Legalize / United Kingdom / Public General Act

Financial Services and Markets Act 2000

Type Public General Act

Publication 2000-06-14

Last updated 2026-09-05

State In force

Department Statute Law Database

Source legislation.gov.uk

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articles Not indexed

An Act to make provision about the regulation of financial services and markets; to provide for the transfer of certain statutory functions relating to building societies, friendly societies, industrial and provident societies and certain other mutual societies; and for connected purposes.

Reform history JSON API

(b) all persons falling within subsection (4), or a particular paragraph of that subsection, or all persons within a specified class of person falling within a particular paragraph of that subsection.

(4) A person falls within this subsection if the person is—

(a) a relevant recognised body (whether or not the appropriate regulator making the order is the appropriate regulator in relation to relevant recognised bodies of that type),

(b) an authorised person,

(d) a person to whom, as a result of Part 20, the general prohibition does not apply in relation to a regulated activity.

(5) If a Part 18 prohibition order makes provision in relation to a person or persons falling within subsection (4)(b), (c) or (d), subsection (3)(a) applies in relation to such provision as if references to an activity or activities were to a regulated activity or regulated activities.

(6) In this section, “specified” means specified in the Part 18 prohibition order.

Procedure for making Part 18 prohibition orders

309C

(1) If the appropriate regulator proposes to make a Part 18 prohibition order it must—

(a) comply with such consultation requirements as may be prescribed, and

(b) give the individual to whom the order would apply a warning notice.

(2) A warning notice under subsection (1)(b) must set out the terms of the prohibition.

(3) If the appropriate regulator decides to make a Part 18 prohibition order it must give the individual to whom the order applies a decision notice.

(4) The decision notice must—

(a) name the individual to whom the Part 18 prohibition order applies, and

(b) set out the terms of the order.

(5) If the appropriate regulator decides to make a Part 18 prohibition order, the individual to whom the order applies may refer the matter to the Tribunal.

Varying and withdrawing Part 18 prohibition orders

309D

(1) This section applies where the appropriate regulator has made a Part 18 prohibition order in relation to an individual.

(2) The appropriate regulator may vary or revoke the Part 18 prohibition order on the application of the individual.

(3) Before varying or revoking a Part 18 prohibition order, the appropriate regulator must comply with such consultation requirements as may be prescribed.

(4) On an application for the variation or revocation of a Part 18 prohibition order—

(a) if the appropriate regulator decides to grant the application, it must give the applicant written notice of its decision;

(b) if the appropriate regulator proposes to refuse the application, it must give the applicant a warning notice;

(5) If the appropriate regulator gives the applicant a decision notice under subsection (4)(c), the applicant may refer the matter to the Tribunal.

Offence of breaching prohibition

309E

(1) An individual who performs a function, or agrees to perform a function, in breach of a Part 18 prohibition order is guilty of an offence.

(2) An individual who commits an offence under this section is liable—

(a) on summary conviction in England and Wales, to a fine;

(b) on summary conviction in Scotland, to a fine not exceeding level 5 on the standard scale;

(3) In proceedings for an offence under this section, it is a defence for the individual to show that the individual took all reasonable precautions and exercised all due diligence to avoid committing the offence.

Duty in relation to prohibited individuals

309F

(1) A person (“P”) falling within section 309B (4) must take reasonable care to ensure that no function in relation to the carrying on of P’s activities is performed by an individual who is prohibited from performing that function by a Part 18 prohibition order.

(2) A contravention of subsection (1) is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.

(3) In prescribed cases, a contravention of subsection (1) which would be actionable at the suit of a private person is actionable at the suit of a person who is not a private person, subject to the defences and other incidents applying to actions for breach of statutory duty.

(4) In this section “private person” has such meaning as may be prescribed.

Approval

Requirement for approval

309G

(1) A relevant recognised body must take reasonable care to ensure that a person does not perform a designated senior management function in relation to the carrying on of an activity by the body, unless the person is acting in accordance with an approval given by the appropriate regulator under this section.

(2) Subsection (1) applies only in relation to a function performed under—

(a) an arrangement entered into by the relevant recognised body, or

(b) an arrangement entered into by a contractor of the relevant recognised body.

(3) “Designated senior management function” means a function of a description specified in rules made by the appropriate regulator.

(4) The appropriate regulator may specify a description of function under subsection (3) only if it is satisfied that the function is a senior management function.

(5) A function is a “senior management function” in relation to the carrying on of a relevant recognised body’s activities if—

(a) the function will require the person performing it to be responsible for managing one or more aspects of the body’s affairs, and

(b) those aspects involve, or might involve, a risk of serious consequences—

(i) for the body, or

(ii) for business or other interests in the United Kingdom.

(6) In subsection (5)(a), the reference to managing one or more aspects of a relevant recognised body’s affairs includes a reference to taking decisions, or participating in the taking of decisions, about how one or more aspects of those affairs should be carried on.

(7) In subsection (2), “arrangement”—

(a) means any kind of arrangement for the performance of a function of a relevant recognised body which is entered into by the body, or by a contractor of the body, and another person, and

(b) includes, in particular, an arrangement under which the other person is appointed to an office, becomes a partner or is employed (whether under a contract of service or otherwise).

Rules under section 309G(3): transitional provision

309H

(1) In relation to rules made by the Bank of England or the FCA under section 309G (3), the power conferred by section 137T(c) to make transitional provision includes, in particular, power—

(a) to provide for anything done under this Chapter, or under Part 5 (performance of regulated activities), in relation to a senior management function of a particular description to be treated as having been done in relation to a senior management function of a different description;

(b) to provide for anything done under this Chapter, or under Part 5 (including any application or order made, any requirement imposed and any approval or notice given) to cease to have effect, to continue to have effect, or to continue to have effect with modifications, or subject to time limits or conditions;

(d) to make saving provision.

(2) The Treasury may by regulations make whatever incidental, consequential, transitional, supplemental or saving provision the Treasury consider appropriate in connection with the making of rules under section 309G (3).

(3) Regulations under subsection (2) may—

(a) confer functions on the Bank of England or the FCA (including the function of making rules);

(b) modify legislation (including any provision of, or made under, this Act).

(4) In subsection (3)(b)—

“legislation” means primary legislation, subordinate legislation (within the meaning of the Interpretation Act 1978) and assimilated direct legislation, but does not include rules or other instruments made by any regulator;

“modify” includes amend, repeal or revoke.

Applications for approval

309I

(1) A relevant recognised body may apply for approval from the appropriate regulator under section 309G for a person to perform a designated senior management function in relation to the carrying on of the body’s activities.

(2) The application must be made in such manner as the appropriate regulator may direct.

