingdom if—

(a)at least one other person is a trustee of the trust,

(b)the other trustee (or at least one of the other trustees if the trust has more than two trustees) is resident in the United Kingdom, and

(c)a person makes, at a time when the person is resident in the United Kingdom, a gift of property which becomes subject to the trust.

(4)In this paragraph “property” has the meaning given by section 436 of the Insolvency Act 1986.

Debt respite schemeE+W+N.I.

35Debt respite schemeE+W+N.I.

(1)In section 6(2)(c) of the Financial Guidance and Claims Act 2018 (debt respite scheme), omit “and their creditors”.

(2)In section 7 of that Act (debt respite scheme: regulations), after subsection (4) insert—

(4A)The regulations may include the following as part of the scheme so far as it applies in England and Wales—

(a)provision about the involvement of creditors in the process of devising a plan for the repayment of some or all of an individual's debts;

(b)provision to protect an individual, during the period of a repayment plan, from being required to repay a debt to which the plan applies otherwise than in accordance with the plan;

(c)provision for an amount payable in respect of a debt in accordance with a repayment plan—

(i)to be payable instead towards the costs of operating the repayment plan, other repayment plans or the debt respite scheme, and

(ii)to be treated, so far as paid towards those costs, as permanently reducing a debt to which the plan applies.

(3)In section 7(5) of that Act, after paragraph (b) insert—

(ba)make provision binding the Crown,.

(4)The amendment in subsection (1) does not have the effect that further advice on the establishment of a debt respite scheme has to be sought, provided or published under section 6(1), (4) or (5) of the Financial Guidance and Claims Act 2018 (such advice having been sought, provided and published in accordance with those provisions before the day on which this Act is passed).

Help to saveU.K.

36Successor accounts for Help-to-Save saversU.K.

In Schedule 2 to the Savings (Government Contributions) Act 2017 (Help-to-Save accounts), after paragraph 13 insert—

Successor accounts for certain Help-to-Save accounts

13A(1)In this paragraph “matured account” means an account provided by the Director of Savings which has been, but has ceased to be, a Help-to-Save account.

(2)Treasury regulations may make provision for, or in connection with, the transfer of the balance in a matured account to another account provided by the Director of Savings (a “successor account”).

(3)Regulations under sub-paragraph (2) must require the successor account to be an account in the National Savings Bank.

(4)Regulations under sub-paragraph (2) may not include provision for a transfer which overrides an instruction for dealing with the balance in a matured account where—

(a)the instruction is given by, or by a person acting on behalf of, the individual for whom the matured account was opened, and

(b)the Director of Savings receives the instruction before the transfer is made and considers that it is reasonably practicable to implement it.

(5)Regulations under sub-paragraph (2) may make provision about the balance in a matured account opened before the regulations are made.

(6)Where regulations under sub-paragraph (2) provide for a transfer from a matured account to a successor account—

(a)the successor account may be a new or existing account, and

(b)no charge for the transfer may be imposed on the individual for whom the matured account was opened.

MiscellaneousU.K.

Prospective

37Regulated activities and application of Consumer Credit Act 1974U.K.

(1)This section applies on or at any time after the making of an order under section 22 of the Financial Services and Markets Act 2000, after this section comes into force, which has the effect that a relevant credit activity becomes a regulated activity for the purposes of that Act.

(2)Section 107(6) of the Financial Services Act 2012 (power to make provision about the application of the Consumer Credit Act 1974) has effect as if—

(a)the reference to an order of the kind mentioned in subsection (1) of that section included an order of the kind mentioned in subsection (1) of this section, and

(b)the references to a transferred activity included a relevant credit activity which is the subject of an order of the kind mentioned in subsection (1) of this section.

(3)Relevant credit activity” means the activity of—

(a)entering into an agreement described in article 60F(2) or (3) of the Regulated Activities Order (certain borrower-lender-supplier agreements for fixed-sum credit or running-account credit) as lender, or

(b)exercising, or having the right to exercise, the lender's rights and duties under such an agreement,

so far as the activity is not a transferred activity (as defined in section 107(1) of the Financial Services Act 2012).

(4)The Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) as it has effect on the passing of this Act.

Prospective

38Amendments of the PRIIPs Regulation etcU.K.

(1)In this section “the PRIIPs Regulation” means Regulation (EU) No. 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs).

(2)After Article 4 of the PRIIPs Regulation insert—

Article 4A U.K.

1

The FCA may make rules specifying whether or not a product, or category of product, falls within the definition of a PRIIP for the purposes of this Regulation.

2

The provisions of Part 9A of FSMA listed in paragraph 3 apply to rules made under this Article as they apply to rules made by the FCA under that Act, subject to the modifications in that paragraph (if any).

3

The provisions are—

(a)section 137T (general supplementary powers), as if—

(i)the reference in paragraph (a) to authorised persons were a reference to persons, and

(ii)paragraph (b) were omitted;

(b)section 138F (notification of rules), as if subsection (2) were omitted;

(c)section 138G (rule-making instruments);

(d)section 138I (consultation by the FCA), as if—

(i)subsection (1)(a) (and the “and” after it) were omitted,

(ii)in subsection (1)(b), “after doing so,” were omitted,

(iii)in subsection (2), paragraphs (c) and (d) were omitted, and

(iv)subsections (5)(b) and (10) were omitted;

(e)section 138L (consultation: general exemptions), as if—

(i)in subsection (1), for “Sections 138I(1)(b) and (2) to (5) and 138K do” there were substituted “ Section 138I(1)(b) and (2) to (5) does ”,

(ii)subsections (2) and (4)(b) were omitted,

(iii)in subsection (5)(a), “or 138J(2)(a)” were omitted, and

(iv)in subsection (5)(b), “or 138J(5)(a)” were omitted;

(f)section 141A (power to make consequential amendments of references to rules etc).

(3)Any requirement that arises by virtue of Article 4A(3)(d) of the PRIIPs Regulation, as inserted by subsection (2), may be satisfied by things done before that subsection comes into force (as well as by things done after that time).

(4)In paragraph 3 of Article 8 of the PRIIPs Regulation (information to be contained in key information document), in point (d)(iii), for “performance scenarios and the assumptions made to produce them” substitute “ information on performance ”.

(5)The Treasury may by regulations substitute a later date for the date that is for the time being mentioned in Article 32(1) of the PRIIPs Regulation (exemption of UCITS).

(6)The date as substituted under subsection (5) must be no later than 31 December 2026.

(7)Regulations under subsection (5) are subject to the negative procedure.

Prospective

39Retention of personal data under the Market Abuse RegulationU.K.

In Article 28 of Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (data protection), omit “Personal data is to be retained for a maximum period of five years.”

Prospective

40Over the counter derivatives: clearing and procedures for reportingU.K.

(1)Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (the “European Market Infrastructure Regulation”) is amended as follows.

(2)In Article 4 (clearing obligation)—

(a)after paragraph 3 insert—

Clearing members and clients which provide clearing services, whether directly or indirectly, must—

(a)provide those services under fair, reasonable, non-discriminatory and transparent commercial terms, and

(b)take all reasonable measures to identify, prevent, manage and monitor conflicts of interest, in particular between the trading unit and the clearing unit, that may adversely affect the fair, reasonable, non-discriminatory and transparent provision of clearing services.

The duty under paragraph 3A(a)—

(a)does not oblige clearing members or clients to contract, and

(b)does not prevent clearing members or clients from taking steps to control the risks related to the clearing services offered.

The duty to take the measures described in paragraph 3A(b) includes a duty to do so where trading and clearing services are provided by different legal entities belonging to the same group.

The duties under paragraph 3A (read with paragraphs 3B and 3C) apply in relation to an undertaking with an indirect contractual arrangement with a clearing member of a CCP which enables that undertaking to clear its transactions with a CCP as they apply in relation to a client., and

(b)after paragraph 4 insert—

The FCA may make rules specifying the conditions under which the commercial terms referred to in paragraph 3A(a) are to be considered fair, reasonable, non-discriminatory and transparent.

(3)In Article 78 (general requirements), at the end insert—

A trade repository must establish the following procedures and policies—

(a)procedures for the effective reconciliation of data between trade repositories;

(b)procedures to verify the completeness and correctness of the data reported;

(c)policies for the orderly transfer of data to other trade repositories where requested by the counterparties or CCPs referred to in Article 9 or where otherwise necessary.

The FCA may make rules applying to trade repositories relating to—

(a)procedures described in paragraph 9(a) and (b),

(b)procedures to be applied to verify compliance by counterparties and CCPs with the reporting obligation under Article 9, and

(c)policies described in paragraph 9(c).

(4)After Article 84a insert—

Article 84b U.K.FCA rules

1

The provisions of Part 9A of FSMA (rules and guidance) listed in paragraph 2 apply in relation to rules made by the FCA under Article 4(4A) or 78(10) as they apply in relation to rules made by the FCA under that Part of that Act, subject to the modification in paragraph 3.

2

The provisions are—

(a)section 137T (general supplementary powers);

(b)section 138C (evidential provision);

(c)section 138E (limits on effect of contravening rules);

(d)sections 138F, 138G and 138H (notification and verification etc);

(e)sections 138I and 138L (consultation);

(f)section 141A (power to make consequential amendments of references to rules).

3

Section 137T applies as if the reference to authorised persons were—

(a)for the purposes of rules made under Article 4(4A), a reference to clearing members, clients and undertakings described in Article 4(3D), and

(b)for the purposes of rules made under Article 78(10), a reference to trade repositories.

(5)The requirements of section 138I of the Financial Services and Markets Act 2000, in so far as they apply in connection with rules made under Article 4(4A) or 78(10) of the European Market Infrastructure Regulation, may be satisfied by things done before the relevant provision of this section comes into force (as well as by things done after that time).

41Regulations about financial collateral arrangementsU.K.

(1)The Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226) as originally made, and all amendments made to them, have effect, and are to be treated as having had effect, despite any lack of power to make the regulations and amendments.

(2)Accordingly, the validity of anything done under or in reliance on those regulations (whether as originally made or as amended) is to be treated as unaffected by any such lack of power.

(3)The Banking Act 2009 is amended in accordance with subsections (4) to (6).

(4)In section 255 (regulations about financial collateral arrangements)—

(a)in subsection (3)(b) omit “or purported to be done”,

(b)omit subsection (5), and

(c)after that subsection insert—

(6)Regulations under this section are to be made by statutory instrument.

(7)A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(8)Section 41 of the Financial Services Act 2021 makes further provision in relation to the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226).

(5)Omit section 256 (procedure for making regulations under section 255).

(6)In the table in section 259(3) (procedure applying to statutory instruments), in the entry for section 255, for “affirmative resolution” substitute “ draft affirmative resolution ”.

42Appointment of chief executive of FCAU.K.

(1)Schedule 1ZA to the Financial Services and Markets Act 2000 (Financial Conduct Authority) is amended as follows.

(2)In paragraph 2A—

(a)after sub-paragraph (1) insert—

(1A)Appointment as chief executive under paragraph 2(2)(b) is to be for a period of 5 years., and

(b)in sub-paragraph (2), for “Sub-paragraph (1) does” substitute “ Sub-paragraphs (1) and (1A) do ”.

(3)After paragraph 2A insert—

2B(1)A person may not be appointed as chief executive under paragraph 2(2)(b) more than twice.

(2)For this purpose an appointment as chief executive on an acting basis, pending a further appointment being made, is to be ignored.

Prospective

43Subordinate legislation made under retained direct EU legislationU.K.

(1)The Financial Services and Markets Act 2000 is amended as follows.

(2)In section 425C (“qualifying provision”)—

(a)the existing text becomes subsection (1),

(b)after paragraph (b) of that subsection insert—

(ba)other subordinate legislation made under retained direct EU legislation;,

(c)in paragraph (c) of that subsection omit “(within the meaning of the Interpretation Act 1978)”, and

(d)after that subsection insert—

(2)In this section, “subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act).

(3)In paragraph 8(3) of Schedule 1ZA (Financial Conduct Authority's arrangements for discharging functions: legislative functions), in paragraph (a), after “rules” insert “ under this Act or under retained direct EU legislation ”.

44Payment services and the provision of cashU.K.

In Part 2 of Schedule 1 to the Payment Services Regulations (S.I. 2017/752) (activities which do not constitute payment services), after paragraph 2 insert—

3(1)The provision of cash otherwise than through an automatic teller machine does not constitute a payment service where—

(a)there is a transfer of a corresponding amount from a payment account held by the recipient of the cash to a relevant person, and

(b)the payment account is not provided by a relevant person.

(2)In sub-paragraph (1), “relevant person” means—

(a)where the cash is provided by a person (“P1”) through one or more persons acting on P1's behalf, P1 and each person acting (directly or indirectly) on P1's behalf;

(b)where the cash is provided by a person (“P2”) otherwise than on behalf of another person or through one or more persons acting on P2's behalf, P2.

(3)The execution of the transfer referred to in sub-paragraph (1)(a), and other services enabling that transfer, are not excluded from the meaning of payment services by this paragraph.

GeneralU.K.

45Power to make consequential provisionU.K.

(1)The Treasury may by regulations make provision that is consequential on any provision made by this Act.

(2)The Secretary of State may by regulations make provision that is consequential on provision made by section 32 or 33 or Schedule 12.

(3)Regulations under this section may—

(a)make different provision for different purposes;

(b)include transitional, transitory or saving provision;

(c)amend, repeal, revoke or otherwise modify an enactment.

(4)Regulations under this section are subject to the affirmative procedure if they amend, repeal or revoke any provision of—

(a)an Act,

(b)retained direct principal EU legislation,

(c)a Measure or Act of Senedd Cymru,

(d)an Act of the Scottish Parliament, or

(e)Northern Ireland legislation.

(5)Regulations under this section to which subsection (4) does not apply are subject to the negative procedure.

46RegulationsU.K.

(1)Regulations under this Act are to be made by statutory instrument.

(2)Where regulations under this Act are subject to “the negative procedure”, the statutory instrument containing the regulations is subject to annulment in pursuance of a resolution of either House of Parliament.

(3)Where regulations under this Act are subject to “the affirmative procedure”, the regulations may not be made unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of each House of Parliament.

(4)Any provision that may be included in regulations under this Act subject to the negative procedure may be made by regulations subject to the affirmative procedure.

47InterpretationU.K.

In this Act—

  • the Benchmarks Regulation” means Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds;

  • the Capital Requirements Regulation” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms;

  • enactment” includes—

    (a)

    retained direct EU legislation,

    (b)

    an enactment comprised in subordinate legislation,

    (c)

    an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,

    (d)

    an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and

    (e)

    an enactment comprised in, or in an instrument made under, Northern Ireland legislation;

  • subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act).

48ExtentU.K.

(1)This Act extends to England and Wales, Scotland and Northern Ireland, subject to subsections (2) and (3).

(2)In section 35—

(a)subsections (1), (2) and (4) extend to England and Wales only, and

(b)subsection (3) extends to England and Wales and Northern Ireland only.

(3)In Schedule 12, paragraph 14(4) extends to Northern Ireland only.

(4)The power under section 79(10) of the Criminal Justice Act 1993 may be exercised so as to extend to any of the British overseas territories the amendment of that Act made by section 31 of this Act (with or without exceptions or modifications).

(5)The power under section 430(3) of the Financial Services and Markets Act 2000 may be exercised so as to extend to any of the Channel Islands or the Isle of Man any amendment or repeal made by or under this Act of any part of that Act (with or without modifications).

49Commencement and transitional provisionU.K.

(1)This section and the following provisions come into force on the day on which this Act is passed—

(a)section 33 and Schedule 12, except for paragraphs 10 to 21 of that Schedule as they extend to Northern Ireland,

(b)section 36,

(c)section 41,

(d)section 45,

(e)section 46,

(f)section 47,

(g)section 48, and

(h)section 50.

(2)The following provisions come into force at the end of the period of two months beginning with the day on which this Act is passed—

(a)section 30,

(b)section 32,

(c)section 35,

(d)section 42, and

(e)section 44.

(3)Paragraphs 10 to 21 of Schedule 12 as they extend to Northern Ireland come into force on such day as the Treasury or the Secretary of State may by regulations appoint.

(4)Section 34 comes into force on such day as the Treasury or the Secretary of State may by regulations appoint.

(5)The other provisions of this Act come into force on such day as the Treasury may by regulations appoint.

(6)Regulations under subsection (3), (4) or (5) may appoint different days for different purposes.

(7)The Treasury or the Secretary of State may by regulations make transitional, transitory or saving provision in connection with the coming into force of a provision of this Act.

(8)Regulations under subsection (7) may make different provision for different purposes.

50Short titleU.K.

This Act may be cited as the Financial Services Act 2021.

SCHEDULES

Prospective

Section 1

SCHEDULE 1U.K.Exclusion of certain investment firms from the Capital Requirements Regulation: consequential amendments

PART 1 U.K.Amendments of the Capital Requirements Regulation

1U.K.The Capital Requirements Regulation is amended as follows.

2(1)Article 4(1) (definitions) is amended as follows.U.K.

(2)Omit point (4) (definition of “local firm”).

(3)After point (22) insert—

(22A) ‘investment holding company’ means a financial institution which is not a financial holding company and whose subsidiaries—

(a)are exclusively or mainly investment firms or financial institutions, and

(b)include at least one investment firm;.

(4)In point (26) (definition of “financial institution”)—

(a)after “including” insert “ an investment firm, ”, and

(b)after “a mixed financial holding company,” insert “ an investment holding company, ”.

(5)For point (29a) substitute—

(29a)UK parent investment firm’ means a parent undertaking in the United Kingdom that is an investment firm;.

(6)For point (51) substitute—

(51)initial capital’, in relation to an institution, means the amount and types of own funds specified in rule 12.1 of the Definition of Capital Part of the PRA rulebook;.

(7)In point (60) (definition of “cash assimilated instrument”), after “institution” (in each place) insert “ or investment firm ”.

3(1)Article 4A (definitions: regulators' rules) is amended as follows.U.K.

(2)In paragraph 1(b) (references to FCA sourcebook), for “as the sourcebook has effect on IP completion day” substitute “ as amended from time to time ”.

(3)At the end insert—

3In this Regulation, “Part 9C rules” has the same meaning as in FSMA (see section 417 of that Act).

4U.K.For Article 4B substitute—

Article 4B U.K.The consolidating supervisor

The consolidating supervisor is the PRA.

5U.K.Before Article 11 (and the Section and Chapter headings before it) insert—

Article 10A U.K.Application of prudential requirements on a consolidated basis where FCA investment firms are parent undertakings

For the purposes of the application of this Chapter, FCA investment firms are to be considered to be UK parent financial holding companies where they are parent undertakings of an institution.

6U.K.Omit Article 15 (derogation from the application of own funds requirements on a consolidated basis for groups of investment firms).

7U.K.Omit Article 16 (derogation from the application of the leverage ratio requirements on a consolidated basis for groups of investment firms).

8U.K.Omit Article 17 (supervision of investment firms waived from the application of own funds requirements on a consolidated basis).

9U.K.In Article 47c(5) (deduction for non-performing exposures), omit “and the FCA”.

10U.K.In Article 49(6) (requirement for deduction where consolidation, supplementary supervision or institutional protection schemes are applied) omit “and Annex 1 of Chapter 3 of the FCA General Prudential sourcebook”.

11(1)Article 81(1)(a) (minority interests that qualify for inclusion in consolidated Common Equity Tier 1 capital) is amended as follows.U.K.

(2)After point (ii) insert—

(iia)an intermediate financial holding company or intermediate mixed financial holding company that is subject to the requirements of this Regulation on a sub-consolidated basis;

(iib)an intermediate investment holding company that is subject to the requirements of Part 9C rules on a consolidated basis;

(iic)an FCA investment firm;.

(3)In point (iii)—

(a)after “subject to prudential requirements” insert “ which are ”,

(b)for “where” substitute “ which ”, and

(c)omit “that those prudential requirements”.

12(1)Article 82(a) (Qualifying Additional Tier 1, Tier 1, Tier 2 capital and qualifying own funds) is amended as follows.U.K.

(2)After point (ii) insert—

(iia)an intermediate financial holding company or intermediate mixed financial holding company that is subject to the requirements of this Regulation on a sub-consolidated basis;

(iib)an intermediate investment holding company that is subject to the requirements of Part 9C rules on a consolidated basis;

(iic)an FCA investment firm;.

(3)In point (iii)—

(a)after “subject to prudential requirements” insert “ which are ”,

(b)for “where” substitute “ which ”, and

(c)omit “that those prudential requirements”.

13(1)Article 84 (minority interests included in consolidated Common Equity Tier 1 capital) is amended as follows.U.K.

(2)In paragraph 1(a), for point (i) substitute—

(i)the amount of Common Equity Tier 1 capital of that subsidiary required to meet the following:

(A)the sum of the requirement laid down in point (a) of Article 92(1), the requirements referred to in Articles 458, 459 and 500, the specific own funds requirements referred to in regulation 34 of the Capital Requirements Regulations 2013, the combined buffer requirement defined in regulation 2 of the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014, and any additional local supervisory regulations in third countries insofar as those requirements are to be met by Common Equity Tier 1 capital, or

(B)where the subsidiary is an FCA investment firm, the sum of the own funds requirements set out in Part 9C rules which apply to the subsidiary and any requirements set out in additional local supervisory regulations in third countries insofar as those requirements are to be met by Common Equity Tier 1 capital;.

(3)In paragraph 3—

(a)for “a competent authority” substitute “ the PRA ”, and

(b)for “interest” substitute “ interests ”.

(4)After paragraph 3 insert—

3AWhere Part 9C rules provide that, in relation to any subsidiaries which are FCA investment firms, the calculation referred to in paragraph 1 is to be undertaken on a consolidated basis so as to include those subsidiaries, minority interests within those subsidiaries shall not be recognised in own funds at the sub-consolidated or consolidated level, as applicable.

14(1)Article 85 (qualifying Tier 1 instruments included in consolidated Tier 1 capital) is amended as follows.U.K.

(2)In paragraph 1(a), for point (i) substitute—

(i)the amount of Tier 1 capital of the subsidiary required to meet the following:

(A)the sum of the requirement laid down in point (b) of Article 92(1), the requirements referred to in Articles 458, 459 and 500, the specific own funds requirements referred to in regulation 34 of the Capital Requirements Regulations 2013, the combined buffer requirement defined in regulation 2 of the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014, and any additional local supervisory regulations in third countries insofar as those requirements are to be met by Tier 1 Capital, or

(B)where the subsidiary is an FCA investment firm, the sum of the own funds requirements set out in Part 9C rules which apply to the subsidiary and any requirements set out in additional local supervisory regulations in third countries insofar as those requirements are to be met by Tier 1 capital;.

(3)In paragraph 3, for “a competent authority” substitute “ the PRA ”.

(4)After paragraph 3 insert—

3AWhere Part 9C rules provide that, in relation to any subsidiaries which are FCA investment firms, the calculation referred to in paragraph 1 is to be undertaken on a consolidated basis so as to include those subsidiaries, Tier 1 instruments within those subsidiaries shall not be recognised in own funds at the sub-consolidated or consolidated level, as applicable.

15(1)Article 87 (qualifying own funds included in consolidated own funds) is amended as follows.U.K.

