Financial Services and Markets Act 2000 (c. 8)

(The document as of February, 2008)

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(a) arranging deals in contracts of insurance written at Lloyd's ("the basic market activity");

(b) arranging deals in participation in Lloyd's syndicates ("the secondary market activity"); and

(3) For the purposes of Part IV, the Society's permission is to be treated as if it had been given on an application for permission under that Part.

(4) The power conferred on the Authority by section 45 may be exercised in anticipation of the coming into force of the Society's permission (or at any other time).

(5) The Society is not subject to any requirement of this Act concerning the registered office of a body corporate.

Power to apply Act to Lloyd's underwriting

316 Direction by Authority

(1) The general prohibition or (if the general prohibition is not applied under this section) a core provision applies to the carrying on of an insurance market activity by--

(a) a member of the Society, or

(b) the members of the Society taken together,

only if the Authority so directs.

(2) A direction given under subsection (1) which applies a core provision is referred to in this Part as "an insurance market direction".

(3) In subsection (1)--

"core provision" means a provision of this Act mentioned in section 317; and
"insurance market activity" means a regulated activity relating to contracts of insurance written at Lloyd's.

(4) In deciding whether to give a direction under subsection (1), the Authority must have particular regard to--

(a) the interests of policyholders and potential policyholders;

(b) any failure by the Society to satisfy an obligation to which it is subject as a result of a provision of the law of another EEA State which--

(i) gives effect to any of the insurance directives; and

(ii) is applicable to an activity carried on in that State by a person to whom this section applies;

(c) the need to ensure the effective exercise of the functions which the Authority has in relation to the Society as a result of section 315.

(5) A direction under subsection (1) must be in writing.

(6) A direction under subsection (1) applying the general prohibition may apply it in relation to different classes of person.

(7) An insurance market direction--

(a) must specify each core provision, class of person and kind of activity to which it applies;

(b) may apply different provisions in relation to different classes of person and different kinds of activity.

(8) A direction under subsection (1) has effect from the date specified in it, which may not be earlier than the date on which it is made.

(9) A direction under subsection (1) must be published in the way appearing to the Authority to be best calculated to bring it to the attention of the public.

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

(11) The Authority must, without delay, give the Treasury a copy of any direction which it gives under this section.

317 The core provisions

(1) The core provisions are Parts V, X, XI, XII, XIV, XV, XVI, XXII and XXIV, sections 384 to 386 and Part XXVI.

(2) References in an applied core provision to an authorised person are (where necessary) to be read as references to a person in the class to which the insurance market direction applies.

(3) An insurance market direction may provide that a core provision is to have effect, in relation to persons to whom the provision is applied by the direction, with modifications.

318 Exercise of powers through Council

(1) The Authority may give a direction under this subsection to the Council or to the Society (acting through the Council) or to both.

(2) A direction under subsection (1) is one given to the body concerned--

(a) in relation to the exercise of its powers generally with a view to achieving, or in support of, a specified objective; or

(b) in relation to the exercise of a specified power which it has, whether in a specified manner or with a view to achieving, or in support of, a specified objective.

(3) "Specified" means specified in the direction.

(4) A direction under subsection (1) may be given--

(a) instead of giving a direction under section 316(1); or

(b) if the Authority considers it necessary or expedient to do so, at the same time as, or following, the giving of such a direction.

(5) A direction may also be given under subsection (1) in respect of underwriting agents as if they were among the persons mentioned in section 316(1).

(6) A direction under this section--

(a) does not, at any time, prevent the exercise by the Authority of any of its powers;

(b) must be in writing.

(7) A direction under subsection (1) must be published in the way appearing to the Authority to be best calculated to bring it to the attention of the public.

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

(9) The Authority must, without delay, give the Treasury a copy of any direction which it gives under this section.

319 Consultation

(1) Before giving a direction under section 316 or 318, the Authority must publish a draft of the proposed direction.

(2) The draft must be accompanied by--

(a) a cost benefit analysis; and

(b) notice that representations about the proposed direction may be made to the Authority within a specified time.

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

(4) If the Authority gives the proposed direction it must publish an account, in general terms, of--

(a) the representations made to it in accordance with subsection (2)(b); and

(b) its response to them.

(5) If the direction differs from the draft published under subsection (1) in a way which is, in the opinion of the Authority, significant--

(a) the Authority must (in addition to complying with subsection (4)) publish details of the difference; and

(b) those details must be accompanied by a cost benefit analysis.

