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Session 1998-99 Internet Publications Other Bills before Parliament

Financial Services and Markets Bill This is the text of the Financial Services and Markets Bill, as presented to the House of Commons on 17th June 1999.
	EXPLANATORY NOTES Explanatory Notes to the Bill, prepared by HM Treasury, are published separately as Bill 121- EN. HC Bill 121- EN. EUROPEAN CONVENTION ON HUMAN RIGHTS Mr Chancellor of the Exchequer has made the following statement under section 19(1)(a) of the Human Rights Act 1998: In my view the provisions of the Financial Services and Markets Bill are compatible with the Convention rights.
	Financial Services and Markets Bill
	ARRANGEMENT OF CLAUSES PART I THE REGULATOR Clause   1. The Financial Services Authority. The Authority's general duties 2. The Authority's general duties. The regulatory objectives 3. Market confidence. 4. Public awareness. 5. The protection of consumers. 6. The reduction of financial crime. Arrangements for consulting practitioners and consumers 7. The Authority's general duty to consult. 8. The Practitioner Panel. 9. The Consumer Panel. Reviews 10. Reviews. 11. Right to obtain documents and information. Inquiries 12. Cases in which the Treasury may arrange independent inquiries. 13. Power to appoint person to hold an inquiry. 14. Powers of appointed person and procedure. 15. Conclusion of inquiry. 16. Obstruction and contempt. PART II REGULATED AND PROHIBITED ACTIVITIES The general prohibition 17. The general prohibition. Requirement for permission 18. Authorised persons acting without permission. Financial promotion 19. Restrictions on financial promotion. Regulated activities 20. The classes of activity and categories of investment. Offences 21. Contravention of the general prohibition. 22. False claims to be authorised or exempt. 23. Contravention of section 19. Enforceability of agreements 24. Agreements made by unauthorised persons. 25. Agreements made through unauthorised persons. 26. Agreements made unenforceable by section 24 or 25. 27. Enforceability of agreements resulting from unlawful communications. PART III AUTHORISATION AND EXEMPTION Authorisation 28. Authorised persons. 29. Partnerships and unincorporated associations. Ending of authorisation 30. Withdrawal of authorisation by the Authority. 31. EEA firms. 32. Treaty firms. 33. UCITS qualifiers. Exemption 34. Exemption orders. 35. Exemption of appointed representatives. PART IV PERMISSION TO CARRY ON REGULATED ACTIVITIES Application for permission 36. Application for permission. Permission 37. Giving permission. 38. Imposition of requirements. Variation and cancellation of Part IV permission 39. Variation etc at request of authorised person. 40. Variation etc on the Authority's own initiative. 41. Variation of permission on acquisition of control. 42. Exercise of powers in support of overseas regulator. 43. Prohibitions and restrictions. Connected persons 44. Persons connected with an applicant. Additional permissions 45. Authority's duty to consider other permissions etc. Procedure 46. Applications under this Part. 47. Determination of applications. 48. When permission is given. 49. Refusal of application for permission. 50. Procedure on exercise of the Authority's own-initiative power. 51. Exercise of own-initiative power with immediate effect. References to the Tribunal 52. Right to refer matters to the Tribunal. PART V PERFORMANCE OF REGULATED ACTIVITIES Prohibition orders 53. Prohibition orders. 54. Prohibition orders: procedure and right to refer to Tribunal. 55. Applications relating to prohibitions: procedure and right to refer to Tribunal. Approval 56. Approval for particular arrangements. 57. Applications for approval. 58. Determination of applications. 59. Applications for approval: procedure and right to refer to Tribunal. 60. Withdrawal of approval. Conduct 61. Conduct: statements and codes. 62. Statements and codes: procedure. 63. Disciplinary powers. 64. Disciplinary measures: procedure and right to refer to Tribunal. 65. Notice for payment. 66. Publication. 67. Practice statements and guidance. Breach of statutory duty 68. Actions for damages. PART VI OFFICIAL LISTING The competent authority 69. The competent authority. The official list 70. The official list. Listing 71. Applications for listing. 