The Banking Coordination (Second Council Directive) Regulations 1992

Regulation 55.

SCHEDULE 9AMENDMENTS OF FINANCIAL SERVICES ACT

Preliminary

1.  In this Schedule—

“the Act” means the Financial Services Act(1);

“investment agreement” has the same meaning as in the Act.

Restriction on carrying on business

2.  Section 5 of the Act (agreements made by or through unauthorised persons) shall have effect as if the persons mentioned in subsection (1)(b)(i) included a European institution acting in the course of home-regulated investment business carried on by it in the United Kingdom.

Authorised persons

3.  Section 10 of the Act (grant and refusal of recognition of self-regulating organisations) shall have effect as if the excepted cases mentioned in subsection (3) included the case where the member is a European institution and the business is home-regulated investment business.

4.  Section 13 of the Act(2) (alteration of rules of recognised self-regulating organisation for protection of investors) shall have effect as if the excepted cases mentioned in subsection (2) (both as amended and as originally enacted) included the case where the member is a European institution and the business is home-regulated investment business.

5.  Section 28 of the Act (withdrawal and suspension of authorisation) shall have effect in relation to an authorisation granted to a European institution as if the reference in subsection (1)(a) to the investment business which the holder of the authorisation is carrying on or proposing to carry on did not include a reference to any home-regulated investment business.

6.  Section 32 of the Act (notice of commencement of business) shall have effect in relation to a notice given under subsection (1) by a European institution or quasi-European authorised institution as if the reference in subsection (2)(a) to the investment business which is proposed to be carried on did not include a reference to any home-regulated investment business.

Exempted persons

7.  Section 44 of the Act (appointed representatives) shall have effect as if any reference to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom.

8.  Section 45 of the Act (miscellaneous exemptions) shall have effect as if the reference in subsection (2) to a partnership which is an authorised person included a reference to a partnership which is or was a European institution carrying on home-regulated investment business in the United Kingdom.

Conduct of business

9.—(1) Section 47A of the Act(3) (statements of principle) shall have effect as if—

(a)the reference in subsection (1) to the conduct expected of persons authorised to carry on investment business included a reference to the conduct expected of European institutions carrying on home-regulated investment business in the United Kingdom; and

(b)the reference in subsection (4) to the withdrawal or suspension of authorisation under section 28 of the Act included a reference to the imposition of a prohibition under regulation 15 of these Regulations.

(2) That section shall also have effect as if it included provision that a statement of principle issued under that section shall not include, as respects any European institution—

(a)provision as to the fitness of the institution to carry on any home-regulated investment business; or

(b)provision as to any other matter for which, under the Second Council Directive, responsibility is reserved to the relevant supervisory authority in the institution’s home State.

10.—(1) Section 48 of the Act(4) (conduct of business rules) shall have effect as if—

(a)the reference in subsection (1) to the conduct of investment business by authorised persons included a reference to the conduct of home-regulated investment business carried on in the United Kingdom by European institutions; and

(b)the reference in subsection (2) to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom.

(2) That section shall have effect as if it included provision that rules under that section shall not include, as respects any European institution—

(a)provision prohibiting the institution from carrying on, or holding itself out as carrying on, any home-regulated investment business; or

(b)provision as to any matter for which, under the Second Council Directive, responsibility is reserved to the relevant supervisory authority in the institution’s home State.

11.—(1) Section 49 of the Act(5) (financial resources rules) shall have effect as if it included provision that rules under that section shall not include, as respects any European institution which is a member of a recognised self-regulating organisation, provision requiring the institution to have and maintain financial resources in respect of any home-regulated investment business carried on by it.

(2) Subsection (2) of that section shall also have effect in relation to an authorised person who is a European institution as if the reference in paragraph (b) to any business (whether or not investment business) carried on by the person concerned did not include a reference to any homeregulated investment business.

12.—(1) Section 51 of the Act (cancellation rules) shall have effect as if the reference in subsection (1) to a person who has entered or offered to enter into an investment agreement with an authorised person included a reference to a person who has entered or offered to enter into an investment agreement to which sub-paragraph (2) below applies.

(2) This sub-paragraph applies to an investment agreement which is made by a European institution in the course of the carrying on by it of home-regulated investment business in the United Kingdom.

13.—(1) Section 52 of the Act(6) (notification regulations) shall have effect as if any reference to authorised persons, or an authorised person, included a reference to European institutions, or a European institution, carrying on home-regulated investment business in the United Kingdom.