(2)In paragraph 1(a), for point (i) substitute—

(i)the amount of own funds of the subsidiary required to meet the following—

(A)the sum of the requirement laid down in point (c) of Article 92(1), the requirements referred to in Articles 458, 459 and 500, the specific own funds requirements referred to in regulation 34 of the Capital Requirements Regulations 2013, the combined buffer requirement defined in regulation 2 of the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014, and any additional local supervisory regulations in third countries, or

(B)where the subsidiary is an FCA investment firm, the sum of the own funds requirements set out in Part 9C rules which apply to the subsidiary and any requirements set out in additional local supervisory regulations in third countries;.

(3)In paragraph 3, for “a competent authority” substitute “ the PRA ”.

(4)After paragraph 3 insert—

3AWhere Part 9C rules provide that, in relation to any subsidiaries which are FCA investment firms, the calculation referred to in paragraph 1 is to be undertaken on a consolidated basis so as to include those subsidiaries, own funds instruments within those subsidiaries shall not be recognised in own funds at the sub-consolidated or consolidated level, as applicable.

16U.K.In Article 93 (initial capital requirement on going concern)—

(a)omit paragraph 3,

(b)in paragraphs 4 and 5, omit “or 3”, and

(c)in paragraph 6, for “2 to 5” substitute “ 2, 4 and 5 ”.

17U.K.Omit Article 95 (own funds requirements for investment firms with limited authorisation to provide investment services).

18U.K.Omit Article 96 (own funds requirements for IFPRU 730k firms).

19U.K.Omit Article 97 (own funds based on fixed overheads).

20U.K.Omit Article 98 (own funds for investment firms on a consolidated basis).

21U.K.In Article 100 (additional reporting requirements), in the second subparagraph, for “The FCA or the PRA (as the case may be)” substitute “ The PRA ”.

22U.K.In Article 115(2) (exposures to regional governments or local authorities), in the second subparagraph, omit “and FCA”.

23U.K.In Article 119 (exposures to institutions), after paragraph 5 insert—

6For the purposes of paragraph 5, the requirements laid down in Part 9C rules are to be treated as being comparable to those applied to institutions in terms of robustness.

24(1)Article 136 (mapping of ECAI's credit assessments) is amended as follows.U.K.

(2)In paragraph 1, for “The FCA and the PRA may each” substitute “ The PRA may ”.

(3)In paragraph 2—

(a)for “the FCA and the PRA”, in each place it occurs, substitute “ the PRA ”, and

(b)in point (e), for “have” substitute “ has ”.

(4)In paragraph 3, for “The FCA and the PRA may each” substitute “ The PRA may ”.

25U.K.In Article 162(3) (maturity), in the second subparagraph, in point (a), after “institutions” insert “ or investment firms ”.

26(1)Article 197 (eligibility of collateral under all approaches and methods) is amended as follows.U.K.

(2)In paragraph 1(c), after “issued by institutions” insert “ or investment firms ”.

(3)In paragraph 4, after “other institutions” insert “ or investment firms ”.

27U.K.In Article 199(8) (additional eligibility for collateral under the IRB Approach), omit “and the FCA”.

28U.K.In Article 200 (other funded credit protection), for point (c) substitute—

(c)instruments issued by a third party institution, or an investment firm, which will be repurchased by that institution, or that investment firm, on request.

29U.K.In Article 202 (eligibility of protection providers under the IRB Approach which qualify for Article 153(3) treatment), after “institutions,” insert “ investment firms, ”.

30U.K.In Article 224(6) (supervisory volatility adjustment under Financial Collateral Comprehensive Method), after “institutions”, in the first place it occurs, insert “ or investment firms ”.

31U.K.In Article 227(3) (conditions for applying 0% volatility adjustment under Financial Collateral Comprehensive Method), after point (b) insert—

(ba)investment firms;.

32U.K.In Article 243(1) (criteria for STS securitisations qualifying for differentiated capital treatment), in the second subparagraph, after “an institution,” insert “ an investment firm, ”.

33(1)Article 270e (securitisation mapping) is amended as follows.U.K.

(2)For “The FCA and the PRA may each” substitute “ The PRA may ”.

(3)For the words from “For” to “shall” substitute “ For the purposes of this Article, the PRA shall ”.

34U.K.In Article 290(3) (stress testing), for the words from “the relevant regulatory rules” to the end substitute “ rule 6.1 of the Internal Capital Adequacy Part of the PRA rulebook ”.

35(1)Article 304(5) (treatment of clearing members' exposure to clients) is amended as follows.U.K.

(2)In the first subparagraph, for “The FCA and the PRA may each” substitute “ The PRA may ”.

(3)In the second subparagraph, for “the FCA or the PRA (as the case may be)” substitute “ the PRA ”.

36(1)Article 325u(5) (own funds requirements for residual risks) is amended as follows.U.K.

(2)In the first subparagraph, for “The FCA and PRA may each” substitute “ The PRA may ”.

(3)In the second subparagraph, for “the FCA and PRA” substitute “ the PRA ”.

37(1)Article 325az (alternative internal model approach and permission to use alternative internal models) is amended as follows.U.K.

(2)In paragraph 8, for “The FCA and PRA may each” substitute “ The PRA may ”.

(3)In paragraph 9—

(a)for “The FCA and the PRA may each” substitute “ The PRA may ”, and

(b)for “they” substitute “ it ”.

38(1)Article 325bk(3) (calculation of stress scenario risk measure) is amended as follows.U.K.

(2)In the first subparagraph, for “The FCA and PRA may each” substitute “ The PRA may ”.

(3)In the second subparagraph, for “the FCA and PRA” substitute “ the PRA ”.

39U.K.In Article 382(4) (scope of own funds requirements for CVA risk), in point (b), for “institutions” substitute “ entities ”.

40(1)Article 441(2) (indicators of global systemic importance) is amended as follows.U.K.

(2)For “The FCA and the PRA may each” substitute “ The PRA may ”.

(3)For “the FCA or the PRA (as the case may be)” substitute “ the PRA ”.

41U.K.In Article 450(1)(d) (remuneration policy) omit “19A.3.44R to 44DR and”.

42U.K.In Article 456(1) (regulations modifying this Regulation) omit points (f) and (g).

43(1)Article 464B (power to make technical standards) is amended as follows.U.K.

(2)Omit paragraph 1.

(3)In paragraph 2, for “the PRA and FCA may both” substitute “ the PRA may ”.

(4)In paragraph 3 omit “alone”.

44U.K.In Article 522(1)(b) (savings provisions: pre-exit decisions)—

(a)omit “and FCA”, and

(b)omit the words from “in relation to” to “other person”.

45U.K.In Annex 1 (classification of off-balance sheet items), in point 1(d), at the end insert “ or an investment firm ”.

46(1)Annex 3 (items subject to supplementary reporting of liquid assets) is amended as follows.U.K.

(2)In point 3(b), for “of an institution or any of its affiliated entities” substitute “ of, or of an affiliated entity of, an institution or an investment firm ”.

(3)In point 5(b), for “of an institution or any of its affiliated entities” substitute “ of, or of an affiliated entity of, an institution or an investment firm ”.

(4)In point 6(a), for “on an SSPE, an institution or any of its affiliated entities” substitute “ on, or on an affiliated entity of, an SSPE, an institution or an investment firm ”.

(5)In point 7, for “on an SSPE, an institution or any of its affiliated entities” substitute “ on, or on an affiliated entity of, an SSPE, an institution or an investment firm ”.

(6)In point 11, for “by an institution or any of its affiliates” substitute “ by, or by an affiliate of, an institution or an investment firm ”.

47U.K.In the following provisions, for “FCA and PRA may each” or “FCA and the PRA may each” (as appropriate) substitute “ PRA may ”

  • Article 4(4);

  • Article 18(9);

  • Article 26(4);

  • Article 27(2);

  • Article 28(5);

  • Article 29(6);

  • Article 32(2);

  • Article 33(4);

  • Article 36(2), (3) and (4);

  • Article 41(2);

  • Article 52(2);

  • Article 73(7);

  • Article 76(4);

  • Article 78(5);

  • Article 79(2);

  • Article 83(2);

  • Article 84(4);

  • Article 99(5), first subparagraph;

  • Article 99(6), second subparagraph;

  • Article 101(4);

  • Article 105(14);

  • Article 110(4);

  • Article 132a(4);

  • Article 143(5);

  • Article 144(2);

  • Article 148(6);

  • Article 150(3);

  • Article 152(5);

  • Article 153(9);

  • Article 164(8);

  • Article 173(3);

  • Article 178(6);

  • Article 180(3);

  • Article 181(3);

  • Article 182(4);

  • Article 183(6);

  • Article 194(10);

  • Article 197(8);

  • Article 221(9);

  • Article 248(1), second subparagraph;

  • Article 255(9);

  • Article 270a(2);

  • Article 277(5);

  • Article 279a(3);

  • Article 312(4);

  • Article 314(5);

  • Article 316(3);

  • Article 318(3);

  • Article 325(9);

  • Article 325w(8);

  • Article 325ap(3);

  • Article 325bd(7);

  • Article 325be(3);

  • Article 325bf(9);

  • Article 325bg(4);

  • Article 325bp(12);

  • Article 329(3);

  • Article 341(3);

  • Article 344(1);

  • Article 352(6);

  • Article 354(3);

  • Article 358(4), first subparagraph;

  • Article 363(4);

  • Article 382(5);

  • Article 383(7);

  • Article 430b(6);

  • Article 434a, first subparagraph;

  • Article 437(2);

  • Article 440(2);

  • Article 443;

  • Article 451(2);

  • Article 487(3);

  • Article 492(5).

PART 2 U.K.Amendments of the Capital Requirements (Country-by-Country Reporting) Regulations 2013

48U.K.The Capital Requirements (Country-by-Country Reporting) Regulations 2013 (S.I. 2013/3118) are amended as follows.

49(1)Regulation 1(2) (interpretation) is amended as follows.U.K.

(2)For the definition of “capital requirements regulation” substitute—

the capital requirements regulation” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012;.

(3)After that definition insert—

  • FCA investment firm” has the same meaning as in Part 9C of the 2000 Act;

  • financial institution” has the meaning given in Article 4(1)(26) of the capital requirements regulation;.

(4)After the definition of “period of account” insert—

Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544);

relevant FCA investment firm” has the meaning given in paragraph (2A);

small and non-interconnected firm” has the meaning given in rules made by the Financial Conduct Authority for the purposes of Part 9C of the 2000 Act;.

50U.K.In regulation 1, after paragraph (2) insert—

(2A)For the purposes of these Regulations, an FCA investment firm is “relevant” if—

(a)it has a branch or subsidiary in a country or territory outside the United Kingdom that is a financial institution, and

(b)it is not a small and non-interconnected firm,

subject to paragraphs (2B) and (2C).

(2B)Where an FCA investment firm which has not been a small and non-interconnected firm for a period becomes a small and non-interconnected firm, it only ceases to be a relevant FCA investment firm once—

(a)it has been a small and non-interconnected firm for a continuous period of six months, and

(b)it has notified the Financial Conduct Authority.

(2C)Where an FCA investment firm which has been a small and non-interconnected firm for a period determines that it is no longer a small and non-interconnected firm—

(a)it must notify the Financial Conduct Authority, and

(b)it does not become a relevant FCA investment firm until—

(i)the end of the period of 12 months beginning with the day on which it made the determination, or

(ii)if the notification specifies an earlier date, that date.

51U.K.In regulation 1(3) (interpretation of references to EU legislation), for “any EU regulation,” substitute “ any EU regulation other than the capital requirements regulation or to any ”.

52(1)Regulation 2 (ongoing reporting obligation) is amended as follows.U.K.

(2)In paragraph (1), after “Institutions” insert “ and relevant FCA investment firms ”.

(3)In paragraph (2), after “institution” insert “ or relevant FCA investment firm ”.

(4)In paragraph (3), for “institution's period of account” substitute “ period of account for the institution or relevant FCA investment firm ”.

(5)In paragraph (4)—

(a)in the opening words, after “institution” insert “ or relevant FCA investment firm ”, and

(b)in sub-paragraph (a), after “institution” insert “ or relevant FCA investment firm ”.

(6)In paragraph (8), after “institution” insert “ or relevant FCA investment firm ”.

53U.K.In regulation 3(1) (interim reporting obligation), after “Institutions” insert “ and relevant FCA investment firms ”.

54(1)Regulation 4 (group disclosure) is amended as follows.U.K.

(2)In paragraph (1), after “institution” insert “ or relevant FCA investment firm ”.

(3)In paragraph (2), after “institution” insert “ or relevant FCA investment firm ”.

55(1)Regulation 5 (prior disclosure: prevention of duplication) is amended as follows.U.K.

(2)In paragraph (3)—

(a)after “an institution” insert “ or relevant FCA investment firm ”, and

(b)after “the institution” (in both places) insert “ or firm ”.

(3)In paragraph (4)—

(a)after “an institution” insert “ or relevant FCA investment firm ”, and

(b)after “the institution” (in both places) insert “ or firm ”.

56U.K.In regulation 6(2) (enforcement)—

(a)in sub-paragraph (a) omit “which is a PRA-authorised person within the meaning of section 2B(5) of the 2000 Act”, and

(b)in sub-paragraph (b), for “any other institution” substitute “ a relevant FCA investment firm ”.

Prospective

Section 2

SCHEDULE 2U.K.Prudential regulation of FCA investment firms

PART 1 U.K.New Part 9C of the Financial Services and Markets Act 2000

1U.K.In the Financial Services and Markets Act 2000, after Part 9B insert—

PART 9C U.K.Prudential regulation of FCA investment firms

InterpretationU.K.
143AFCA investment firms

(1)In this Part, “FCA investment firm” means an investment firm that—

(a)is an authorised person within the meaning of section 31(1)(a),

(b)is not for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556), and

(c)has its registered office or, if it has no registered office, its head office in the United Kingdom.

(2)But the following are not FCA investment firms—

(a)a person excluded from the definition of “investment firm” in Article 3(1) of the Financial Services and Markets 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) by paragraph (a) or (b) of that definition;

(b)an investment firm which has a Part 4A permission to carry on regulated activities as an exempt investment firm within the meaning of regulation 8 of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701).

143BOther terms used in this Part

(1)In this Part—

  • authorised parent undertaking” means a parent undertaking that—

    (a)

    is incorporated in the United Kingdom or has its principal place of business in the United Kingdom, and

    (b)

    is an authorised person;

  • on a consolidated basis” means as if all members of an FCA investment firm's group are a single FCA investment firm;

  • Directive 2013/36/EU UK law” means the law of the United Kingdom which was relied on immediately before IP completion day to implement the capital requirements directive and its implementing measures as it has effect—

    (a)

    on IP completion day, in the case of rules made by the FCA or the PRA under this Act, and

    (b)

    as amended from time to time, in all other cases;

  • EU tertiary legislation” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018;

  • governance arrangements” includes organisational structure, lines of responsibility and internal control mechanisms;

  • integrity”, in relation to the UK financial system, has the meaning given in section 1D;

  • investment firm” has the meaning given in Article 4(1)(2) of the capital requirements regulation;

  • non-authorised parent undertaking” means a parent undertaking that—

    (a)

    is incorporated in the United Kingdom or has its principal place of business in the United Kingdom, and

    (b)

    is not an authorised person.

(2)The Treasury may by regulations make provision about the meaning of the following terms for the purposes of this Part—

  • “on a consolidated basis”;

  • “group”;

  • “parent undertaking”;

  • “subsidiary undertaking”.

(3)Regulations under subsection (2) may, among other things, amend, repeal or otherwise modify provisions of this Act.

(4)In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of retained EU law.

RulesU.K.
143CDuty to make rules applying to FCA investment firms

(1)In the exercise of its power to make general rules, the FCA must make rules applying to FCA investment firms which impose the following types of prudential requirements—

(a)requirements relating to the types and amounts of capital and liquid assets that such firms must hold in order to manage the risks specified in or under subsection (2);

(b)requirements relating to the management of risks arising from the strength or extent of such firms' relationships with, or direct exposure to, a single client or group of connected clients;

(c)reporting requirements related to requirements described in paragraph (a) or (b);

(d)public disclosure requirements related to requirements described in paragraph (a) or (b);

(e)requirements in respect of governance arrangements related to the risks specified in or under subsection (2);

(f)requirements in respect of remuneration policies and practices related to the risks specified in or under subsection (2).

(2)The risks referred to in subsection (1)(a), (e) and (f) are—

(a)the risks to consumers (as defined in section 1G) arising from FCA investment firms,

(b)the risks to the integrity of the UK financial system arising from FCA investment firms,

(c)the risks to which FCA investment firms are exposed, and

(d)any other risks specified by the Treasury by regulations.

(3)General rules made for the purpose of subsection (1) may, among other things—

(a)impose requirements to be satisfied on an individual basis or on a consolidated basis;

(b)impose requirements relating to the processes for consolidation;

(c)make provision relating to transactions between an FCA investment firm and a member of its group, including provision requiring the disclosure of information;

(d)provide for exceptions from requirements;

(e)make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.

(4)General rules made for the purpose of subsection (1) may, despite section 137A(6), include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke a provision of that regulation or such an instrument).

143DDuty to make rules applying to parent undertakings

(1)In the exercise of its power to make general rules, the FCA must make rules applying to authorised parent undertakings of FCA investment firms which impose the following types of prudential requirements—

(a)requirements relating to the types and amounts of capital and liquid assets that such undertakings must hold in order to manage the risks specified in or under subsection (2);

(b)requirements relating to the management of risks arising from the strength or extent of such undertakings' relationships with, or direct exposure to, a single client or group of connected clients;

(c)reporting requirements related to requirements described in paragraph (a) or (b);

(d)public disclosure requirements related to requirements described in paragraph (a) or (b);

(e)requirements in respect of governance arrangements related to the risks specified in or under subsection (2);

(f)requirements in respect of remuneration policies and practices related to the risks specified in or under subsection (2).

(2)The risks referred to in subsection (1)(a), (e) and (f) are—

(a)the risks to consumers (as defined in section 1G) arising from FCA investment firms, from parent undertakings of FCA investment firms and from FCA investment firms belonging to groups,

(b)the risks to the integrity of the UK financial system arising from FCA investment firms, from parent undertakings of FCA investment firms and from FCA investment firms belonging to groups,

(c)the risks to which FCA investment firms are exposed by virtue of their relationship with their parent undertaking, and

(d)any other risks specified by the Treasury by regulations.

(3)The FCA must make rules applying to non-authorised parent undertakings of FCA investment firms which impose requirements described in subsection (1), where such rules appear to it to be necessary or expedient for the purpose of advancing one or more of its operational objectives.

(4)Rules made for the purpose of subsection (1) or under subsection (3) may, among other things—

(a)impose requirements to be satisfied on an individual basis or on a consolidated basis;

(b)impose requirements relating to the processes for consolidation;

(c)make provision relating to transactions between a parent undertaking of an FCA investment firm and a member of its group, including provision requiring the disclosure of information;

(d)provide for exceptions from requirements;

(e)make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.

(5)Section 137A(6) and (7) (restriction on modifying etc retained direct EU legislation) apply to rules made by the FCA under subsection (3) as they apply to general rules made by the FCA.

(6)Rules made for the purpose of subsection (1) or under subsection (3) may, despite section 137A(6), include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke a provision of that regulation or such an instrument).

(7)Section 137H (rules about remuneration) applies where the FCA makes rules under subsection (3) prohibiting persons, or persons of a specified description, from being remunerated in a specified way as it applies where the FCA makes general rules imposing such a prohibition.

(8)Section 137I (Treasury direction to consider compliance with remuneration policies) applies where the FCA makes rules under subsection (3) requiring non-authorised parent undertakings, or non-authorised parent undertakings of a specified description, to act in accordance with a remuneration policy as it applies where the FCA makes general rules imposing such requirements on authorised persons, but as if—

(a)the references in that section to authorised persons were references to non-authorised parent undertakings of FCA investment firms, and

(b)subsection (7) of that section were omitted.

(9)Section 141A (power to make consequential amendments of references to rules etc) applies to the exercise by the FCA of its power to make, alter or revoke rules under subsection (3) as it applies in relation to the exercise by the FCA of its power to make, alter or revoke rules under Part 9A.

(10)This section is subject to section 143E.

143EPowers to make rules applying to parent undertakings

(1)Subsections (1) and (3) of section 143D do not require the FCA to make rules applying to parent undertakings of FCA investment firms which belong to a group which includes a relevant body, but the FCA may make rules described in those subsections applying to such parent undertakings.

(2)In subsection (1), “relevant body” means—

(a)an undertaking (as defined in section 1161(1) of the Companies Act 2006) that has its head office in the United Kingdom and that has permission under Part 4A to accept deposits, other than—

(i)an undertaking that also has permission under Part 4A to effect or carry out contracts of insurance, or

(ii)a credit union within the meaning of section 1 of the Credit Unions Act 1979;

(b)an investment firm that is for the time being designated by the PRA under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556).

(3)The FCA may make rules applying to parent undertakings of FCA investment firms which impose requirements for the disclosure of information about such undertakings' branches and subsidiary undertakings outside the United Kingdom.

(4)The FCA's powers to make rules under subsections (1) and (3) are powers to do so—

(a)in relation to authorised parent undertakings, in exercise of its power to make general rules, and

(b)in relation to non-authorised parent undertakings, where such rules appear to it to be necessary or expedient for the purpose of advancing one or more of its operational objectives.

(5)Section 143D(4) and (6) apply in relation to rules made by the FCA in exercise of the powers conferred by, or described in, this section as they apply in relation to rules made in the performance of the FCA's duties under that section.

(6)Section 143D(5), (7), (8) and (9) apply in relation to rules made under this section applying to non-authorised parent undertakings as they apply in relation to rules made under section 143D(3).

143FPart 9C rules

(1)In this Act, “Part 9C rules” means rules made, or to be made, by the FCA—

(a)in the performance of its duties under section 143C or 143D, or

(b)in exercise of the powers conferred by, or described in, section 143E.

(2)The FCA must publish a list of all Part 9C rules in force in the way appearing to the FCA to be best calculated to bring it to the attention of people likely to be affected by the rules.

(3)The FCA's opinion as to whether a rule is a Part 9C rule is conclusive for all purposes.

143GMatters to consider when making Part 9C rules

(1)When making Part 9C rules, the FCA must, among other things, have regard to—

(a)any relevant standards set by an international standard-setting body,

(b)the likely effect of the rules on the relative standing of the United Kingdom as a place for internationally active investment firms to be based or to carry on activities,

(c)the target in section 1 of the Climate Change Act 2008 (carbon target for 2050), and

(d)any other matter specified by the Treasury by regulations.

(2)For the purposes of subsection (1)(b), the FCA must consider the United Kingdom's standing in relation to the other countries and territories in which, in its opinion, internationally active investment firms are most likely to choose to be based or carry on activities.

(3)When making Part 9C rules, the FCA must consider, and consult the Treasury about, the likely effect of the rules on relevant equivalence decisions.

(4)For the purpose of this section, an equivalence decision is “relevant” if the Treasury have, by notice in writing, informed the FCA that it is relevant for that purpose.

(5)In this section—

  • equivalence decision” means a decision as to whether the law and practice of one country or territory is equivalent to the law and practice of another country or territory, either generally or as it relates to a particular matter;

  • territory” includes the European Union and any other international organisation or authority comprising countries or territories.

(6)This section is subject to section 143I.

