Financial Services and Markets Act 2000 (c. 8)

(The document as of February, 2008)

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(a)

in relation to a body corporate whose principal place of business is within the United Kingdom, means an employee of that body who, alone or jointly with one or more others, is responsible under the immediate authority of the directors, for the conduct of the whole of the business of that body; and

(b)

in relation to a body corporate whose principal place of business is outside the United Kingdom, means the person who, alone or jointly with one or more others, is responsible for the conduct of its business within the United Kingdom;

"collective investment scheme" has the meaning given in section 235;

"the Commission" means the European Commission (except in provisions relating to the Competition Commission);

"the compensation scheme" has the meaning given in section 213(2);

"control of information rules" has the meaning given in section 147(1);

"director", in relation to a body corporate, includes--

(a)

a person occupying in relation to it the position of a director (by whatever name called); and

(b)

a person in accordance with whose directions or instructions (not being advice given in a professional capacity) the directors of that body are accustomed to act;

"documents" includes information recorded in any form and, in relation to information recorded otherwise than in legible form, references to its production include references to producing a copy of the information in legible form;

"exempt person", in relation to a regulated activity, means a person who is exempt from the general prohibition in relation to that activity as a result of an exemption order made under section 38(1) or as a result of section 39(1) or 285(2) or (3);

"financial promotion rules" means rules made under section 145;

"friendly society" means an incorporated or registered friendly society;

"general prohibition" has the meaning given in section 19(2);

"general rules" has the meaning given in section 138(2);

"incorporated friendly society" means a society incorporated under the [1992 c. 40.] Friendly Societies Act 1992;

"industrial and provident society" means a society registered or deemed to be registered under the [1965 c. 12.] Industrial and Provident Societies Act 1965 or the [1969 c. 24. (N.I.)] Industrial and Provident Societies Act (Northern Ireland) 1969;

"market abuse" has the meaning given in section 118;

"Minister of the Crown" has the same meaning as in the Ministers of the [1975 c. 26.] Crown Act 1975;

"money laundering rules" means rules made under section 146;

"notice of control" has the meaning given in section 178(5);

"the ombudsman scheme" has the meaning given in section 225(3);

"open-ended investment company" has the meaning given in section 236;

"Part IV permission" has the meaning given in section 40(4);

"partnership" includes a partnership constituted under the law of a country or territory outside the United Kingdom;

"prescribed" (where not otherwise defined) means prescribed in regulations made by the Treasury;

"price stabilising rules" means rules made under section 144;

"private company" has the meaning given in section 1(3) of the [1985 c. 6.] Companies Act 1985 or in Article 12(3) of the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986;

"prohibition order" has the meaning given in section 56(2);

"recognised clearing house" and "recognised investment exchange" have the meaning given in section 285;

"registered friendly society" means a society which is--

(a)

a friendly society within the meaning of section 7(1)(a) of the [1992 c. 40.] Friendly Societies Act 1974; and

(b)

registered within the meaning of that Act;

"regulated activity" has the meaning given in section 22;

"regulating provisions" has the meaning given in section 159(1);

"regulatory objectives" means the objectives mentioned in section 2;

"regulatory provisions" has the meaning given in section 302;

"rule" means a rule made by the Authority under this Act;

"rule-making instrument" has the meaning given in section 153;

"the scheme manager" has the meaning given in section 212(1);

"the scheme operator" has the meaning given in section 225(2);

"scheme particulars rules" has the meaning given in section 248(1);

"Seventh Company Law Directive" means the European Council Seventh Company Law Directive of 13 June 1983 on consolidated accounts (No. 83/349/EEC);

"threshold conditions", in relation to a regulated activity, has the meaning given in section 41;

"the Treaty" means the treaty establishing the European Community;

"trust scheme rules" has the meaning given in section 247(1);

"UK authorised person" has the meaning given in section 178(4); and

"unit trust scheme" has the meaning given in section 237.

(2) In the application of this Act to Scotland, references to a matter being actionable at the suit of a person are to be read as references to the matter being actionable at the instance of that person.

(3) For the purposes of any provision of this Act authorising or requiring a person to do anything within a specified number of days no account is to be taken of any day which is a public holiday in any part of the United Kingdom.