(6) Subsections (1) to (5) do not apply if the Authority considers that the delay involved in complying with them would be prejudicial to the interests of consumers.

(7) Neither subsection (2)(a) nor subsection (5)(b) applies if the Authority considers--

(a) that, making the appropriate comparison, there will be no increase in costs; or

(b) that, making that comparison, there will be an increase in costs but the increase will be of minimal significance.

(8) The Authority may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).

(9) When the Authority is required to publish a document under this section it must do so in the way appearing to it to be best calculated to bring it to the attention of the public.

(10) "Cost benefit analysis" means an estimate of the costs together with an analysis of the benefits that will arise--

(a) if the proposed direction is given; or

(b) if subsection (5)(b) applies, from the direction that has been given.

(11) "The appropriate comparison" means--

(a) in relation to subsection (2)(a), a comparison between the overall position if the direction is given and the overall position if it is not given;

(b) in relation to subsection (5)(b), a comparison between the overall position after the giving of the direction and the overall position before it was given.

Former underwriting members

320 Former underwriting members

(1) A former underwriting member may carry out each contract of insurance that he has underwritten at Lloyd's whether or not he is an authorised person.

(2) If he is an authorised person, any Part IV permission that he has does not extend to his activities in carrying out any of those contracts.

(3) The Authority may impose on a former underwriting member such requirements as appear to it to be appropriate for the purpose of protecting policyholders against the risk that he may not be able to meet his liabilities.

(4) A person on whom a requirement is imposed may refer the matter to the Tribunal.

321 Requirements imposed under section 320

(1) A requirement imposed under section 320 takes effect--

(a) immediately, if the notice given under subsection (2) states that that is the case;

(b) in any other case, on such date as may be specified in that notice.

(2) If the Authority proposes to impose a requirement on a former underwriting member ("A") under section 320, or imposes such a requirement on him which takes effect immediately, it must give him written notice.

(3) The notice must--

(a) give details of the requirement;

(b) state the Authority's reasons for imposing it;

(c) inform A that he may make representations to the Authority within such period as may be specified in the notice (whether or not he has referred the matter to the Tribunal);

(d) inform him of the date on which the requirement took effect or will take effect; and

(e) inform him of his right to refer the matter to the Tribunal.

(4) The Authority may extend the period allowed under the notice for making representations.

(5) If, having considered any representations made by A, the Authority decides--

(a) to impose the proposed requirement, or

(b) if it has been imposed, not to revoke it,

it must give him written notice.

(6) If the Authority decides--

(a) not to impose a proposed requirement, or

(b) to revoke a requirement that has been imposed,

it must give A written notice.

(7) If the Authority decides to grant an application by A for the variation or revocation of a requirement, it must give him written notice of its decision.

(8) If the Authority proposes to refuse an application by A for the variation or revocation of a requirement it must give him a warning notice.

(9) If the Authority, having considered any representations made in response to the warning notice, decides to refuse the application, it must give A a decision notice.

(10) A notice given under--

(a) subsection (5), or

(b) subsection (9) in the case of a decision to refuse the application,

must inform A of his right to refer the matter to the Tribunal.

(11) If the Authority decides to refuse an application for a variation or revocation of the requirement, the applicant may refer the matter to the Tribunal.

(12) If a notice informs a person of his right to refer a matter to the Tribunal, it must give an indication of the procedure on such a reference.

322 Rules applicable to former underwriting members

(1) The Authority may make rules imposing such requirements on persons to whom the rules apply as appear to it to be appropriate for protecting policyholders against the risk that those persons may not be able to meet their liabilities.

(2) The rules may apply to--

(a) former underwriting members generally; or

(b) to a class of former underwriting member specified in them.

(3) Section 319 applies to the making of proposed rules under this section as it applies to the giving of a proposed direction under section 316.

(4) Part X (except sections 152 to 154) does not apply to rules made under this section.

Transfers of business done at Lloyd's

323 Transfer schemes

The Treasury may by order provide for the application of any provision of Part VII (with or without modification) in relation to schemes for the transfer of the whole or any part of the business carried on by one or more members of the Society or former underwriting members.

Supplemental

324 Interpretation of this Part

(1) In this Part--

"arranging deals", in relation to the investments to which this Part applies, has the same meaning as in paragraph 3 of Schedule 2;
"former underwriting member" means a person ceasing to be an underwriting member of the Society on, or at any time after, 24 December 1996; and
"participation in Lloyd's syndicates", in relation to the secondary market activity, means the investment described in sub-paragraph (1) of paragraph 21 of Schedule 2.