143HExplanation to accompany consultation on rules

(1)A draft of proposed Part 9C rules published in accordance with section 138I(1)(b) must be accompanied by—

(a)an explanation of the provision that the FCA has considered it appropriate to include in the rules given the risks specified in or under section 143C(2) or 143D(2), and

(b)an explanation of the ways in which having regard to the matters specified in or under section 143G(1) has affected the proposed rules,

(as well as being accompanied by the information listed in section 138I(2)).

(2)If the FCA makes the proposed Part 9C rules, it must publish—

(a)a summary of the purpose of the proposed rules, and

(b)explanations complying with subsection (1),

(as well as the information required by section 138I(4) and (5)).

(3)This section is subject to section 143I.

143IExceptions from sections 143G and 143H

(1)Sections 143G and 143H do not apply where the FCA makes Part 9C rules—

(a)in order to comply with a direction given by the Financial Policy Committee of the Bank of England under section 9H of the Bank of England Act 1998 (directions requiring macro-prudential measures), or

(b)in order to act in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of the FCA's functions).

(2)Section 143H does not apply in relation to Part 9C rules if the FCA considers that the delay involved in complying with that section would be prejudicial to the interests of consumers (as defined in section 425A).

(3)If the FCA proposes Part 9C rules that change existing Part 9C rules and the changes consist of or include changes which, in the FCA's opinion, are not material—

(a)the explanations described in section 143H(1) are not required in relation to the rules to the extent that they make those changes, but

(b)the draft of the rules must be accompanied by a statement of the FCA's opinion.

(4)If the FCA makes Part 9C rules that change existing Part 9C rules and the changes consist of or include changes which, in the FCA's opinion, are not material—

(a)the summary and explanations described in section 143H(2) are not required in relation to the rules to the extent that they make those changes, but

(b)the FCA must publish a statement of its opinion.

(5)For the purposes of this section, whether a change to Part 9C rules is material is to be determined by the FCA by reference to, among other things, the risks specified in or under section 143C(2) or 143D(2) and the matters specified in or under section 143G(1).

Requirement to have UK parent undertakingU.K.
143JRequirement to have UK parent undertaking

(1)This section applies where—

(a)two or more FCA investment firms are subsidiary undertakings of the same parent undertaking,

(b)the parent undertaking's head office is in a country or territory outside the United Kingdom, and

(c)in the FCA's opinion, the law and practice in the other country or territory does not impose requirements on the parent undertaking which have equivalent effect to requirements imposed by Part 9C rules.

(2)Where this section applies, the FCA may exercise its power under section 55L(3) to impose a requirement on the FCA investment firms to secure that a parent undertaking with its head office in the United Kingdom is established.

Imposition of requirements on non-authorised parent undertakingsU.K.
143KImposition of requirements on non-authorised parent undertakings

(1)The FCA may, on the application of a non-authorised parent undertaking of an FCA investment firm—

(a)impose a requirement on the parent undertaking,

(b)vary a requirement imposed on the parent undertaking under this section, or

(c)cancel such a requirement.

(2)The FCA may exercise its power under subsection (3) in relation to a non-authorised parent undertaking of an FCA investment firm if it appears to the FCA that—

(a)it is necessary or expedient to do so in order to manage risks specified in or under section 143D(2), and

(b)it is desirable to do so in order to advance one or more of its operational objectives.

(3)The FCA's power under this subsection is a power—

(a)to impose a requirement,

(b)to vary a requirement imposed under this section, or

(c)to cancel such a requirement.

(4)The FCA may refuse an application under subsection (1) if it appears to the FCA that it is desirable to do so in order to advance one or more of the FCA's operational objectives.

(5)A requirement may, in particular, be imposed under this section—

(a)so as to require the parent undertaking to take specified action, or

(b)so as to require the parent undertaking to refrain from taking specified action.

(6)A requirement may be imposed by reference to the parent undertaking's relationship with—

(a)its group, or

(b)other members of its group.

(7)A requirement may refer to the past conduct of the parent undertaking (for example, by requiring the parent undertaking to review or take remedial action in respect of past conduct).

(8)A requirement may be expressed to expire at the end of a specified period, but the imposition of a requirement that expires at the end of a specified period does not affect the FCA's power to impose a new requirement.

(9)A requirement ceases to be in force if the person on whom it is imposed ceases to be a non-authorised parent undertaking of an FCA investment firm.

(10)For the purposes of a provision of this section which refers to the FCA's operational objectives, in relation to the exercise of a power in relation to a particular parent undertaking, it does not matter whether there is a relationship between the parent undertaking and the persons whose interests will be protected by the exercise of the power.

143LApplications under section 143K

(1)An application under section 143K(1) for the imposition or variation of a requirement must contain a statement of the desired requirement or variation.

(2)An application under section 143K(1)—

(a)must be made in such manner as the FCA may direct, and

(b)must contain, or be accompanied by, such other information as the FCA may reasonably require.

(3)At any time after the application is received and before it is determined, the FCA may require the applicant to provide it with such further information as the FCA reasonably considers necessary to enable it to determine the application.

(4)The FCA may require an applicant to provide information which the applicant is required to provide the FCA under this section in such form, or to verify it in such a way, as the FCA may direct.

(5)Different directions may be given, and different requirements imposed, in relation to different applications or categories of application.

143MDetermination of applications under section 143K

(1)The FCA must determine an application under section 143K(1)—

(a)if the application is complete, before the end of the period of six months beginning with the day on which the FCA received the application, or

(b)if the application is incomplete, before the end of the period of 12 months beginning with the day on which the FCA received the application.

(2)The applicant may withdraw the application, by giving the FCA a written notice, at any time before the FCA determines it.

(3)If the FCA grants an application under section 143K(1), it must give the applicant a written notice.

(4)The notice must state the date from which the requirement or variation has effect.

143NRefusal of applications under section 143K

(1)If the FCA proposes to refuse an application under section 143K(1), it must give the applicant a warning notice.

(2)If the FCA decides to refuse an application under section 143K(1), it must give the applicant a decision notice.

143OExercise of own-initiative power under section 143K

(1)The imposition or variation of a requirement by the FCA under section 143K(2) takes effect—

(a)immediately, if the notice given under subsection (3) states that is the case,

(b)on such date as may be specified in the notice, or

(c)if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.

(2)The imposition or variation of the requirement may be expressed to take effect immediately, or on a specified date, only if the FCA reasonably considers that it is necessary for it to take effect immediately or on that date, having regard to the ground on which it is exercising its power under section 143K(2).

(3)If the FCA—

(a)proposes to exercise its power under section 143K(2) so as to impose a requirement on a parent undertaking or to vary a requirement imposed on a parent undertaking, or

(b)exercises that power so as to impose a requirement on a parent undertaking, or to vary a requirement imposed on a parent undertaking, with immediate effect,

it must give the parent undertaking a written notice.

(4)The notice must—

(a)give details of the requirement or its variation,

(b)state the FCA's reasons for imposing or varying the requirement,

(c)inform the parent undertaking that it may make representations to the FCA within the period specified in the notice (whether or not the parent undertaking has referred the matter to the Tribunal),

(d)inform the parent undertaking of when the imposition or variation of the requirement takes effect, and

(e)inform the parent undertaking of its right to refer the matter to the Tribunal.

(5)The FCA may extend the period allowed under the notice for making representations.

(6)If, having considered any representations made by the parent undertaking, the FCA decides—

(a)to impose the requirement or vary the requirement in the way proposed, or

(b)if the requirement has been imposed or varied, not to rescind its imposition or variation,

it must give the parent undertaking a written notice.

(7)A notice under subsection (6) must inform the parent undertaking of its right to refer the matter to the Tribunal.

(8)If, having considered any representations made by the parent undertaking, the FCA decides—

(a)not to impose the requirement or vary the requirement in the way proposed,

(b)to impose a different requirement or vary the requirement in a different way, or

(c)to rescind a requirement or variation which has effect,

it must give the parent undertaking a written notice.

(9)A notice under subsection (8)(b) must comply with subsection (4).

(10)If a notice under this section informs a person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure for such a reference.

(11)For the purposes of subsection (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).

143PRight to refer matters to the Tribunal

(1)An applicant who is aggrieved by the determination of an application under section 143K(1) may refer the matter to the Tribunal.

(2)A parent undertaking aggrieved by the exercise by the FCA of its power under section 143K(2) to impose a requirement on the parent undertaking, or vary a requirement imposed on the parent undertaking, may refer the matter to the Tribunal.

143QAssets requirements

(1)This section makes provision about a requirement imposed on a non-authorised parent undertaking of an FCA investment firm (“N”) under section 143K—

(a)prohibiting the disposal of, or other dealing with, any of N's assets (whether in the United Kingdom or elsewhere) or restricting such disposals or dealings, or

(b)requiring that some or all of N's assets, or some or all assets belonging to consumers (as defined in section 1G) but held by N or to N's order, must be transferred to and held by a trustee approved by the FCA.

(2)If the FCA—

(a)imposes a requirement described in subsection (1)(a), and

(b)gives notice of the requirement to an institution with whom N keeps an account,

the notice has the effects set out in subsection (3).

(3)Those effects are that—

(a)the institution does not act in breach of a contract with N if, having been instructed by N (or on N's behalf) to transfer a sum or otherwise make a payment out of N's account, it refuses to do so in the reasonably held belief that complying with the instruction would be incompatible with the requirement, and

(b)if the institution complies with such an instruction, it is liable to pay to the FCA an amount equal to the amount transferred from, or otherwise paid out of, N's account in contravention of the requirement.

(4)If the FCA imposes a requirement described in subsection (1)(b), no assets held by a person as trustee in accordance with the requirement may, while the requirement is in force, be released or dealt with except with the consent of the FCA.

(5)If, while a requirement described in subsection (1)(b) is in force, N creates a charge over any assets of N held in accordance with the requirement, the charge is (to the extent that it confers security over the assets) void against the liquidator and N's creditors.

(6)Assets held by a person as trustee are to be taken to be held by the trustee in accordance with a requirement mentioned in subsection (1)(b) only if—

(a)N has given the trustee a written notice that those assets are to be held by the trustee in accordance with the requirement, or

(b)they are assets into which assets to which paragraph (a) applies have been transposed by the trustee on the instruction of N.

(7)A person who contravenes subsection (4) commits an offence and is liable—

(a)on summary conviction in England and Wales, to a fine;

(b)on summary conviction in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.

(8)In this section, references to imposing a requirement (however expressed) include imposing a requirement by varying an existing requirement.

(9)In this paragraph, “charge” includes a mortgage (or, in Scotland, a security over property).

(10)Subsections (4) and (6) do not affect any equitable interest or remedy in favour of a person who is a beneficiary of a trust as a result of a requirement described in subsection (1)(b).

Control of managers etc of non-authorised parent undertakingsU.K.
143RManagers of non-authorised parent undertakings

A non-authorised parent undertaking of an FCA investment firm must take reasonable care to ensure that members of its management body—

(a)are of sufficiently good repute, and

(b)possess sufficient knowledge, skills and experience to perform their duties effectively.

143SPart 9C prohibition orders

(1)Subsection (2) applies where it appears to the FCA that an individual—

(a)is not of sufficiently good repute, or

(b)does not possess sufficient knowledge, skills and experience,

to perform a function in relation to an activity carried on by a non-authorised parent undertaking of an FCA investment firm.

(2)The FCA may make an order (“a Part 9C prohibition order”) prohibiting the individual from performing the function.

(3)A Part 9C prohibition order may relate to—

(a)all functions in relation to an activity carried on by a non-authorised parent undertaking of an FCA investment firm, or

(b)a function specified in the order or of a description specified in the order.

(4)A Part 9C prohibition order may relate to—

(a)all activities of a non-authorised parent undertaking of an FCA investment firm, or

(b)an activity specified in the order or of a description specified in the order.

(5)A Part 9C prohibition order may relate to—

(a)all non-authorised parent undertakings of FCA investment firms, or

(b)an undertaking specified, or within a description specified, in the order.

(6)A non-authorised parent undertaking of an FCA investment firm must take reasonable care to ensure that none of its functions is performed by a person who is prohibited from performing that function by a Part 9C prohibition order.

143TProcedure for making a Part 9C prohibition order

(1)If the FCA proposes to make a Part 9C prohibition order it must give the individual to whom the order would apply a warning notice.

(2)The warning notice must set out the terms of the prohibition.

(3)If the FCA decides to make a Part 9C prohibition order it must give the individual to whom the order applies a decision notice.

(4)The decision notice must—

(a)name the individual to whom the Part 9C prohibition order applies, and

(b)set out the terms of the order.

(5)If the FCA decides to make a Part 9C prohibition order, the individual to whom the order applies may refer the matter to the Tribunal.

143UVarying and withdrawing a Part 9C prohibition order

(1)The FCA may vary or revoke a Part 9C prohibition order on the application of the individual named in the order.

(2)On an application for the variation or revocation of a Part 9C prohibition order—

(a)if the FCA decides to grant the application, it must give the applicant written notice of its decision,

(b)if the FCA proposes to refuse the application, it must give the applicant a warning notice, and

(c)if the FCA decides to refuse the application, it must give the applicant a decision notice.

(3)If the FCA gives the applicant a decision notice under subsection (2)(c), the applicant may refer the matter to the Tribunal.

143VOffence of breaching a Part 9C prohibition order

(1)An individual who performs a function, or agrees to perform a function, in breach of a Part 9C prohibition order commits an offence.

(2)An individual who commits an offence under this section is liable—

(a)on summary conviction in England and Wales, to a fine, and

(b)on summary conviction in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.

(3)In proceedings for an offence under this section, it is a defence for the individual to show that they took all reasonable precautions and exercised all due diligence to avoid committing the offence.

Disciplinary measures for non-authorised parent undertakingsU.K.
143WDisciplinary measures

(1)This section applies if the FCA is satisfied that a non-authorised parent undertaking of an FCA investment firm has contravened—

(a)a provision of Part 9C rules,

(b)a requirement imposed under section 143K,

(c)section 143R, or

(d)section 143S(6).

(2)The FCA may impose a penalty of such amount as it considers appropriate on any of the following—

(a)the non-authorised parent undertaking;

(b)a person who was knowingly concerned in the contravention.

(3)The FCA may (instead of or in addition to imposing a penalty under subsection (2)) publish a statement to the effect that the person has contravened, or been knowingly concerned in a contravention of, a provision of Part 9C rules.

(4)Subsection (5) applies to—

(a)a member of the management body of the non-authorised parent undertaking, or

(b)a person not falling within paragraph (a) who is an employee of the non-authorised parent undertaking,

who was, at any time, knowingly concerned in the contravention.

(5)The FCA may impose, for such period as it considers appropriate, restrictions (including a ban) on the exercise by the person of functions of an FCA investment firm or a parent undertaking of an FCA investment firm.

(6)The FCA may—

(a)vary a restriction imposed under subsection (5) so as to reduce the period for which it has effect or otherwise to limit its effect, or

(b)cancel the restriction.

(7)The FCA may not take action against a person under this section after the end of the limitation period unless, before the end of that period, it has given a warning notice to the person under section 143X.

(8)In subsection (7), “the limitation period” means the period of six years beginning with the first day on which the FCA knew of the contravention.

(9)For the purpose of subsection (8), the FCA is to be treated as knowing of a contravention if it has information from which the contravention can reasonably be inferred.

(10)In this section, “management body” means the board of directors or, if there is no such board, the equivalent body responsible for the management of the undertaking concerned.

(11)The reference in subsection (4) to an employee of a person (“P”) includes a person who—

(a)personally provides, or is under an obligation personally to provide, services to P under an arrangement made between P and the person providing the services or another person, and

(b)is subject to (or to the right of) supervision, direction or control by P as to the manner in which those services are provided.

143XProcedure for disciplinary measures

(1)If the FCA proposes to take action against a person under section 143W(2), (3) or (5) it must give the person a warning notice.

(2)A warning notice about a proposal to impose a penalty must state the amount of the penalty.

(3)A warning notice about a proposal to publish a statement must set out the terms of the statement.

(4)A warning notice about a proposal to impose a restriction under section 143W(5) must state—

(a)the terms of the restriction, and

(b)the period for which the restriction is to have effect.

(5)If the FCA decides to take action against a person under section 143W(2), (3) or (5) it must give the person a decision notice.

(6)A decision notice about the imposition of a penalty must state the amount of the penalty.

(7)A decision notice about the publication of a statement must state the terms of the statement.

(8)After the statement is published, the FCA must send a copy of the statement to—

(a)the person in respect of whom it is made, and

(b)any person to whom a copy of the decision notice was given under section 393(4).

(9)A decision notice about the imposition of a restriction under section 143W(5) must state—

(a)the terms of the restriction, and

(b)the period for which the restriction is to have effect.

(10)If the FCA decides to take action against a person under section 143W(2), (3) or (5), the person may refer the matter to the Tribunal.

(11)If the FCA decides to vary or cancel a restriction under section 143W(6), it must give written notice of its decision to the applicant.

143YStatement of policy for penalties under section 143W

(1)The FCA must prepare and issue a statement of policy with respect to—

(a)the imposition of penalties under section 143W, and

(b)the amount of penalties under that section.

(2)The FCA's policy in determining what the amount of a penalty should be must include having regard to—

(a)the seriousness of the contravention,

(b)the extent to which the contravention was deliberate or reckless, and

(c)whether the person on whom the penalty is to be imposed is an individual.

(3)The FCA may at any time alter or replace a statement issued under this section.

(4)If a statement issued under this section is altered or replaced, the FCA must issue the altered or replacement statement.

(5)In exercising, or deciding whether to exercise, a power under section 143W(2) in the case of any particular contravention, the FCA must have regard to any statement of policy published under this section and in force at a time when the contravention occurred.

(6)A statement under this section must be published by the FCA in the way appearing to the FCA to be best calculated to bring it to the attention of the public.

(7)The FCA must, without delay, give the Treasury a copy of any statement which it publishes under this section.

(8)The FCA may charge a reasonable fee for providing a person with a copy of a statement published under this section.

143ZProcedure for statement of policy

(1)Before issuing a statement of policy under section 143Y, the FCA must publish a draft of the proposed statement in the way appearing to the FCA to be best calculated to bring it to the attention of the public.

(2)The draft must be accompanied by notice that representations about the proposal may be made to the FCA within a specified time.

(3)Before issuing the proposed statement, the FCA must have regard to any representations made to it in accordance with subsection (2).

(4)If the FCA issues the proposed statement, it must publish an account in general terms of—

(a)the representations made to it in accordance with subsection (2), and

(b)its response to them.

(5)If the statement differs from the draft published under subsection (1) in a way which is, in the FCA's opinion, significant, the FCA must publish details of the difference (in addition to complying with subsection (4)).

(6)The FCA may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).

(7)This section also applies to a proposal to alter or replace a statement.

PART 2 U.K.Minor and consequential amendments

2U.K.The Financial Services and Markets Act 2000 is amended as follows.

3U.K.In section 133(7A) (proceedings before the Tribunal: meaning of “disciplinary reference”), after paragraph (ia) insert—

(ib)a decision to take action under section 143W;.

4U.K.In section 137A (the FCA's general rules), at the end insert—

(7)Subsection (6) is subject to sections 143C(4) and 143D(6).

5U.K.In section 165(7) (regulators' power to require information), after paragraph (d) insert—

(da)by the FCA, to impose requirements on a person who provides, or has provided, a service to an FCA investment firm or to a relevant parent undertaking of such a firm;.

6(1)Section 166 (regulators' power to require reports by skilled persons) is amended as follows.U.K.

(2)In subsection (10), after “subsection (11)” insert “ or (12) ”.

(3)After subsection (11) insert—

(12)This subsection applies to a person who provides, or has provided, a service to an FCA investment firm or to a relevant parent undertaking of such a firm.

7(1)Section 167 (regulators' power to appoint investigators) is amended as follows.U.K.

(2)In subsection (1)—

(a)in paragraph (a), for “a recognised investment exchange or an authorised person or of” substitute “ a person to whom subsection (1A) applies or ”, and

(b)in paragraph (c), for “a recognised investment exchange or an authorised person” substitute “ a person to whom subsection (1A) applies ”.

(3)After subsection (1) insert—

(1A)This subsection applies to the following persons—

(a)a recognised investment exchange;

(b)an authorised person;

(c)a relevant parent undertaking of an FCA investment firm;

(d)a person who provides a service to an FCA investment firm or to a relevant parent undertaking of such a firm.

(4)For subsection (4) substitute—

(4A)The power conferred by this section may be exercised in relation to a person who has at any time been an authorised person or a person described in subsection (1A)(c) or (d) but only in relation to—

(a)business carried on at any time when the person was an authorised person or a person described in subsection (1A)(c) or (d), or

(b)the ownership or control of the person at such a time.

(4B)The power conferred by this section may be exercised in relation to a person who has at any time been an appointed representative but only in relation to business carried on at any time when the person was an appointed representative.

(5)In subsection (5A), at the end insert—

(d)in relation to a person who is, or has at any time been, a person described in subsection (1A)(c) or (d) who is not an authorised person, the FCA.

8(1)In section 168(4), after paragraph (i) insert—U.K.

(ia)a person may have failed to comply with section 143R;

(ib)an individual may have performed or agreed to perform a function in breach of a Part 9C prohibition order;

(ic)a person may have failed to comply with section 143S(6);.

(2)Section 171 (powers of person appointed under section 167) is amended as follows.

(3)In subsection (1), for the words before paragraph (a) substitute “ An investigator may require a person to whom subsection (1A) applies— ”.

(4)After subsection (1) insert—

(1A)This subsection applies to the following persons—

(a)the person who is the subject of the investigation (“the person under investigation”);

(b)any person connected with the person under investigation;

(c)where the person under investigation is an FCA investment firm, a person who provides, or has provided, a service to the firm or to a relevant parent undertaking of the firm;

(d)where the person under investigation is a relevant parent undertaking of an FCA investment firm, a person who provides, or has provided, a service to the parent undertaking or to the firm.

9(1)Section 176 (entry of premises under warrant) is amended as follows.U.K.

(2)In subsection (3)(a), for “an authorised person or an appointed representative” substitute “ a person to whom subsection (3A) applies ”.

(3)After subsection (3) insert—

(3A)This subsection applies to the following persons—

(a)an authorised person;

(b)an appointed representative;

(c)a relevant parent undertaking of an FCA investment firm;

(d)a person who provides a service to an FCA investment firm or to a relevant parent undertaking of such a firm.

10U.K.After section 177 insert—

InterpretationU.K.

177AInterpretation of Part 11

In this Part—

  • FCA investment firm” has the meaning given in section 143A;

  • relevant parent undertaking”, in relation to an FCA investment firm, means an authorised parent undertaking or a non-authorised parent undertaking (as defined in section 143B).

11U.K.In section 347(1)(g) (record of authorised persons etc), after “order” insert “ or Part 9C prohibition order ”.

12U.K.In section 391(1ZB) (publication of warning notices), after paragraph (ia) insert—

(ib)section 143T;

(ic)section 143X;.

13U.K.In section 392 (application of third party rights to notices)—

(a)in paragraph (a), after “142T(1),” insert “ 143N(1), 143T(1), 143U(2), 143X(1), ”, and

(b)in paragraph (b), after “142T(4),” insert “ 143N(2), 143T(3), 143U(2), 143X(5), ”.

14U.K.In section 395(13) (meaning of supervisory notice), after paragraph (bba) insert—

(bbb)section 143O(3), (6) or (8)(b);.

