Search Legislation

Advanced Search

Financial Services Act 2021

Contents

Schedule 7: UK-based persons carrying on activities in Gibraltar

  1. This Schedule adds new Schedule 2B to FSMA.

Part 1: Interpretation

  1. As market access is a sovereign matter, it will be up to the government of Gibraltar to legislate for market access arrangements for UK-based firms ("UK-based persons"), and it will ultimately decide which regulated activities UK-based persons will be able to carry on in Gibraltar. Schedule 2B will facilitate the market access of UK-based persons that wish to carry on activities in Gibraltar. Paragraph 1 sets out the definition of a "UK-based person" that can carry on activities in Gibraltar, that is, a person with a head office or registered office in the UK. Paragraph 2 identifies the Gibraltar regulator ("the GFSC") and the appropriate UK regulators ("the PRA" and "the FCA").
  2. Paragraph 3 provides the meaning of "restricted activity" for the purposes of UK-based persons operating in Gibraltar. It will be up for the government of Gibraltar to make provision about the approval of regulated activities by UK-based persons in Gibraltar provided those persons are authorised in the UK. Schedule 2B supplements that arrangement by requiring UK-based persons to have a permission to carry on restricted activities in Gibraltar. Paragraph 3(1) lists three types of "restricted activities":
    1. an activity which would be a regulated activity if carried on in the UK;
    2. marketing a UCITS; or
    3. marketing an AIF.
  3. Sub-paragraphs (2) to (6) make provision in relation to the marketing of UCITS and AIFs.
  4. Paragraph 4 defines key terms under this Schedule.
  5. Paragraph 5 provides that, when the powers of the FCA and the PRA under Schedule 2B can be exercised to advance their objectives, the regulators may use their powers in relation to one person to protect another person even if there is no relationship between the two persons

Part 2: Permission to carry on activities in Gibraltar

  1. Paragraph 6, sub-paragraph (1) prohibits UK-based persons from carrying on a restricted activity in Gibraltar unless they are permitted to do so under Schedule 2B. Sub-paragraph (2) makes the carrying on of a restricted activity an offence if the activity is carried on by a person who is not an authorised person and does not have a permission under this Schedule.
  2. Paragraph 7 sets out the conditions that a UK-based person must meet in order to obtain permission to carry on activities in Gibraltar (a "Schedule 2B permission" as defined by sub-paragraph (6)). Sub-paragraphs (2) to (5) set out the conditions, which are as follows: the UK-based person must give the appropriate UK regulator notice of its intentions by way of a "Gibraltar notice." Following this, the UK regulator must give a "consent notice" to the Gibraltar regulator. A Schedule 2B permission is automatically granted after a period elapses from the day on which the UK regulator gave the Gibraltar regulator the consent notice. This period is two months for a UK-based person seeking to carry on a restricted activity through a branch in Gibraltar, and one month in other cases. A person could obtain a Schedule 2B permission earlier if the consent notice specifies a shorter period.
  3. Paragraph 8 clarifies that a UK-based person must hold a relevant Part 4A permission while holding a Schedule 2B permission. Sub-paragraph (2) defines a ‘relevant Part 4A permission’ in this context.
  4. Paragraph 9, sub-paragraph (1) sets out the contents of a "Gibraltar notice" that will be given by interested UK-based persons to the UK regulators. This includes information specified in a direction by a UK regulator. Sub-paragraph (2) provides that a Gibraltar notice may relate to more than one activity. Sub-paragraph (3) provides that a Gibraltar notice may ask the UK regulator to specify a start date for a Schedule 2B permission earlier than the default period under paragraph 7. Sub-paragraph (4) enables the UK regulators to vary or revoke a direction under this paragraph. Under sub-paragraph (5), a direction may make different provision for different purposes. Sub-paragraph (6) provides for a publication requirement.
  5. Paragraph 10 describes the process that the appropriate UK regulator should follow upon receiving a Gibraltar notice, unless it intends to refuse to give a consent notice for the request. According to sub-paragraph (1), the UK regulator must give a consent notice to the Gibraltar regulator and confirm to the UK-based person in writing that a consent notice was sent to the Gibraltar regulator. Sub-paragraph (2) to (4) provides for certain requirements connected with notices under sub-paragraph (1).
  6. Paragraph 11, sub-paragraph (1) allows the appropriate UK regulator to refuse to give a consent notice to the Gibraltar regulator if the notice does not meet the requirements under paragraph 9, or it appears to the UK regulators that it is desirable to refuse in order to advance one or more of their objectives (which, for the FCA, are defined by sub-paragraph (2)). Sub-paragraphs (3) and (4) require the UK regulator to give a warning notice or decision notice to the person affected by the decision. Sub-paragraph (5) confers a right on UK-based persons to refer the matter to the Upper Tribunal if the UK regulator refuses to give a consent notice.