418 Carrying on regulated activities in the United Kingdom

(1) In the four cases described in this section, a person who--

(a) is carrying on a regulated activity, but

(b) would not otherwise be regarded as carrying it on in the United Kingdom,

is, for the purposes of this Act, to be regarded as carrying it on in the United Kingdom.

(2) The first case is where--

(a) his registered office (or if he does not have a registered office his head office) is in the United Kingdom;

(b) he is entitled to exercise rights under a single market directive as a UK firm; and

(3) The second case is where--

(a) his registered office (or if he does not have a registered office his head office) is in the United Kingdom;

(b) he is the manager of a scheme which is entitled to enjoy the rights conferred by an instrument which is a relevant Community instrument for the purposes of section 264; and

(4) The third case is where--

(a) his registered office (or if he does not have a registered office his head office) is in the United Kingdom;

(b) the day-to-day management of the carrying on of the regulated activity is the responsibility of--

(i) his registered office (or head office); or

(ii) another establishment maintained by him in the United Kingdom.

(5) The fourth case is where--

(a) his head office is not in the United Kingdom; but

(b) the activity is carried on from an establishment maintained by him in the United Kingdom.

(6) For the purposes of subsections (2) to (5) it is irrelevant where the person with whom the activity is carried on is situated.

419 Carrying on regulated activities by way of business

(1) The Treasury may by order make provision--

(a) as to the circumstances in which a person who would otherwise not be regarded as carrying on a regulated activity by way of business is to be regarded as doing so;

(b) as to the circumstances in which a person who would otherwise be regarded as carrying on a regulated activity by way of business is to be regarded as not doing so.

(2) An order under subsection (1) may be made so as to apply--

(a) generally in relation to all regulated activities;

(b) in relation to a specified category of regulated activity; or

(3) An order under subsection (1) may be made so as to apply--

(a) for the purposes of all provisions;

(b) for a specified group of provisions; or

(4) "Provision" means a provision of, or made under, this Act.

(5) Nothing in this section is to be read as affecting the provisions of section 428(3).

420 Parent and subsidiary undertaking

(1) In this Act, except in relation to an incorporated friendly society, "parent undertaking" and "subsidiary undertaking" have the same meaning as in Part VII of the [1985 c. 6.] Companies Act 1985 (or Part VIII of the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986).

(2) But--

(a) "parent undertaking" also includes an individual who would be a parent undertaking for the purposes of those provisions if he were taken to be an undertaking (and "subsidiary undertaking" is to be read accordingly);

(b) "subsidiary undertaking" also includes, in relation to a body incorporated in or formed under the law of an EEA State other than the United Kingdom, an undertaking which is a subsidiary undertaking within the meaning of any rule of law in force in that State for purposes connected with implementation of the Seventh Company Law Directive (and "parent undertaking" is to be read accordingly).

(3) In this Act "subsidiary undertaking", in relation to an incorporated friendly society, means a body corporate of which the society has control within the meaning of section 13(9)(a) or (aa) of the [1992 c. 40.] Friendly Societies Act 1992 (and "parent undertaking" is to be read accordingly).

421 Group

(1) In this Act "group", in relation to a person ("A"), means A and any person who is--

(a) a parent undertaking of A;

(b) a subsidiary undertaking of A;

(d) a parent undertaking of a subsidiary undertaking of A;

(e) an undertaking in which A or an undertaking mentioned in paragraph (a), (b), (c) or (d) has a participating interest;

(f) if A or an undertaking mentioned in paragraph (a) or (d) is a building society, an associated undertaking of the society; or

(g) if A or an undertaking mentioned in paragraph (a) or (d) is an incorporated friendly society, a body corporate of which the society has joint control (within the meaning of section 13(9)(c) or (cc) of the [1992 c. 40.] Friendly Societies Act 1992).

(2) "Participating interest" has the same meaning as in Part VII of the [1985 c. 6.] Companies Act 1985 or Part VIII of the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986; but also includes an interest held by an individual which would be a participating interest for the purposes of those provisions if he were taken to be an undertaking.

(3) "Associated undertaking" has the meaning given in section 119(1) of the [1986 c. 53.] Building Societies Act 1986.

422 Controller

(1) In this Act "controller", in relation to an undertaking ("A"), means a person who falls within any of the cases in subsection (2).