15(1)Section 417(1) (definitions) is amended as follows.U.K.

(2)At the appropriate place insert—

Part 9C prohibition order” has the meaning given in section 143S;

Part 9C rules” has the meaning given in section 143F;.

(3)In the definition of “prohibition order”, after “order”” insert “ (except in the expression “Part 9C prohibition order”) ”.

16U.K.In section 424A(1) (investment firm), after “this Act” insert “ (except as otherwise provided) ”.

17(1)Section 429 (parliamentary control of statutory instruments) is amended as follows.U.K.

(2)In subsection (2), after “142W,” insert “ 143C(2), 143D(2), 143G(1), ”.

(3)In subsection (2B), after paragraph (b) insert—

(ba)provision made under section 143B(2) which amends this Act;.

18U.K.In paragraph 20(4) of Schedule 1ZA (enforcement costs), after paragraph (b) insert—

(ba)its powers under section 143S (Part 9C prohibition orders),.

PART 3 U.K.Transitional provision

Rules made before Part 1 of this Schedule comes into forceU.K.

19(1)The Financial Conduct Authority may identify general rules made under section 137A of the Financial Services and Markets Act 2000 before Part 1 of this Schedule comes into force and without complying with sections 143G and 143H of that Act (“pre-commencement rules”) that are to be Part 9C rules.U.K.

(2)Where the Financial Conduct Authority identifies such rules, it must, as soon as reasonably practicable after Part 1 of this Schedule comes into force, publish—

(a)a list of the pre-commencement rules that are to be Part 9C rules, and

(b)a statement confirming that, in deciding that those pre-commencement rules should be Part 9C rules, the Financial Conduct Authority has—

(i)considered the risks specified in or under section 143C(2) or 143D(2) and the matters specified in or under section 143G(1), and

(ii)considered, and consulted the Treasury about, the likely effect of the rules on relevant equivalence decisions (as defined in section 143G).

(3)Rules included in the list published in accordance with sub-paragraph (2)(a) are to be treated for all purposes as Part 9C rules.

Pre-commencement consultation etcU.K.

20(1)In relation to Part 9C rules, the requirements of the provisions listed in sub-paragraph (2) may be satisfied by things done before Part 1 of this Schedule comes into force (as well as by things done after that time).U.K.

(2)Those provisions are—

(a)section 138I of the Financial Services and Markets Act 2000 (consultation);

(b)sections 143G to 143I of that Act (inserted by Part 1 of this Schedule).

Relevant equivalence decisionsU.K.

21U.K.For the purposes of section 143G of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), an equivalence decision may be a relevant equivalence decision by virtue of a notice in writing given by the Treasury before Part 1 of this Schedule comes into force (as well as by a notice given after that time).

Carbon targetU.K.

22U.K.In relation to the making of Part 9C rules that are made on or before 1 January 2022—

(a)paragraph (c) of section 143G(1) of the Financial Services and Markets Act 2000 (duty to have regard to carbon target for 2050) does not apply, and

(b)section 143H(1)(b) of that Act does not require an explanation in respect of matters specified in that paragraph.

InterpretationU.K.

23U.K.In this Part of this Schedule, “Part 9C rules” has the same meaning as in the Financial Services and Markets Act 2000 (see section 143F of that Act, inserted by Part 1 of this Schedule).

Prospective

Section 5

SCHEDULE 3U.K.Prudential regulation of credit institutions etc

PART 1 U.K.New Part 9D of the Financial Services and Markets Act 2000

1U.K.In the Financial Services and Markets Act 2000, after Part 9C (inserted by Schedule 2 to this Act) insert—

PART 9D U.K.Prudential regulation of credit institutions etc

InterpretationU.K.
144ACRR rules

(1)In this Act, “CRR rules” means rules of a type described in subsection (2) to the extent that they make provision about a matter described in subsection (3).

(2)The types of rules are—

(a)general rules made, or to be made, by the PRA applying to CRR firms or a description of CRR firm;

(b)rules made, or to be made, under section 192XA.

(3)The matters are any matter that is the subject of—

(a)a relevant provision of the capital requirements regulation, or

(b)a CRR Basel standard.

(4)For the purposes of subsection (3)(a), a provision is “relevant” if—

(a)it has been or may be revoked by regulations made under section 3(1) of the Financial Services Act 2021, or

(b)it has been revoked by regulations made under section 3(3) or (5) of that Act.

(5)In subsection (3)—

(a)the reference to a matter that is the subject of a provision of the capital requirements regulation includes a matter that is the subject of an instrument made under the provision, and

(b)the reference to a matter that is the subject of a CRR Basel standard includes such a matter as it relates to any CRR firm (even where the standard in question does not apply to all CRR firms).

144BTerms used in this Part

(1)In this Part—

  • CRR Basel standard” has the meaning given in section 4 of the Financial Services Act 2021;

  • CRR firm” has the same meaning as in the capital requirements regulation;

  • EU tertiary legislation” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018.

(2)In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of retained EU law.

Making CRR rulesU.K.
144CMatters to consider when making CRR rules

(1)When making CRR rules, the PRA must, among other things, have regard to—

(a)relevant standards recommended by the Basel Committee on Banking Supervision from time to time,

(b)the likely effect of the rules on the relative standing of the United Kingdom as a place for internationally active credit institutions and investment firms to be based or to carry on activities,

(c)the likely effect of the rules on the ability of CRR firms to continue to provide finance to businesses and consumers in the United Kingdom on a sustainable basis in the medium and long term,

(d)the target in section 1 of the Climate Change Act 2008 (carbon target for 2050), and

(e)any other matter specified by the Treasury by regulations.

(2)For the purposes of subsection (1)(b), the PRA must consider the United Kingdom's standing in relation to the other countries and territories in which, in its opinion, internationally active credit institutions and investment firms are most likely to choose to be based or carry on activities.

(3)When making CRR rules, the PRA must consider, and consult the Treasury about, the likely effect of the rules on relevant equivalence decisions.

(4)For the purpose of this section, an equivalence decision is “relevant” if the Treasury have, by notice in writing, informed the PRA that it is relevant for that purpose.

(5)In this section—

  • consumer” means an individual who is acting for purposes outside those of any trade, business or profession carried on by the individual;

  • equivalence decision” means a decision as to whether the law and practice of one country or territory is equivalent to the law and practice of another country or territory, either generally or as it relates to a particular matter;

  • territory” includes the European Union and any other international organisation or authority comprising countries or territories.

(6)This section is subject to section 144E.

144DExplanation to accompany consultation on CRR rules

(1)A draft of proposed CRR rules published in accordance with section 138J(1)(b) must be accompanied by an explanation of the ways in which having regard to the matters specified in or under section 144C(1) has affected the proposed rules (as well as being accompanied by the information listed in section 138J(2)).

(2)If the PRA makes the proposed CRR rules, it must publish—

(a)a summary of the purpose of the proposed rules, and

(b)an explanation complying with subsection (1),

(as well as the information required by section 138J(4) and (5)).

(3)This section is subject to section 144E.

144EExceptions from sections 144C and 144D etc

(1)Sections 144C and 144D do not apply where the PRA makes CRR rules—

(a)in order to comply with a direction given by the Financial Policy Committee of the Bank of England under section 9H of the Bank of England Act 1998 (directions requiring macro-prudential measures), or

(b)in order to act in accordance with a recommendation made by that Committee under section 9Q of that Act (recommendations about the exercise of the PRA's functions).

(2)Section 144C does not apply where the PRA makes CRR rules to the extent that they make provision (“CRR restatement provision”) reproducing without any changes which, in the PRA's opinion, are material—

(a)a provision of the capital requirements regulation as it had effect immediately before it was revoked by regulations made under section 3 of the Financial Services Act 2021, or

(b)a provision of an instrument made under the capital requirements regulation as it had effect immediately before it was revoked by such regulations.

(3)The following do not apply in relation to CRR rules to the extent that they make CRR restatement provision—

(a)section 138J, other than subsection (1)(a),

(b)section 138K, and

(c)section 144D,

but, if it makes rules making such provision, the PRA must publish a statement of which provisions of the capital requirements regulation, or of the instrument made under that regulation, are reproduced and what changes (if any) are made.

(4)Section 144D does not apply in relation to CRR rules if the PRA considers that the delay involved in complying with that section would be prejudicial to the safety and soundness of PRA-authorised persons.

(5)If the PRA proposes CRR rules that change existing CRR rules and the changes consist of or include changes which, in the PRA's opinion, are not material—

(a)the explanation described in section 144D(1) is not required in relation to the rules to the extent that they make those changes, but

(b)the draft of the rules must be accompanied by a statement of the PRA's opinion.

(6)If the PRA makes CRR rules that change existing CRR rules and the changes consist of or include changes which, in the PRA's opinion, are not material—

(a)the summary and explanation described in section 144D(2) are not required in relation to the rules to the extent that they make those changes, but

(b)the PRA must publish a statement of its opinion.

(7)For the purposes of this section, whether a change is material is to be determined by the PRA by reference to, among other things, the matters specified in or under section 144C(1).

144FPower to consequentially amend enactments

(1)The Treasury may by regulations make provision amending an enactment that is consequential on CRR rules.

(2)In this section—

  • enactment” includes—

    (a)

    retained direct EU legislation,

    (b)

    an enactment comprised in subordinate legislation,

    (c)

    an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,

    (d)

    an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and

    (e)

    an enactment comprised in, or in an instrument made under, Northern Ireland legislation;

  • subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act).

Content of CRR rulesU.K.
144GDisapplication or modification of CRR rules in individual cases

(1)This section applies to a CRR rule if, or to the extent that, CRR rules provide for it to apply to the rule.

(2)The PRA may, on the application of or with the consent of a person who is subject to CRR rules, give the person a permission that enables the person—

(a)not to apply the CRR rule, or

(b)to apply the CRR rule with the modifications specified in the permission.

(3)The PRA may—

(a)give permission under this section subject to conditions, and

(b)revoke or vary permission under this section.

144HRelationship with the capital requirements regulation

(1)CRR rules may make provision by reference to the capital requirements regulation, to an instrument made under the capital requirements regulation or to Directive 2013/36/EU UK law, as amended from time to time.

(2)CRR rules may, despite section 137G(6), include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke a provision of that regulation or such an instrument).

(3)In this section, “Directive 2013/36/EU UK law” means the law of the United Kingdom which was relied on immediately before IP completion day to implement the capital requirements directive and its implementing measures as it has effect—

(a)on IP completion day, in the case of rules made by the PRA or the FCA under this Act, and

(b)as amended from time to time, in all other cases.

PART 2 U.K.PRA's powers in relation to certain holding companies

2U.K.Part 12B of the Financial Services and Markets Act 2000 (approval of certain holding companies by the PRA) is amended as follows.

3U.K.Before section 192O insert— “ Interpretation ”.

4(1)Section 192O(1) (interpretation) is amended as follows.U.K.

(2)Omit the definition of “section 192V rules”.

(3)After that definition insert—

  • section 192XA rules” means rules made under section 192XA;.

5U.K.Before section 192P insert— “ Approval ”.

6U.K.Omit section 192V (rules imposing consolidated or sub-consolidated requirements).

7U.K.After section 192X insert—

RulesU.K.

192XARules applying to holding companies

(1)The PRA may make rules described in subsection (2) applying to financial holding companies and mixed financial holding companies that are—

(a)approved under section 192R, or

(b)designated under section 192T(2)(c),

where it appears to the PRA to be necessary or expedient to make the rules for the purpose of advancing any of its objectives.

(2)Those rules are—

(a)rules imposing requirements to be complied with by holding companies on a consolidated or sub-consolidated basis;

(b)rules imposing requirements which, in the PRA's opinion, are likely to mitigate group risk;

(c)rules imposing reporting requirements related to requirements described in paragraph (a) or (b);

(d)rules imposing public disclosure requirements related to requirements described in paragraph (a) or (b);

(e)rules imposing requirements in respect of governance arrangements;

(f)rules imposing requirements in respect of remuneration policies and practices.

(3)Subject to subsection (4), rules made under this section may not modify, amend or revoke any retained direct EU legislation, except retained direct EU legislation which takes the form of PRA rules.

(4)Rules made under this section may include provision that modifies the capital requirements regulation or an instrument made under that regulation (but may not amend or revoke provisions of that regulation or such an instrument).

(5)Rules made under this section may make provision by reference to the capital requirements regulation, to instruments made under that regulation or to Directive 2013/36/EU UK law, as amended from time to time.

(6)Section 137H (rules about remuneration) applies where the PRA makes rules under this section prohibiting persons, or persons of a specified description, from being remunerated in a specified way as it applies where the PRA makes general rules imposing such a prohibition.

(7)Section 137I (Treasury direction to consider compliance with remuneration policies) applies where the PRA makes rules under this section requiring financial holding companies or mixed financial holding companies, or a specified description of such companies, to act in accordance with a remuneration policy as it applies where the PRA makes general rules imposing such requirements on authorised persons, but as if—

(a)the references in that section to authorised persons were references to financial holding companies or mixed financial holding companies, and

(b)subsection (7) of that section were omitted.

(8)Section 141A (power to make consequential amendments of references to rules etc) applies to the exercise by the PRA of its power to make, alter or revoke rules under this section as it applies in relation to the exercise by the PRA of its power to make, alter or revoke rules under Part 9A.

(9)In this section—

  • governance arrangements” includes organisational structure, lines of responsibility and internal control mechanisms;

  • group risk” means the risk that the financial position of a financial holding company or mixed financial holding company or of a member of its group may be adversely affected—

    (a)

    by its relationships, whether financial or non-financial, with other members of the group, or

    (b)

    by matters which affect the financial position of the group, or of a group which forms part of that group, taken as a whole (including, for example, reputational contagion).

192XBProcedural provision

(1)For provision about the making of section 192XA rules that are CRR rules, see Part 9D.

(2)The following provisions of Part 9D apply in relation to section 192XA rules that are not CRR rules as if they were CRR rules—

(a)section 144C (matters to consider when making rules);

(b)section 144D (explanation to accompany consultation on rules);

(c)section 144E(1) and (4) to (7) (exceptions from sections 144C and 144D).

192XCDisapplication or modification of rules in individual cases

(1)This section applies to a section 192XA rule if, or to the extent that, section 192XA rules provide for it to apply to the rule.

(2)The PRA may, on the application of or with the consent of a person who is subject to section 192XA rules, give the person a permission that enables the person—

(a)not to apply the section 192XA rule, or

(b)to apply the section 192XA rule with the modifications specified in the permission.

(3)The PRA may—

(a)give permission under this section subject to conditions, and

(b)revoke or vary permission under this section.

Disciplinary measures .

8U.K.In section 192Y(1) (power to impose penalty or issue censure), for paragraph (d) substitute—

(d)the capital requirements regulation or an instrument made under that regulation.”

PART 3 U.K.Minor and consequential amendments

Bank of England Act 1998 (c. 11)U.K.

9(1)Section 9H of the Bank of England Act 1998 (directions to FCA or PRA requiring macro-prudential measures) is amended as follows.U.K.

(2)In subsection (2) (definition of “regulated person”), for paragraph (b) substitute—

(b)in relation to the PRA—

(i)a PRA-authorised person within the meaning of that Act, or

(ii)a financial holding company or mixed financial holding company that is approved under section 192R of that Act or designated under section 192T(2)(c) of that Act.

(3)At the end insert—

(12)In this section—

  • the Capital Requirements Regulation” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms;

  • financial holding company” has the meaning given in Article 4(1)(20) of the Capital Requirements Regulation;

  • mixed financial holding company” has the meaning given in Article 4(1)(21) of the Capital Requirements Regulation.

Financial Services and Markets Act 2000 (c. 8)U.K.

10U.K.The Financial Services and Markets Act 2000 is amended as follows.

11U.K.In section 137G (the PRA's general rules), at the end insert—

(7)Subsection (6) is subject to section 144H(2).

12U.K.In section 138J(10) (consultation by the PRA), for “section 138L” substitute “ sections 138L and 144E(3). ”

13U.K.In section 138K (consultation: mutual societies), at the end insert—

(7)This section is subject to section 144E(3).

14(1)Section 192O (interpretation of Part 12B) is amended as follows.U.K.

(2)In subsection (1)—

(a)in the definition of “Directive 2013/36/EU UK law”, omit the words following paragraph (b), and

(b)after that definition insert—

  • EU tertiary legislation” has the meaning given in section 20 of the European Union (Withdrawal) Act 2018;.

(3)At the end insert—

(3)In this Part, references to instruments made under the capital requirements regulation include EU tertiary legislation made under that regulation which forms part of retained EU law.

15U.K.In section 192R(3) (grant of approval)—

(a)in paragraph (a) omit “, section 192V rules” and the “and” at the end, and

(b)after that paragraph insert—

(aa)adequate for the purpose of complying with section 192XA rules, and.

16(1)Section 192T (measures) is amended as follows.U.K.

(2)In subsection (1)—

(a)omit the “and” at the end of paragraph (a),

(b)in paragraph (b) omit “, section 192V rules”, and

(c)at the end of paragraph (b) insert , and

(c)to ensure that the relevant group complies with section 192XA rules.

(3)In subsection (2)(c)—

(a)omit “, section 192V rules”, and

(b)at the end insert “ and with section 192XA rules ”.

17U.K.In section 192Y(1) (power to impose penalty or issue censure)—

(a)omit paragraph (c) (including the “or” at the end), and

(b)after that paragraph insert—

(ca)section 192XA rules; or.

18U.K.In section 417(1) (definitions), at the appropriate place, insert—

CRR rules” has the meaning given in section 144A;.

19U.K.In section 429(2) (parliamentary control of statutory instruments: affirmative procedure), before “214A” insert “ 144C(1), 144F, ”.

Capital Requirements Regulations 2013 (S.I. 2013/3115)U.K.

20U.K.The Capital Requirements Regulations 2013 (meaning of “permission” etc) is amended as follows.

21U.K.In regulation 2(1), in the definition of “appropriate regulator”, at the end insert “ , subject to regulation 39(2) ”.

22(1)Regulation 39 (meaning of “permission” etc) is amended as follows.U.K.

(2)The existing text becomes paragraph (1).

(3)In that paragraph, in the definition of “permission”, after paragraph (a) insert—

(aa)section 144G of FSMA and CRR rules (as defined in Part 9D of FSMA);

(ab)section 192XC of FSMA and section 192XA rules (as defined in Part 12B of FSMA);.

(4)After that paragraph insert—

(2)In this Part, in relation to—

(a)a decision made under a power conferred by section 144G of FSMA and CRR rules (as defined in Part 9D of FSMA) that are section 192XA rules (as defined in Part 12B of FSMA), or

(b)a decision made under a power conferred by section 192XC of FSMA and section 192XA rules (as defined in Part 12B of FSMA),

appropriate regulator” means the PRA.

PART 4 U.K.Transitional provision

Pre-commencement consultation etcU.K.

23(1)In relation to general rules that are CRR rules, the requirements of the provisions listed in sub-paragraph (3) may be satisfied by things done before Part 1 of this Schedule comes into force (as well as by things done after that time).U.K.

(2)In relation to section 192XA rules, the requirements of the provisions listed in sub-paragraph (3) may be satisfied by things done before Part 2 of this Schedule comes into force (as well as by things done after that time).

(3)Those provisions are—

(a)sections 138J and 138K of the Financial Services and Markets Act 2000 (consultation);

(b)sections 144C to 144E of that Act (inserted by Part 1 of this Schedule).

Relevant equivalence decisionsU.K.

24U.K.For the purposes of section 144C of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), an equivalence decision may be a relevant equivalence decision by virtue of a notice in writing given by the Treasury before Part 1 of this Schedule comes into force (as well as by a notice given after that time).

Carbon targetU.K.

25U.K.In relation to the making of CRR rules or section 192XA rules that are made on or before 1 January 2022—

(a)paragraph (d) of section 144C(1) of the Financial Services and Markets Act 2000 (duty to have regard to carbon target for 2050) does not apply, and

(b)section 144D(1) of that Act does not require an explanation in respect of matters specified in that paragraph.

Section 192V rulesU.K.

26(1)Rules made by the Prudential Regulation Authority under section 192V of the Financial Services and Markets Act 2000 and in force immediately before the day on which the repeal of that section by Part 2 of this Schedule comes into force (“the repeal day”) are to be treated, on and after that day—U.K.

(a)as validly made section 192XA rules, and

(b)to the extent that they make provision about a matter described in section 144A(3) of the Financial Services and Markets Act 2000 (inserted by Part 1 of this Schedule), as validly made CRR rules.

(2)Sections 192Y, 192Z and 192Z1 of the Financial Services and Markets Act 2000 (disciplinary measures) continue to have effect in relation to a contravention, before the repeal day, of a rule made under section 192V of that Act, despite the repeal of section 192Y(1)(c) of that Act.

InterpretationU.K.

27U.K.In this Part of this Schedule—

  • CRR rules” has the same meaning as in the Financial Services and Markets Act 2000 (see section 144A of that Act, inserted by Part 1 of this Schedule);

  • general rules” has the meaning given in section 137G(2) of that Act;

  • section 192XA rules” has the same meaning as in Part 12B of that Act (see section 192O of that Act, as amended by Part 3 of this Schedule).

Prospective

Section 7

SCHEDULE 4U.K.Amendments of the Capital Requirements Regulation

1U.K.The Capital Requirements Regulation is amended as follows.

2U.K.In Article 4A(1)(a) (definitions: references to PRA rulebook), for “as the rulebook has effect on IP completion day” substitute “ as amended from time to time ”.

3U.K.In Article 92(3) (own funds requirements), for points (b) and (c) substitute—

(b)the own funds requirements for the trading-book business of an institution for the following—

(i)market risk as determined in accordance with Title IV of this Part, excluding the approaches set out in Chapters 1a and 1b of that Title;

(ii)large exposures exceeding the limits specified in Articles 395 to 401, to the extent that an institution is permitted to exceed those limits, as determined in accordance with Part Four;

(c)the own funds requirements for market risk as determined in accordance with Title IV of this Part, excluding the approaches set out in Chapters 1a and 1b of that Title, for all business activities that are subject to foreign exchange risk or commodity risk;

(ca)the own funds requirements for settlement risk calculated in accordance with Title V of this Part, with the exception of Article 379;.

4U.K.In Article 107(3) (approaches to credit risk), for “third-country investment firms and exposures to third country credit institutions and exposures to third country clearing houses and exchanges” substitute “ a third-country investment firm, a third-country credit institution and a third-country exchange ”.

5U.K.In Article 144(1)(g) (competent authorities' assessment of an application to use an IRB Approach), for “Article 99” substitute “ Article 430 ”.

6U.K.In Article 201(1) (eligibility of protection providers under all approaches), for point (h) substitute—

(h)qualifying central counterparties.

7(1)Article 223 (Financial Collateral Comprehensive Method) is amended as follows.U.K.

(2)In paragraph 3, in the second subparagraph, for “institutions” substitute “ , institutions using the method laid down in Section 6 of Chapter 6 ”.

(3)After paragraph 5 insert—

5AFor the purposes of the calculation under paragraph 5, in the case of OTC derivative transactions, institutions using the methods laid down in Sections 3, 4 and 5 of Chapter 6 shall take into account the risk-mitigating effects of collateral in accordance with the provisions laid down in Sections 3, 4 and 5 of Chapter 6, as applicable.

