The Financial Services and Markets Act 2000 (Transitional Provisions) (Authorised Persons etc.) Order 2001

• (a) if it relates to the carrying on of an activity or activities which the person has a Part IV permission to carry on, as if it were a requirement imposed on him under section 43;

• (b) if it relates to the carrying on of an activity or activities which he has permission to carry on as a result of Schedule 3 or 4, as if it were a requirement imposed on him under section 196.

Conditions and directions under the Friendly Societies Act

Conditions imposed under the Friendly Societies Act

45

• (1) This article applies where immediately before commencement a friendly society was subject to a condition imposed—

• (a) at the society’s request under section 32(4) of the Friendly Societies Act;

• (b) under section 34 of the Friendly Societies Act (including any conditions imposed pursuant to section 35 of that Act);

• (c) under section 36 of the Friendly Societies Act (including those deemed to be imposed under that section pursuant to a direction given under section 36A of that Act²⁶;

• (2) The condition has effect after commencement as if it were a requirement imposed on the society under section 43.

• (3) Where a condition imposed pursuant to a direction given under section 36A of the Friendly Societies Act has effect after commencement under paragraph (2), that requirement is not to be treated as limited in time, notwithstanding section 36A(2) of that Act.

Direction under section 40 of the Friendly Societies Act

46

• (1) This article applies where—

• (a) immediately before commencement a friendly society was subject to a direction given under section 40 of the Friendly Societies Act; and

• (b) on commencement, that friendly society has a Part IV permission.

• (2) The direction has effect after commencement as if it were a requirement imposed under section 43 that the society refrain from carrying on any activity which immediately before commencement it was prevented by the direction from carrying on (having regard to any subsequent grant of authorisation as mentioned in section 40(5) of the Friendly Societies Act).

• (3) A direction having effect under paragraph (2) may be varied or revoked in accordance with section 44, notwithstanding section 40(5)(b) of the Friendly Societies Act.

Direction under section 51 of the Friendly Societies Act

47

• (1) This article applies where—

• (a) immediately before commencement a friendly society was subject to a direction given under section 51 of the Friendly Societies Act; and

• (b) on commencement, that friendly society has a Part IV permission.

• (2) Subject to paragraph (3), the direction has effect after commencement as if it were a requirement imposed under section 43 that the society refrain from accepting any new members.

• (3) If a direction given under section 51 of the Friendly Societies Act before commencement has, by reason of section 58(3) of that Act, not come into force before commencement—

• (a) that fact does not prevent a person from being treated as subject to the direction for the purposes of this article; but

• (b) the direction has effect as described in paragraph (2) only if the period within which an appeal can be brought against the direction expires without such an appeal being brought.

Order of the court under section 52A of the Friendly Societies Act

48

• (1) This article applies to a friendly society where there is in force against it immediately before commencement an order of the court made under section 52A of the Friendly Societies Act²⁷ and where that society has, at commencement, a Part IV permission.

• (2) A society to which this article applies is to be treated after commencement as if it were subject to an assets requirement within the meaning of section 48(3)(a), prohibiting the society from disposing of or otherwise dealing with its assets in any manner which would have been prohibited by the order as it had effect immediately before commencement (having regard to any subsequent orders made under section 52A(3) of the Friendly Societies Act) and section 48(4) and (5) applies accordingly.

• (3) On commencement, the order of the court referred to in paragraph (1) ceases to have effect.

• (4) Where—

• (a) before commencement, a person (“P”) was subject to an order made under section 52A of the Friendly Societies Act;

• (b) the Authority had, at any time after the making of this Order, given notice of that order to an institution with whom P keeps an account;

• (c) P is subject to a requirement after commencement by virtue of paragraph (2),

that notice is to be treated after commencement as if it had been given under section 48(4)(b).

Direction under section 53 of the Friendly Societies Act

49

• (1) This article applies where—

• (a) immediately before commencement a friendly society was subject to a direction given under section 53 of the Friendly Societies Act; and

• (b) that friendly society has, at commencement, a Part IV permission.

• (2) The direction has effect after commencement as if it were a requirement imposed by the Authority under section 43.