(3) The application must contain—

(a) a statement setting out the aspects of the applicant’s affairs which it is intended that the person will be responsible for managing in performing the function, and

(b) such other information as the appropriate regulator may reasonably require.

(4) A statement provided under subsection (3)(a) is known as a “statement of responsibilities”.

(5) At any time after the application is received, and before it is determined, the appropriate regulator may require the applicant to provide it with such further information as it reasonably considers necessary to enable it to determine the application.

(6) The appropriate regulator may require the applicant to present information provided under this section in such form, or to verify the information in such a way, as the appropriate regulator may direct.

(7) Different directions may be given, and different requirements may be imposed, in relation to different applications or categories of application.

(8) In subsection (1), “relevant recognised body” includes—

(a) if recognised investment exchanges are a type of recognised body to which this Chapter applies, a person who has applied for recognition as such under section 287;

(b) if recognised central counterparties are a type of recognised body to which this Chapter applies, a person who has applied for recognition as such under section 288;

(c) if recognised CSDs are a type of recognised body to which this Chapter applies, a person who has applied for recognition as such under section 288A.

Vetting by relevant recognised bodies

309J

(1) Before making an application under section 309I for approval for a person to perform a designated senior management function, a relevant recognised body must be satisfied that the person is a fit and proper person to perform the function.

(2) In deciding that question, the relevant recognised body must have regard, among other things, to whether the person, or any person who may perform a function on the person’s behalf—

(a) has obtained a specified qualification;

(b) has undergone, or is undergoing, specified training;

(d) has specified personal characteristics.

(3) In subsection (2), “specified” means specified in rules made by the appropriate regulator.

(4) Before making rules for the purposes of this section, the appropriate regulator must comply with such consultation requirements as may be prescribed.

Determining applications: power to grant approval

309K

(1) The appropriate regulator may grant an application under section 309I for approval for a person to perform a designated senior management function only if—

(a) it is satisfied that the person is a fit and proper person to perform the function, or

(b) it is satisfied that the condition in paragraph (a) will be met if the application is granted subject to one or more conditions (see subsection (3)).

(2) In determining the application, the appropriate regulator may have regard, among other things, to the matters mentioned in section 309J (2) (qualifications etc of person for whom approval sought).

(3) The appropriate regulator may, if it appears to it that it is desirable to do so in order to advance a relevant objective—

(a) grant the application subject to any conditions that it considers appropriate;

(b) grant the application so as to give approval only for a limited period.

(4) For the purposes of subsection (3), “relevant objective” means—

(a) if the appropriate regulator is the FCA, any of its operational objectives;

(b) if the appropriate regulator is the Bank of England, the Financial Stability Objective.

(5) Before granting approval under this section (whether or not subject to conditions or for a limited period), the appropriate regulator must comply with such consultation requirements as may be prescribed.

Determining applications: period for approval

309L

(1) The appropriate regulator must, before the end of the period for consideration, determine whether—

(a) to grant an application under section 309I for approval for a person to perform a function, without imposing conditions or limiting the period for which the approval has effect, or

(b) to give a warning notice under section 309M (2).

(2) In subsection (1), “the period for consideration” means the period of 3 months beginning with the day on which the appropriate regulator receives the application.

This is subject to subsections (3) and (4).

(3) Where the application under section 309I is made by a person in reliance on section 309I (8) (applicants for recognition to be treated as relevant recognised bodies), “the period for consideration” means whichever of the following periods ends later—

(a) the period described in subsection (2), and

(b) the period within which the person’s application for recognition must be determined—

(i) in the case of an application under section 287, in accordance with section 290(1B);

(ii) in the case of an application under section 288, in accordance with Article 17(7) of the EMIR regulation;

(iii) in the case of an application under section 288A, in accordance with section 290(4A).

(4) If the appropriate regulator imposes a requirement under section 309I (5), the period described in subsection (2) stops running on the day on which the requirement is imposed but starts running again—

(a) on the day on which the required information is received by the appropriate regulator, or

(b) if the information is not provided on a single day, on the last of the days on which it is received by the appropriate regulator.

(5) An applicant may withdraw an application under section 309I, by giving written notice to the appropriate regulator, at any time before the appropriate regulator determines the application, but only with the consent of—

(a) the person in relation to whom the application is made, and

(b) the person by whom that person is to be retained to perform the function to which the application relates, if not the applicant.

Determining applications: further procedure

309M

(1) If the appropriate regulator decides to grant an application under section 309I without imposing conditions or limiting the period for which approval is given, it must give written notice of its decision to each of the interested parties.

(2) If the appropriate regulator proposes to refuse the application, or to grant the application subject to conditions or for a limited period (or both), it must give a warning notice to each of the interested parties.

(3) If the appropriate regulator decides to refuse the application, or to grant the application subject to conditions or for a limited period (or both), it must give a decision notice to each of the interested parties.

(4) If the appropriate regulator decides to refuse the application, or to grant the application subject to conditions or for a limited period (or both), each of the interested parties may refer the matter to the Tribunal.

(5) In this section, “the interested parties”, in relation to an application under section 309I for approval for a person to perform a function, are—

(a) the applicant,

(b) the person in relation to whom the application is made, and

(c) the person by whom that person is to be retained to perform the function to which the application relates, if not the applicant.

Changes in responsibilities

309N

(1) This section applies where, on an application made by a relevant recognised body under section 309I, the appropriate regulator has given approval for a person to perform a designated senior management function (and has not withdrawn the approval).

(2) Each time there is a notifiable change in the aspects of the relevant recognised body’s affairs which the person is responsible for managing in performing the function, the relevant recognised body must provide the appropriate regulator with a revised statement of responsibilities (see section 309I (4)).

(3) Whether a change is “notifiable” is to be determined by the relevant recognised body in accordance with rules made by the appropriate regulator.

(4) The appropriate regulator may require the relevant recognised body to present information provided under this section in such form, or to verify the information in such a way, as the appropriate regulator may direct.

Withdrawing approval

309O

(1) This section applies if an approval under section 309G has been given by the appropriate regulator in relation to the performance by a person of a designated senior management function.

(2) The appropriate regulator may withdraw the approval if it considers that the person is not a fit and proper person to perform the function.

(3) In considering whether to withdraw an approval, the appropriate regulator may take into account any matter which may be taken into account in considering an application under section 309I.

(4) The relevant recognised body on whose application the approval was given must, at specified intervals—

(a) consider whether there are grounds on which the appropriate regulator could withdraw the approval under this section, and

(b) if it considers that there are such grounds, notify the appropriate regulator of those grounds.

(5) For the purposes of subsection (4), a “specified interval” is an interval specified in rules made by the appropriate regulator for the purposes of this section.

