Financial Services and Markets Act 2000 (c. 8)

(The document as of February, 2008)

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(6) If the Authority decides that it should exercise its power of intervention in respect of the incoming EEA firm as a matter of urgency in order to protect the interests of consumers, it may exercise that power--

(a) before complying with subsections (3) and (4); or

(b) where it has complied with those subsections, before it is satisfied as mentioned in subsection (5).

(7) In such a case the Authority must at the earliest opportunity inform the firm's home state regulator and the Commission.

(8) If--

(a) the Authority has (by virtue of subsection (6)) exercised its power of intervention before complying with subsections (3) and (4) or before it is satisfied as mentioned in subsection (5), and

(b) the Commission decides under any of the single market directives that the Authority must rescind or vary any requirement imposed in the exercise of its power of intervention,

the Authority must in accordance with the decision rescind or vary the requirement.

Supplemental

200 Rescission and variation of requirements

(1) The Authority may rescind or vary a requirement imposed in exercise of its power of intervention on its own initiative or on the application of the person subject to the requirement.

(2) The power of the Authority on its own initiative to rescind a requirement is exercisable by written notice given by the Authority to the person concerned, which takes effect on the date specified in the notice.

(3) Section 197 applies to the exercise of the power of the Authority on its own initiative to vary a requirement as it applies to the imposition of a requirement.

(4) If the Authority proposes to refuse an application for the variation or rescission of a requirement, it must give the applicant a warning notice.

(5) If the Authority decides to refuse an application for the variation or rescission of a requirement--

(a) the Authority must give the applicant a decision notice; and

(b) that person may refer the matter to the Tribunal.

201 Effect of certain requirements on other persons

If the Authority, in exercising its power of intervention, imposes on an incoming firm a requirement of a kind mentioned in subsection (3) of section 48, the requirement has the same effect in relation to the firm as it would have in relation to an authorised person if it had been imposed on the authorised person by the Authority acting under section 45.

202 Contravention of requirement imposed under this Part

(1) Contravention of a requirement imposed by the Authority under this Part does not--

(a) make a person guilty of an offence;

(b) make any transaction void or unenforceable; or

(2) In prescribed cases the contravention is actionable at the suit of a person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.

Powers of Director General of Fair Trading

203 Power to prohibit the carrying on of Consumer Credit Act business

(1) If it appears to the Director General of Fair Trading ("the Director") that subsection (4) has been, or is likely to be, contravened as respects a consumer credit EEA firm, he may by written notice given to the firm impose on the firm a consumer credit prohibition.

(2) If it appears to the Director that a restriction imposed under section 204 on an EEA consumer credit firm has not been complied with, he may by written notice given to the firm impose a consumer credit prohibition.

(3) "Consumer credit prohibition" means a prohibition on carrying on, or purporting to carry on, in the United Kingdom any Consumer Credit Act business which consists of or includes carrying on one or more listed activities.

(4) This subsection is contravened as respects a firm if--

(a) the firm or any of its employees, agents or associates (whether past or present), or

(b) if the firm is a body corporate, any controller of the firm or an associate of any such controller,

does any of the things specified in paragraphs (a) to (d) of section 25(2) of the [1974 c. 39.] Consumer Credit Act 1974.

(5) A consumer credit prohibition may be absolute or may be imposed--

(a) for such period,

(b) until the occurrence of such event, or

as may be specified in the notice given under subsection (1) or (2).

(6) Any period, event or condition so specified may be varied by the Director on the application of the firm concerned.

(7) A consumer credit prohibition may be withdrawn by written notice served by the Director on the firm concerned, and any such notice takes effect on such date as is specified in the notice.

(8) Schedule 16 has effect as respects consumer credit prohibitions and restrictions under section 204.

(9) A firm contravening a prohibition under this section is guilty of an offence and liable--

(a) on summary conviction, to a fine not exceeding the statutory maximum;

(b) on conviction on indictment, to a fine.