72. Decision on application. 73. Discontinuance and suspension of listing. Listing particulars 74. Listing particulars and other documents. 75. General duty of disclosure in listing particulars. 76. Supplementary listing particulars. 77. Exemptions from disclosure. 78. Registration of listing particulars. Prospectuses 79. Prospectuses. 80. Publication of prospectus. 81. Application of this Part to prospectuses. 82. Approval of prospectus where no application for listing. Compensation 83. Compensation for false or misleading particulars. Penalties 84. Penalties for breach of listing rules. 85. Warning notices. 86. Statement of policy. 87. Appeals against penalties. 88. Notice for payment. Miscellaneous 89. Obligations of issuers of listed securities. 90. Advertisements etc in connection with listing applications. 91. Fees. 92. Listing rules: general provisions. 93. Exemption from liability in damages. 94. Interpretation of this Part. PART VII PENALTIES FOR MARKET ABUSE Market abuse 95. Market abuse. The Code 96. The Code. 97. Effect of the Code. Power to impose penalties 98. Power to impose penalties in cases of market abuse. Statement of policy 99. Statement of policy. Procedure 100. Warning notices. 101. Decision notices and right to refer to Tribunal. 102. Notice for payment. Miscellaneous 103. Suspension of investigations. 104. Power of court to impose penalty in cases of market abuse. 105. Guidance. 106. Effect on transactions. PART VIII HEARINGS AND APPEALS 107. The Financial Services and Markets Tribunal. 108. Proceedings: general provision. 109. Further appeal on a point of law. PART IX RULES AND GUIDANCE CHAPTER I RULE-MAKING POWERS 110. General rule-making power. 111. Non-regulated activity rules. 112. Miscellaneous ancillary matters. 113. Insurance business: regulations supplementing Authority's rules. 114. Endorsement of codes etc. issued by other bodies. Price stabilising and certain other rules 115. Price stabilising rules. 116. Financial promotion rules. 117. Money laundering rules. Modification or waiver 118. Modification or waiver of rules. Contravention of rules 119. Evidential provisions. 120. Actions for damages. 121. Limits on effect of contravening rules. Procedural provisions 122. Notification of rules to Treasury. 123. Rule-making instruments. 124. Verification of rules. 125. Consultation. 126. General supplementary powers. CHAPTER II GUIDANCE 127. Guidance. 128. Notification of guidance to Treasury. CHAPTER III COMPETITION SCRUTINY 129. Interpretation. 130. Reports by Director General of Fair Trading. 131. Power of the Director to request information. 132. Powers and duties of Treasury. Exclusions from UK competition law 133. The Fair Trading Act 1973. 134. The Competition Act 1998. PART X INFORMATION GATHERING AND INVESTIGATIONS Powers to gather information 135. Authority's power to require information. 136. Reports by skilled persons. Appointment of investigators 137. Appointment of persons to carry out general investigations. 138. Appointment of persons to carry out investigations in particular cases. Assistance to overseas regulators 139. Investigations etc in support of overseas regulator. Conduct of investigations 140. Investigations: general. 141. Powers of persons appointed under section 137. 142. Additional power of persons appointed as a result of section 138(1). 143. Powers of person appointed to investigate as a result of section 138(2). 144. Admissibility of statements made to investigators. 145. Information and documents: supplemental provisions. 146. Entry of premises under warrant. Offences 147. Offences. PART XI CONTROL OVER AUTHORISED PERSONS Notice of control 148. Obligation to notify the Authority. Acquiring, increasing and reducing control 149. Acquiring control. 150. Increasing control. 151. Reducing control. Acquiring or increasing control: procedure 152. Notification. 153. Duty of Authority in relation to notice of control. 154. Approval of acquisition of control. 155. Conditions attached to approval. 156. Objection to acquisition of control. 