(2) A term used in this Part which is defined in [1982 c.xiv.] Lloyd's Act 1982 has the same meaning as in that Act.

Part XX Provision of Financial Services by Members of the Professions

325 Authority's general duty

(1) The Authority must keep itself informed about--

(a) the way in which designated professional bodies supervise and regulate the carrying on of exempt regulated activities by members of the professions in relation to which they are established;

(b) the way in which such members are carrying on exempt regulated activities.

(2) In this Part--

"exempt regulated activities" means regulated activities which may, as a result of this Part, be carried on by members of a profession which is supervised and regulated by a designated professional body without breaching the general prohibition; and
"members", in relation to a profession, means persons who are entitled to practise the profession in question and, in practising it, are subject to the rules of the body designated in relation to that profession, whether or not they are members of that body.

(3) The Authority must keep under review the desirability of exercising any of its powers under this Part.

(4) Each designated professional body must co-operate with the Authority, by the sharing of information and in other ways, in order to enable the Authority to perform its functions under this Part.

326 Designation of professional bodies

(1) The Treasury may by order designate bodies for the purposes of this Part.

(2) A body designated under subsection (1) is referred to in this Part as a designated professional body.

(3) The Treasury may designate a body under subsection (1) only if they are satisfied that--

(a) the basic condition, and

(b) one or more of the additional conditions,

are met in relation to it.

(4) The basic condition is that the body has rules applicable to the carrying on by members of the profession in relation to which it is established of regulated activities which, if the body were to be designated, would be exempt regulated activities.

(5) The additional conditions are that--

(a) the body has power under any enactment to regulate the practice of the profession;

(b) being a member of the profession is a requirement under any enactment for the exercise of particular functions or the holding of a particular office;

(c) the body has been recognised for the purpose of any enactment other than this Act and the recognition has not been withdrawn;

(d) the body is established in an EEA State other than the United Kingdom and in that State--

(i) the body has power corresponding to that mentioned in paragraph (a);

(ii) there is a requirement in relation to the body corresponding to that mentioned in paragraph (b); or

(iii) the body is recognised in a manner corresponding to that mentioned in paragraph (c).

(6) "Enactment" includes an Act of the Scottish Parliament, Northern Ireland legislation and subordinate legislation (whether made under an Act, an Act of the Scottish Parliament or Northern Ireland legislation).

(7) "Recognised" means recognised by--

(a) a Minister of the Crown;

(b) the Scottish Ministers;

(d) a Northern Ireland department or its head.

327 Exemption from the general prohibition

(1) The general prohibition does not apply to the carrying on of a regulated activity by a person ("P") if--

(a) the conditions set out in subsections (2) to (7) are satisfied; and

(b) there is not in force--

(i) a direction under section 328, or

(ii) an order under section 329,

which prevents this subsection from applying to the carrying on of that activity by him.

(2) P must be--

(a) a member of a profession; or

(b) controlled or managed by one or more such members.

(3) P must not receive from a person other than his client any pecuniary reward or other advantage, for which he does not account to his client, arising out of his carrying on of any of the activities.

(4) The manner of the provision by P of any service in the course of carrying on the activities must be incidental to the provision by him of professional services.

(5) P must not carry on, or hold himself out as carrying on, a regulated activity other than--

(a) one which rules made as a result of section 332(3) allow him to carry on; or

(b) one in relation to which he is an exempt person.

(6) The activities must not be of a description, or relate to an investment of a description, specified in an order made by the Treasury for the purposes of this subsection.

(7) The activities must be the only regulated activities carried on by P (other than regulated activities in relation to which he is an exempt person).

(8) "Professional services" means services--

(a) which do not constitute carrying on a regulated activity, and

(b) the provision of which is supervised and regulated by a designated professional body.

328 Directions in relation to the general prohibition

(1) The Authority may direct that section 327(1) is not to apply to the extent specified in the direction.

(2) A direction under subsection (1)--

(a) must be in writing;

(b) may be given in relation to different classes of person or different descriptions of regulated activity.

(3) A direction under subsection (1) must be published in the way appearing to the Authority to be best calculated to bring it to the attention of the public.

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

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

(6) The Authority may exercise the power conferred by subsection (1) only if it is satisfied that it is desirable in order to protect the interests of clients.

(7) In considering whether it is so satisfied, the Authority must have regard amongst other things to the effectiveness of any arrangements made by any designated professional body--

(a) for securing compliance with rules made under section 332(1);

(b) for dealing with complaints against its members in relation to the carrying on by them of exempt regulated activities;

(c) in order to offer redress to clients who suffer, or claim to have suffered, loss as a result of misconduct by its members in their carrying on of exempt regulated activities;

(d) for co-operating with the Authority under section 325(4).