(10) In this section and section 204--

"a consumer credit EEA firm" means an EEA firm falling within any of paragraphs (a) to (c) of paragraph 5 of Schedule 3 whose EEA authorisation covers any Consumer Credit Act business;
"Consumer Credit Act business" means consumer credit business, consumer hire business or ancillary credit business;
"consumer credit business", "consumer hire business" and "ancillary credit business" have the same meaning as in the [1974 c. 39.] Consumer Credit Act 1974;
"listed activity" means an activity listed in the Annex to the second banking co-ordination directive or the Annex to the investment services directive;
"associate" has the same meaning as in section 25(2) of the [1974 c. 39.] Consumer Credit Act 1974;
"controller" has the meaning given by section 189(1) of that Act.

204 Power to restrict the carrying on of Consumer Credit Act business

(1) In this section "restriction" means a direction that a consumer credit EEA firm may not carry on in the United Kingdom, otherwise than in accordance with such condition or conditions as may be specified in the direction, any Consumer Credit Act business which--

(a) consists of or includes carrying on any listed activity; and

(b) is specified in the direction.

(2) If it appears to the Director that the situation as respects a consumer credit EEA firm is such that the powers conferred by section 203(1) are exercisable, the Director may, instead of imposing a prohibition, impose such restriction as appears to him desirable.

(3) A restriction--

(a) may be withdrawn, or

(b) may be varied with the agreement of the firm concerned,

by written notice served by the Director on the firm, and any such notice takes effect on such date as is specified in the notice.

(4) A firm contravening a restriction is guilty of an offence and liable--

(a) on summary conviction, to a fine not exceeding the statutory maximum;

(b) on conviction on indictment, to a fine.

Part XIV Disciplinary Measures

205 Public censure

If the Authority considers that an authorised person has contravened a requirement imposed on him by or under this Act, the Authority may publish a statement to that effect.

206 Financial penalties

(1) If the Authority considers that an authorised person has contravened a requirement imposed on him by or under this Act, it may impose on him a penalty, in respect of the contravention, of such amount as it considers appropriate.

(2) The Authority may not in respect of any contravention both require a person to pay a penalty under this section and withdraw his authorisation under section 33.

(3) A penalty under this section is payable to the Authority.

207 Proposal to take disciplinary measures

(1) If the Authority proposes--

(a) to publish a statement in respect of an authorised person (under section 205), or

(b) to impose a penalty on an authorised person (under section 206),

it must give the authorised person a warning notice.

(2) A warning notice about a proposal to publish a statement must set out the terms of the statement.

(3) A warning notice about a proposal to impose a penalty, must state the amount of the penalty.

208 Decision notice

(1) If the Authority decides--

(a) to publish a statement under section 205 (whether or not in the terms proposed), or

(b) to impose a penalty under section 206 (whether or not of the amount proposed),

it must without delay give the authorised person concerned a decision notice.

(2) In the case of a statement, the decision notice must set out the terms of the statement.

(3) In the case of a penalty, the decision notice must state the amount of the penalty.

(4) If the Authority decides to--

(a) publish a statement in respect of an authorised person under section 205, or

(b) impose a penalty on an authorised person under section 206,

the authorised person may refer the matter to the Tribunal.

209 Publication

After a statement under section 205 is published, the Authority must send a copy of it to the authorised person and to any person on whom a copy of the decision notice was given under section 393(4).

210 Statements of policy

(1) The Authority must prepare and issue a statement of its policy with respect to--

(a) the imposition of penalties under this Part; and

(b) the amount of penalties under this Part.

(2) The Authority's policy in determining what the amount of a penalty should be must include having regard to--

(a) the seriousness of the contravention in question in relation to the nature of the requirement contravened;

(b) the extent to which that contravention was deliberate or reckless; and

(3) The Authority 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 Authority must issue the altered or replacement statement.

(5) The Authority must, without delay, give the Treasury a copy of any statement which it publishes under this section.

(6) A statement issued under this section must be published by the Authority in the way appearing to the Authority to be best calculated to bring it to the attention of the public.

(7) In exercising, or deciding whether to exercise, its power under section 206 in the case of any particular contravention, the Authority must have regard to any statement published under this section and in force at the time when the contravention in question occurred.