Procedure for withdrawing approval

309P

(1) If the appropriate regulator proposes to withdraw an approval given under section 309G, it must—

(a) comply with such consultation requirements as may be prescribed, and

(b) give each of the interested parties a warning notice.

(2) If the appropriate regulator decides to withdraw the approval, it must give each of the interested parties a decision notice.

(3) If the appropriate regulator decides to withdraw the approval, each of the interested parties may refer the matter to the Tribunal.

(4) In this section, “the interested parties”, in relation to an approval given under section 309G, are—

(a) the relevant recognised body on whose application the approval was given,

(b) the person in relation to whom the approval was given, and

Varying approval at request of relevant recognised body

309Q

(1) Where an approval under section 309G has effect subject to conditions, the relevant recognised body that applied for the approval may apply to the appropriate regulator to vary the approval by—

(a) varying a condition,

(b) removing a condition, or

(2) Where an approval under section 309G has effect for a limited period, the relevant recognised body that applied for the approval may apply to the appropriate regulator to vary the approval by—

(a) varying the period, or

(b) removing the limit on the period for which the approval is to have effect.

(3) The appropriate regulator must, before the end of the consultation period, determine whether—

(a) to grant the application, or

(b) to give a warning notice under section 309M (2) (as applied by subsection (8)).

(4) The “consultation period” is—

(a) such period as may be prescribed (and different periods may be prescribed in relation to different types of relevant recognised bodies), or

(b) if no such period is prescribed, the period of 3 months beginning with the day on which the appropriate regulator receives the application to vary the approval.

(5) The appropriate regulator may refuse an application under this section, if it appears to it that it is desirable to do so in order to advance a relevant objective.

(6) For the purposes of subsection (5), “relevant objective” means—

(a) if the appropriate regulator is the FCA, any of its operational objectives;

(b) if the appropriate regulator is the Bank of England, the Financial Stability Objective.

(7) An application may not be made under this section to vary or remove a condition or limit that was imposed under section 309Z2.

(8) Except as provided for below, the following sections apply to an application under this section for variation of an approval as they apply to an application under section 309I—

(a) section 309I (2) to (8),

(b) section 309L (4) and (5), and

(c) section 309M, but as if the references in subsections (1) to (4) to granting the application subject to conditions or for a limited period, or without imposing conditions or limiting the period for which approval is given, were omitted.

Varying approval on the appropriate regulator’s initiative

309R

(1) The appropriate regulator may vary an approval under section 309G if it considers it desirable to do so in order to advance a relevant objective.

(2) For these purposes, “relevant objective” means—

(a) if the appropriate regulator is the FCA, any of its operational objectives;

(b) if the appropriate regulator is the Bank of England, the Financial Stability Objective.

(3) The appropriate regulator may vary the approval by doing the following—

(a) imposing a condition,

(b) varying a condition,

(d) where the approval has effect for an unlimited period, limiting the period of the approval, or

(e) where the approval has effect for a limited period, varying that period or removing the limit on the period.

(4) A variation under this section takes effect—

(a) immediately, if the notice given under subsection (5) states that to be the case,

(b) on a date specified in the notice, or

(5) If the appropriate regulator proposes to vary an approval or varies an approval with immediate effect, it must give each of the interested parties written notice—

(a) setting out details of the variation,

(b) stating the reasons for the variation,

(c) stating that each of the interested parties may make representations to the appropriate regulator within the period specified in the notice (whether or not any of the interested parties has referred the matter to the Tribunal),

(d) stating when the variation takes effect, and

(e) setting out each interested party’s right to refer the matter to the Tribunal.

(6) A variation may be expressed to take effect immediately or on a specified date only if the appropriate regulator, having regard to its reason for varying the approval, reasonably considers that it is necessary for the variation to take effect immediately or on that date (as appropriate).

(7) The appropriate regulator may extend the period allowed under the notice for making representations.

(8) The appropriate regulator must give each of the interested parties written notice if, having considered the representations made, it decides—

(a) to vary the approval, or

(b) if the variation has taken effect, not to rescind it.

(9) A notice under subsection (8) must inform the interested parties of the right of each of them to refer the matter to the Tribunal.

(10) The appropriate regulator must give each of the interested parties written notice if, having considered the representations made, it decides—

(a) not to vary the approval,

(b) to vary the approval in a different way, or

(11) A notice under subsection (10)(b) must comply with the requirements set out in subsection (5)(a) to (e).

(12) A notice under this section which informs the interested parties of the right to refer a matter to the Tribunal must give an indication of the procedure on such a reference.

(13) In this section, “the interested parties” has the same meaning as in section 309P.

(14) For the purposes of subsection (4)(c), whether a matter is open to review is to be determined in accordance with section 391(8).

Statement of policy on approval

309S

(1) The appropriate regulator must prepare and issue a statement of its policy with respect to—

(a) the giving of approval under section 309G subject to conditions or for a limited period only, and

(b) the variation under section 309Q or 309R of an approval given under section 309G.

(2) The appropriate regulator—

(a) may alter or replace a statement issued under this section, and

(b) if it does so, must issue the altered or replacement statement.

(3) Before the appropriate regulator issues a statement of policy under this section, it must publish a draft of the proposed statement in the way appearing to it to be best calculated to bring it to the attention of the public.

(4) The draft statement must be accompanied by a notice stating that representations about the proposal may be made to the appropriate regulator within a period specified in the notice.

(5) Before issuing the proposed statement, the appropriate regulator must have regard to any representations made to it in accordance with subsection (4).

(6) If the appropriate regulator issues the proposed statement it must publish the following in the way appearing to it to be best calculated to bring them to the attention of the public—

(a) the statement,

(b) an account, in general terms, of the representations made to it in accordance with subsection (4) and its response to them, and

(c) if the statement issued differs from the draft published under subsection (3) in a way which the appropriate regulator considers to be significant, details of the difference.

(7) The appropriate regulator may charge a reasonable fee for providing a person with—

(a) a copy of a draft statement published under subsection (3), or

(b) a copy of a statement published under subsection (6)(a).

(8) The appropriate regulator must, without delay, give the Treasury a copy of each statement it publishes under subsection (6)(a).

Breach of statutory duty by relevant recognised bodies

309T

(1) A contravention of section 309G(1) is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.

(2) In prescribed cases, a contravention of section 309G(1) which would be actionable at the suit of a private person is actionable at the suit of a person who is not a private person, subject to the defences and other incidents applying to actions for breach of statutory duty.

(3) In this section “private person” has such meaning as may be prescribed.

Power to impose penalties

309U

(1) The appropriate regulator may impose a penalty on a person if it is satisfied that—

(a) the person has at any time performed a designated senior management function without approval, and

(b) at that time the person knew, or could reasonably be expected to have known, that they were performing a designated senior management function without approval.