8U.K.In Article 283 (permission to use the Internal Model Method), for paragraph 4 substitute—

4For all OTC derivative transactions, and for long settlement transactions for which an institution has not received permission under paragraph 1 to use the IMM, the institution shall use the methods set out in Section 3. Those methods may be used in combination on a permanent basis within a group.

9U.K.For Article 298 substitute—

Article 298 U.K.Effects of recognition of netting as risk-reducing

Netting for the purposes of Sections 3 to 6 shall be recognised as set out in those Sections.

10U.K.In Article 299(2) (items in the trading book), omit point (a).

11U.K.In Article 384(1) (standardised method), in the definition of “EADitotal”—

(a)for “Title II, Chapter 6” (in the first place those words occur) substitute “ Chapter 6 of Title II ”, and

(b)omit the words from “An institution using” to the end of the definition.

12(1)Article 500d (temporary calculation of exposure value of regular-way purchases and sales awaiting settlement in view of COVID-19 pandemic) is amended as follows.U.K.

(2)In the heading, omit “Temporary”.

(3)In paragraph 1, omit “until 27 June 2021,”.

13(1)Annex 2 (types of derivatives) is amended as follows.U.K.

(2)In point 1, for point (e) substitute—

(e)interest-rate options;.

(3)In point 2, for point (d) substitute—

(d)currency options;.

(4)For point 3 substitute—

3Contracts of a nature similar to those in points 1(a) to (e) and 2(a) to (d) of this Annex concerning other reference items or indices. This includes as a minimum all instruments specified in paragraphs 4 to 7, 9, 10 and 11 of Part 1 of Schedule 2 to the Regulated Activities Order not otherwise included in point 1 or 2 of this Annex.

Prospective

Section 21

SCHEDULE 5U.K.Benchmarks: minor and consequential amendments

1U.K.The Benchmarks Regulation is amended as follows.

2(1)Article 3(1) (definitions) is amended as follows.U.K.

(2)In point (6) (administrator)—

(a)after “means” insert—

(a)”, and

(b)at the end insert , or

(b)in the case of an Article 23A benchmark, a natural or legal person that would have control over the provision of the benchmark but for Article 23D;.

(3)After point (25) insert—

(25A)Article 23A benchmark’ has the meaning given in Article 23A(14);.

(4)After point (36) insert—

(37)working day’ means a day other than—

(a)Saturday or Sunday,

(b)Christmas Day or Good Friday, or

(c)a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in England and Wales.

3U.K.In Article 3, after paragraph 1 insert—

1AReferences in this Regulation to the capability of a benchmark to measure the underlying market or economic reality are references to both its current capability to do so and its capability to do so in the future.

4U.K.In Article 11 (input data), after paragraph 4 insert—

4AIn the case of a critical benchmark, paragraph 4 does not require the administrator to cease providing the benchmark before the end of a period during which the administrator is required to continue publishing the benchmark by Article 21(1) or (2) or by a decision of the FCA under Article 21(3).

4BIn the case of a critical benchmark in respect of which measures adopted under Article 23(6) have effect—

(a)paragraph 4 does not require the administrator to cease providing the benchmark while those measures have effect, and

(b)the administrator's duty under paragraph 4 to make changes is a duty to make changes so far as compatible with those measures.

5U.K.In Article A20(5)(b) (review of critical benchmarks), for “determines” substitute “ determine ”.

6(1)Article 20 (critical benchmarks: conditions and other matters) is amended as follows.U.K.

(2)In paragraph 5(b), for “determines” substitute “ determine ”.

(3)In paragraph 5A(a)—

(a)for “the values in points (a) and (c)(i) of paragraph 1 (the “thresholds”)” substitute “ the value in point (a) of paragraph 1 (“the paragraph 1(a) value”) ”, and

(b)for “to the thresholds” substitute “ to the paragraph 1(a) value ”.

(4)In paragraph 5A(b), for “the thresholds” substitute “ the paragraph 1(a) value ”.

(5)In paragraph 6(a), for “thresholds” substitute “ values ”.

(6)In paragraph 6(b), for “the thresholds in points (a) and (c)(i)” substitute “ the value in point (a) ”.

7U.K.In Article 21(3) (mandatory administration of a critical benchmark), in the first subparagraph, in point (b), at the end insert “ (whether by the exercise of the FCA's powers under Article 23D or otherwise) ”.

8U.K.After Article 26 insert—

CHAPTER 7 COMPLIANCE WITH REQUIREMENTSU.K.

Article 26A U.K.Compliance with requirements

Supervised entities and supervised third country entities must comply with prohibitions and other requirements imposed on them by the FCA under this Regulation.

9U.K.In Article 29 (use of a benchmark), after paragraph 1 insert—

1AParagraph 1 does not enable a supervised entity to use a benchmark in the United Kingdom in breach of a prohibition under Article 21A or 23B.

1BThe use of a benchmark by a supervised entity for a financial contract, financial instrument or investment fund in breach of a prohibition under Article 21A or 23B does not affect the validity or enforceability of a contract or other arrangement.

10U.K.In Article 36(1) (register of administrators and benchmarks), after point (d) insert—

(e)any prohibitions under Article 21A or 23B on the use of benchmarks by supervised entities that are in force;

(f)any benchmarks that are Article 23A benchmarks.

11U.K.After Article 48 insert—

TITLE 6A U.K.PROVISION OF INFORMATION AND PERIODS OF TIME

Article 48A U.K.Provision of information and documents

1The Treasury may by regulations make provision about the procedure to be followed, or rules to be applied, when a provision of or made under this Regulation—

(a)requires information or a document of any kind to be given, or

(b)authorises the imposition of a requirement.

2The regulations may, among other things, make provision—

(a)requiring information to be given in writing;

(b)requiring, or allowing, information or a document to be sent electronically;

(c)requiring, or allowing, information or a document to be given in another manner;

(d)as to the address to which information or a document must or may be sent;

(e)requiring a person to provide an address to which information or a document must or may be sent;

(f)for treating information or a document as having been given, or as having been received, on a date or at a time determined in accordance with the regulations;

(g)as to what must, or may, be done if the person to whom information or a document is required to be given is not an individual;

(h)as to what must, or may, be done if the intended recipient of information or a document is outside the United Kingdom.

3Paragraph 1 applies however the obligation to give information or a document is expressed (and so, among other things, includes a provision which requires a person to be notified of something and a provision which requires a document to be submitted).

4Section 7 of the Interpretation Act 1978 (service of notice by post) has effect in relation to provisions made by or under this Regulation subject to any provision made by regulations under this Article.

Article 48B U.K.Periods of time

The following provisions of Regulation (EEC, Euratom) No. 1182/71 of the Council of 3 June 1971 determining the rules applicable to periods, dates and time limits do not apply to a reference in this Regulation to a period of time—

(a)Article 3(2)(c) (periods expressed in weeks, months or years);

(b)Article 3(4) (periods ending with a weekend or public holiday).

Prospective

Section 22

SCHEDULE 6U.K.Gibraltar-based persons carrying on activities in the UK

After Schedule 2 to the Financial Services and Markets Act 2000 insert—

Section 31

SCHEDULE 2AU.K.Gibraltar-based persons carrying on activities in the UK

PART 1 U.K.Interpretation etc
Gibraltar-based personU.K.

1(1)In this Act, “Gibraltar-based person” means a person listed in sub-paragraph (2) which has its head office and, if it has one, its registered office in Gibraltar (and see also Part 14 of this Schedule).

(2)Those persons are—

(a)an individual,

(b)a body corporate,

(c)a partnership, or

(d)an unincorporated association.

RegulatorsU.K.

2(1)In this Schedule—

  • the Gibraltar regulator” means the Gibraltar Financial Services Commission;

  • UK regulator” means the FCA or the PRA.

(2)The Treasury may by regulations amend the definition of “the Gibraltar regulator” if they consider it appropriate to do so in consequence of a change in the law of Gibraltar.

Activities and branchesU.K.

3(1)In this Schedule, “approved activity” means a regulated activity for the time being approved by regulations under paragraph 5.

(2)For the purposes of this Schedule—

(a)corresponding activity” means an activity corresponding to an approved activity, and

(b)references (however expressed) to an activity corresponding to an approved activity, or an approved activity corresponding to another activity, are to be interpreted in accordance with regulations under paragraph 6.

(3)In this Schedule, “branch” means—

(a)a place where a person carries on an activity for an indefinite period and which does not have legal personality, or

(b)any other description of place specified in regulations made by the Treasury.

UK regulators' objectivesU.K.

4For the purposes of any provision of this Schedule which refers to the FCA's operational objectives or the PRA's objectives, in relation to the exercise of a power in relation to a particular person, it does not matter whether there is a relationship between that person and the persons whose interests will be protected by the exercise of the power.

PART 2 U.K.Approved activities
Approval of regulated activitiesU.K.

5(1)The Treasury may by regulations approve a regulated activity for the purposes of this Schedule.

(2)The power under this paragraph includes power to approve a regulated activity—

(a)only so far as it is carried on by a person of a description specified in the regulations,

(b)only so far as it is carried on through a branch in the United Kingdom,

(c)only so far as it is carried on in other circumstances specified in the regulations, or

(d)subject to other limitations.

(3)In making regulations under this paragraph, the Treasury may have regard to any matter that they consider relevant (and see the restrictions in paragraphs 7, 8 and 9 and the requirement in paragraph 10).

Corresponding activities regulated in GibraltarU.K.

6(1)The Treasury must by regulations make provision about how each approved activity corresponds to activities which the Gibraltar regulator has authorised, or may authorise, a person to carry on in Gibraltar.

(2)The power under this paragraph includes power to make provision about an activity—

(a)only so far as it is carried on by a person of a description specified in the regulations,

(b)only so far as it is carried on in other circumstances specified in the regulations, or

(c)subject to other limitations.

(3)In making regulations under this paragraph, the Treasury may have regard to any matter that they consider relevant (and see the restrictions in paragraphs 7 and 8 and the requirement in paragraph 10).

ObjectivesU.K.

7(1)The Treasury may not make regulations under paragraph 5 or 6 unless they are satisfied that doing so is compatible with each of the following objectives—

(a)to protect and enhance the soundness, stability and resilience of the UK financial system;

(b)to protect and enhance public confidence in the UK financial system;

(c)to prevent the use of the UK financial system for a purpose connected with financial crime;

(d)to ensure that the relevant markets in the United Kingdom function well;

(e)to protect consumers;

(f)to protect the operation of the compensation scheme;

(g)to protect public funds;

(h)to maintain and improve relations between the United Kingdom and other countries and territories with significant financial markets or significant markets for financial services.

(2)In this paragraph—

  • consumers” has the meaning given in section 1G;

  • financial crime” has the meaning given in section 1H;

  • public funds” means the Consolidated Fund and any other account or source of money which cannot be drawn or spent other than by, or with the authority of, the Treasury;

  • the relevant markets” means the markets for services provided by persons carrying on the regulated activity or approved activity (as appropriate) to which the regulations relate.

Alignment of law and practiceU.K.

8(1)The Treasury may not approve a regulated activity under paragraph 5, or identify an activity as corresponding to an approved activity under paragraph 6, unless they are satisfied that, having regard to the objectives in paragraph 7(1), the relevant law and practice of the United Kingdom and Gibraltar are sufficiently aligned.

(2)In this paragraph, “the relevant law and practice” means—

(a)in relation to the United Kingdom, law and practice under which the carrying on of what is or would be the approved activity is authorised and supervised and other law and practice relevant to the carrying on of that activity,

(b)in relation to Gibraltar, law and practice under which the carrying on of what would be the corresponding activity is authorised and supervised and other law and practice relevant to the carrying on of that activity, and

(c)in relation to both the United Kingdom and Gibraltar, law and practice relevant to the objectives in paragraph 7(1).

(3)The reference to alignment between the law and practice of the United Kingdom and Gibraltar in sub-paragraph (1) includes both alignment as regards the effect of the law and practice and alignment of the text of the law and of any guidance or other documents relating to practice.

Co-operationU.K.

9(1)The Treasury may not approve a regulated activity under paragraph 5 unless they are satisfied that, having regard to the objectives in paragraph 7(1), there is, or will be, adequate co-operation between—

(a)the UK entities listed in sub-paragraph (2), and

(b)the Gibraltar entities listed in sub-paragraph (3).

(2)The UK entities are—

(a)the Treasury,

(b)the FCA,

(c)the PRA, and

(d)the scheme manager.

(3)The Gibraltar entities are—

(a)the government of Gibraltar, and

(b)the Gibraltar regulator.

(4)In determining whether the test in sub-paragraph (1) is satisfied, the Treasury must have regard to—

(a)memoranda describing how the UK entities and the Gibraltar entities intend to co-operate,

(b)arrangements for the UK entities to obtain information and documents from the Gibraltar entities,

(c)arrangements for the verification of such information and documents (whether by, or by a person appointed by, a UK entity or a Gibraltar entity),

(d)arrangements for the Gibraltar entities to obtain information and documents from the UK entities, and

(e)anything else that the Treasury consider relevant.

ConsultationU.K.

10Before making regulations under paragraph 5 or 6, the Treasury must consult—

(a)the government of Gibraltar,

(b)the FCA, and

(c)if the regulations relate to activities which consist of or include PRA-regulated activities, the PRA.

Withdrawal of approvalU.K.

11(1)The restrictions in paragraphs 7, 8 and 9 do not apply in relation to regulations under paragraph 5 to the extent that the regulations—

(a)revoke other regulations under paragraph 5, or

(b)otherwise amend other regulations under paragraph 5 in order to withdraw the Treasury's approval of an activity.

(2)The restrictions in paragraphs 7 and 8 do not apply in relation to regulations under paragraph 6 to the extent that the regulations—

(a)revoke other regulations under paragraph 6, or

(b)otherwise amend other regulations under paragraph 6 in order to provide that an activity which the Gibraltar regulator has authorised, or may authorise, a person to carry on in Gibraltar does not correspond to an approved activity.

PART 3 U.K.Permission to carry on an approved activity
Obtaining permission to carry on an approved activityU.K.

12(1)If the appropriate UK regulator receives a notification from the Gibraltar regulator that a Gibraltar-based person wants to be able to carry on an approved activity in the United Kingdom (see paragraph 15), the person obtains permission to do so at the end of the period for considering the notification, as it relates to the activity (see paragraph 16).

(2)The person does not obtain permission to carry on an activity under sub-paragraph (1) if, during the period for considering the notification—

(a)the appropriate UK regulator rejects the notification, as it relates to the activity (see paragraph 17), or

(b)the Gibraltar regulator withdraws the notification, as it relates to the activity.

(3)References in this Part of this Schedule to a notification are references to a notification for the purposes of this paragraph.

(4)A permission obtained under this paragraph is referred to in this Act as “a Schedule 2A permission”.

Schedule 2A permissionU.K.

13(1)A Schedule 2A permission for a person to carry on an activity is a permission to do so only if and to the extent that—

(a)the person is a Gibraltar-based person,

(b)the activity is an approved activity, and

(c)the person has permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar,

subject to the transitional arrangements in Parts 9 and 10 of this Schedule.

(2)A Gibraltar-based person's Schedule 2A permission to carry on an activity is a permission to do so—

(a)on terms equivalent to the terms of the person's permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar, and

(b)subject to any limitations specified in the notification (for example, as to the circumstances in which the activity is to be carried on in the United Kingdom) (and see also paragraph 21(3)).

(3)The reference in sub-paragraph (2)(a) to the terms of the person's permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar includes—

(a)any restrictions included in the permission, and

(b)any other restrictions imposed by the Gibraltar regulator on the carrying on by the person of the activity in Gibraltar.

The appropriate UK regulatorU.K.

14In relation to a notification, “the appropriate UK regulator” means—

(a)the PRA, in a case where the approved activities to which the notification relates consist of or include PRA-regulated activities, and

(b)the FCA, in any other case.

Notifying the appropriate UK regulatorU.K.

15(1)A notification must—

(a)name the Gibraltar-based person,

(b)state the address of the person's head office in Gibraltar,

(c)specify the approved activity which the person wants to be able to carry on in the United Kingdom, including any limitations,

(d)specify the corresponding activity, including any restrictions,

(e)state that the person has permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar,

(f)state that the Gibraltar regulator consents to the person carrying on the approved activity in the United Kingdom,

(g)identify each person who is responsible for managing an aspect of the Gibraltar-based person's affairs relating to the approved activity and describe that person's responsibilities as regards those affairs,

(h)state whether the Gibraltar-based person wants to carry on the activity through a branch in the United Kingdom and, if so—

(i)identify each person who is or will be responsible for managing an aspect of the affairs of the branch, and

(ii)describe that person's responsibilities as regards those affairs, and

(i)contain, or be accompanied by, any further information specified in a direction given by the appropriate UK regulator under paragraph 57 and in force when the notification is given.

(2)A notification may relate to more than one approved activity.

(3)The Treasury may by regulations change the information that a notification must contain.

(4)Regulations under sub-paragraph (3) may amend this paragraph, but may not amend or repeal sub-paragraph (1)(i).

(5)Before making regulations under sub-paragraph (3), the Treasury must consult—

(a)the government of Gibraltar, and

(b)the UK regulators.

(6)In sub-paragraph (1), the references to managing an aspect of a person's affairs or a branch's affairs includes a reference to taking decisions, or participating in the taking of decisions, about how that aspect of the affairs should be carried on.

Considering a notificationU.K.

16(1)Where the appropriate UK regulator receives a notification, it must acknowledge receipt in writing without delay.

(2)The period for considering a notification is—

(a)so far as it relates to an activity that is to be carried on through a branch in the United Kingdom, the period of two months beginning with the day on which the appropriate UK regulator receives the notification, and

(b)so far as it relates to any other activity, the period of one month beginning with that day.

(3)If, before the end of the period described in sub-paragraph (2), the appropriate UK regulator gives the Gibraltar-based person a confirmation notice in respect of an approved activity specified in the notification, then the period for considering the notification as it relates to the activity ends when the notice is given.

(4)A “confirmation notice” is a written notice confirming that the person has a Schedule 2A permission in relation to the approved activity.

(5)A confirmation notice may relate to more than one activity.

Rejecting a notificationU.K.

17(1)The appropriate UK regulator may not reject a notification unless—

(a)it is required to do so under paragraph 18, or

(b)it has power to do under paragraph 19 or 20.

(2)A notification is rejected when the appropriate UK regulator gives a written notice of the rejection to the Gibraltar regulator.

(3)The rejection of a notification does not prevent the Gibraltar regulator from giving a further notification relating to the same person and the same activity.

Duties to rejectU.K.

18(1)The appropriate UK regulator must reject a notification if satisfied that the notification does not satisfy one or more of the requirements in paragraph 15(1).

(2)The appropriate UK regulator must reject a notification, so far as it relates to an activity, if the activity ceases to be an approved activity.

(3)The appropriate UK regulator must reject a notification, so far as it relates to an approved activity, if satisfied that the Gibraltar-based person does not have permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar.

Power to reject: prohibition order in respect of senior managerU.K.

19(1)The appropriate UK regulator may reject a notification, so far as it relates to an approved activity, if satisfied that a person with responsibility for managing an aspect of the Gibraltar-based person's affairs—

(a)is prohibited from performing a function by a prohibition order, and

(b)performs a senior management function in relation to the carrying on of the approved activity by the Gibraltar-based person in the United Kingdom, Gibraltar or elsewhere or is expected to do so if the person obtains a Schedule 2A permission to carry on the approved activity in the United Kingdom.

(2)In sub-paragraph (1)—

(a)the reference to managing an aspect of a person's affairs includes a reference to taking decisions, or participating in the taking of decisions, about how that aspect of those affairs should be carried on,

(b)prohibition order” means—

(i)an order under section 56,

(ii)an order under section 143S, or

(iii)an order under the law of Gibraltar which the appropriate UK regulator considers to be equivalent to an order under section 56 or 143S, and

(c)senior management function”, in relation to the carrying on of an activity by the Gibraltar-based person, means a function which requires a person to manage an aspect of the Gibraltar-based person's affairs which involves, or might involve, a risk of serious consequences—

(i)for the Gibraltar-based person, or

(ii)for business or other interests in the United Kingdom, Gibraltar or elsewhere.

Power to reject: loss of access right and serious threat to the UKU.K.

20(1)The appropriate UK regulator may reject a notification if satisfied that the Gibraltar-based person—

(a)lost a relevant access right at any time, and

(b)poses, or is likely to pose, a serious threat to—

(i)the interests of consumers (as defined in section 1G), or

(ii)the soundness, stability and resilience of the UK financial system or a part of that system.

(2)The appropriate UK regulator may reject a notification if satisfied that—

(a)the Gibraltar-based person—

(i)is a member of the same group as a person that lost a relevant access right at any time, or

(ii)has close links with such a person (as defined in paragraph 2C(2) of Schedule 6), and

(b)given the nature of the relationship between that person and the Gibraltar-based person, the Gibraltar-based person poses, or is likely to pose, a serious threat to—

(i)the interests of consumers (as defined in section 1G), or

(ii)the soundness, stability and resilience of the UK financial system or a part of that system.

(3)For the purposes of this paragraph, a person lost a relevant access right if—

(a)its Part 4A permission was cancelled,

(b)its Schedule 2A permission was cancelled, or

(c)it ceased to qualify for authorisation under Schedule 3 (other than by virtue of the repeal of that Schedule).

(4)When deciding whether to reject a notification under this paragraph, the appropriate UK regulator must have regard, among other things, to the reasons why the person lost the relevant access right.

PART 4 U.K.Variation of permission
Variation of permissionU.K.

21(1)A Schedule 2A permission may be varied in accordance with this Part of this Schedule—

(a)on the initiative of the Gibraltar regulator (see paragraphs 22 to 26), or

(b)on the initiative of a UK regulator (see paragraphs 27 to 30).

(2)References in this Part of this Schedule to the variation of a Schedule 2A permission (however expressed) are to its variation by—

(a)adding an approved activity to those to which the permission relates,

(b)removing an approved activity from those to which the permission relates, or

(c)varying the description of an activity to which the permission relates (including by adding, removing or varying a limitation).

(3)Where a limitation is added, removed or varied under this Part of this Schedule, paragraph 13(2)(b) has effect as if it referred to the limitations (if any) that have effect after that change.

Gibraltar regulator's initiative: notificationU.K.

22(1)If the appropriate UK regulator receives a notification from the Gibraltar regulator requesting the variation of a Gibraltar-based person's Schedule 2A permission (see paragraph 24), the permission is varied—

(a)if the notification specifies a time for the variation to take effect which falls after the end of the period for considering the notification as it relates to the variation (see paragraph 25), at that time, or

(b)otherwise, at the end of the period for considering the notification, as it relates to the variation.

(2)A variation requested in a notification does not take effect under sub-paragraph (1) if, during the period for considering the notification—

(a)the appropriate UK regulator rejects the notification, as it relates to the variation (see paragraph 26), or

(b)the Gibraltar regulator withdraws the notification, as it relates to the variation.

(3)References in this Part of this Schedule to a notification are references to a notification for the purposes of this paragraph.

Gibraltar regulator's initiative: the appropriate UK regulatorU.K.

23In relation to a notification, “the appropriate UK regulator” means—

(a)the PRA, in a case where the approved activities to which the notification relates consist of or include PRA-regulated activities, and

(b)the FCA, in any other case.