(8) The Authority may charge a reasonable fee for providing a person with a copy of the statement.

211 Statements of policy: procedure

(1) Before issuing a statement under section 210, the Authority must publish a draft of the proposed statement in the way appearing to the Authority 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 Authority within a specified time.

(3) Before issuing the proposed statement, the Authority must have regard to any representations made to it in accordance with subsection (2).

(4) If the Authority 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 opinion of the Authority, significant, the Authority must (in addition to complying with subsection (4)) publish details of the difference.

(6) The Authority 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 XV The Financial Services Compensation Scheme

The scheme manager

212 The scheme manager

(1) The Authority must establish a body corporate ("the scheme manager") to exercise the functions conferred on the scheme manager by or under this Part.

(2) The Authority must take such steps as are necessary to ensure that the scheme manager is, at all times, capable of exercising those functions.

(3) The constitution of the scheme manager must provide for it to have--

(a) a chairman; and

(b) a board (which must include the chairman) whose members are the scheme manager's directors.

(4) The chairman and other members of the board must be persons appointed, and liable to removal from office, by the Authority (acting, in the case of the chairman, with the approval of the Treasury).

(5) But the terms of their appointment (and in particular those governing removal from office) must be such as to secure their independence from the Authority in the operation of the compensation scheme.

(6) The scheme manager is not to be regarded as exercising functions on behalf of the Crown.

(7) The scheme manager's board members, officers and staff are not to be regarded as Crown servants.

The scheme

213 The compensation scheme

(1) The Authority must by rules establish a scheme for compensating persons in cases where relevant persons are unable, or are likely to be unable, to satisfy claims against them.

(2) The rules are to be known as the Financial Services Compensation Scheme (but are referred to in this Act as "the compensation scheme").

(3) The compensation scheme must, in particular, provide for the scheme manager--

(a) to assess and pay compensation, in accordance with the scheme, to claimants in respect of claims made in connection with regulated activities carried on (whether or not with permission) by relevant persons; and

(b) to have power to impose levies on authorised persons, or any class of authorised person, for the purpose of meeting its expenses (including in particular expenses incurred, or expected to be incurred, in paying compensation, borrowing or insuring risks).

(4) The compensation scheme may provide for the scheme manager to have power to impose levies on authorised persons, or any class of authorised person, for the purpose of recovering the cost (whenever incurred) of establishing the scheme.

(5) In making any provision of the scheme by virtue of subsection (3)(b), the Authority must take account of the desirability of ensuring that the amount of the levies imposed on a particular class of authorised person reflects, so far as practicable, the amount of the claims made, or likely to be made, in respect of that class of person.

(6) An amount payable to the scheme manager as a result of any provision of the scheme made by virtue of subsection (3)(b) or (4) may be recovered as a debt due to the scheme manager.

(7) Sections 214 to 217 make further provision about the scheme but are not to be taken as limiting the power conferred on the Authority by subsection (1).

(8) In those sections "specified" means specified in the scheme.

(9) In this Part (except in sections 219, 220 or 224) "relevant person" means a person who was--

(a) an authorised person at the time the act or omission giving rise to the claim against him took place; or

(b) an appointed representative at that time.

(10) But a person who, at that time--

(a) qualified for authorisation under Schedule 3, and

(b) fell within a prescribed category,

is not to be regarded as a relevant person in relation to any activities for which he had permission as a result of any provision of, or made under, that Schedule unless he had elected to participate in the scheme in relation to those activities at that time.

Provisions of the scheme

214 General

(1) The compensation scheme may, in particular, make provision--

(a) as to the circumstances in which a relevant person is to be taken (for the purposes of the scheme) to be unable, or likely to be unable, to satisfy claims made against him;

(b) for the establishment of different funds for meeting different kinds of claim;

(d) limiting the levy payable by a person in respect of a specified period;

(e) for repayment of the whole or part of a levy in specified circumstances;

(f) for a claim to be entertained only if it is made by a specified kind of claimant;

(g) for a claim to be entertained only if it falls within a specified kind of claim;

(h) as to the procedure to be followed in making a claim;

(i) for the making of interim payments before a claim is finally determined;

(j) limiting the amount payable on a claim to a specified maximum amount or a maximum amount calculated in a specified manner;

(k) for payment to be made, in specified circumstances, to a person other than the claimant.