157. Notices of objection: procedure. Improperly acquired shares 158. Improperly acquired shares. Reducing control: procedure 159. Notification. Offences 160. Offences under this Part. Miscellaneous 161. Power to change definitions of control etc. PART XII INCOMING FIRMS: INTERVENTION BY AUTHORITY Interpretation 162. Interpretation of this Part. 163. General grounds on which powers of intervention are exercisable. 164. Exercise of powers in support of overseas regulator. 165. The power of intervention. Exercise of powers of intervention 166. Procedure. 167. Procedure in cases of urgency. 168. Power to apply to court for injunction in respect of certain overseas insurance companies. 169. Additional procedure for EEA firms in certain cases. Supplemental 170. Rescission and variation of requirements. 171. Re-issue of certificate of authorisation. 172. Effect of certain requirements on other persons. 173. Actions for damages. Powers of Director General of Fair Trading 174. Power to prohibit the carrying on of Consumer Credit Act business. 175. Power to restrict the carrying on of Consumer Credit Act business. PART XIII DISCIPLINARY MEASURES 176. Public censure. 177. Financial penalties. 178. Proposal to take disciplinary measures. 179. Decision notice. 180. Notice for payment. 181. Publication. 182. Statements of policy. PART XIV THE FINANCIAL SERVICES AND MARKETS COMPENSATION SCHEME The scheme manager 183. The scheme manager. The scheme 184. The compensation scheme. Provisions of the scheme 185. General. 186. Rights of the scheme in relevant person's insolvency. 187. Continuity of long-term insurance policies. 188. Insurers in financial difficulties. Annual report 189. Annual report. Information and documents 190. Scheme manager's power to require information. 191. Scheme manager's power to inspect information held by liquidator etc. 192. Powers of court where information required. Miscellaneous 193. Statutory immunity. 194. Management expenses. 195. Tax treatment of levies and repayments. 196. Scheme manager's power to inspect documents held by Official Receiver etc. PART XV THE FINANCIAL SERVICES OMBUDSMAN The scheme 197. The scheme and the scheme operator. 198. Compulsory jurisdiction. 199. Voluntary jurisdiction. Determination of complaints 200. Determination under the compulsory jurisdiction. 201. Awards. 202. Costs. Information 203. Ombudsman's power to require information. 204. Powers of court where information required. Funding 205. Industry funding. PART XVI COLLECTIVE INVESTMENT SCHEMES CHAPTER I INTERPRETATION 206. Collective investment schemes. 207. Other definitions. CHAPTER II RESTRICTIONS ON PROMOTION 208. Restrictions on promotion. 209. Single property schemes. 210. Restriction on approval of promotion. 211. Actions for damages. CHAPTER III AUTHORISED UNIT TRUST SCHEMES Applications for authorisation 212. Applications for authorisation of unit trust schemes. 213. Authorisation orders. 214. Determination of applications. Applications refused 215. Procedure when refusing an application. Certificates 216. Certificates. Rules 217. Rules. 218. Scheme particulars rules. 219. Disqualification of auditor for breach of trust scheme rules. 220. Modification or waiver of rules. Alterations of schemes 221. Alteration of schemes and changes of manager or trustee. 222. Procedure when refusing approval of change of manager or trustee. Exclusion clauses 223. Avoidance of exclusion clauses. Ending of authorisation 224. Revocation of authorisation order otherwise than by consent. 225. Procedure. 226. Requests for revocation of authorisation order. Powers of intervention 227. Directions. 228. Applications to the court. 229. Procedure: giving directions and varying them otherwise than as requested. 230. Procedure: refusal to revoke or vary direction. 231. Procedure: revocation of direction and grant of request for variation. 232. Procedure in cases of urgency. CHAPTER IV OPEN-ENDED INVESTMENT COMPANIES 233. Open-ended investment companies. 234. Amendment of section 716 Companies Act 1985. CHAPTER V RECOGNISED OVERSEAS SCHEMES Schemes constituted in other EEA States 235. Schemes constituted in other EEA States. 236. Representations and references to the Tribunal. 237. Disapplication of rules. 238. Power of Authority to suspend promotion of scheme. Schemes authorised in designated countries or territories 239. Schemes authorised in designated countries or territories. 