(2) The penalty may be of such amount as the appropriate regulator considers appropriate.

(3) A person performs a designated senior management function without approval at a time if—

(a) the person performs a designated senior management function under an arrangement entered into by a relevant recognised body, or by a contractor of a relevant recognised body, in relation to the carrying on of an activity by the body, and

(b) when performing the function, the person is not acting in accordance with an approval given under section 309G.

(4) The appropriate regulator may not impose a penalty on a person under this section after the end of the limitation period unless it gave the person a warning notice under section 309V before the end of that period.

(5) For the purposes of subsection (4)—

(a) “the limitation period” means the period of 6 years beginning with the first day on which the appropriate regulator knew that the person concerned had performed a designated senior management function without approval, and

(b) the appropriate regulator is to be treated as knowing that a person has performed a designated senior management function without approval if it has information from which that can reasonably be inferred.

Procedure for imposing penalties

309V

(1) If the appropriate regulator proposes to impose a penalty on a person under section 309U, it must give the person a warning notice.

(2) A warning notice under this section must state the amount of the penalty.

(3) If the appropriate regulator decides to impose a penalty on a person under section 309U, it must give the person a decision notice.

(4) A decision notice under this section must state the amount of the penalty.

(5) If the appropriate regulator decides to impose a penalty on a person under section 309U, the person may refer the matter to the Tribunal.

Statement of policy on penalties

309W

(1) The appropriate regulator must prepare and issue a statement of its policy with respect to—

(a) the imposition of penalties under section 309U, and

(b) the amount of penalties under that section.

(2) The appropriate regulator’s policy in determining whether a penalty should be imposed, and what the amount of a penalty should be, must include having regard to—

(a) the conduct of the person on whom the penalty is to be imposed,

(b) the extent to which the person could reasonably be expected to have known that a designated senior management function was performed without approval,

(c) the length of the period during which the person performed a designated senior management function without approval, and

(d) whether the person on whom the penalty is to be imposed is an individual.

(3) The appropriate regulator’s policy in determining whether a penalty should be imposed on a person must also include having regard to the appropriateness of taking action against the person instead of, or in addition to, taking action against a relevant recognised body.

(4) A statement issued under this section must include an indication of the circumstances in which the appropriate regulator would expect to be satisfied that a person could reasonably be expected to have known that the person was performing a designated senior management function without approval.

(5) The appropriate regulator—

(a) may alter or replace a statement issued under this section, and

(b) if it does so, must issue the altered or replacement statement.

(6) When imposing, or deciding whether to impose, a penalty on a person under section 309U, the appropriate regulator must have regard to any statement of policy published under this section (which was in force at a time when the person performed a designated senior management function without approval).

Procedure for statement of policy on penalties

309X

(1) Before the appropriate regulator issues a statement under section 309W (1) or (5), it must publish a draft of the proposed statement in the way appearing to it to be best calculated to bring it to the attention of the public.

(2) The draft statement must be accompanied by a notice stating that representations about the proposal may be made to the appropriate regulator within the period specified in the notice.

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

(4) If the appropriate regulator issues the proposed statement it must publish the following in the way appearing to it to be best calculated to bring them to the attention of the public—

(a) the statement,

(b) an account, in general terms, of the representations made to the appropriate regulator in accordance with subsection (2) and the appropriate regulator’s response to them, and

(c) if the statement issued differs from the draft published under subsection (1) in a way which the appropriate regulator considers to be significant, details of the difference.

(5) The appropriate regulator may charge a reasonable fee for providing a person with—

(a) a copy of a draft statement published under subsection (1), or

(b) a copy of a statement published under subsection (4)(a).

(6) The appropriate regulator must, without delay, give the Treasury a copy of a statement which it publishes under subsection (4)(a).

Certification of employees

Certification of employees by relevant recognised bodies

309Y

(1) A relevant recognised body must take reasonable care to ensure that none of its employees performs a specified function in relation to the carrying on of an activity by the body, unless the employee has a valid certificate issued by the body under section 309Z.

(2) Subsection (1) applies only in relation to a function performed under an arrangement entered into by the body.

(3) In this section, “specified function” means a function of a description specified in rules made by the appropriate regulator.

(4) The appropriate regulator may specify a description of function under subsection (3) only if, in relation to the carrying on of an activity by a relevant recognised body of a particular description—

(a) the function is not a designated senior management function in relation to the carrying on of that activity by a relevant recognised body of that description, and

(b) the appropriate regulator is satisfied that the function is a significant-harm function.

(5) A function is a “significant-harm function”, in relation to the carrying on of an activity by a relevant recognised body, if—

(a) the function will require the person performing it to be involved in one or more aspects of the body’s affairs, so far as relating to the activity, and

(b) those aspects involve, or might involve, a risk of significant harm to the body or to any of its consumers.

(6) In this section, “consumers”, in relation to a relevant recognised body, means—

(a) persons who use, have used or may use a service provided by the body, or

(b) persons who have relevant rights or interests in relation to any such service.

(7) A person (“P”) has a “relevant right or interest” in relation to a service provided by a relevant recognised body if P has a right or interest—

(a) which is derived from, or is otherwise attributable to, the use of the service by others, or

(b) which may be adversely affected by the use of the service by persons acting on P’s behalf or in a fiduciary capacity in relation to P.

(8) For these purposes—

(a) if a person is providing a service 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 may use the service;

(b) a person who deals with another person (“A”) in the course of A providing a service is to be treated as using the service.

Issuing certificates

309Z

(1) A relevant recognised body may issue a certificate to a person under this section in relation to a function only if the body is satisfied that the person is a fit and proper person to perform the function.

(2) In deciding that question the body must have regard, among other things, to whether the person—

(a) has obtained a specified qualification,

(b) has undergone, or is undergoing, specified training,

(d) has specified personal characteristics.

(3) In subsection (2), “specified” means specified in rules made by the appropriate regulator.

(4) A certificate issued by a relevant recognised body to a person under this section must—

(a) state that the body is satisfied that the person is a fit and proper person to perform the function to which the certificate relates, and

(b) set out the aspects of the body’s affairs in which the person will be involved in performing the function.

(5) A certificate issued under this section is valid for a period of 12 months beginning with the day on which it is issued.

(6) If, after having considered whether a person is a fit and proper person to perform a function, a relevant recognised body decides not to issue a certificate to the person under this section, the body must give the person a notice in writing stating—

(a) what steps (if any) the body proposes to take in relation to the person as a result of the decision, and

(b) the reasons for proposing to take those steps.

(7) A relevant recognised body must maintain a record of every employee who has a valid certificate issued by it under this section.