(2) Different provision may be made with respect to different kinds of claim.

(3) The scheme may provide for the determination and regulation of matters relating to the scheme by the scheme manager.

(4) The scheme, or particular provisions of the scheme, may be made so as to apply only in relation to--

(a) activities carried on,

(b) claimants,

(d) events occurring,

in specified territories, areas or localities.

(5) The scheme may provide for a person who--

(a) qualifies for authorisation under Schedule 3, and

(b) falls within a prescribed category,

to elect to participate in the scheme in relation to some or all of the activities for which he has permission as a result of any provision of, or made under, that Schedule.

(6) The scheme may provide for the scheme manager to have power--

(a) in specified circumstances,

(b) but only if the scheme manager is satisfied that the claimant is entitled to receive a payment in respect of his claim--

(i) under a scheme which is comparable to the compensation scheme, or

(ii) as the result of a guarantee given by a government or other authority,

to make a full payment of compensation to the claimant and recover the whole or part of the amount of that payment from the other scheme or under that guarantee.

215 Rights of the scheme in relevant person's insolvency

(1) The compensation scheme may, in particular, make provision--

(a) as to the effect of a payment of compensation under the scheme in relation to rights or obligations arising out of the claim against a relevant person in respect of which the payment was made;

(b) for conferring on the scheme manager a right of recovery against that person.

(2) Such a right of recovery conferred by the scheme does not, in the event of the relevant person's insolvency, exceed such right (if any) as the claimant would have had in that event.

(3) If a person other than the scheme manager presents a petition under section 9 of the 1986 Act or Article 22 of the 1989 Order in relation to a company or partnership which is a relevant person, the scheme manager has the same rights as are conferred on the Authority by section 362.

(4) If a person other than the scheme manager presents a petition for the winding up of a body which is a relevant person, the scheme manager has the same rights as are conferred on the Authority by section 371.

(5) If a person other than the scheme manager presents a bankruptcy petition to the court in relation to an individual who, or an entity which, is a relevant person, the scheme manager has the same rights as are conferred on the Authority by section 374.

(6) Insolvency rules may be made for the purpose of integrating any procedure for which provision is made as a result of subsection (1) into the general procedure on the administration of a company or partnership or on a winding-up, bankruptcy or sequestration.

(7) "Bankruptcy petition" means a petition to the court--

(a) under section 264 of the 1986 Act or Article 238 of the 1989 Order for a bankruptcy order to be made against an individual;

(b) under section 5 of the 1985 Act for the sequestration of the estate of an individual; or

(c) under section 6 of the 1985 Act for the sequestration of the estate belonging to or held for or jointly by the members of an entity mentioned in subsection (1) of that section.

(8) "Insolvency rules" are--

(a) for England and Wales, rules made under sections 411 and 412 of the 1986 Act;

(b) for Scotland, rules made by order by the Treasury, after consultation with the Scottish Ministers, for the purposes of this section; and

(c) for Northern Ireland, rules made under Article 359 of the 1989 Order and section 55 of the [1978 c. 23.] Judicature (Northern Ireland) Act 1978.

(9) "The 1985 Act", "the 1986 Act", "the 1989 Order" and "court" have the same meaning as in Part XXIV.

216 Continuity of long-term insurance policies

(1) The compensation scheme may, in particular, include provision requiring the scheme manager to make arrangements for securing continuity of insurance for policyholders, or policyholders of a specified class, of relevant long-term insurers.

(2) "Relevant long-term insurers" means relevant persons who--

(a) have permission to effect or carry out contracts of long-term insurance; and

(b) are unable, or likely to be unable, to satisfy claims made against them.

(3) The scheme may provide for the scheme manager to take such measures as appear to him to be appropriate--

(a) for securing or facilitating the transfer of a relevant long-term insurer's business so far as it consists of the carrying out of contracts of long-term insurance, or of any part of that business, to another authorised person;

(b) for securing the issue by another authorised person to the policyholders concerned of policies in substitution for their existing policies.