240. Procedure. Individually recognised overseas schemes 241. Individually recognised overseas schemes. 242. Matters that may be taken into account. 243. Applications for recognition of individual schemes. 244. Determination of applications. 245. Procedure when refusing an application. 246. Alteration of schemes and changes of operator, trustee or depositary. Rules and information gathering: schemes recognised under sections 239 and 241 247. Rules as to scheme particulars. 248. Power to require information. Revocation of recognition under sections 239 and 241 249. Revocation of recognition. 250. Procedure. Powers of intervention: schemes recognised under sections 239 and 241 251. Directions. 252. Procedure. 253. Procedure in cases of urgency. Facilities and information in UK 254. Facilities and information in UK. CHAPTER VI INVESTIGATIONS 255. Power to investigate. PART XVII RECOGNISED INVESTMENT EXCHANGES AND CLEARING HOUSES CHAPTER I EXEMPTION General 256. Exemption for recognised investment exchanges and clearing houses. 257. Qualification for recognition. Applications for recognition 258. Application by an investment exchange. 259. Application by a clearing house. 260. Applications: supplementary. 261. Recognition orders. 262. Liability in relation to recognised body's regulatory functions 263. Overseas investment exchanges and clearing houses. Supervision 264. Notification requirements. 265. Modification or waiver of rules. 266. Notification: overseas investment exchanges and overseas clearing houses. 267. Authority's power to give directions. 268. Revoking recognition. 269. Directions and revocation: procedure. 270. Complaints about recognised bodies. Other matters 271. Supervision of certain contracts. CHAPTER II COMPETITION SCRUTINY 272. Interpretation. 273. Examination of rules and guidance. 274. Continuing scrutiny. 275. Initial report by Director General of Fair Trading. 276. Further reports by Director General of Fair Trading. 277. Reports: supplementary. 278. Investigations by Director General of Fair Trading. 279. Procedure on exercise of certain powers by Treasury. CHAPTER III EXCLUSION FROM OTHER UK COMPETITION LAW The Fair Trading Act 1973 280. Monopoly situations etc. The Competition Act 1998 (c.41.) 281. The Chapter I prohibition. 282. The Chapter II prohibition. CHAPTER IV Interpretation 283. Interpretation of this Part. PART XVIII LLOYD'S General 284. Authority's general duty. The Society 285. The Society: authorisation and permission. Power to apply Act to Lloyd's underwriting 286. Direction by Authority. 287. The core provisions. 288. Exercise of powers through Council. Former underwriting members 289. Former underwriting members. Supplemental 290. Interpretation of this Part. PART XIX MUTUAL SOCIETIES Friendly societies 291. The Friendly Societies Commission. 292. The Registry of Friendly Societies. Building societies 293. The Building Societies Commission. 294. The Building Societies Investor Protection Board. Industrial and provident societies 295. Industrial and provident societies. Supplemental 296. Supplemental provisions. PART XX AUDITORS AND ACTUARIES Appointment 297. Appointment. Information 298. Auditor or actuary's access to books etc. 299. Information given by auditor or actuary to the Authority. 300. Information given by auditor or actuary to the Authority: persons with close links. 301. Duty of auditor or actuary resigning etc. to give notice. Disqualification 302. Disqualification. Offence 303. Provision of false or misleading information to auditor or actuary. PART XXI PUBLIC RECORD AND DISCLOSURE OF INFORMATION The public record 304. The record of authorised persons etc. Disclosure of information 305. Restrictions on disclosure of confidential information by Authority etc. 306. Exceptions from section 305. 307. Offences. 308. Removal of other restrictions on disclosure. PART XXII INSOLVENCY Interpretation 309. Interpretation of this Part. Company voluntary arrangements 310. Authority's powers to participate in proceedings. Administration orders 311. Petitions. 312. Insurance companies. 313. Administrator's duty to report to Authority. 314. Authority's powers to participate in proceedings. Voluntary winding up 315. Authority's powers to participate in proceedings. 316. Insurance companies carrying on long-term business. Winding up by the court 317. Winding-up petitions. 