Rules of conduct

309Z1

(1) If it appears to the appropriate regulator to be necessary or expedient for the purposes of advancing a relevant objective, the appropriate regulator may make rules about the conduct of the following persons in relation to the performance by them of qualifying functions—

(a) persons in relation to whom the appropriate regulator has given its approval under section 309G (“Part 18 approved persons”);

(b) directors of relevant recognised bodies;

(2) Rules under subsection (1) may include provision requiring a relevant recognised body to—

(a) notify persons mentioned in subsection (1) of the rules that apply to them;

(b) take specified steps to secure that such persons understand how those rules apply in relation to them.

(3) Rules under subsection (1) may include provision requiring a relevant recognised body to notify the appropriate regulator if the body takes specified disciplinary action in relation to a person mentioned in subsection (1).

(4) In this section—

“qualifying function” means a function relating to the carrying on of activities by the following—in the case of a Part 18 approved person, the relevant recognised body on whose application approval was given;in the case of a director or employee of a relevant recognised body, who is not a Part 18 approved person, the relevant recognised body;

“relevant objective” means—if the appropriate regulator is the FCA, any of its operational objectives;if the appropriate regulator is the Bank of England, the Financial Stability Objective.

“specified” means specified in the rules.

Disciplinary action by appropriate regulator

Power to take disciplinary action for misconduct

309Z2

(1) Subsection (2) applies if—

(a) it appears to the appropriate regulator that a person is guilty of misconduct (see section 309Z3), and

(b) the appropriate regulator is satisfied that it is appropriate in all the circumstances to take action against the person.

(2) The appropriate regulator may do one or more of the following—

(a) publish a statement of the person’s misconduct;

(b) impose a penalty on the person of such amount as the appropriate regulator considers appropriate;

(c) suspend an approval of the performance of a function by the person under section 309G for such period as the appropriate regulator considers appropriate;

(d) impose such conditions as the appropriate regulator considers appropriate in relation to such an approval for such period as the appropriate regulator considers appropriate;

(e) limit the period for which such an approval is to have effect.

(3) Where the appropriate regulator takes action described in subsection (2)(c), (d) or (e)—

(a) it may not suspend an approval for more than 2 years;

(b) it may not impose conditions which have effect for more than 2 years;

(c) it may impose a condition so as to, among other things, require a person to take, or refrain from taking, specified action;

(d) it may impose a suspension, condition or limitation that has effect in relation to part of a function.

(4) The appropriate regulator that has taken action described in subsection (2)(c), (d) or (e) may (at any time)—

(a) withdraw a suspension, condition or limitation;

(b) vary a suspension or condition so as to reduce the period for which it has effect or otherwise to limit its effect;

(5) The appropriate regulator may not take action under this section after the end of the period of 6 years beginning with the first day on which the appropriate regulator knew of the misconduct unless, before the end of that period, it gave a warning notice to the person concerned under section 309Z4.

(6) For the purposes of subsection (5), the appropriate regulator is to be treated as knowing of misconduct if it has information from which the misconduct can reasonably be inferred.

(7) When a suspension is in force under subsection (2)(c) in relation to part of a function, the references in section 309G and 309U to the performance of a function include the performance of part of a function.

(8) If at any time a condition imposed under subsection (2)(d) is contravened, the approval in relation to the person concerned is to be treated for the purposes of sections 309G and 309U as if it had been withdrawn at that time.

Meaning of “misconduct”

309Z3

(1) For the purposes of section 309Z2, a person is guilty of misconduct if any of conditions A to C is met.

(2) Condition A is that—

(a) the person has at any time failed to comply with rules made under section 309Z1, and

(b) at that time the person was—

(i) a Part 18 approved person,

(ii) an employee of a relevant recognised body, or

(iii) a director of a relevant recognised body.

(3) Condition B is that—

(a) the person has at any time after the passing of this Act been knowingly concerned in a contravention by a relevant recognised body of a relevant requirement, and

(b) at that time the person was—

(i) a Part 18 approved person in relation to the relevant recognised body,

(ii) an employee of the relevant recognised body, or

(iii) a director of the relevant recognised body.

(4) Condition C is that—

(a) the person has at any time been a Part 18 approved person in relation to a relevant recognised body,

(b) at that time there was, or continued to be, a contravention by the body of a relevant requirement,

(c) the person was at that time responsible for the management of any of the body’s activities in relation to which the contravention occurred, and

(d) the person did not take such steps as a person in that position could reasonably be expected to take to avoid the contravention occurring or continuing.

(5) In this section—

“Part 18 approved person”—means a person in relation to whom an approval is given under section 309G, andin relation to a relevant recognised body, means a person in relation to whom such approval is given on the application of the relevant recognised body;

“relevant requirement” has the meaning given by section 312E(2) and (3).

Procedure for disciplinary action

309Z4

(1) If the appropriate regulator proposes to take action against a person under section 309Z2, it must—

(a) give the person a warning notice, and

(b) in the case of proposed action under section 309Z2 (2)(c), (d) or (e), give each of the other interested parties a warning notice.

(2) A warning notice under this section about a proposal to publish a statement of a person’s misconduct must set out the terms of the statement.

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

(4) A warning notice under this section about—

(a) a proposal to suspend an approval given under section 309G, or

(b) a proposal to impose a condition in relation to such an approval,

must state the period for which the suspension or condition is to have effect.

(5) A warning notice under this section about a proposal to limit the period for which an approval under section 309G is to have effect must state the length of that period.

(6) If the appropriate regulator decides to take action against a person under section 309Z2, it must—

(a) give the person a decision notice, and

(b) in the case of proposed action under section 309Z2 (2)(c), (d) or (e), give each of the other interested parties a copy of the decision notice.

(7) A decision notice under this section about the publication of a statement of a person’s misconduct must set out the terms of the statement.

(8) A decision notice under this section about the imposition of a penalty must state the amount of the penalty.

(9) A decision notice under this section about—

(a) the suspension of an approval given under section 309G, or

(b) the imposition of a condition in relation to such an approval,

must state the period for which the suspension or condition is to have effect.

(10) A decision notice under this section about limiting the period for which an approval under section 309G is to have effect must state the length of that period.

(11) If the appropriate regulator decides to take action against a person under section 309Z2—

(a) the person may refer the matter to the Tribunal, and

(b) in the case of proposed action under section 309Z2 (2)(c), (d) or (e), each of the other interested parties may also refer the matter to the Tribunal.

(12) After a statement of a person’s misconduct is published under section 309Z2, the appropriate regulator must send a copy of it to—

(a) the person concerned, and

(b) any person to whom a copy of the decision notice was given.