(4) The scheme may also provide for the scheme manager to make payments to the policyholders concerned--

(a) during any period while he is seeking to make arrangements mentioned in subsection (1);

(b) if it appears to him that it is not reasonably practicable to make such arrangements.

(5) A provision of the scheme made by virtue of section 213(3)(b) may include power to impose levies for the purpose of meeting expenses of the scheme manager incurred in--

(a) taking measures as a result of any provision of the scheme made by virtue of subsection (3);

(b) making payments as a result of any such provision made by virtue of subsection (4).

217 Insurers in financial difficulties

(1) The compensation scheme may, in particular, include provision for the scheme manager to have power to take measures for safeguarding policyholders, or policyholders of a specified class, of relevant insurers.

(2) "Relevant insurers" means relevant persons who--

(a) have permission to effect or carry out contracts of insurance; and

(b) are in financial difficulties.

(3) The measures may include such measures as the scheme manager considers appropriate for--

(a) securing or facilitating the transfer of a relevant insurer's business so far as it consists of the carrying out of contracts of insurance, or of any part of that business, to another authorised person;

(b) giving assistance to the relevant insurer to enable it to continue to effect or carry out contracts of insurance.

(4) The scheme may provide--

(a) that if measures of a kind mentioned in subsection (3)(a) are to be taken, they should be on terms appearing to the scheme manager to be appropriate, including terms reducing, or deferring payment of, any of the things to which any of those who are eligible policyholders in relation to the relevant insurer are entitled in their capacity as such;

(b) that if measures of a kind mentioned in subsection (3)(b) are to be taken, they should be conditional on the reduction of, or the deferment of the payment of, the things to which any of those who are eligible policyholders in relation to the relevant insurer are entitled in their capacity as such;

(c) for ensuring that measures of a kind mentioned in subsection (3)(b) do not benefit to any material extent persons who were members of a relevant insurer when it began to be in financial difficulties or who had any responsibility for, or who may have profited from, the circumstances giving rise to its financial difficulties, except in specified circumstances;

(d) for requiring the scheme manager to be satisfied that any measures he proposes to take are likely to cost less than it would cost to pay compensation under the scheme if the relevant insurer became unable, or likely to be unable, to satisfy claims made against him.

(5) The scheme may provide for the Authority to have power--

(a) to give such assistance to the scheme manager as it considers appropriate for assisting the scheme manager to determine what measures are practicable or desirable in the case of a particular relevant insurer;

(b) to impose constraints on the taking of measures by the scheme manager in the case of a particular relevant insurer;

(c) to require the scheme manager to provide it with information about any particular measures which the scheme manager is proposing to take.

(6) The scheme may include provision for the scheme manager to have power--

(a) to make interim payments in respect of eligible policyholders of a relevant insurer;

(b) to indemnify any person making payments to eligible policyholders of a relevant insurer.

(7) A provision of the scheme made by virtue of section 213(3)(b) may include power to impose levies for the purpose of meeting expenses of the scheme manager incurred in--

(a) taking measures as a result of any provision of the scheme made by virtue of subsection (1);

(b) making payments or giving indemnities as a result of any such provision made by virtue of subsection (6).

(8) "Financial difficulties" and "eligible policyholders" have such meanings as may be specified.

Annual report

218 Annual report

(1) At least once a year, the scheme manager must make a report to the Authority on the discharge of its functions.

(2) The report must--

(a) include a statement setting out the value of each of the funds established by the compensation scheme; and

(b) comply with any requirements specified in rules made by the Authority.

(3) The scheme manager must publish each report in the way it considers appropriate.

Information and documents

219 Scheme manager's power to require information

(1) The scheme manager may, by notice in writing given to the relevant person in respect of whom a claim is made under the scheme or to a person otherwise involved, require that person--

(a) to provide specified information or information of a specified description; or

(b) to produce specified documents or documents of a specified description.

(2) The information or documents must be provided or produced--

(a) before the end of such reasonable period as may be specified; and

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