Gibraltar regulator's initiative: notifying the UK regulatorU.K.

24(1)A notification must—

(a)state the desired variation,

(b)specify the approved activity or approved activities which the Gibraltar-based person wants to carry on following the variation, including any limitations,

(c)specify the corresponding activity, including any restrictions,

(d)state that the person has permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar,

(e)state that the Gibraltar regulator consents to the variation, and

(f)contain, or be accompanied by, any further information specified in a direction given by the appropriate UK regulator under paragraph 57 and in force when the notification is given.

(2)A notification may state when the desired variation is to have effect.

(3)A notification may relate to more than one variation.

Gibraltar regulator's initiative: considering a notificationU.K.

25(1)Where the appropriate UK regulator receives a notification, it must acknowledge receipt in writing without delay.

(2)The period for considering a notification is—

(a)so far as it relates to a variation in respect of an activity carried on through a branch in the United Kingdom, the period of two months beginning with the day on which the appropriate UK regulator receives the notification, and

(b)so far as it relates to any other variation, the period of one month beginning with that day.

(3)If, before the end of the period described in sub-paragraph (2), the appropriate UK regulator gives the Gibraltar-based person a confirmation notice in respect of a variation specified in the notification, then the period for considering the notification as it relates to the variation ends when the notice is given.

(4)A “confirmation notice” is a written notice confirming that the variation has effect as specified in the notification.

(5)A confirmation notice may relate to more than one variation.

Gibraltar regulator's initiative: rejecting a notificationU.K.

26(1)The appropriate UK regulator may not reject a notification unless—

(a)it is required to do so under sub-paragraph (3) or (4), or

(b)it has power to do under sub-paragraph (5).

(2)A notification is rejected when the appropriate UK regulator gives a written notice of the rejection to the Gibraltar regulator.

(3)The appropriate UK regulator must reject a notification if satisfied that the notification does not satisfy one or more of the requirements in paragraph 24(1).

(4)The appropriate UK regulator must reject a notification if it would be required to do so by paragraph 18(2) or (3) if the notification were a notification under Part 3 of this Schedule relating to—

(a)the Gibraltar-based person, and

(b)the activities that the person would have a Schedule 2A permission to carry on if the permission were varied as specified in the notification.

(5)The appropriate UK regulator may reject a notification if it would have power to do so under paragraph 19 or 20 if the notification were a notification under Part 3 of this Schedule relating to—

(a)the Gibraltar-based person, and

(b)the activities that the person would have a Schedule 2A permission to carry on if the permission were varied as specified in the notification.

(6)The rejection of a notification does not prevent the Gibraltar regulator from giving a further notification.

UK regulator's initiativeU.K.

27(1)A UK regulator may exercise a power under this paragraph in relation to a Gibraltar-based person with a Schedule 2A permission where one of the own-initiative conditions is satisfied (see paragraph 28).

(2)The FCA may vary a Schedule 2A permission.

(3)The PRA may vary a PRA-authorised person's Schedule 2A permission.

(4)In the case of a person who is not a PRA-authorised person, the PRA may vary the person's Schedule 2A permission by adding an approved activity that is a PRA-regulated activity to those to which the permission relates.

(5)Where it adds an approved activity under sub-paragraph (4), the PRA may vary the person's Schedule 2A permission in any of the other ways described in paragraph 21(2).

Own-initiative conditionsU.K.

28(1)For the purposes of this Schedule, “the own-initiative conditions” are—

(a)in relation to the exercise of a power by the FCA, conditions A to C, and

(b)in relation to the exercise of a power by the PRA, conditions A to D.

(2)Condition A is that the UK regulator in question considers that—

(a)it is desirable to exercise the power in order to advance one or more of its objectives, and

(b)the Gibraltar regulator—

(i)is aware, or ought reasonably to be aware, of the reasons why the UK regulator considers that to be the case, and

(ii)has had time to take steps, or indicate what steps (if any) it is likely to take, in response.

(3)Condition B is that the UK regulator in question considers that—

(a)it is desirable to exercise the power in order to advance one or more of its objectives, and

(b)a delay in exercising the power would be materially detrimental to—

(i)the interests of consumers (as defined in section 1G), or

(ii)the soundness, stability and resilience of the UK financial system or a part of that system.

(4)Condition C is that the UK regulator in question considers that—

(a)the Gibraltar-based person is contravening, or has contravened, a rule made by the UK regulator or a requirement imposed on it by the UK regulator under Part 6 of this Schedule, and

(b)the contravention is not minor, having regard to the nature of the contravention or its consequences (or both).

(5)Condition D is that the PRA considers that—

(a)it is desirable to exercise the power in order to advance one or more of the PRA's objectives, and

(b)the Gibraltar-based person poses, or may pose, a risk to the soundness, stability and resilience of the UK financial system, or a part of that system, of a type specified for the purposes of this condition in the policy statement produced by the PRA under paragraph 71.

(6)In the case of the FCA, references in this paragraph to its objectives are references only to its operational objectives.

UK regulator's initiative: procedureU.K.

29(1)The variation of a Schedule 2A permission under paragraph 27 takes effect—

(a)immediately, if the notice given under sub-paragraph (3) states that is the case,

(b)on such date as may be specified in the notice, or

(c)if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.

(2)The variation of a Schedule 2A permission under paragraph 27 may be expressed to take effect immediately, or on a specified date, only if the UK regulator reasonably considers that it is necessary for the variation to take effect immediately or on that date, having regard to the own-initiative condition on which it is relying for the purposes of paragraph 27(1).

(3)If a UK regulator—

(a)proposes to vary a Schedule 2A permission under paragraph 27, or

(b)varies a Schedule 2A permission under that paragraph with immediate effect,

it must give the Gibraltar-based person a written notice.

(4)The notice must—

(a)give details of the variation,

(b)state the UK regulator's reasons for varying the permission,

(c)inform the Gibraltar-based person that the person may make representations to the UK regulator within the period specified in the notice (whether or not the Gibraltar-based person has referred the matter to the Tribunal),

(d)inform the Gibraltar-based person of when the variation of the permission takes effect, and

(e)inform the Gibraltar-based person of the person's right to refer the matter to the Tribunal.

(5)The UK regulator may extend the period allowed under the notice for making representations.

(6)If, having considered any representations made by the Gibraltar-based person, the UK regulator decides—

(a)to vary the permission in the way proposed, or

(b)if the permission has been varied, not to rescind its variation,

it must give the Gibraltar-based person a written notice.

(7)A notice under sub-paragraph (6) must inform the Gibraltar-based person of the person's right to refer the matter to the Tribunal.

(8)If, having considered any representations made by the Gibraltar-based person, the UK regulator decides—

(a)not to vary the permission in the way proposed,

(b)to vary the permission in a different way, or

(c)to rescind the variation,

it must give the Gibraltar-based person a written notice.

(9)A notice under sub-paragraph (8)(b) must comply with sub-paragraph (4).

(10)If a notice under this paragraph informs a person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure for such a reference.

(11)For the purposes of sub-paragraph (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).

Right to refer matters to the TribunalU.K.

30A Gibraltar-based person who is aggrieved by the exercise by a UK regulator of a power under paragraph 27 in relation to the person may refer the matter to the Tribunal.

PART 5 U.K.Cancellation of permission
Cancellation of permissionU.K.

31A Schedule 2A permission may be cancelled in accordance with this Part of this Schedule—

(a)on the initiative of the Gibraltar regulator (see paragraphs 32 to 36), or

(b)on the initiative of a UK regulator (see paragraphs 37 to 39).

Gibraltar regulator's initiative: notificationU.K.

32(1)If the appropriate UK regulator receives a notification from the Gibraltar regulator requesting the cancellation of a Gibraltar-based person's Schedule 2A permission (see paragraph 34), the permission is cancelled when the period for considering the notification ends (see paragraph 35).

(2)A Schedule 2A permission is not cancelled under sub-paragraph (1) if, during the period for considering the notification—

(a)the appropriate UK regulator rejects the notification (see paragraph 36), or

(b)the Gibraltar regulator withdraws the notification.

(3)References in this Part of this Schedule to a notification are references to a notification for the purposes of this paragraph.

Gibraltar regulator's initiative: the appropriate UK regulatorU.K.

33In relation to a notification, “the appropriate UK regulator” means—

(a)the PRA, in a case where the Gibraltar-based person is a PRA-authorised person, and

(b)the FCA, in any other case.

Gibraltar regulator's initiative: notifying the UK regulatorU.K.

34A notification must—

(a)state the reason for requesting the cancellation of the permission,

(b)state that the Gibraltar regulator consents to the cancellation, and

(c)contain, or be accompanied by, any further information specified in a direction given by the appropriate UK regulator under paragraph 57 and in force when the notification is given.

Gibraltar regulator's initiative: considering a notificationU.K.

35(1)Where the appropriate UK regulator receives a notification, it must acknowledge receipt in writing without delay.

(2)The period for considering a notification is—

(a)where the Schedule 2A permission relates to one or more activities carried on through a branch in the United Kingdom, the period of two months beginning with the day on which the appropriate UK regulator receives the notification, and

(b)otherwise, the period of one month beginning with that day.

(3)If, before the end of the period described in sub-paragraph (2), the appropriate UK regulator gives the Gibraltar-based person a confirmation notice in respect of the notification, then the period for considering the notification ends when the notice is given.

(4)A “confirmation notice” is a written notice confirming that the Schedule 2A permission is cancelled.

Gibraltar regulator's initiative: rejecting a notificationU.K.

36(1)The appropriate UK regulator may not reject a notification unless—

(a)it is required to do so under sub-paragraph (3), or

(b)it has power to do under sub-paragraph (4) or (5).

(2)A notification is rejected when the appropriate UK regulator gives a written notice of the rejection to the Gibraltar regulator.

(3)The appropriate UK regulator must reject a notification if satisfied that the notification does not satisfy a requirement in paragraph 34.

(4)The FCA may reject a notification if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.

(5)The PRA may reject a notification if it appears to the PRA that it is desirable to do so in order to advance one or more of its objectives.

(6)The rejection of a notification does not prevent the Gibraltar regulator from giving a further notification.

UK regulator's initiativeU.K.

37(1)The FCA may cancel a Schedule 2A permission where one of the own-initiative conditions is satisfied (see paragraph 28).

(2)The PRA may cancel a PRA-authorised person's Schedule 2A permission where one of the own-initiative conditions is satisfied (see paragraph 28).

(3)The appropriate UK regulator must cancel a Schedule 2A permission where—

(a)the permission no longer enables the person to carry on an approved activity (whether by virtue of paragraph 13 or otherwise), and

(b)the UK regulator is satisfied that it is no longer necessary to keep the permission in force.

(4)In this paragraph, “the appropriate UK regulator” means—

(a)the PRA, in a case where the Gibraltar-based person is a PRA-authorised person, and

(b)the FCA, in any other case.

UK regulator's initiative: procedureU.K.

38(1)If a UK regulator proposes to cancel a Gibraltar-based person's Schedule 2A permission under paragraph 37, it must give the person a warning notice.

(2)If a UK regulator decides to cancel a Gibraltar-based person's Schedule 2A permission under paragraph 37, it must give the person a decision notice.

Right to refer matters to the TribunalU.K.

39If a UK regulator gives a Gibraltar-based person a decision notice under paragraph 38, the person may refer the matter to the Tribunal.

PART 6 U.K.Requirements
RequirementsU.K.

40(1)A requirement may be imposed on a Gibraltar-based person in accordance with this Part of this Schedule—

(a)by a UK regulator as part of the process of considering a notification under Part 3 or 4 of this Schedule (see paragraphs 41 to 43),

(b)on the initiative of the Gibraltar regulator (see paragraphs 44 to 48), or

(c)on the UK regulator's initiative (see paragraphs 49 to 52).

(2)Requirements imposed on a Gibraltar-based person in accordance with this Part of this Schedule may be varied or cancelled in accordance with this Part of this Schedule—

(a)on the initiative of the Gibraltar regulator (see paragraphs 44 to 48), or

(b)on the UK regulator's initiative (see paragraphs 49 to 52).

Imposing requirements in connection with Part 3 or 4 notificationU.K.

41(1)This paragraph applies where a UK regulator has received—

(a)a notification for the purposes of paragraph 12 in respect of the carrying on of an activity by a Gibraltar-based person, or

(b)a notification for the purposes of paragraph 22 in respect of the variation of a Gibraltar-based person's Schedule 2A permission.

(2)A UK regulator may exercise the powers under this paragraph where it considers that it is desirable to do so in order to advance one or more of its objectives.

(3)The FCA may impose requirements on the Gibraltar-based person.

(4)The PRA may impose requirements on the Gibraltar-based person if—

(a)the notification mentioned in sub-paragraph (1) relates to activities which consist of or include PRA-regulated activities, or

(b)the Gibraltar-based person is a PRA-authorised person.

(5)A requirement may not be imposed under this paragraph—

(a)after the end of the period for considering the notification mentioned in sub-paragraph (1), or

(b)so as to take effect before the end of that period.

(6)In the case of the FCA, the reference in this paragraph to its objectives is a reference only to its operational objectives.

Imposing requirements in connection with Part 3 or 4 notification: procedureU.K.

42(1)If a UK regulator proposes to impose a requirement on a Gibraltar-based person under paragraph 41, it must—

(a)give the person a warning notice,

(b)give the Gibraltar regulator a written notice of the proposed requirement, stating the UK regulator's reasons for imposing the requirement, and

(c)consider any representations made by the Gibraltar regulator within the period specified in the notice.

(2)If a UK regulator decides to impose a requirement on a Gibraltar-based person under paragraph 41, it must give the person a decision notice.

Right to refer matters to the TribunalU.K.

43If a UK regulator gives a Gibraltar-based person a decision notice under paragraph 42, the person may refer the matter to the Tribunal.

Gibraltar regulator's initiative: notificationU.K.

44(1)If the appropriate UK regulator receives a notification from the Gibraltar regulator (see paragraph 46)—

(a)asking for a requirement to be imposed on a Gibraltar-based person with a Schedule 2A permission, or

(b)asking for a requirement imposed on a Gibraltar-based person with a Schedule 2A permission to be varied or cancelled,

the requirement is imposed, varied or cancelled as specified in the notification at the end of the period for considering the notification, as it relates to the requirement (see paragraph 47).

(2)The requirement is not imposed, varied or cancelled under sub-paragraph (1) if, during the period for considering the notification—

(a)the appropriate UK regulator rejects the notification, as it relates to the requirement (see paragraph 48), or

(b)the Gibraltar regulator withdraws the notification, as it relates to the requirement.

(3)References in this Part of this Schedule to a notification are references to a notification for the purposes of this paragraph, except where otherwise stated.

Gibraltar regulator's initiative: the appropriate UK regulatorU.K.

45In relation to a notification, “the appropriate UK regulator” means—

(a)the PRA, in a case where the approved activities to which the notification relates consist of or include PRA-regulated activities, and

(b)the FCA, in any other case.

Gibraltar regulator's initiative: notifying the UK regulatorU.K.

46A notification must—

(a)state the requirement to be imposed or the desired variation or cancellation (as appropriate),

(b)state the reason for asking for the requirement to be imposed, varied or cancelled,

(c)state that the Gibraltar regulator consents to the requirement being imposed, varied or cancelled, and

(d)contain, or be accompanied by, any further information specified in a direction given by the appropriate UK regulator under paragraph 57 and in force when the notification is given.

Gibraltar regulator's initiative: considering a notificationU.K.

47(1)Where the appropriate UK regulator receives a notification, it must acknowledge receipt in writing without delay.

(2)The period for considering a notification is—

(a)so far as it relates to a requirement to be imposed on a Gibraltar-based person with a branch in the United Kingdom, the period of two months beginning with the day on which the appropriate UK regulator receives the notification, and

(b)so far as it relates to any other requirement, the period of one month beginning with that day.

(3)If, before the end of the period described in sub-paragraph (2), the appropriate UK regulator gives the Gibraltar-based person a confirmation notice in respect of a requirement specified in the notification, then the period for considering the notification as it relates to the requirement ends when the notice is given.

(4)A “confirmation notice” is a written notice confirming that the requirement is imposed, varied or cancelled as requested in the notification.

Gibraltar regulator's initiative: rejecting a notificationU.K.

48(1)The appropriate UK regulator may not reject a notification so far as it relates to a requirement unless—

(a)it is required to do so under sub-paragraph (3), or

(b)it has power to do under sub-paragraph (4) or (5).

(2)A notification is rejected when the appropriate UK regulator gives a written notice of the rejection to the Gibraltar regulator.

(3)The appropriate UK regulator must reject a notification if satisfied that the notification does not satisfy one or more of the requirements in paragraph 46.

(4)The FCA may reject a notification, so far as it relates to a requirement, if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.

(5)The PRA may reject a notification, so far as it relates to a requirement, if it appears to the PRA that it is desirable to do so in order to advance one or more of its objectives.

(6)The rejection of a notification does not prevent the Gibraltar regulator from giving a further notification in respect of the same requirement.

UK regulator's initiative: imposing, varying and cancelling requirementsU.K.

49(1)A UK regulator may exercise the powers under this paragraph in relation to a Gibraltar-based person only where one of the own-initiative conditions is satisfied (see paragraph 28).

(2)The FCA may—

(a)impose a requirement on a Gibraltar-based person with a Schedule 2A permission,

(b)vary a requirement imposed by the FCA under this Part of this Schedule, or

(c)cancel such a requirement.

(3)The PRA may—

(a)impose a requirement on a Gibraltar-based person with a Schedule 2A permission where the person is a PRA-authorised person,

(b)vary a requirement imposed by the PRA under this Part of this Schedule, or

(c)cancel such a requirement.

UK regulator's initiative: procedure for imposing or varying requirementsU.K.

50(1)The imposition or variation of a requirement under paragraph 49 takes effect—

(a)immediately, if the notice given under sub-paragraph (3) states that is the case,

(b)on such date as may be specified in the notice, or

(c)if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.

(2)The imposition or variation of a requirement under paragraph 49 may be expressed to take effect immediately, or on a specified date, only if the UK regulator reasonably considers that it is necessary for the imposition or variation of the requirement to take effect immediately or on that date, having regard to the own-initiative condition on which it is relying for the purposes of paragraph 49(1).

(3)If a UK regulator—

(a)proposes to exercise the power under paragraph 49 to impose a requirement on a Gibraltar-based person, or vary a requirement imposed on a Gibraltar-based person, or

(b)exercises that power so as to impose a requirement on a Gibraltar-based person, or vary a requirement imposed on a Gibraltar-based person, with immediate effect,

it must give the person a written notice.

(4)The notice must—

(a)give details of the requirement or its variation,

(b)state the UK regulator's reasons for imposing or varying the requirement,

(c)inform the Gibraltar-based person that the person may make representations to the UK regulator within the period specified in the notice (whether or not the Gibraltar-based person has referred the matter to the Tribunal),

(d)inform the Gibraltar-based person of when the imposition or variation of the requirement takes effect, and

(e)inform the Gibraltar-based person of the person's right to refer the matter to the Tribunal.

(5)The UK regulator may extend the period allowed under the notice for making representations.

(6)If, having considered any representations made by the Gibraltar-based person, the UK regulator decides—

(a)to impose the requirement or vary the requirement in the way proposed, or

(b)if the requirement has been imposed or varied, not to rescind its imposition or variation,

it must give the Gibraltar-based person a written notice.

(7)A notice under sub-paragraph (6) must inform the Gibraltar-based person of the person's right to refer the matter to the Tribunal.

(8)If, having considered any representations made by the Gibraltar-based person, the UK regulator decides—

(a)not to impose the requirement or vary the requirement in the way proposed,

(b)to impose a different requirement or vary the requirement in a different way, or

(c)to rescind a requirement or variation which has effect,

it must give the Gibraltar-based person a written notice.

(9)A notice under sub-paragraph (8)(b) must comply with sub-paragraph (4).

(10)If a notice under this paragraph informs a person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure for such a reference.

(11)For the purposes of sub-paragraph (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).

UK regulator's initiative: procedure for cancellationU.K.

51(1)If a UK regulator proposes to exercise a power under paragraph 49 to cancel a requirement imposed on a Gibraltar-based person, it must give the person a written notice.

(2)The notice must specify the date on which the cancellation takes effect.

Right to refer matters to the TribunalU.K.

52A Gibraltar-based person who is aggrieved by the exercise by a UK regulator of a power under paragraph 49 to impose a requirement on the person, or vary a requirement imposed on the person, may refer the matter to the Tribunal.

Assets requirementsU.K.

53(1)This paragraph makes provision about a requirement imposed on a Gibraltar-based person (“G”) by a UK regulator under this Part of this Schedule—

(a)prohibiting the disposal of, or other dealing with, any of G's assets (whether in the United Kingdom, Gibraltar or elsewhere) or restricting such disposals or dealings, or

(b)requiring that some or all of G's assets, or some or all assets belonging to consumers (as defined in section 1G) but held by G or to G's order, must be transferred to and held by a trustee approved by the UK regulator.

(2)If a UK regulator—

(a)imposes a requirement described in sub-paragraph (1)(a), and

(b)gives notice of the requirement to an institution with whom G keeps an account,

the notice has the effects set out in sub-paragraph (3).

(3)Those effects are that—

(a)the institution does not act in breach of a contract with G if, having been instructed by G (or on G's behalf) to transfer a sum or otherwise make a payment out of G's account, it refuses to do so in the reasonably held belief that complying with the instruction would be incompatible with the requirement, and

(b)if the institution complies with such an instruction, it is liable to pay to the UK regulator an amount equal to the amount transferred from, or otherwise paid out of, G's account in contravention of the requirement.

(4)If a UK regulator imposes a requirement described in sub-paragraph (1)(b), no assets held by a person as trustee in accordance with the requirement may, while the requirement is in force, be released or dealt with except with the consent of the UK regulator.

(5)If, while a requirement described in sub-paragraph (1)(b) is in force, G creates a charge over any assets of G held in accordance with the requirement, the charge is (to the extent that it confers security over the assets) void against the liquidator and G's creditors.

(6)Assets held by a person as trustee are to be taken to be held by the trustee in accordance with a requirement mentioned in sub-paragraph (1)(b) only if—

(a)G has given the trustee a written notice that those assets are to be held by the trustee in accordance with the requirement, or

(b)they are assets into which assets to which paragraph (a) applies have been transposed by the trustee on the instruction of G.

(7)A person who contravenes sub-paragraph (4) commits an offence and is liable—

(a)on summary conviction in England and Wales, to a fine;

(b)on summary conviction in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.

(8)In this paragraph, references to imposing a requirement (however expressed) include imposing a requirement by varying an existing requirement.

(9)In this paragraph, “charge” includes a mortgage (or, in Scotland, a security over property).

(10)Sub-paragraphs (4) and (6) do not affect any equitable interest or remedy in favour of a person who is a beneficiary of a trust as a result of a requirement described in sub-paragraph (1)(b).

Further provision about requirementsU.K.

54(1)A requirement imposed on a Gibraltar-based person under this Part of this Schedule may, among other things, be imposed so as to require the person—

(a)to take specified action, or

(b)to refrain from taking specified action.

(2)A requirement imposed under this Part of this Schedule may extend to activities which are not approved activities.