(13) In this section—

“Part 18 approved person”, in relation to a relevant recognised body, has the meaning given by section 309Z3 (5);

“the other interested parties”, in relation to a Part 18 approved person in relation to a relevant recognised body, are—the relevant recognised body, andthe person by whom the Part 18 approved person’s services are retained, if different from the relevant recognised body.

Statement of policy about disciplinary action

309Z5

(1) The appropriate regulator must prepare and issue a statement of its policy with respect to—

(a) the imposition of penalties, suspensions, conditions or limitations under section 309Z2,

(b) the amount of penalties under that section,

(d) the period for which approvals under section 309G are to have effect as a result of a limitation under section 309Z2.

(2) The appropriate regulator’s policy in determining what the amount of a penalty should be, or what the period for which a suspension or restriction is to have effect should be, must include having regard to—

(a) the seriousness of the misconduct in question,

(b) the extent to which that misconduct was deliberate or reckless, and

(3) The appropriate regulator—

(a) may alter or replace a statement issued under this section, and

(b) if it does so, must issue the altered or replacement statement.

(4) In exercising, or deciding whether to exercise, its power under section 309Z2 in the case of particular misconduct, the appropriate regulator must have regard to any statement of policy published under this section and in force at the time when the misconduct in question occurred.

Procedure for statement of policy about disciplinary action

309Z6

(1) Before the appropriate regulator issues a statement under section 309Z5 (1) or (3), it must publish a draft of the proposed statement in the way appearing to it to be best calculated to bring it to the attention of the public.

(2) The draft statement must be accompanied by a notice stating that representations about the proposal may be made to the appropriate regulator within a period specified in the notice.

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

(4) If the appropriate regulator issues the proposed statement it must publish the following in the way appearing to the appropriate regulator to be best calculated to bring it to the attention of the public—

(a) the statement,

(b) an account, in general terms, of the representations made to the appropriate regulator in accordance with subsection (2) and the appropriate regulator’s response to them, and

(c) if the statement differs from the draft published under subsection (1) in a way which the appropriate regulator considers significant, details of the difference.

(5) The appropriate regulator may charge a reasonable fee for providing a person with—

(a) a copy of a draft statement published under subsection (1), or

(b) a copy of a statement published under subsection (4)(a).

(6) The appropriate regulator must, without delay, give the Treasury a copy of any statement which it publishes under subsection (4)(a).

Interpretation

Interpretation of Chapter 2A

309Z7

(1) In this Chapter—

“director”, in relation to a relevant recognised body, means a member of the board of directors of the body or, if there is no such board, the equivalent body responsible for the management of the body;

“employee”, in relation to a relevant recognised body, includes a person who—personally provides, or is under an obligation personally to provide, services to the body under an arrangement made between the body and the person providing the services or another person, andis subject to, or to the right of, supervision, direction or control by the body as to the manner in which those services are provided;

“relevant recognised body” has the meaning given in section 309A;

“senior management function” and “designated senior management function” have the meanings given in section 309G (see subsections (3) and (5) of that section).

(2) In this Chapter, references to performing a designated senior management function without approval have the meaning given in section 309U (3).

Application of this Chapter to credit rating agencies

Power to apply this Chapter to credit rating agencies

309Z8

(1) The Treasury may by regulations provide for this Chapter, or any provision of this Chapter, to apply (with or without modifications) in relation to—

(a) registered credit rating agencies, or

(b) registered credit rating agencies of descriptions specified in the regulations.

(2) Regulations under subsection (1) must provide for the FCA to be the appropriate regulator in relation to a registered credit rating agency to which any provision of this Chapter is applied by the regulations.

(3) Regulations under subsection (1) may modify legislation (including any provision of, or made under, this Act).

(4) Before making regulations under subsection (1), the Treasury must consult—

(a) the FCA, and

(b) such other persons who appear to the Treasury to be representative of persons likely to be affected by the application of this Chapter to registered credit rating agencies, or registered credit rating agencies of descriptions specified in the regulations.

(5) In this section—

“legislation” means primary legislation, subordinate legislation (within the meaning of the Interpretation Act 1978) and assimilated direct legislation, but does not include rules or other instruments made by any regulator;

“modify” includes amend, repeal or revoke;

“registered credit rating agency” means a credit rating agency registered in accordance with Regulation (EC) No 1060/2009 of the European Parliament and the Council of 16 September 2009 on credit rating agencies.

Chapter III — Exclusion from the Competition Act 1998

The Chapter I prohibition.

311

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Chapter II prohibition.

312

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 3A — PASSPORT RIGHTS

EEA market operators in United Kingdom

Exercise of passport rights by EEA market operator

312A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Removal of passport rights from EEA market operator

312B

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recognised investment exchanges operating in EEA States (other than the United Kingdom)

Exercise of passport rights by recognised investment exchange

312C

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation

Interpretation of Chapter 3A

312D

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 3B — Disciplinary measures in respect of recognised bodies

Public censure

312E

(1) If the appropriate regulator considers that a recognised body or data reporting service provider has contravened a relevant requirement imposed on the body or provider, it may publish a statement to that effect.

(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) Where the FCA is the appropriate regulator, a requirement is a “relevant requirement” for the purposes of this Chapter if it is—

(a) a requirement that is imposed by or under any provision of this Part that relates to a recognised investment exchange or data reporting service provider,

(b) a requirement that is imposed under any other provision of this Act by the FCA that relates to a recognised investment exchange,

(c) a requirement that is imposed by a qualifying provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order, or

(d) a requirement that is imposed by this Act and whose contravention constitutes an offence that the FCA has power to prosecute under this Act (see section 401).

(3) Where the Bank of England is the appropriate regulator, a requirement is a “relevant requirement” for the purposes of this Chapter if it is—

(a) a requirement that is imposed by or under any provision of this Part that relates to a recognised clearing house , third country central counterparty or a recognised CSD,

(b) a requirement that is imposed under any other provision of this Act by the Bank,

(c) a requirement that is imposed by or under a qualifying provision specified, or of a description specified, for the purposes of this subsection by the Treasury by order, or

(d) a requirement that is imposed by this Act and whose contravention constitutes an offence that the Bank has power to prosecute under this Act (see section 401, as applied by paragraph 31 of Schedule 17A).

(4) In this Chapter “data reporting service provider” has the meaning given by regulation 2 of the Data Reporting Services Regulations 2024.

Financial penalties

312F

(1) If the appropriate regulator considers that a recognised body or data reporting service provider has contravened a relevant requirement imposed on the body or provider, it may impose on the body or provider a penalty, in respect of the contravention, of such amount as it considers appropriate.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Central securities depositories: further disciplinary measures

312FA

(1) If the Bank of England considers that a contravention by a recognised CSD of a relevant requirement occurred with the consent or connivance of, or was attributable to any neglect on the part of, a member of the management body or other person who effectively controls the business of the recognised CSD, the Bank of England may do one or both of the following—

(a) publish a statement to that effect;

(b) impose on that person a penalty, in respect of the contravention, of such amount as it considers appropriate.