(2) That section shall also have effect as if it included provision that regulations under that section shall not require European institutions to furnish information which is not reasonably required for purposes connected with the exercise of functions under the Act or these Regulations.

14.  Section 53 of the Act (indemnity rules) shall have effect as if the reference in subsection (1) to civil liability incurred by an authorised person in connection with his investment business included a reference to civil liability incurred by a European institution in connection with home-regulated investment business carried on by it in the United Kingdom.

15.  Section 54 of the Act(7) (compensation fund) shall have effect as if—

(a)it included provision that rules establishing a scheme under that section may include in the scheme provision for compensating investors in cases where persons who are or have been European institutions are unable, or likely to be unable, to satisfy claims in respect of any civil liability incurred by them in connection with home-regulated investment business carried on by them in the United Kingdom; and

(b)any reference in subsection (2) to authorised persons included a reference to European institutions carrying on home-regulated investment business in the United Kingdom.

16.  Section 55 of the Act(8) (clients' money) shall have effect as if any reference to authorised persons, or an authorised person, included a reference to European institutions, or a European institution, carrying on home-regulated investment business in the United Kingdom.

17.  Section 57 of the Act (restrictions on advertising) shall have effect as if any reference to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom.

18.  Section 59 of the Act (employment of prohibited persons) shall have effect as if any reference to authorised persons, or an authorised person, included a reference to European institutions, or a European institution, carrying on home-regulated investment business in the United Kingdom.

19.  Section 60 of the Act (public statement as to person’s misconduct) shall have effect as if—

(a)the reference in subsection (1) to a person who is or was an authorised person by virtue of section 25 of that Act included a reference to a person who is or was a European institution carrying on home-regulated investment business in the United Kingdom;

(b)the reference in subsection (3) to the authorised person included a reference to the European institution; and

(c)it included provision that where any notice under that section is given to a person who is or was a European institution, a copy of the notice shall be served on the Bank.

20.  Section 64 of the Act (scope of powers of intervention) shall have effect in relation to an authorised person who is a European institution as if the reference in subsection (1) to investment business of a particular kind did not include a reference to any home-regulated investment business which the authorised person is carrying on or proposing to carry on.

21.  Section 65 of the Act (restriction of business) shall have effect as if the reference in subsection (1) to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom.

22.  Section 66 of the Act (restriction on dealing with assets) shall have effect as if—

(a)the reference in subsection (1) to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom; and

(b)it included provision that a prohibition may not be imposed under that section in relation to a European institution unless the relevant supervisory authority in the institution’s home State has requested that measures be taken for the purpose of ensuring that the institution has sufficient assets available to cover risks arising from open positions on financial markets in the United Kingdom.

23.  Section 67 of the Act (vesting of assets in trustee) shall have effect as if—

(a)any reference to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom; and

(b)it included provision that a requirement may not be imposed under that section in relation to a European institution unless the relevant supervisory authority in the institution’s home State has requested that measures be taken for the purpose of ensuring that the institution has sufficient assets available to cover risks arising from open positions on financial markets in the United Kingdom.

Collective investment schemes

24.  Section 75 of the Act(9) (collective investment schemes: interpretation) shall have effect as if the reference in subsection (6) to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom.

25.  Section 76 of the Act (restrictions on promotion) shall have effect as if any reference to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom.

26.  Section 93 of the Act (applications to the court) shall have effect as if the reference in subsection (1) to an authorised person included a reference to a European institution.

Information

27.  Section 102 of the Act (register of authorised persons etc.) shall have effect as if it included provision that—

(a)the register kept under that section shall contain an entry in respect of each institution which appears to the Board to be a European institution carrying on home-regulated investment business in the United Kingdom;

(b)the entry in respect of each such institution shall consist of—

(i)information as to the services which the institution holds itself out as able to provide; and

(ii)such other information as the Board may determine;

(c)where it appears to the Board that any person in respect of whom there is an entry in the register by virtue of paragraph (a) above has ceased to be a European institution carrying on home-regulated investment business in the United Kingdom, the Board shall make a note to that effect in the entry together with the reason why the person in question is no longer such an institution; and

(d)an entry in respect of which a note is made by virtue of paragraph (c) above may be removed from the register at the end of such period as the Board thinks fit.

28.  Section 104 of the Act (power to call for information) shall have effect as if—

(a)the reference in subsection (1) to a person who is authorised to carry on investment business by virtue of any of the provisions there mentioned included a reference to a European institution carrying on home-regulated investment business in the United Kingdom; and

(b)references to functions under the Act included references to functions under these Regulations.