(3)A requirement imposed on a Gibraltar-based person under this Part of this Schedule may be imposed by reference to the person's relationship with—

(a)the person's group, or

(b)other members of the person's group.

(4)A requirement imposed under this Part of this Schedule may be expressed to expire at the end of a specified period (but the imposition of such a requirement does not affect the UK regulator's powers to impose a new requirement).

(5)A requirement imposed on a Gibraltar-based person under this Part of this Schedule may refer to the past conduct of the person (for example, by requiring the person concerned to review or take remedial action in respect of past conduct).

Contravention of requirement imposed under this PartU.K.

55(1)Contravention of a requirement imposed under this Part of this Schedule does not—

(a)make a person guilty of an offence,

(b)make a transaction void or unenforceable, or

(c)give rise to a right of action for breach of statutory duty, subject to sub-paragraph (2).

(2)A contravention of a requirement imposed under this Part of this Schedule is actionable at the suit of a person who suffers loss as a result of the contravention where—

(a)the action would be brought at the suit of a private person, or

(b)the conditions in sub-paragraph (3) are met,

subject to the defences and other incidents applying to actions for breach of statutory duty.

(3)The conditions mentioned in sub-paragraph (2)(b) are that—

(a)the action would be brought by a person acting in a fiduciary or representative capacity on behalf of a private person, and

(b)any remedy would be exclusively for the benefit of that private person and could not be obtained through an action brought otherwise than at the suit of the person acting in a fiduciary or representative capacity.

(4)Sub-paragraph (2) does not apply where the requirement contravened is a requirement to have or maintain financial resources.

(5)In this paragraph, “private person” has such meaning as may be prescribed.

PART 7 U.K.Changes
Duty to notify UK regulators of changesU.K.

56(1)A UK regulator may direct that a change relating to a Gibraltar-based person with a Schedule 2A permission is subject to the requirements in this paragraph.

(2)A direction under sub-paragraph (1) may only be given in relation to a change relating to a matter about which information must be provided in a notification given to the UK regulator for the purposes of paragraph 12 or 22 (see paragraphs 15 and 24).

(3)Where, by virtue of a direction under sub-paragraph (1), a change is subject to the requirements in this paragraph, a Gibraltar-based person with a Schedule 2A permission must notify the following of the change—

(a)the Gibraltar regulator;

(b)the UK regulator that gave the direction.

(4)A direction under sub-paragraph (1) in respect of a change may specify when the action described in sub-paragraph (3) must be taken in connection with the change.

(5)If a direction in respect of a change does not specify when the action described in sub-paragraph (3) must be taken in connection with the change, the action must be taken—

(a)before the change is made, where that is reasonably practicable, or

(b)otherwise, as soon as reasonably practicable after the change is made.

(6)A direction under this paragraph—

(a)may make different provision for different purposes, but

(b)may not make provision in relation to a specific Gibraltar-based person.

(7)A UK regulator that gives a direction under this paragraph may, by a further direction, vary or revoke the direction.

(8)The FCA must consult the Treasury before giving a direction under this paragraph.

(9)The PRA must consult the Treasury and the FCA before giving a direction under this paragraph.

(10)After giving a direction under this paragraph, a UK regulator must—

(a)publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and

(b)give a copy of the direction to the Treasury and the other UK regulator without delay.

PART 8 U.K.UK regulators' directions about information
Directions about information to be included in notificationsU.K.

57(1)A UK regulator may direct that a notification for the purposes of paragraph 12, 22, 32 or 44 in relation to which it is the appropriate UK regulator must include information specified in the direction.

(2)In a direction, a UK regulator may only specify information which it reasonably considers necessary to enable it to discharge functions conferred on it by or under this Act in relation to persons with a Schedule 2A permission.

(3)A UK regulator that gives a direction under this paragraph may, by a further direction, vary or revoke the direction.

(4)A direction under this paragraph—

(a)may make different provision for different purposes, but

(b)may not make provision in relation to a specific person.

(5)The FCA must consult the Treasury before giving a direction under this paragraph.

(6)The PRA must consult the Treasury and the FCA before giving a direction under this paragraph.

(7)After giving a direction under this paragraph, a UK regulator must—

(a)publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and

(b)give a copy of the direction to the Treasury and the other UK regulator without delay.

PART 9 U.K.Transition on withdrawal of approval of regulated activity etc
Transition on withdrawal of approval of regulated activityU.K.

58(1)Sub-paragraph (2) applies where—

(a)the Treasury withdraw their approval of a regulated activity for the purposes of this Schedule (by revoking or amending regulations under paragraph 5), and

(b)immediately before approval is withdrawn, a person had a Schedule 2A permission to carry on the activity.

(2)The regulated activity is to be treated as approved under this Schedule but—

(a)only so far as carried on by the person,

(b)subject to the time limit in sub-paragraph (3), and

(c)subject to any restriction under paragraph 60.

(3)The regulated activity ceases to be treated as approved under this Schedule by virtue of sub-paragraph (2)—

(a)at the end of the period specified by the Treasury by regulations, or

(b)if earlier, when an event listed in sub-paragraph (4) first occurs.

(4)Those events are—

(a)the person ceases to carry on the regulated activity in the United Kingdom;

(b)the person ceases to have permission from the Gibraltar regulator to carry on the corresponding activity in Gibraltar;

(c)the person ceases to have a Schedule 2A permission in respect of the activity;

(d)the person is given permission under Part 4A of this Act in respect of the activity;

(e)the Treasury approve the activity for the purposes of this Schedule (by making regulations under paragraph 5).

(5)Where the approval of the regulated activity referred to in sub-paragraph (1)(a) is subject to limitations, references in this Part of this Schedule to that activity are to that activity subject to those limitations.

(6)Where the withdrawal of the approval of the regulated activity referred to in sub-paragraph (1)(a) is subject to limitations, references in this Part of this Schedule to that activity are to that activity subject to those limitations.

(7)For the purposes of sub-paragraph (4)(b) and (c), a person does not cease to have permission in respect of an activity while it has permission to carry on the activity by virtue of, and subject to the restrictions in, Part 10 of this Schedule.

Transition on Gibraltar activity ceasing to be corresponding activityU.K.

59(1)Sub-paragraph (2) applies where—

(a)the Treasury provide that an activity which the Gibraltar regulator has authorised, or may authorise, a person to carry on in Gibraltar (a “Gibraltar activity”) does not correspond to an approved activity (by revoking or amending regulations under paragraph 6), and

(b)immediately before they do so, a person had a Schedule 2A permission to carry on the approved activity by virtue of having permission from the Gibraltar regulator to carry the Gibraltar activity.

(2)For the purposes of this Schedule, the Gibraltar activity is to be treated as corresponding to the approved activity but—

(a)only so far as the approved activity is carried on by the person in the United Kingdom,

(b)subject to the time limit in sub-paragraph (3), and

(c)subject to any restriction under paragraph 60.

(3)The Gibraltar activity ceases to be treated as corresponding to the approved activity by virtue of sub-paragraph (2)—

(a)at the end of the period specified by the Treasury by regulations, or

(b)if earlier, when an event listed in sub-paragraph (4) first occurs.

(4)Those events are—

(a)the person ceases to carry on the approved activity in the United Kingdom;

(b)the person ceases to have permission from the Gibraltar regulator to carry on the Gibraltar activity;

(c)the person ceases to have a Schedule 2A permission in respect of the approved activity;

(d)the person is given permission under Part 4A of this Act in respect of the approved activity;

(e)the Treasury provide that the Gibraltar activity corresponds to the approved activity (by making regulations under paragraph 6).

(5)Where the provision made about the Gibraltar activity in regulations under paragraph 6 immediately before the Treasury make the provision described in sub-paragraph (1)(a) is subject to limitations, references in this Part of this Schedule to the Gibraltar activity are to that activity subject to those limitations.

(6)Where the provision made about the Gibraltar activity in the regulations under paragraph 6 referred to in sub-paragraph (1)(a) is subject to limitations, references in this Part of this Schedule to the Gibraltar activity are to that activity subject to those limitations.

(7)For the purposes of sub-paragraph (4)(b) and (c), a person does not cease to have permission in respect of an activity while it has permission to carry on the activity by virtue of, and subject to the restrictions in, Part 10 of this Schedule.

Restricting transitional permissionU.K.

60(1)Sub-paragraph (2) applies where—

(a)by virtue of paragraph 58(1), a regulated activity is treated as approved under this Schedule so far as carried on by a person, or

(b)by virtue of paragraph 59(1), an activity which the Gibraltar regulator has authorised, or may authorise, a person to carry on in Gibraltar is treated as corresponding to an approved activity so far as the approved activity is carried on by a person.

(2)The appropriate UK regulator may decide that the person may only carry on the regulated activity or approved activity (as appropriate) in the United Kingdom so far as is necessary for one or more of the following purposes—

(a)for the performance of a protected contract;

(b)in order to reduce the financial risk of a party to a protected contract or a third party affected by the performance of a protected contract;

(c)in order to transfer the property, rights or liabilities under a protected contract to a person authorised to carry on a regulated activity by virtue of section 31(1)(a);

(d)in order to comply with a requirement imposed by or under an enactment.

(3)If it proposes to make a decision under sub-paragraph (2), the appropriate UK regulator must give the person a written notice.

(4)The notice must—

(a)give details of the proposed decision, and

(b)inform the person that the person may make representations to the appropriate UK regulator within the period specified in the notice.

(5)The appropriate UK regulator may extend the period allowed under the notice for making representations.

(6)If, having considered any representations made by the person, the appropriate UK regulator decides to restrict the person's activities as described in sub-paragraph (2), it must—

(a)give the person a written notice (“a restriction notice”), and

(b)inform the Gibraltar regulator in writing without delay.

(7)A restriction notice must—

(a)specify the date on which it takes effect,

(b)inform the person of the person's right to refer the matter to the Tribunal (see paragraph 62), and

(c)indicate the procedure on a reference to the Tribunal.

(8)The Treasury may by regulations provide that a restriction notice may not specify a date falling before the end of a period specified or described in the regulations.

(9)In this paragraph—

  • the appropriate UK regulator” means—

    (a)

    in the case of a PRA-authorised person, the PRA, and

    (b)

    in any other case, the FCA;

  • enactment” includes—

    (a)

    retained direct EU legislation,

    (b)

    an enactment comprised in subordinate legislation,

    (c)

    an enactment comprised in, or in an instrument made under, a Measure or Act of Senedd Cymru,

    (d)

    an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament, and

    (e)

    an enactment comprised in, or in an instrument made under, Northern Ireland legislation;

  • protected contract” means a contract specified or described in a direction by the appropriate UK regulator under paragraph 61;

  • subordinate legislation” has the same meaning as in the Interpretation Act 1978 (see section 21 of that Act).

(10)In this paragraph, references to the performance of a protected contract include the performance of an obligation under the contract which is contingent or conditional.

Directions about protected contractsU.K.

61(1)A UK regulator may direct that a contract specified or described in the direction is a protected contract for the purposes of this Part of this Schedule.

(2)A UK regulator that gives a direction under this paragraph may, by a further direction, vary or revoke the direction.

(3)A direction under this paragraph may make different provision for different purposes, including different provision in connection with—

(a)different activities,

(b)different contracts or descriptions of contract, or

(c)different Gibraltar-based persons or descriptions of Gibraltar-based person.

(4)After giving a direction under this paragraph, a UK regulator must—

(a)publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and

(b)give a copy of the direction to the Treasury and the other UK regulator without delay.

Right to refer matters to the TribunalU.K.

62Where a person in respect of whom a decision under paragraph 60(2) is made is aggrieved by the decision, the person may refer the matter to the Tribunal.

Further powersU.K.

63(1)The Treasury may by regulations extend the period under section 55V(1) or (2) for determining an application which—

(a)is for a Part 4A permission or a variation of a Part 4A permission, and

(b)relates only to the carrying on of an activity which the applicant is carrying on in the United Kingdom by virtue of this Part of this Schedule.

(2)The power under sub-paragraph (1) includes power to amend section 55V.

(3)The Treasury may by regulations extend the period for consideration of an application which—

(a)is for approval under section 59 or variation of approval under section 59, and

(b)relates only to performance of a function in relation to the carrying on of an activity which the applicant is carrying on in the United Kingdom by virtue of this Part of this Schedule.

(4)The power under sub-paragraph (3) includes power to amend sections 61 and 63ZA.

PART 10 U.K.Transition on cancellation of UK or Gibraltar permission
Transition on cancellation of Schedule 2A permissionU.K.

64(1)Sub-paragraphs (2), (4) and (5) apply where—

(a)a person's Schedule 2A permission is cancelled under Part 5 of this Schedule, or

(b)a person's Schedule 2A permission is varied under Part 4 of this Schedule so as to remove permission to carry on an activity (including by adding or varying a limitation).

(2)The person is to be treated as continuing to have the Schedule 2A permission, or the permission to carry on the activity, but—

(a)only so far as is necessary for one or more of the purposes described in sub-paragraph (3), and

(b)subject to the time limit in paragraph 68.

(3)The purposes are—

(a)for the performance of a protected contract;

(b)to reduce the financial risk of a party to a protected contract or a third party affected by the performance of a protected contract;

(c)to transfer the property, rights or liabilities under a protected contract to a person authorised to carry on a regulated activity by virtue of section 31(1)(a);

(d)to comply with a requirement imposed by or under an enactment.

(4)A UK regulator may exercise the powers under paragraph 49(1) (UK regulator's initiative: imposing, varying and cancelling requirements) in relation to the person if it appears to the UK regulator that it is desirable to do so in order to advance—

(a)in the case of the FCA, one or more of its operational objectives, or

(b)in the case of the PRA, one of its objectives.

(5)For the purposes of section 33 (withdrawal of authorisation) a person's Schedule 2A permission is to be treated as being cancelled when the person ceases to be treated as having a Schedule 2A permission by virtue of this paragraph.

(6)In this paragraph—

  • enactment” has the same meaning as in paragraph 60;

  • protected contract” means—

    (a)

    an existing contract, or

    (b)

    a contract specified or described in a direction by the appropriate UK regulator under paragraph 67(1).

(7)In sub-paragraph (6), “existing contract”, in relation to a person referred to in sub-paragraph (1), means a contract entered into before the person's permission is cancelled or varied as described in that sub-paragraph, but—

(a)does not include a contract specified or described in a direction under paragraph 67(2), and

(b)except as otherwise provided in such a direction, does not include—

(i)a variation of a contract agreed on or after that day, or

(ii)a contract renewed on or after that day.

(8)In this paragraph, references to the performance of a protected contract include the performance of an obligation under the contract which is contingent or conditional.

Transition on cancellation of Gibraltar permissionU.K.

65(1)Sub-paragraphs (2) and (4) apply where the Gibraltar regulator—

(a)cancels a Gibraltar-based person's permission to carry on in Gibraltar an activity in relation to which the person has a Schedule 2A permission, or

(b)varies such a permission so as to remove permission to carry on such an activity (including by adding or varying a restriction).

(2)For the purposes of this Schedule, the person is to be treated as continuing to have the permission from the Gibraltar regulator but—

(a)only so far as is necessary for one or more of the purposes described in sub-paragraph (3), and

(b)subject to the time limit in paragraph 68.

(3)The purposes are—

(a)for the performance of a protected contract;

(b)to reduce the financial risk of a party to a protected contract or a third party affected by the performance of a protected contract;

(c)to transfer the property, rights or liabilities under a protected contract to a person authorised to carry on a regulated activity by virtue of section 31(1)(a);

(d)to comply with a requirement imposed by or under an enactment.

(4)A UK regulator may exercise the powers under paragraph 49(1) (UK regulator's initiative: imposing, varying and cancelling requirements) in relation to the person if it appears to the UK regulator that it is desirable to do so in order to advance—

(a)in the case of the FCA, one or more of its operational objectives, or

(b)in the case of the PRA, one of its objectives.

(5)In this paragraph—

  • enactment” has the same meaning as in paragraph 60;

  • protected contract” means—

    (a)

    an existing contract, or

    (b)

    a contract specified or described in a direction by the appropriate UK regulator under paragraph 67(1).

(6)In sub-paragraph (5), “existing contract”, in relation to a person referred to in sub-paragraph (1), means a contract entered into before the person's permission is cancelled or varied as described in that sub-paragraph, but—

(a)does not include a contract specified or described in a direction under paragraph 67(2), and

(b)except as otherwise provided in such a direction, does not include—

(i)a variation of a contract agreed on or after that day, or

(ii)a contract renewed on or after that day.

(7)In this paragraph, references to the performance of a protected contract include the performance of an obligation under the contract which is contingent or conditional.

The appropriate UK regulatorU.K.

66(1)In this Part of this Schedule, “the appropriate UK regulator” means—

(a)the PRA, in a case in which the Gibraltar-based person is a PRA-authorised person but not a paragraph 37(1) person, or

(b)the FCA, in any other case.

(2)In this paragraph, “a paragraph 37(1) person” means a person who is treated as having a Schedule 2A permission by virtue of paragraph 64 following the cancellation of that permission by the FCA under paragraph 37(1).

Directions about protected contractsU.K.

67(1)A UK regulator may direct that a contract specified or described in the direction is a protected contract for the purposes of paragraph 64 or 65 (or both).

(2)A UK regulator may, by giving a direction, modify the definition of “existing contract” for the purposes of paragraph 64 or 65 (or both) in the ways provided for in the definitions of that term in those paragraphs.

(3)A UK regulator that gives a direction under this paragraph may, by a further direction, vary or revoke the direction.

(4)A UK regulator may give different directions under this paragraph in connection with—

(a)different activities,

(b)different contracts or descriptions of contract, or

(c)different Gibraltar-based persons or descriptions of Gibraltar-based person.

(5)After giving a direction under this paragraph, a UK regulator must—

(a)publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and

(b)give a copy of the direction to the Treasury and the other UK regulator without delay.

End of transitionU.K.

68(1)A Gibraltar-based person ceases to be treated as having a permission by virtue of paragraph 64 or 65—

(a)when an event listed in sub-paragraph (2) first occurs, or

(b)if the appropriate UK regulator specifies an earlier date, on that date.

(2)Those events are—

(a)the person ceases to carry on the regulated activity in the United Kingdom;

(b)the person is given permission under Part 4A of this Act in respect of the regulated activity;

(c)the regulated activity ceases to be an approved activity;

(d)the person obtains (as appropriate)—

(i)a new Schedule 2A permission to carry on the activity referred to in paragraph 64(1), or

(ii)a new permission from the Gibraltar regulator to carry on the activity referred to in paragraph 65(1).

(3)If the appropriate UK regulator specifies a date for the purposes of sub-paragraph (1)(b), it may vary the date but only by specifying a later date.

(4)In sub-paragraph (2), references to “the regulated activity” are references (as appropriate) to—

(a)the regulated activity in respect of which the Gibraltar-based person is treated as having a Schedule 2A permission by virtue of paragraph 64, or

(b)the regulated activity corresponding to the activity in respect of which the Gibraltar-based person is treated as having permission from the Gibraltar regulator by virtue of paragraph 65.

(5)For the purposes of sub-paragraph (2)(c), a regulated activity does not cease to be an approved activity while it is treated as approved in relation to the Gibraltar-based person under Part 9 of this Schedule (with or without the restrictions under that Part).

End of transition: procedureU.K.

69(1)If a UK regulator proposes to specify or vary a date in relation to a person under paragraph 68(1)(b) or (3), it must give the person a warning notice.

(2)If a UK regulator decides to specify or vary a date in relation to a person under paragraph 68(1)(b) or (3), it must give the person a decision notice.

Right to refer matters to the TribunalU.K.

70If a UK regulator gives a Gibraltar-based person a decision notice under paragraph 69, the person may refer the matter to the Tribunal.

PART 11 U.K.Policy statements
Policy statementsU.K.

71(1)Each UK regulator must prepare and issue a statement of its policy with respect to—

(a)its powers to vary or cancel a Schedule 2A permission under Part 4 or 5 of this Schedule other than on a notification by the Gibraltar regulator,

(b)its powers to impose, vary or cancel requirements under Part 6 of this Schedule, other than on a notification by the Gibraltar regulator, and

(c)its power to give directions under Part 7 of this Schedule.

(2)Where a UK regulator has issued a statement under sub-paragraph (1), it may prepare and issue a revised statement.

(3)In exercising a power described in sub-paragraph (1), a UK regulator must have regard to any relevant statement of policy issued under this paragraph and in force at the time.

Policy statements: procedureU.K.

72(1)Before issuing a statement under paragraph 71(1) or (2), a UK regulator must—

(a)publish a draft of the proposed statement in the way appearing to it to be best calculated to bring it to the attention of the public,

(b)publish a notice stating that representations may be made to the UK regulator within the period specified in the notice, and

(c)have regard to any representations made to it in accordance with the notice.

(2)If the UK regulator issues the proposed statement, it must publish—

(a)the statement, and

(b)an account in general terms of—

(i)the representations made to it in accordance with the notice, and

(ii)its response to them.

(3)If the statement issued differs from the draft published under sub-paragraph (1) in a way which, in the opinion of the UK regulator, is significant, the UK regulator must publish details of the differences (as well as complying with sub-paragraph (2)).

(4)A UK regulator—

(a)must give a copy of a statement issued under paragraph 71(1) or (2) to the Treasury before publishing it, and

(b)may charge a reasonable fee for providing a person with a copy of such a statement or a draft statement published under this paragraph.

(5)Anything published by a UK regulator under this paragraph must be published in the way appearing to the UK regulator to be best calculated to bring it to the attention of the public.

PART 12 U.K.Consultation etc by UK regulators
FCA's duties to consult the PRAU.K.

73(1)The FCA must consult the PRA before—

(a)rejecting a notification under paragraph 19 in a case in which the person with responsibility for managing an aspect of the Gibraltar-based person's affairs is prohibited by an order under section 56 from performing a function in relation to an activity carried on by a PRA-authorised person, or

(b)rejecting a notification under paragraph 20 in a case in which a relevant access right that was lost related to a PRA-regulated activity.

(2)The FCA must consult the PRA before doing any of the following in a case in which the Gibraltar-based person is a PRA-authorised person or a member of a group that includes a PRA-authorised person—

(a)rejecting a notification under paragraph 26(5);

(b)varying a Schedule 2A permission under paragraph 27;

(c)rejecting a notification under paragraph 36(4);

(d)cancelling a Schedule 2A permission under paragraph 37(1);

(e)imposing a requirement under paragraph 41(3);

(f)rejecting a notification under paragraph 48(4);

(g)imposing, varying or cancelling a requirement under paragraph 49(2).

FCA's duties to obtain consent from the PRAU.K.

74(1)The FCA must obtain the PRA's consent before exercising its power under paragraph 27 in relation to a PRA-authorised person so as to—

(a)add an activity to those to which the person's Schedule 2A permission relates, or

(b)widen the description of an activity to which the person's Schedule 2A permission relates.

(2)Sub-paragraph (1) does not apply in relation to the regulated activity specified in article 63S of the Financial Services and Markets 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (administering a benchmark).

(3)Consent given by the PRA for the purposes of this paragraph may be conditional on the way in which the FCA exercises its power.

FCA's duties to inform the PRAU.K.

75(1)The FCA must inform the PRA in writing without delay after rejecting a notification under—

(a)paragraph 18(2) or (3), 19 or 20;

(b)paragraph 26(4) or (5);

(c)paragraph 36(4);

(d)paragraph 48(4).