318. Winding-up petitions: EEA and Treaty firms. 319. Insurance companies: service of petition etc. on Authority. 320. Liquidator's duty to report to Authority. 321. Authority's powers to participate in proceedings. Bankruptcy 322. Petitions. 323. Insolvency practitioner's duty to report to Authority. 324. Authority's powers to participate in proceedings. Provisions against debt avoidance 325. Authority's right to apply for an order. Supplemental provisions concerning insurance companies 326. Continuation of long term business while in liquidation. 327. Reducing the value of contracts instead of winding up. 328. Treatment of assets on winding up. 329. Winding up rules. PART XXIII INJUNCTIONS AND RESTITUTION Injunctions 330. Injunctions. 331. Injunctions in cases of market abuse. Restitution orders 332. Restitution orders. 333. Restitution orders in cases of market abuse. Restitution required by Authority 334. Power of Authority to require restitution. 335. Warning notices. 336. Decision notices. 337. Notice for payment. PART XXIV NOTICES Warning notices 338. Warning notices. Decision notice 339. Decision notices. The Authority's procedures 340. The Authority's procedures. PART XXV OFFENCES Miscellaneous offences 341. Misleading statements and practices. 342. Misleading the Authority: residual cases. Bodies corporate and partnerships 343. Offences by bodies corporate etc. Institution of proceedings 344. Proceedings for offences. 345. Power of the Authority to institute proceedings for certain other offences. PART XXVI MISCELLANEOUS Third countries: Community measures 346. Directions. 347. Interpretation of section 346. 348. Consequences of a direction under section 346. 349. EFTA firms. International obligations 350. International obligations. Gaming contracts 351. Gaming contracts. PART XXVII INTERPRETATION 352. Definitions. 353. Carrying on activities in the United Kingdom. 354. Parent and subsidiary undertaking. 355. Group. 356. Controller. 357. Manager. 358. Expressions relating to insurance. 359. Expressions relating to authorisation elsewhere in the single market. 360. Privileged communications. PART XXVIII SUPPLEMENTAL 361. Consequential and supplementary provision. 362. Regulations and orders. 363. Parliamentary control of statutory instruments. 364. Northern Ireland. 365. Commencement. 366. Minor and consequential amendments, transitional provisions and repeals. 367. Short title.   SCHEDULES:     Schedule 1 - The Financial Services Authority.     Part I - General.     Part II - Status.     Part III - Penalties and Fees.     Part IV - Miscellaneous.     Schedule 2 - Regulated Activities.     Part I - Regulated Activities.     Part II - Investments.     Part III - Supplemental Provisions.     Schedule 3 - EEA Passport Rights.     Part I - Defined terms.     Part II - Exercise of Passport Rights by EEA Firms.     Part III - Exercise of Passport Rights by UK Firms.     Schedule 4 - Treaty Rights.     Schedule 5 - Persons Concerned in Collective Investment Schemes.     Schedule 6 - Qualifying Conditions.     Part I - Section 36 Authorisation.     Part II - Authorisation.     Part III - Additional Conditions.     Schedule 7 - Transfer of functions under Part VI.     Schedule 8 - Non-listing Prospectuses.     Schedule 9 - Compensation: Exemptions.     Schedule 10 - Offers of Securities.     Schedule 11 - The Financial Services and Markets Tribunal.     Part I - General.     Part II - The Tribunal.     Part III - Constitution of Tribunal.     Part IV - Tribunal Procedure.     Schedule 12 - Information and Investigations: Connected Persons.     Part I - Rules for Specific Bodies.     Part II - Additional Rules.     Schedule 13 - Prohibitions and Restrictions imposed by Director General of Fair Trading.     Schedule 14 - Financial Services Ombudsman Scheme.     Part I - General.     Part II - The Scheme Operator.     Part III - The Compulsory Jurisdiction.     Part IV - The Voluntary Jurisdiction.     Schedule 15 - Mutuals.     Part I - Friendly Societies.     Part II - Building Societies.     Part III - Industrial and Provident Societies.     Schedule 16 - Minor and Consequential Amendments.     Schedule 17 - Repeals.

© Parliamentary copyright 1999

Prepared 17 June 1999