29.  Section 106 of the Act(10) (exercise of investigation powers by officer etc.) shall have effect as if it included provision that—

(a)where the Secretary of State or the Board authorises a person other than one of his or its officers to exercise any powers under section 105 of the Act (investigation powers) in relation to any home-regulated investment business of a European institution, the Secretary of State or, as the case may be, the Board may determine that subsection (3) of section 106 shall not apply; and

(b)where such a determination is made, the person authorised to exercise the powers shall make a report to the relevant supervisory authority in the institution’s home State, in such manner as that authority may require, on the exercise of those powers and the results of exercising them.

Auditors

30.  Subsection (3) of section 107 of the Act(11) (appointment of auditors) shall have effect in relation to an auditor appointed by an authorised person which is a European institution as if the reference to the accounts of the authorised person did not include a reference to any accounts relating to a home-regulated activity.

31.  Section 109 of the Act (communication by auditor with supervisory authorities) shall have effect as if in subsection (1)—

(a)the reference to an authorised person included a reference to a European institution; and

(b)the reference to functions under the Act included a reference to functions under these Regulations.

32.  Subsection (3) of section 110 of the Act (overseas business) shall have effect in relation to a European institution as if any reference to investment business did not include a reference to home-regulated investment business; and the reference in paragraph (b) of that subsection to the powers and duties of an auditor shall be construed accordingly.

Fees

33.  Section 113 of the Act (periodical fees) shall have effect as if it included provision that a European institution carrying on home-regulated investment business in the United Kingdom shall pay such periodical fees to the Board as may be prescribed by regulations made under that section.

Prevention of restrictive practices

34.  Section 119 of the Act(12) (recognised self-regulating organisations, investment exchanges and clearing houses) shall have effect as if any reference in subsections (1) and (2) to the protection of investors included a reference to compliance with the Second Council Directive.

35.  Section 121 of the Act(13) (designated agencies) shall have effect as if any reference in subsections (1) and (2) to the protection of investors included a reference to compliance with the Second Council Directive.

Relations with other regulatory authorities

36.—(1) Section 128C of the Act(14) (enforcement in support of overseas regulatory authority) shall have effect as if it—

(a)required the powers mentioned in subsection (1) to be exercised at the request of the relevant supervisory authority in another member State if their exercise is necessary for the purposes of complying with the Second Council Directive; and

(b)included provision that, in relation to the exercise of those powers in such a case, subsections (4) and (5) shall not apply and the Board shall notify the action taken by it to that authority.

(2) That section shall also have effect as if the reference in subsection (2) to the power to withdraw or suspend authorisation under section 28 of the Act included a reference to the power to impose a prohibition under regulation 15 of these Regulations.

Official listing of securities

37.  Section 154 of the Act (advertisements etc. in connection with listing applications) shall have effect as if—

(a)it included provision that, where a European institution carrying on home-regulated investment business in the United Kingdom contravenes that section, it shall be treated as having contravened rules made under Chapter V of Part I of the Act, or in the case of an institution which is a member of a recognised self-regulating organisation, the rules of that organisation; and

(b)the reference in subsection (3) to a person other than an authorised person did not include a reference to such an institution.

Offers of unlisted securities

38.  Section 171 of the Act(15) (contraventions in relation to offers of unlisted securities) shall have effect as if—

(a)it included provision that, where a European institution carrying on home-regulated investment business in the United Kingdom does any of the things specified in paragraphs (a) to (c) of subsection (1), it shall be treated as having contravened rules made under Chapter V of Part I of the Act, or in the case of an institution which is a member of a recognised self-regulating organisation, the rules of that organisation; and

(b)the reference in subsection (3) to a person other than an authorised person did not include a reference to such an institution.

Insider dealing

39.—(1) Section 178 of the Act (penalty for failure to co-operate with section 177 investigations) shall have effect as if—

(a)the reference in subsection (3) to an authorised person included a reference to a European institution; and

(b)the notices which may be served on a European institution under that subsection included a notice—

(i)directing that regulation 5(1)(b) of these Regulations shall not apply in relation to the institution after the expiry of a specified period after the service of the notice; or

(ii)directing that during a specified period that provision shall apply in relation to the institution only as respects the performance of contracts entered into before the notice comes into force;

(c)the reference in subsection (4) to the period mentioned in paragraphs (a) and (c) of subsection (3) included a reference to the period mentioned in paragraph (b)(i) and (ii) above;

(d)any reference in subsection (5) to an unauthorised person did not include a reference to a European institution carrying on home-regulated investment business in the United Kingdom; and

(e)the reference in that subsection to any authorised person included a reference to such a European institution.