(2) If the Bank of England considers that a member of the management body or other person who effectively controls the business of a recognised CSD is responsible for a contravention by the central securities depository of a relevant requirement, it may do one or more of the following—

(a) publish a statement to that effect;

(b) impose on that person a penalty, in respect of the contravention, of such amount as it considers appropriate;

(c) prohibit that person from holding an office or position involving responsibility for taking decisions about the management of the recognised CSD.

(3) A prohibition under subsection (2)(c) may apply—

(a) for a specified period,

(b) until further notice, or

(4) The Bank of England may, on the application of the person subject to a prohibition under subsection (2)(c), vary or revoke the prohibition.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Proposal to take disciplinary measures

312G

(1) If the appropriate regulator proposes to impose a sanction—

(a) on a recognised body or data reporting service provider under section 312E or 312F, or

(b) on a person under section 312FA,

it must give the body , provider or person (as the case may be) a warning notice.

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

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

(4) A warning notice about a proposal to impose a prohibition must specify the extent of the prohibition.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Decision notice

312H

(1) If the appropriate regulator decides to impose a sanction—

(a) on a recognised body or data reporting service provider under section 312E or 312F, or

(b) on a person under section 312FA,

it must give the body , provider or person (as the case may be) a decision notice.

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

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

(3A) In the case of a prohibition, the decision notice must specify the extent of the prohibition.

(3B) The sanction which the appropriate regulator decides to impose may differ from that proposed in the warning notice.

(4) If the appropriate regulator decides to impose a sanction—

(a) on a recognised body or data reporting service provider under section 312E or 312F, or

(b) on a person under section 312FA,

the body , provider or person (as the case may be) may refer the matter to the Tribunal.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Publication

312I

After an appropriate regulator publishes a statement under section 312E or 312FA, it must send a copy of the statement to—

(a) the recognised body , data reporting service provider ... or person concerned, and

(b) any person to whom a copy of the decision notice was given under section 393(4).

Statement of policy

312J

(1) Each appropriate regulator must prepare and issue a statement of its policy with respect to—

(a) the imposition of penalties under sections 312F and 312FA and prohibitions under section 312FA, ...

(b) the amount of penalties under those sections ; and

(2) An appropriate regulator's policy in determining what the amount of a penalty should be , or what the period for which a prohibition is to have effect should be, must include having regard to—

(a) the seriousness of the contravention in question in relation to the nature of the requirement concerned, ...

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

(3) An appropriate regulator may at any time alter or replace a statement issued by it under this section.

(4) If a statement issued by an appropriate regulator under this section is altered or replaced, the regulator must issue the altered or replacement statement.

(5) In exercising, or deciding whether to exercise, its power under section 312F or 312FA in the case of any particular contravention, an appropriate regulator must have regard to any statement of policy published by it under this section and in force at a time when the contravention in question occurred.

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

(7) An appropriate regulator may charge a reasonable fee for providing a person with a copy of the statement.

(8) An appropriate regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.

Statement of policy: procedure

312K

(1) Before issuing a statement under section 312J, an appropriate regulator must publish a draft of the proposed statement in the way appearing to the regulator to be best calculated to bring it to the attention of the public.

(2) The draft must be accompanied by notice that representations about the proposal may be made to the regulator within a specified time.

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

(4) If the regulator issues the proposed statement it must publish an account, in general terms, of—

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

(b) its response to them.

(5) If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the regulator, significant, the regulator must (in addition to complying with subsection (4)) publish details of the difference.

(6) An appropriate regulator may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).

(7) This section also applies to a proposal to alter or replace a statement.

CHAPTER 3C — Critical third parties

Critical third parties

312L

(1) The Treasury may by regulations designate a person who provides services to one or more authorised persons, relevant service providers or FMI entities as a “critical third party”.

(2) The Treasury may designate a person under subsection (1) only if in the Treasury’s opinion a failure in, or disruption to, the provision of those services (either individually or, where more than one service is provided, taken together) could threaten the stability of, or confidence in, the UK financial system.

(3) The Treasury must have regard to the following factors when forming an opinion for the purposes of subsection (2)—

(a) the materiality of the services provided to the delivery, by any person, of essential activities, services or operations (wherever carried out);

(b) the number and type of authorised persons, relevant service providers or FMI entities to which the person provides services.

(4) Before making regulations under subsection (1) the Treasury must—

(a) consult each of the relevant regulators and such other persons as the Treasury consider appropriate,

(b) give notice in writing to the person to be designated specifying a reasonable period within which that person may make representations in writing about the proposal to the Treasury, and

(5) The Treasury may not designate the Bank of England under subsection (1).

(6) Each of the following is a relevant regulator for the purposes of this Chapter—

(a) the FCA,

(b) the PRA, and

(7) Activities, services or operations are “essential” for the purposes of subsection (3) if they are essential to—

(a) the economy of the United Kingdom, or

(b) the stability of, or confidence in, the UK financial system.

(8) In this Chapter—

“critical third party” means a person designated under subsection (1);

“FMI entity” means—a recognised clearing house;a recognised CSD;a recognised investment exchange which is not an overseas investment exchange;a recognised payment system under section 184 of the Banking Act 2009;a person specified as a service provider in relation to a recognised payment system under section 206A of the Banking Act 2009;

“relevant service provider” means—an electronic money institution as defined by regulation 2(1) of the Electronic Money Regulations 2011 (S.I. 2011/99);an authorised payment institution, small payment institution or registered account information services provider as defined by regulation 2(1) of the Payment Services Regulations 2017 (S.I. 2017/752);

“service” includes facility.

Power to make rules

312M

(1) A relevant regulator may make such rules imposing duties on critical third parties in connection with the provision of services to authorised persons, relevant service providers and FMI entities as appear to the regulator to be necessary or expedient for the purpose of advancing any of its objectives.

(2) The reference in subsection (1) to a relevant regulator’s objectives is a reference to—

(a) where the regulator is the FCA, one or more of its operational objectives;

(b) where the regulator is the PRA, one or more of its objectives;

(3) In the application of Part 9A to rules made by the FCA or the PRA under this section, the following provisions apply with the modifications specified in this subsection—

(a) section 137T (general supplementary powers) applies as if—

(i) the reference in paragraph (a) to “authorised persons, activity or investment” were a reference to “critical third parties or services”, and

(ii) in paragraph (b) for the words from “as” to the end there were substituted “or the Bank, or standards issued by any other person, as those rules or standards have effect from time to time,”;

(b) section 138B (publication of directions) applies as if subsection (4) were omitted;

(d) section 138I (consultation) applies as if the reference in subsection (1)(a) to the “PRA” were a reference to the “PRA and the Bank”;

(e) section 138J (consultation) applies as if the reference in subsection (1)(a) to the “FCA” were a reference to the “FCA and the Bank”.