(2) The cases are where the person--

(a) holds 10% or more of the shares in A;

(b) is able to exercise significant influence over the management of A by virtue of his shareholding in A;

(d) is able to exercise significant influence over the management of P by virtue of his shareholding in P;

(e) is entitled to exercise, or control the exercise of, 10% or more of the voting power in A;

(f) is able to exercise significant influence over the management of A by virtue of his voting power in A;

(g) is entitled to exercise, or control the exercise of, 10% or more of the voting power in P; or

(h) is able to exercise significant influence over the management of P by virtue of his voting power in P.

(3) In subsection (2) "the person" means--

(a) the person;

(b) any of the person's associates; or

(4) "Associate", in relation to a person ("H") holding shares in an undertaking ("C") or entitled to exercise or control the exercise of voting power in relation to another undertaking ("D"), means--

(a) the spouse of H;

(b) a child or stepchild of H (if under 18);

(d) an undertaking of which H is a director;

(e) a person who is an employee or partner of H;

(f) if H is an undertaking--

(i) a director of H;

(ii) a subsidiary undertaking of H;

(iii) a director or employee of such a subsidiary undertaking; and

(g) if H has with any other person an agreement or arrangement with respect to the acquisition, holding or disposal of shares or other interests in C or D or under which they undertake to act together in exercising their voting power in relation to C or D, that other person.

(5) "Settlement", in subsection (4)(c), includes any disposition or arrangement under which property is held on trust (or subject to a comparable obligation).

(6) "Shares"--

(a) in relation to an undertaking with a share capital, means allotted shares;

(b) in relation to an undertaking with capital but no share capital, means rights to share in the capital of the undertaking;

(i) conferring any right to share in the profits, or liability to contribute to the losses, of the undertaking; or

(ii) giving rise to an obligation to contribute to the debts or expenses of the undertaking in the event of a winding up.

(7) "Voting power", in relation to an undertaking which does not have general meetings at which matters are decided by the exercise of voting rights, means the right under the constitution of the undertaking to direct the overall policy of the undertaking or alter the terms of its constitution.

423 Manager

(1) In this Act, except in relation to a unit trust scheme or a registered friendly society, "manager" means an employee who--

(a) under the immediate authority of his employer is responsible, either alone or jointly with one or more other persons, for the conduct of his employer's business; or

(b) under the immediate authority of his employer or of a person who is a manager by virtue of paragraph (a) exercises managerial functions or is responsible for maintaining accounts or other records of his employer.

(2) If the employer is not an individual, references in subsection (1) to the authority of the employer are references to the authority--

(a) in the case of a body corporate, of the directors;

(b) in the case of a partnership, of the partners; and

(3) "Manager", in relation to a body corporate, means a person (other than an employee of the body) who is appointed by the body to manage any part of its business and includes an employee of the body corporate (other than the chief executive) who, under the immediate authority of a director or chief executive of the body corporate, exercises managerial functions or is responsible for maintaining accounts or other records of the body corporate.

424 Insurance

(1) In this Act, references to--

(a) contracts of insurance,

(b) reinsurance,

(d) contracts of general insurance,

are to be read with section 22 and Schedule 2.

(2) In this Act "policy" and "policyholder", in relation to a contract of insurance, have such meaning as the Treasury may by order specify.

(3) The law applicable to a contract of insurance, the effecting of which constitutes the carrying on of a regulated activity, is to be determined, if it is of a prescribed description, in accordance with regulations made by the Treasury.

425 Expressions relating to authorisation elsewhere in the single market

(1) In this Act--

(a) "EEA authorisation", "EEA firm", "EEA right", "EEA State", "first life insurance directive", "first non-life insurance directive", "insurance directives", "investment services directive", "single market directives" and "second banking co-ordination directive" have the meaning given in Schedule 3; and

(b) "home state regulator", in relation to an EEA firm, has the meaning given in Schedule 3.

(2) In this Act--

(a) "home state authorisation" has the meaning given in Schedule 4;

(a) "Treaty firm" has the meaning given in Schedule 4; and

Part XXX Supplemental

426 Consequential and supplementary provision

(1) A Minister of the Crown may by order make such incidental, consequential, transitional or supplemental provision as he considers necessary or expedient for the general purposes, or any particular purpose, of this Act or in consequence of any provision made by or under this Act or for giving full effect to this Act or any such provision.

