The Financial Services Act 1986 (Investment Services) (Extension of Scope of Act) Order 1995

Made: 18th December 1995

Laid before Parliament: 18th December 1995

Coming into force: 1st January 1996

The Treasury, in exercise of the powers conferred on them by sections 2 and 205A[^f00001] of the Financial Services Act 1986[^f00002] and of all other powers enabling them in that behalf, hereby make the following Order:—

Citation and commencement

1

This Order may be cited as the Financial Services Act 1986 (Investment Services) Extension of Scope of Act) Order 1995 and shall come into force on 1st January 1996.

Interpretation

2

— In this Order—

• “the Act” means the Financial Services Act 1986;

• “core investment service” means a service listed in Section A of the Annex to the Investment Services Directive, the text of which is set out in Part I of Schedule 1 to this Order together with the text of Section B of that Annex which is relevant to the interpretation of Section A;

• “investment firm” has the meaning given in paragraph (2) below;

• “the Investment Services Directive” means the Council Directive on investment services in the securities field (No. 93/22/EEC)[^f00003]; and

• “listed service” means a service listed in Section A or C of the Annex to the Investment Services Directive.

• (2) In this Order references to an investment firm are references to any person, other than one within paragraph (3) below, whose regular occupation or business is the provision of any one or more core investment services to third parties on a professional basis.

• (3) The persons within this paragraph are persons to whom the Investment Services Directive does not apply by virtue of the provisions of Article 2(2) of that Directive, the text of which is set out in Schedule 2 to this Order.

Shares in industrial and provident societies

3

Paragraph 1 of Schedule 1 to the Act shall have effect as if transferable shares in a body incorporated under the law of, or of any part of, the United Kingdom relating to industrial and provident societies fell within that paragraph.

Bills of exchange

4

Paragraph 2 of Schedule 1 to the Act shall have effect as if bills of exchange accepted by a banker fell within that paragraph.

Amendment of Part II of Schedule 1 to the Act for certain purposes

5

For the purposes of the provisions of sections 47A and 48 of the Act, Part II of Schedule 1 to the Act shall have effect as if amongst the activities falling within that Part of that Schedule were those listed services falling within Section C of the Annex to the Investment Services Directive; and for these purposes none of the exclusions in Part III of that Schedule shall have effect.

Amendment of Part III of Schedule 1 to the Act

6

• (1) Nothing in paragraphs 17 to 19 and 21 of Schedule 1 to the Act shall have the effect that the provision of any core investment service to third parties on a professional basis is excluded from the activities which fall within the paragraphs in Part II of Schedule 1 to the Act.

• (2) Paragraph 23 of Schedule 1 to the Act shall have effect as if it precluded a permission being granted to any person who is an investment firm.

Transitional provisions

7

The prohibitions in section 3 of the Act shall not, until 1st January 1997, extend to any person who is, by virtue only of any provision of this Order, carrying on, or purporting to carry on, investment business in the United Kingdom.

SCHEDULE 1 — ANNEX TO THE INVESTMENT SERVICES DIRECTIVE

SCHEDULE 2 — ARTICLE 2.2 OF THE INVESTMENT SERVICES DIRECTIVE

Signed

Derek Conway — Simon Burns — Two of the Lords Commissioners of Her Majesty’s Treasury — 18th December 1995

Explanatory note

(This note is not part of the Order)

The Order makes amendments to the scope of the Financial Services Act 1986 (“the Act”) required to give effect to Council Directive No. 93/22/EEC on investment services in the securities field (OJ No. L 141, 10.5.93, p. 27). In so far as other legislative provision is needed to implement the provisions of the directive, this is contained in the Act, in an Order to be made under section 46 of the Act and in Regulations to be made under section 2(2) of the European Communities Act 1972. The Order comes into force on 1 January 1996.

The scope of the Act is determined by section 1 of the Act. Section 2 confers power on the Treasury to make orders extending or restricting the scope of the Act for the purposes of all or any of its provisions. The exercise of this power is among the functions transferred to the Treasury by the Transfer of Functions (Financial Services) Order 1992 (S.I. 1992/1315).

Section 1 of the Act defines “investments” by reference to the instruments falling within Part I of Schedule 1. Articles 3 and 4 of the Order add certain instruments to the investments falling within Part I of that Schedule (certain shares in industrial and provident societies and certain bills of exchange).

Article 5 of the Order extends, for the purposes of sections 47A and 48 of the Act, the activities that are to constitute the carrying on of investment business. As required by article 11 of the directive, statements of principle and rules can now be made under those two sections in respect of all services covered by the directive.

Section 1 of the Act defines “investment business” by reference to activities which fall within Part II of Schedule 1 to the Act and which are not excluded by Part III of that Schedule. Article 6 of the Order amends the meaning of “investment business” to cover the provision of all investment services to which the directive applies.

Footnotes

[^f00001]: section 205A of the Financial Services Act 1986 was inserted by section 206 of the Companies Act 1989 (c. 40).

[^f00002]: 1986 c. 60. Various functions of the Secretary of State under the Financial Services Act 1986, including the functions under section 2 of that Act, have been transferred to the Treasury by the Transfer of Functions (Financial Services) Order 1992 (S.I. 1992/1315).

[^f00003]: OJ No. L 141, 10.5.93, p. 27.

[^f00004]: OJ No. L 228, 16.8.1973, p. 3. Directive last amended by Directive 90/619/EEC (OJ No. L 330, 29.11.1990, p. 50).

[^f00005]: OJ No. L 63, 13.3.1979, p. 1. Directive last amended by Directive 90/618/EEC (OJ No. L 330, 29.11.1990, p. 44).

[^f00006]: OJ No. 56, 4.4.1964, p. 878/64.

[^f00007]: OJ No. L 322, 17.12.1977, p. 30. Directive last amended by Directive 89/646/EEC (OJ No. L 386, 30.12.1989, p. 1).

[^f00008]: OJ No. L 386, 30.12.1989, p. 1.

[^f00009]: OJ No. L 141, 15.3.1993, p. 1.

[^f00010]: OJ No. L 26, 30.1.1977, p. 1. Directive last amended by the Act of Accession of Spain and Portugal.