Power of direction

312N

(1) A relevant regulator may, if it appears to the regulator to be necessary or expedient for the purpose of advancing any of its objectives, direct a critical third party to—

(a) do anything specified in the direction, or

(b) refrain from doing anything specified in the direction.

(2) A direction under this section—

(a) must be given by notice in writing,

(b) may be expressed to have effect during a specified period or until revoked, and

(3) Subsection (4) applies if a direction is given to a critical third party for the purpose of resolving or reducing a threat to the stability or integrity of the UK financial system.

(4) The critical third party (including the critical third party’s officers and staff) has immunity from liability in damages in respect of action or inaction in accordance with the direction.

(5) A direction given for the purpose mentioned in subsection (3) must—

(a) include a statement that it is given for that purpose, and

(b) inform the critical third party of the effect of subsection (4).

(6) An immunity conferred by this section does not extend to action or inaction—

(a) in bad faith, or

(b) in contravention of section 6(1) of the Human Rights Act 1998.

(7) A relevant regulator may at any time revoke a direction under this section by giving notice in writing to the critical third party to which the direction relates.

(8) The revocation of the direction does not affect the validity of anything previously done in accordance with it.

(9) For the purposes of this section the objectives of a relevant regulator are as described in section 312M(2).

Directions: procedure

312O

(1) If a relevant regulator proposes to give a direction under section 312N, or gives such a direction with immediate effect, it must give written notice to the critical third party to which the direction is given (or is to be given) (the “relevant critical third party”).

(2) A direction under section 312N takes effect—

(a) immediately, if the notice under subsection (1) states that this is the case,

(b) on such other date as may be specified in the notice, or

(3) A direction may be expressed to take effect immediately, or on a specified date, only if the relevant regulator reasonably considers that it is necessary for the direction to take effect immediately or on that date.

(4) The notice under subsection (1) must—

(a) give details of the direction,

(b) state the relevant regulator’s reasons for the direction and for its determination as to when the direction takes effect,

(c) inform the relevant critical third party that it may make representations to the regulator within such period as may be specified in the notice (whether or not the critical third party has referred the matter to the Tribunal), and

(d) inform the relevant critical third party of its right to refer the matter to the Tribunal (including giving an indication of the procedure on such a reference).

(5) The relevant regulator may extend the period allowed under the notice for making representations.

(6) If, having considered any representations made by the relevant critical third party, the regulator decides—

(a) to give the direction proposed, or

(b) if the direction has been given, not to revoke the direction,

it must give the critical third party written notice.

(7) If, having considered any representations made by the relevant critical third party, the regulator decides—

(a) not to give the direction proposed,

(b) to give a different direction, or

it must give the critical third party written notice.

(8) A notice given under subsection (6) must inform the relevant critical third party of its right to refer the matter to the Tribunal (including giving an indication of the procedure on such a reference).

(9) A notice under subsection (7)(b) must comply with subsection (4).

(10) For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 391(8).

Information gathering and investigations

312P

(1) The provisions of Part 11 (information gathering and investigations) mentioned in this section are to apply in relation to this Chapter in accordance with the provision made by this section.

(2) In any case where subsection (1) applies—

(a) any reference in Part 11 to the FCA or PRA which is contained in, or relates to, any of those provisions (however expressed) is to be read as a reference to a relevant regulator, and

(b) Part 11 has effect with any other necessary modifications.

(3) The powers conferred by section 165(1) and (3) (power to require information) are exercisable by a relevant regulator or (as the case may be) a relevant regulator’s officers to impose requirements on a critical third party or a person connected with a critical third party.

(4) The information or documents that a relevant regulator may require to be produced or provided in accordance with subsection (3) are limited to information and documents reasonably required in connection with the exercise by the relevant regulator of functions conferred on it by or under this Chapter (and accordingly section 165(4) does not apply).

(5) The power conferred by section 166 (reports by skilled person) is exercisable by a relevant regulator in relation to a critical third party or a person connected with a critical third party.

(6) The power conferred by section 166A (appointment of skilled person) is exercisable by a relevant regulator in relation to a critical third party.

(7) The power conferred by section 168(5) (appointment of persons to carry out investigations in particular cases) is exercisable by a relevant regulator if it appears to the relevant regulator that there are circumstances suggesting that a person may have contravened any requirement imposed by or under this Chapter.

(8) In addition to the powers conferred by section 171, a person conducting an investigation under section 168(5) as a result of subsection (7) is to have the powers conferred by sections 172 and 173 (and for this purpose any references in those sections to an investigator are to be read accordingly).

(9) The power under section 176(1) (entry of premises under warrant) is exercisable on information on oath given by or on behalf of a relevant regulator, or an investigator appointed by a relevant regulator, as if the reference to the third set of conditions were omitted.

(10) For the purposes of this section a person is connected with a critical third party if that person is or has at any relevant time been—

(a) a member of the critical third party’s group,

(b) a controller of the critical third party, or

(c) in relation to the critical third party, a person mentioned in Part 1 of Schedule 15 (reading references in that Part to the authorised person as references to the critical third party).

Power of censure

312Q

If a relevant regulator considers that a critical third party has contravened a requirement imposed by or under this Chapter the regulator may publish a statement to that effect.

Disciplinary measures

312R

(1) This section applies if a relevant regulator considers that a critical third party has contravened a requirement imposed by or under this Chapter.

(2) The relevant regulator may publish a notice—

(a) prohibiting the critical third party from entering into arrangements, or continuing, to provide services to authorised persons, relevant service providers or FMI entities;

(b) prohibiting authorised persons, relevant service providers or FMI entities who receive services from the critical third party from continuing to receive those services from that party;

(c) prohibiting authorised persons, relevant service providers or FMI entities from entering into arrangements for receipt of services from the critical third party;

(d) providing for the provision of any services by the critical third party to be subject to such conditions or limitations as are specified in the notice;

(e) providing for any receipt of services by authorised persons, relevant service providers or FMI entities from the critical third party to be subject to such conditions or limitations as are specified in the notice.

(3) A notice under subsection (2) may make different provision for different cases and may in particular make different provision in respect of different descriptions of services, authorised persons, FMI entities or relevant service providers.

(4) A relevant regulator may only exercise the powers under subsection (2) if the regulator is satisfied that—

(a) it is appropriate in the circumstances to take action against the critical third party,

(b) the exercise of the power will not threaten the stability of, or confidence in, the UK financial system, and

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