(2) An order under subsection (1) may, in particular, make provision--

(a) for enabling any person by whom any powers will become exercisable, on a date set by or under this Act, by virtue of any provision made by or under this Act to take before that date any steps which are necessary as a preliminary to the exercise of those powers;

(b) for applying (with or without modifications) or amending, repealing or revoking any provision of or made under an Act passed before this Act or in the same Session;

(d) for making savings, or additional savings, from the effect of any repeal or revocation made by or under this Act.

(3) Amendments made under this section are additional, and without prejudice, to those made by or under any other provision of this Act.

(4) No other provision of this Act restricts the powers conferred by this section.

427 Transitional provisions

(1) Subsections (2) and (3) apply to an order under section 426 which makes transitional provisions or savings.

(2) The order may, in particular--

(a) if it makes provision about the authorisation and permission of persons who before commencement were entitled to carry on any activities, also include provision for such persons not to be treated as having any authorisation or permission (whether on an application to the Authority or otherwise);

(b) make provision enabling the Authority to require persons of such descriptions as it may direct to re-apply for permissions having effect by virtue of the order;

(c) make provision for the continuation as rules of such provisions (including primary and subordinate legislation) as may be designated in accordance with the order by the Authority, including provision for the modification by the Authority of provisions designated;

(d) make provision about the effect of requirements imposed, liabilities incurred and any other things done before commencement, including provision for and about investigations, penalties and the taking or continuing of any other action in respect of contraventions;

(e) make provision for the continuation of disciplinary and other proceedings begun before commencement, including provision about the decisions available to bodies before which such proceedings take place and the effect of their decisions;

(f) make provision as regards the Authority's obligation to maintain a record under section 347 as respects persons in relation to whom provision is made by the order.

(3) The order may--

(a) confer functions on the Treasury, the Secretary of State, the Authority, the scheme manager, the scheme operator, members of the panel established under paragraph 4 of Schedule 17, the Competition Commission or the Director General of Fair Trading;

(b) confer jurisdiction on the Tribunal;

(d) modify, exclude or apply (with or without modifications) any primary or subordinate legislation (including any provision of, or made under, this Act).

(4) In subsection (2) "commencement" means the commencement of such provisions of this Act as may be specified by the order.

428 Regulations and orders

(1) Any power to make an order which is conferred on a Minister of the Crown by this Act and any power to make regulations which is conferred by this Act is exercisable by statutory instrument.

(2) The Lord Chancellor's power to make rules under section 132 is exercisable by statutory instrument.

(3) Any statutory instrument made under this Act may--

(a) contain such incidental, supplemental, consequential and transitional provision as the person making it considers appropriate; and

(b) make different provision for different cases.

429 Parliamentary control of statutory instruments

(1) No order is to be made under--

(a) section 144(4), 192(b) or (e), 236(5), 404 or 419, or

(b) paragraph 1 of Schedule 8,

unless a draft of the order has been laid before Parliament and approved by a resolution of each House.

(2) No regulations are to be made under section 262 unless a draft of the regulations has been laid before Parliament and approved by a resolution of each House.

(3) An order to which, if it is made, subsection (4) or (5) will apply is not to be made unless a draft of the order has been laid before Parliament and approved by a resolution of each House.

(4) This subsection applies to an order under section 21 if--

(a) it is the first order to be made, or to contain provisions made, under section 21(4);

(b) it varies an order made under section 21(4) so as to make section 21(1) apply in circumstances in which it did not previously apply;

(d) it varies a previous order made under section 21(5) so as to make section 21(1) apply in circumstances in which it did not, as a result of that previous order, apply;

(e) it is the first order to be made, or to contain provisions made, under section 21(9) or (10);

(f) it adds one or more activities to those that are controlled activities for the purposes of section 21; or

(g) it adds one or more investments to those which are controlled investments for the purposes of section 21.

(5) This subsection applies to an order under section 38 if--

(a) it is the first order to be made, or to contain provisions made, under that section; or

(b) it contains provisions restricting or removing an exemption provided by an earlier order made under that section.

(6) An order containing a provision to which, if the order is made, subsection (7) will apply is not to be made unless a draft of the order has been laid before Parliament and approved by a resolution of each House.