Part 3: Variation of permission

  1. Paragraph 12 provides for both a UK-based person to request a variation of a Schedule 2B permission or for a UK regulator to vary a person’s Schedule 2B permission. Sub-paragraph (2) defines a variation of permission as adding or removing an activity or varying the description of an activity.
  2. Paragraph 13 provides for a Schedule 2B permission to be varied on the initiative of the UK-based person if the conditions specified in sub-paragraphs (2) to (6) are met.
  3. Paragraph 14 sets out the contents that a variation notice must contain and makes further provision related to such notice.
  4. Paragraph 15, sub-paragraph (1) sets out the process for the appropriate UK regulator to give a consent to variation notice to the Gibraltar regulator and confirm to the UK-based person in writing that it has done so. Sub-paragraphs (2) to (4) provide for certain requirements connected with notices under sub-paragraph (1).
  5. Paragraph 16, sub-paragraph (1) sets out the circumstances where a UK regulator may refuse to give a consent to variation notice. Sub-paragraphs (3) and (4) direct the UK regulators to give the UK-based person a warning notice or decision notice if they intend or have decided to refuse to give a consent to variation notice. Sub-paragraph (5) gives the UK-based person a right to refer a refusal to consent to variation to the Upper Tribunal. Sub-paragraph (2) is self-explanatory.
  6. Paragraph 17, sub-paragraphs (1) and (2) confer a power on the FCA to vary a Schedule 2B permission if this would be desirable to advance the FCA’s operational objectives. Sub-paragraphs (3) to (6) confer a power on the PRA to vary the Schedule 2B permission of certain persons if it desirable to do so to advance the PRA’s objectives.
  7. Paragraph 18 sets out the process for a UK regulator to vary a Schedule 2B permission of their own initiative. It explains when a variation of the permission takes effect (sub-paragraphs (1) and (2)); and provides for certain procedural requirements to ensure that a person affected by a decision can express their views and challenge the decision (sub-paragraphs (3) to (11)).
  8. Paragraph 19 gives UK-based persons the right to refer a decision to the Upper Tribunal.

Part 4: Cancellation of permission

  1. Paragraph 20, sub-paragraphs (1) and (2) provide that the UK regulators may cancel a Schedule 2B permission if (a) they receive a written request from the UK-based person, or (b) on their own initiative, if they are satisfied that it is desirable to cancel a permission in order to advance one or more of their objectives.
  2. Sub-paragraphs (3) and (4) require the UK regulator to give a warning notice and eventually, a decision notice, to the UK-based person if the regulator intends to cancel a Schedule 2B permission on its own initiative under this paragraph and subsequently decides to do so. In the event of a cancellation occurring, sub-paragraph (5) provides for a right to refer the matter to the Upper Tribunal. Sub-paragraph (6) requires a UK regulator to inform the Gibraltar regulator of the cancellation of a Schedule 2B permission.

Part 5: Public record, consultation and consent

  1. Paragraph 21 provides that the FCA must include in its public record information whether a UK-based person has Schedule 2B permission to carry on restricted activities in Gibraltar and whether the person has a branch in Gibraltar.
  2. Paragraph 22 requires the FCA to consult, or obtain consent from, the PRA in specified cases.
  3. Paragraph 23 requires the PRA to consult, or obtain consent from, the FCA in specified cases.

Part 6: Special cases

  1. Part 6 makes provision for special cases. Under paragraph 24, sub-paragraph (1), an individual without a head office in the UK is treated as having a head office in the UK for the purposes of Schedule 2B if the individual has a Part 4A permission to carry on an insurance distribution activity in the UK. Under sub-paragraph (2) a notification given for the purposes of paragraph 9 must state the individual’s main address where the insurance distribution activity is carried on in the UK. Sub-paragraph (3) makes similar provision for a variation notice under paragraph 14. Sub-paragraph (4) defines "insurance distribution activity".

Back to top