(8) In this Part "clients" means--

(a) persons who use, have used or are or may be contemplating using, any of the services provided by a member of a profession in the course of carrying on exempt regulated activities;

(b) persons who have rights or interests which are derived from, or otherwise attributable to, the use of any such services by other persons; or

(c) persons who have rights or interests which may be adversely affected by the use of any such services by persons acting on their behalf or in a fiduciary capacity in relation to them.

(9) If a member of a profession is carrying on an exempt regulated activity in his capacity as a trustee, the persons who are, have been or may be beneficiaries of the trust are to be treated as persons who use, have used or are or may be contemplating using services provided by that person in his carrying on of that activity.

329 Orders in relation to the general prohibition

(1) Subsection (2) applies if it appears to the Authority that a person to whom, as a result of section 327(1), the general prohibition does not apply is not a fit and proper person to carry on regulated activities in accordance with that section.

(2) The Authority may make an order disapplying section 327(1) in relation to that person to the extent specified in the order.

(3) The Authority may, on the application of the person named in an order under subsection (1), vary or revoke it.

(4) "Specified" means specified in the order.

(5) If a partnership is named in an order under this section, the order is not affected by any change in its membership.

(6) If a partnership named in an order under this section is dissolved, the order continues to have effect in relation to any partnership which succeeds to the business of the dissolved partnership.

(7) For the purposes of subsection (6), a partnership is to be regarded as succeeding to the business of another partnership only if--

(a) the members of the resulting partnership are substantially the same as those of the former partnership; and

(b) succession is to the whole or substantially the whole of the business of the former partnership.

330 Consultation

(1) Before giving a direction under section 328(1), the Authority must publish a draft of the proposed direction.

(2) The draft must be accompanied by--

(a) a cost benefit analysis; and

(b) notice that representations about the proposed direction may be made to the Authority within a specified time.

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

(4) If the Authority gives the proposed direction it must publish an account, in general terms, of--

(a) the representations made to it in accordance with subsection (2)(b); and

(b) its response to them.

(5) If the direction differs from the draft published under subsection (1) in a way which is, in the opinion of the Authority, significant--

(a) the Authority must (in addition to complying with subsection (4)) publish details of the difference; and

(b) those details must be accompanied by a cost benefit analysis.

(6) Subsections (1) to (5) do not apply if the Authority considers that the delay involved in complying with them would prejudice the interests of consumers.

(7) Neither subsection (2)(a) nor subsection (5)(b) applies if the Authority considers--

(a) that, making the appropriate comparison, there will be no increase in costs; or

(b) that, making that comparison, there will be an increase in costs but the increase will be of minimal significance.

(8) The Authority may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).

(9) When the Authority is required to publish a document under this section it must do so in the way appearing to it to be best calculated to bring it to the attention of the public.

(10) "Cost benefit analysis" means an estimate of the costs together with an analysis of the benefits that will arise--

(a) if the proposed direction is given; or

(b) if subsection (5)(b) applies, from the direction that has been given.

(11) "The appropriate comparison" means--

(a) in relation to subsection (2)(a), a comparison between the overall position if the direction is given and the overall position if it is not given;

(b) in relation to subsection (5)(b), a comparison between the overall position after the giving of the direction and the overall position before it was given.

331 Procedure on making or varying orders under section 329

(1) If the Authority proposes to make an order under section 329, it must give the person concerned a warning notice.

(2) The warning notice must set out the terms of the proposed order.

(3) If the Authority decides to make an order under section 329, it must give the person concerned a decision notice.

(4) The decision notice must--

(a) name the person to whom the order applies;

(b) set out the terms of the order; and

(5) Subsections (6) to (8) apply to an application for the variation or revocation of an order under section 329.

(6) If the Authority decides to grant the application, it must give the applicant written notice of its decision.

(7) If the Authority proposes to refuse the application, it must give the applicant a warning notice.

(8) If the Authority decides to refuse the application, it must give the applicant a decision notice.

(9) A person--

(a) against whom the Authority have decided to make an order under section 329, or

(b) whose application for the variation or revocation of such an order the Authority had decided to refuse,

may refer the matter to the Tribunal.

(10) The Authority may not make an order under section 329 unless--

(a) the period within which the decision to make to the order may be referred to the Tribunal has expired and no such reference has been made; or

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