(2) That section shall also have effect as if it included provision that if, it appears to the Secretary of State—

(a)that a person on whom he serves a notice under subsection (3) is a European institution carrying on home-regulated investment business in the United Kingdom; or

(b)that a person on whom he serves a revocation notice under subsection (7) was such an institution at the time when the notice which is being revoked was served,

he shall serve a copy of the notice on the Board or, in the case of an institution which is a member of a recognised self-regulating organisation, that organisation.

Restrictions on disclosure of information

40.  Section 179 of the Act(16) (restrictions on disclosure of information) shall have effect as if the reference in subsection (2) to functions under the Act included a reference to functions under these Regulations.

41.  Section 180 of the Act(17) (exceptions from restriction on disclosure of information) shall have effect as if—

(a)the reference in paragraph (g) of subsection (1) to functions under the Banking Act included a reference to functions under these Regulations;

(b)the reference in that subsection to functions under the Building Societies Act included a reference to functions under these Regulations; and

(c)the reference in that subsection to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom.

Miscellaneous and supplementary

42.  Section 191 of the Act (occupational pension schemes) shall have effect as if any reference to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom.

43.  Section 206 of the Act(18) shall have effect as if the reference in subsection (1) to authorised persons included a reference to European institutions.

Activities constituting investment business

44.—(1) Paragraph 17 of Schedule 1 to the Act(19) (investments and investment business) shall have effect as if any reference to authorised persons, or an authorised person, included a reference to European institutions, or a European institution, carrying on home-regulated investment business in the United Kingdom.

(2) Paragraph 18 of that Schedule shall have effect as if the reference in sub-paragraph (2) to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom.

(3) Paragraph 26 of that Schedule shall have effect as if any reference to an authorised person, or authorised persons, included a reference to a European institution, or European institutions, carrying on home-regulated investment business in the United Kingdom.

Requirements for recognition of self-regulating organisation

45.—(1) Paragraph 2 of Schedule 2 to the Act (requirements for recognition of self-regulating organisation) shall have effect as if it included provision that the rules and practices of the organisation must be such as to secure that no European institution, other than one on which an absolute prohibition has been imposed under regulation 15 of these Regulations, is refused admission to the organisation, or expelled from it, for reasons relating to the institution’s fitness to carry on any home-regulated investment business.

(2) Paragraph 3 of that Schedule(20) shall have effect as if it included provision that the rules of the organisation must not include, as respects any European institution—

(a)provision requiring the institution to have and maintain financial resources in respect of any home-regulated investment business carried on by it; or

(b)provision as to any other matter for which, under the Second Council Directive, responsibility is reserved to a supervisory authority in the institution’s home State.

(3) That paragraph shall also have effect as if—

(a)the reference in sub-paragraph (3) to Chapter VI of Part I of the Act included a reference to regulation 16 of these Regulations; and

(b)it included provision that the rules of the organisation must be such as to secure that, where a power falling within that sub-paragraph is exercisable by virtue of a European institution’s contravention of a requirement to furnish information for statistical purposes, the exercise of the power shall be subject to such restrictions as are necessary for the purposes of complying with article 21 of the Second Council Directive.

(4) Paragraph 7 of that Schedule shall have effect as if it included provision that, for the purposes of complying with the Second Council Directive, the organisation must be able and willing to co-operate, by the sharing of information and otherwise, with supervisory authorities in other member States.

Qualifications of designated agency

46.—(1) Paragraph 4 of Schedule 7 to the Act(21) (qualifications of designated agency) shall have effect as if any reference to authorised persons included a reference to European institutions carrying on home-regulated investment business in the United Kingdom.

(2) Paragraph 5 of that Schedule shall have effect as if it included provision that, for the purposes of complying with the Second Council Directive, the agency must be able and willing to co-operate, by the sharing of information and otherwise, with supervisory authorities in other member States.

Principles applicable to designated agency’s legislative provisions

47.  Schedule 8 to the Act(22) (principles applicable to designated agency’s legislative provisions) shall have effect as if any reference to an authorised person included a reference to a European institution carrying on home-regulated investment business in the United Kingdom.