(2)The FCA must inform the PRA in writing without delay after imposing, varying or cancelling a requirement under paragraph 41(3) or 49(2).

PRA's duties to consult the FCAU.K.

76(1)The PRA must consult the FCA before—

(a)giving a confirmation notice under paragraph 16;

(b)rejecting a notification under paragraph 19 or 20;

(c)giving a confirmation notice under paragraph 25;

(d)rejecting a notification under paragraph 26(5);

(e)varying a Schedule 2A permission under paragraph 27;

(f)giving a confirmation notice under paragraph 35;

(g)rejecting a notification under paragraph 36(5);

(h)cancelling a Schedule 2A permission under paragraph 37(2);

(i)imposing a requirement under paragraph 41(4);

(j)giving a confirmation notice under paragraph 47;

(k)rejecting a notification under paragraph 48(5);

(l)imposing, varying or cancelling a requirement under paragraph 49(3);

(m)giving a notice under paragraph 60;

(n)giving a direction under paragraph 61;

(o)giving a direction under paragraph 67.

(2)The PRA must—

(a)consult the FCA before publishing a draft statement under paragraph 72, and

(b)if the final version of the statement is to differ from the draft in a way which, in the opinion of the PRA, is significant, consult the FCA again before issuing it.

PRA's duty to obtain consent from the FCAU.K.

77(1)The PRA must obtain the FCA's consent before exercising its power under paragraph 27 so as to—

(a)add an activity to those to which a Schedule 2A permission relates, or

(b)widen the description of an activity to which a Schedule 2A permission relates.

(2)Consent given by the FCA for the purposes of this paragraph may be conditional on the way in which the PRA exercises its power.

PRA's duties to inform the FCAU.K.

78(1)When the PRA receives a notification for the purposes of a provision listed in the first column of the following table, it must give a copy to the FCA without delay, except where it rejects the notification under the provision listed in the second column (notification incomplete)—

Notification for the purposes ofRejection under
paragraph 12paragraph 18(1)
paragraph 22paragraph 26(3)
paragraph 32paragraph 36(3)
paragraph 44paragraph 48(3).

(2)The PRA must inform the FCA in writing without delay after rejecting a notification under—

(a)paragraph 18(2) or (3), 19 or 20;

(b)paragraph 26(4) or (5);

(c)paragraph 36(5);

(d)paragraph 48(5).

(3)The PRA must inform the FCA in writing without delay after imposing, varying or cancelling a requirement under paragraph 41(4) or 49(3).

UK regulators' duties to inform the Gibraltar regulatorU.K.

79(1)A UK regulator must inform the Gibraltar regulator in writing before giving a confirmation notice under—

(a)paragraph 16,

(b)paragraph 25,

(c)paragraph 35, or

(d)paragraph 47.

(2)A UK regulator must inform the Gibraltar regulator in writing without delay after—

(a)varying a Schedule 2A permission under paragraph 27,

(b)cancelling a Schedule 2A permission under paragraph 37,

(c)imposing a requirement under paragraph 41, or

(d)imposing, varying or cancelling a requirement under paragraph 49.

PART 13 U.K.Co-operation and Assistance
Duties to co-operateU.K.

80(1)Each of the FCA, the PRA and the scheme manager must take such steps as they consider appropriate, for the purposes in sub-paragraph (2), to co-operate—

(a)with each other and the Treasury (“the UK entities”), and

(b)with the government of Gibraltar and the Gibraltar regulator (“the Gibraltar entities”).

(2)Those purposes are—

(a)to secure that they, and the Treasury, are able to perform their functions under this Schedule and section 32A, and

(b)to secure that, so far as is reasonably possible, there is co-operation between the UK entities and the Gibraltar entities which the Treasury, having regard to the objectives in paragraph 7(1), consider adequate.

(3)For the purposes of sub-paragraph (2), the FCA, the PRA and the scheme manager must, among other things, have regard to—

(a)the memoranda and arrangements described in paragraph 9(4)(a) to (d),

(b)reports laid before Parliament by the Treasury under section 32A, and

(c)any guidance published by the Treasury.

(4)Each of the FCA, the PRA and the scheme manager must ensure that one or more memoranda describing how it intends to comply with sub-paragraph (1) are prepared and maintained.

(5)The steps taken for the purposes of sub-paragraph (1) may include arrangements for the sharing of information which the FCA, the PRA or the scheme manager is not prevented from disclosing.

(6)When carrying out functions under this Schedule, the FCA and the PRA must, among other things, have regard to any relevant arrangements in force at the time for co-operation between the UK entities or for co-operation between those entities and the Gibraltar entities.

Publication and review of arrangements for co-operationU.K.

81(1)Each of the FCA, the PRA and the scheme manager must—

(a)ensure that a copy of each memorandum describing how it intends to comply with paragraph 80(1), and of any other document recording arrangements that it enters into for the purpose of complying with paragraph 80(1), is given to the Treasury (unless the Treasury also entered into the arrangement),

(b)ensure that each memorandum is published in the way appearing to it to be best calculated to bring it to the attention of the public, and

(c)review the memoranda that it has in place for the purpose of complying with paragraph 80(1) at least once in each of the reporting periods described in section 32A.

(2)Where the Treasury enter into arrangements with the FCA, the PRA, the scheme manager, the government of Gibraltar or the Gibraltar regulator for a purpose described in paragraph 80(2), they must—

(a)ensure that any memorandum recording the arrangements is published in the way appearing to the Treasury to be best calculated to bring it to the attention of the public, and

(b)review the memoranda that the Treasury have in place for a purpose described in paragraph 80(2) at least once in each of the reporting periods described in section 32A.

(3)The Treasury must lay before Parliament a copy of any memorandum—

(a)given to them under sub-paragraph (1), or

(b)published in accordance with sub-paragraph (2)(a).

Provision of reports to assist the TreasuryU.K.

82(1)A UK regulator or the scheme manager must, on a request from the Treasury, prepare and send to the Treasury a report on a matter specified in the request.

(2)The Treasury may only make a request under this paragraph for a report that they reasonably require in connection with the exercise of their functions under—

(a)this Schedule, or

(b)section 32A.

(3)A request for a report under this paragraph—

(a)must be made in writing, and

(b)may require the UK regulator or scheme manager to send the report to the Treasury before a date specified in the request.

PART 14 U.K.Special cases
Gibraltar-based individuals carrying on insurance distribution activitiesU.K.

83(1)For the purposes of paragraph 1, an individual without a head office in Gibraltar is to be treated as having a head office there if the individual—

(a)is normally resident in Gibraltar, and

(b)has permission from the Gibraltar regulator to carry on an insurance distribution activity in Gibraltar.

(2)A notification for the purposes of paragraph 12 in respect of an individual who is a Gibraltar-based person by virtue of this paragraph satisfies paragraph 15(1)(b) if it states the main address where the individual carries on an insurance distribution activity in Gibraltar.

(3)The Treasury may by regulations replace the requirement in sub-paragraph (1)(a) with a different requirement relating to residence in Gibraltar.

(4)In this paragraph, “insurance distribution activity” has the meaning given in paragraph 2B(5) and (6) of Schedule 6.

Prospective

Section 22

SCHEDULE 7U.K.UK-based persons carrying on activities in Gibraltar

After Schedule 2A to the Financial Services and Markets Act 2000 (inserted by Schedule 6 to this Act) insert—

Section 36A

SCHEDULE 2BU.K.UK-based persons carrying on activities in Gibraltar

PART 1 U.K.Interpretation etc
UK-based personU.K.

1(1)In this Schedule, “UK-based person” means a person listed in sub-paragraph (2) whose head office or registered office is in the United Kingdom (and see also Part 6 of this Schedule).

(2)Those persons are—

(a)an individual,

(b)a body corporate,

(c)a partnership, or

(d)an unincorporated association.

RegulatorsU.K.

2(1)In this Schedule—

  • the Gibraltar regulator” has the same meaning as in Schedule 2A (see paragraph 2 of that Schedule);

  • UK regulator” means the FCA or the PRA.

(2)In this Schedule, “the appropriate UK regulator” means—

(a)the PRA, in a case where the UK-based person is a PRA-authorised person, and

(b)the FCA, in any other case.

Restricted activityU.K.

3(1)In this Schedule, “restricted activity” means—

(a)an activity which, when carried on in the United Kingdom, is a regulated activity,

(b)marketing a UCITS, or

(c)marketing an AIF.

(2)For the purposes of this Schedule, “marketing”, in relation to a UCITS, means, in the course of business, communicating an invitation or inducement to a person to participate in the UCITS (and related expressions are to be interpreted accordingly).

(3)In sub-paragraph (2), “communicating” includes causing a communication to be made.

(4)Regulations under section 21(4) (circumstances in which a person is to be regarded as carrying on a business) apply for the purposes of sub-paragraph (2) as they apply for the purposes of section 21(1).

(5)For the purposes of this Schedule—

(a)an AIFM markets an AIF when the AIFM makes a direct or indirect offering or placement of units or shares of an AIF managed by it to or with an investor or when another person makes such an offering or placement at the initiative of, or on behalf of, the AIFM, and

(b)an investment firm markets an AIF when it makes a direct or indirect offering or placement of units or shares of the AIF to or with an investor at the initiative of, or on behalf of, the AIFM of the AIF.

(6)For the purposes of this Schedule, a person markets a UCITS or an AIF in Gibraltar only if the marketing is capable of having an effect in Gibraltar.

Other definitionsU.K.

4In this Schedule—

  • AIFM” has the meaning given in regulation 4 of the Alternative Investment Fund Managers Regulations 2013 (S.I. 2013/1773);

  • branch” has the same meaning as in Schedule 2A (see paragraph 3 of that Schedule);

  • consent notice” has the meaning given in paragraph 7;

  • consent to variation notice” has the meaning given in paragraph 13;

  • Gibraltar notice” has the meaning given in paragraph 7;

  • variation notice” has the meaning given in paragraph 13.

UK regulators' objectivesU.K.

5For the purposes of any provision of this Schedule which refers to the FCA's operational objectives or the PRA's objectives, in relation to the exercise of a power in relation to a particular person, it does not matter whether there is a relationship between that person and the persons whose interests will be protected by the exercise of the power.

PART 2 U.K.Permission required to carry on activities in Gibraltar
ProhibitionU.K.

6(1)A UK-based person may not carry on a restricted activity in Gibraltar unless it has permission to do so under this Schedule.

(2)A UK-based person who is not an authorised person and who contravenes the prohibition in sub-paragraph (1) commits an offence and is liable—

(a)on summary conviction in England and Wales, to a fine;

(b)on summary conviction in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum;

(c)on conviction on indictment, to a fine.

Obtaining permission to carry on a restricted activity in GibraltarU.K.

7(1)A UK-based person obtains permission to carry on a restricted activity in Gibraltar when the following three conditions are satisfied.

(2)The first condition is that the UK-based person has given the appropriate UK regulator notice that it wants to carry on the restricted activity in Gibraltar (a “Gibraltar notice”) (see paragraph 9).

(3)The second condition is that the appropriate UK regulator has given notice to the Gibraltar regulator consenting to the UK-based person carrying on the restricted activity in Gibraltar (a “consent notice”) (see paragraph 10).

(4)The third condition is that the waiting period has ended.

(5)In sub-paragraph (4), “the waiting period” means—

(a)in relation to an activity that is to be carried on through a branch in Gibraltar, the period of two months beginning with the day on which the appropriate UK regulator gave the Gibraltar regulator the consent notice, and

(b)in relation to any other activity, the period of one month beginning with that day,

unless the appropriate UK regulator specifies a shorter waiting period in the consent notice.

(6)A permission under this paragraph is referred to in this Act as “a Schedule 2B permission”.

Schedule 2B permissionU.K.

8(1)A Schedule 2B permission for a person to carry on a restricted activity is a permission to do so only while the person has a relevant Part 4A permission.

(2)In this paragraph, “relevant Part 4A permission” means—

(a)if the restricted activity is an activity which, when carried on in the United Kingdom, is a regulated activity, a Part 4A permission in respect of that regulated activity, and

(b)if the restricted activity is marketing a UCITS or an AIF, a Part 4A permission in respect of any regulated activity.

Gibraltar noticeU.K.

9(1)A Gibraltar notice must—

(a)name the UK-based person giving the notice,

(b)state the address of the person's head office or registered office in the United Kingdom,

(c)identify the activity that the UK-based person wants to carry on,

(d)state whether the UK-based person wants to carry on the activity through a branch in Gibraltar,

(e)contain, or be accompanied by, such other information as the appropriate UK regulator may direct, and

(f)be given in such form and manner as the appropriate UK regulator may direct.

(2)A Gibraltar notice may relate to more than one activity.

(3)A Gibraltar notice may ask the appropriate UK regulator to specify a shorter waiting period for the purpose of paragraph 7(4).

(4)A UK regulator that gives a direction under sub-paragraph (1)(e) or (f) may, by a further direction, vary or revoke the direction.

(5)A direction under this paragraph may make different provision for different purposes, including different provision in relation to different persons.

(6)After giving a direction under this paragraph, a UK regulator must—

(a)publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and

(b)give a copy of the direction to the Treasury and the other UK regulator without delay.

Consent and confirmationU.K.

10(1)After receiving a Gibraltar notice, the appropriate UK regulator must without delay—

(a)give a consent notice, and

(b)give a written notice to the UK-based person confirming that it has given the consent notice,

unless it intends to refuse to give a consent notice in accordance with paragraph 11.

(2)A consent notice—

(a)may specify a shorter waiting period for the purpose of paragraph 7(4), and

(b)must contain, or be accompanied by, the Gibraltar notice.

(3)A notice under sub-paragraph (1)(b) must—

(a)state the date on which the consent notice was given to the Gibraltar regulator, and

(b)if the consent notice specified a shorter waiting period for the purpose of paragraph 7(4), specify that period.

(4)Where a Gibraltar notice relates to more than one activity, the appropriate UK regulator may give a consent notice in relation to one activity and refuse to do so in relation to another.

Refusing consentU.K.

11(1)The appropriate UK regulator may refuse to give a consent notice in relation to a regulated activity only if—

(a)it is satisfied that the Gibraltar notice does not satisfy one or more of the requirements in paragraph 9, or

(b)it appears to the regulator that it is desirable to refuse to do so in order to advance one or more of its objectives.

(2)In the case of the FCA, the reference in sub-paragraph (1)(b) to its objectives is a reference only to its operational objectives.

(3)If the appropriate UK regulator proposes to refuse to give a consent notice, it must give the UK-based person a warning notice.

(4)If the appropriate UK regulator decides to refuse to give a consent notice, it must give the UK-based person a decision notice.

(5)If the appropriate UK regulator gives the UK-based person a decision notice under sub-paragraph (4), the UK-based person may refer the matter to the Tribunal.

PART 3 U.K.Variation of permission
Variation of permissionU.K.

12(1)A UK-based person's Schedule 2B permission may be varied in accordance with this Part of this Schedule—

(a)on the initiative of the UK-based person (see paragraphs 13 to 16), or

(b)on the initiative of a UK regulator (see paragraphs 17 to 19).

(2)In this Part of this Schedule, references to the variation of a Schedule 2B permission (however expressed) are to its variation by—

(a)adding an activity,

(b)removing an activity, or

(c)varying the description of an activity.

UK-based person's initiativeU.K.

13(1)A Schedule 2B permission is varied in accordance with this paragraph when the following four conditions are satisfied in connection with the variation.

(2)The first condition is that the UK-based person has given the appropriate UK regulator notice of the proposed variation (a “variation notice”) (see paragraph 14).

(3)The second condition is that the appropriate UK regulator has given notice to the Gibraltar regulator consenting to the variation (a “consent to variation notice”) (see paragraph 15).

(4)The third condition is that the waiting period has ended.

(5)In sub-paragraph (4), “the waiting period” means—

(a)in relation to a variation in respect of an activity carried on through a branch in Gibraltar, the period of two months beginning with the day on which the appropriate UK regulator gave the Gibraltar regulator the consent to variation notice, and

(b)in relation to any other variation, the period of one month beginning with that day,

unless the appropriate UK regulator specifies a shorter waiting period in the consent to variation notice.

(6)The fourth condition is that the appropriate UK regulator has not cancelled the permission (see Part 4 of this Schedule).

UK-based person's initiative: variation noticeU.K.

14(1)A variation notice must—

(a)name the UK-based person giving the notice,

(b)state the address of the person's head office or registered office in the United Kingdom,

(c)specify the proposed variation,

(d)where relevant, state whether the UK-based person wants to carry on an activity through a branch in Gibraltar,

(e)contain, or be accompanied by, such other information as the appropriate UK regulator may direct, and

(f)be given in such form and manner as the appropriate UK regulator may direct.

(2)A variation notice may ask the appropriate UK regulator to specify a shorter waiting period for the purpose of paragraph 13(4).

(3)A UK regulator that gives a direction under sub-paragraph (1)(e) or (f) may, by a further direction, vary or revoke the direction.

(4)A direction under this paragraph may make different provision for different purposes, including different provision in relation to different persons.

(5)After giving a direction under this paragraph, a UK regulator must—

(a)publish the direction in the way appearing to the UK regulator to be best calculated to bring it to the attention of persons likely to be affected by it, and

(b)give a copy of the direction to the Treasury and the other UK regulator without delay.

UK-based person's initiative: consent and confirmationU.K.

15(1)After receiving a variation notice, the appropriate UK regulator must without delay—

(a)give a consent to variation notice, and

(b)give a written notice to the UK-based person confirming that it has given the consent to variation notice,

unless it intends to refuse to give a consent to variation notice in accordance with paragraph 16.

(2)A consent to variation notice—

(a)may specify a shorter waiting period for the purpose of paragraph 13(4), and

(b)must contain, or be accompanied by, the variation notice.

(3)A notice under sub-paragraph (1)(b) must—

(a)state the date on which the consent to variation notice was given to the Gibraltar regulator, and

(b)if the consent notice specified a shorter waiting period for the purpose of paragraph 13(4), specify that period.

(4)Where a variation notice relates to more than one variation, the appropriate UK regulator may give a consent notice in relation to one variation and refuse to do so in relation to another.

UK-based person's initiative: refusing consent to variationU.K.

16(1)The appropriate UK regulator may refuse to give a consent to variation notice in relation to a proposed variation only if—

(a)it is satisfied that the variation notice does not satisfy one or more of the requirements in paragraph 14, or

(b)it appears to the regulator that it is desirable to refuse to do so in order to advance one or more of its objectives.

(2)In the case of the FCA, the reference in sub-paragraph (1)(b) to its objectives is a reference only to its operational objectives.

(3)If the appropriate UK regulator proposes to refuse to give a consent to variation notice, it must give the UK-based person a warning notice.

(4)If the appropriate UK regulator decides to refuse to give a consent to variation notice, it must give the UK-based person a decision notice.

(5)If the appropriate UK regulator gives the UK-based person a decision notice under sub-paragraph (4), the UK-based person may refer the matter to the Tribunal.

UK regulator's initiativeU.K.

17(1)The FCA may exercise a power under sub-paragraph (2) in relation to a Schedule 2B permission if it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.

(2)The FCA may vary a Schedule 2B permission by—

(a)adding to the activities to which the permission relates a restricted activity which, when carried on in the United Kingdom, is not a PRA-regulated activity,

(b)removing a restricted activity from those to which the permission relates,

(c)varying the description of a restricted activity which, when carried on in the United Kingdom, is not a PRA-regulated activity, or

(d)varying the description of a restricted activity which, when carried on in the United Kingdom, is a PRA-regulated activity in a way which does not, in the opinion of the FCA, widen the description.

(3)The PRA may exercise a power under sub-paragraph (4), (5) or (6) in relation to a Schedule 2B permission if it appears to the PRA that it is desirable to do so in order to advance one or more of its objectives.

(4)In the case of a PRA-authorised person, the PRA may vary the person's Schedule 2B permission.

(5)In the case of a person who is not a PRA-authorised person, the PRA may vary the person's Schedule 2B permission by adding to the activities to which the permission relates a restricted activity which, when carried on in the United Kingdom, is a PRA-regulated activity.

(6)Where it adds an activity under sub-paragraph (5), the PRA may vary the person's Schedule 2B permission in any of the other ways described in paragraph 12(2).

UK regulator's initiative: procedureU.K.

18(1)The variation of a Schedule 2B permission under paragraph 17 takes effect—

(a)immediately, if the notice given under sub-paragraph (3) states that is the case,

(b)on such date as may be specified in the notice, or

(c)if no date is specified in the notice, when the matter to which the notice relates is no longer open to review.

(2)The variation of a Schedule 2B permission under paragraph 17 may be expressed to take effect immediately, or on a specified date, only if the UK regulator reasonably considers that it is necessary for the variation to take effect immediately or on that date, having regard to the ground on which the UK regulator is exercising its power to vary.

(3)If a UK regulator—

(a)proposes to vary a Schedule 2B permission under paragraph 17, or

(b)varies a Schedule 2B permission under that paragraph with immediate effect,

it must give the UK-based person a written notice.

(4)The notice must—

(a)give details of the variation,

(b)state the UK regulator's reasons for varying the permission,

(c)inform the UK-based person that the person may make representations to the UK regulator within the period specified in the notice (whether or not the UK-based person has referred the matter to the Tribunal),

(d)inform the UK-based person of when the variation of the permission takes effect, and

(e)inform the UK-based person of the person's right to refer the matter to the Tribunal.

(5)The UK regulator may extend the period allowed under the notice for making representations.

(6)If, having considered any representations made by the UK-based person, the UK regulator decides—

(a)to vary the permission in the way proposed, or

(b)if the permission has been varied, not to rescind its variation,

it must give the UK-based person a written notice.

(7)A notice under sub-paragraph (6) must inform the UK-based person of the person's right to refer the matter to the Tribunal.

(8)If, having considered any representations made by the UK-based person, the UK regulator decides—

(a)not to vary the permission in the way proposed,

(b)to vary the permission in a different way, or

(c)to rescind the variation,

it must give the UK-based person a written notice.

(9)A notice under sub-paragraph (8)(b) must comply with sub-paragraph (4).

(10)If a notice under this paragraph informs a person of the person's right to refer a matter to the Tribunal, it must give an indication of the procedure for such a reference.

(11)For the purposes of sub-paragraph (1)(c), whether a matter is open to review is to be determined in accordance with section 391(8).

Right to refer matters to the TribunalU.K.

19A UK-based person who is aggrieved by the exercise by a UK regulator of a power under paragraph 17 in relation to the person may refer the matter to the Tribunal.

PART 4 U.K.Cancellation of permission
Cancellation of permissionU.K.

20(1)The FCA may cancel a Schedule 2B permission if—

(a)it receives a written request from the UK-based person to do so, or

(b)it appears to the FCA that it is desirable to do so in order to advance one or more of its operational objectives.

(2)The PRA may cancel a PRA-authorised person's Schedule 2B permission if—

(a)it receives a written request from the UK-based person to do so, or

(b)it appears to the PRA that it is desirable to do so in order to advance one or more of its objectives.

(3)If a UK regulator proposes to cancel a UK-based person's Schedule 2B permission under sub-paragraph (1)(b) or (2)(b), it must give the UK-based person a warning notice.

(4)If a UK regulator decides to cancel a UK-based person's Schedule 2B permission under sub-paragraph (1)(b) or (2)(b), it must give the UK-based person a decision notice.