(7) This subsection applies to a provision contained in an order if--

(a) it is the first to be made in the exercise of the power conferred by subsection (1) of section 326 or it removes a body from those for the time being designated under that subsection; or

(b) it is the first to be made in the exercise of the power conferred by subsection (6) of section 327 or it adds a description of regulated activity or investment to those for the time being specified for the purposes of that subsection.

(8) Any other statutory instrument made under this Act, apart from one made under section 431(2) or to which paragraph 26 of Schedule 2 applies, shall be subject to annulment in pursuance of a resolution of either House of Parliament.

430 Extent

(1) This Act, except Chapter IV of Part XVII, extends to Northern Ireland.

(2) Except where Her Majesty by Order in Council provides otherwise, the extent of any amendment or repeal made by or under this Act is the same as the extent of the provision amended or repealed.

(3) Her Majesty may by Order in Council provide for any provision of or made under this Act relating to a matter which is the subject of other legislation which extends to any of the Channel Islands or the Isle of Man to extend there with such modifications (if any) as may be specified in the Order.

431 Commencement

(1) The following provisions come into force on the passing of this Act--

(a) this section;

(b) sections 428, 430 and 433;

(2) The other provisions of this Act come into force on such day as the Treasury may by order appoint; and different days may be appointed for different purposes.

432 Minor and consequential amendments, transitional provisions and repeals

(1) Schedule 20 makes minor and consequential amendments.

(2) Schedule 21 makes transitional provisions.

(3) The enactments set out in Schedule 22 are repealed.

433 Short title

This Act may be cited as the Financial Services and Markets Act 2000.

SCHEDULES

Section 1.

SCHEDULE 1 The Financial Services Authority

Part I General

Interpretation

1 (1) In this Schedule--

"the 1985 Act" means the [1985 c. 6.] Companies Act 1985;
"non-executive committee" means the committee maintained under paragraph 3;
"functions", in relation to the Authority, means functions conferred on the Authority by or under any provision of this Act.

(2) For the purposes of this Schedule, the following are the Authority's legislative functions--

(a) making rules;

(b) issuing codes under section 64 or 119;

(d) giving directions under section 316, 318 or 328;

(e) issuing general guidance (as defined by section 158(5)).

Constitution

2 (1) The constitution of the Authority must continue to provide for the Authority to have--

(a) a chairman; and

(b) a governing body.

(2) The governing body must include the chairman.

(3) The chairman and other members of the governing body must be appointed, and be liable to removal from office, by the Treasury.

(4) The validity of any act of the Authority is not affected--

(a) by a vacancy in the office of chairman; or

(b) by a defect in the appointment of a person as a member of the governing body or as chairman.

Non-executive members of the governing body

3 (1) The Authority must secure--

(a) that the majority of the members of its governing body are non-executive members; and

(b) that a committee of its governing body, consisting solely of the non-executive members, is set up and maintained for the purposes of discharging the functions conferred on the committee by this Schedule.

(2) The members of the non-executive committee are to be appointed by the Authority.

(3) The non-executive committee is to have a chairman appointed by the Treasury from among its members.

Functions of the non-executive committee

4 (1) In this paragraph "the committee" means the non-executive committee.

(2) The non-executive functions are functions of the Authority but must be discharged by the committee.

(3) The non-executive functions are--

(a) keeping under review the question whether the Authority is, in discharging its functions in accordance with decisions of its governing body, using its resources in the most efficient and economic way;

(b) keeping under review the question whether the Authority's internal financial controls secure the proper conduct of its financial affairs; and

(i) the chairman of the Authority's governing body; and

(ii) the executive members of that body.

(4) The function mentioned in sub-paragraph (3)(b) and those mentioned in sub-paragraph (3)(c) may be discharged on behalf of the committee by a sub-committee.

(5) Any sub-committee of the committee--

(a) must have as its chairman the chairman of the committee; but

(b) may include persons other than members of the committee.

(6) The committee must prepare a report on the discharge of its functions for inclusion in the Authority's annual report to the Treasury under paragraph 10.

(7) The committee's report must relate to the same period as that covered by the Authority's report.

Arrangements for discharging functions

5 (1) The Authority may make arrangements for any of its functions to be discharged by a committee, sub-committee, officer or member of staff of the Authority.

(2) But in exercising its legislative functions, the Authority must act through its governing body.

(3) Sub-paragraph (1) does not apply to the non-executive functions.

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