Conditions and directions under the Building Societies Act

Conditions and directions imposed under the Building Societies Act

50

• (1) This article applies where immediately before commencement a building society was subject to—

• (a) a condition imposed under section 9(5) of the Building Societies Act;

• (b) a condition imposed under section 41 of that Act;

• (c) a condition imposed under section 42 of that Act (including any which was imposed as a matter of urgency pursuant to section 42A of that Act²⁸ if it has been confirmed by a notice given under section 42A(8) of that Act);

• (d) a condition imposed under section 44 of that Act;

• (e) a direction given under section 50 of that Act.

• (2) Where this article applies, the condition or direction has effect after commencement as if it were a requirement imposed on the building society under section 43.

Direction under section 43A of the Building Societies Act

51

• (1) Where—

• (a) immediately before commencement, a building society was subject to a direction given under 43A of the Building Societies Act²⁹; and

• (b) by virtue of this Order the building society has a Part IV permission on commencement,

the direction has effect, after commencement, as if it were a requirement (or requirements) imposed on the society under section 43.

• (2) If the direction was one falling within section 43B(2) of the Building Societies Act³⁰ but was not confirmed under that section before commencement, the requirement having effect under paragraph (1) ceases to have effect at the end of 28 days beginning with the day on which the direction was given.

• (3) References in paragraphs (1) and (2) to a direction do not include a direction varying a previous direction; but where a direction has been varied before commencement, the references in paragraph (1) are to the direction as varied even in a case where, by virtue of section 43B(2)(b) of the Building Societies Act, the variation was due to cease to have effect at a time falling after commencement unless confirmed by the Authority before that time.

• (4) A requirement having effect under paragraph (1) ceases to have effect on the occurrence of a relevant event.

• (5) In the case of a society which immediately before commencement held an authorisation granted for the purposes of the Building Societies Act, the reference in paragraph (4) to a relevant event is to be read as follows—

• (a) if the requirement originally had effect as a direction given by virtue of section 43A(1)(a) or (b) of the Building Societies Act (cases where authorisation was to be revoked), and—

• (i) the Authority decides to discontinue the proceedings originated by the proposal to revoke the society’s authorisation under the Building Societies Act; or

• (ii) the decision to revoke the authorisation is reversed by a tribunal,

the giving of a notice of discontinuance under section 389, or the tribunal’s determination, is a relevant event;

• (b) if the requirement originally had effect as a direction given by virtue of section 43A(1)(d) of the Building Societies Act (request to revoke authorisation or cancel registration) and the society subject to it withdraws the application, the withdrawal of the application is a relevant event.

• (6) In the case of a society which immediately before commencement did not hold an authorisation for the purposes of the Building Societies Act, but formerly held such an authorisation, the reference in paragraph (4) to a relevant event is to the society ceasing to have any liability in respect of shares or deposits (within the meaning of the Building Societies Act) for which it had a liability at a time when it held that authorisation.

• (7) Nothing in paragraph (2) or (4) prevents the Authority from exercising its power under section 45 to vary the society’s Part IV permission in order to continue in effect the requirement having effect under paragraph (1).

Prohibitions and restrictions under the 2BCD and ISD Regulations

Prohibitions and restrictions under regulations 9, 10 and 15 of the 2BCD Regulations and regulation 9 of the ISD Regulations

52

• (1) Where immediately before commencement a person was subject to a prohibition or restriction imposed (or deemed to be imposed) under regulation 9, 10, or 15 of the 2BCD Regulations or regulation 9 of the ISD Regulations, the prohibition or restriction has effect after commencement as if it were a requirement imposed on him under section 196.

• (2) In the case of a limited prohibition, a requirement having effect by virtue of this article is to be taken to be framed so as to expire when (but for the revocation of those Regulations) the prohibition would have expired.

• (3) A limited prohibition means a prohibition which was framed so as to expire at the end of a specified period or on the occurrence of a specified event or on compliance with specified conditions.

• (4) Where a requirement which by virtue of this article has effect as if imposed under section 196—

• (a) was originally imposed, or was varied, in a case where regulation 11 or 17 of the 2BCD Regulations or regulation 11 of the ISD Regulations applied; and

• (b) was imposed or varied as a matter of urgency under regulation 11(5) or 17(5) of the 2BCD Regulations or regulation 11(5) of the ISD Regulations,

it is to be treated as if section 199 had applied in its case and it had been imposed as mentioned in section 199(8)(a).

Prohibitions and restrictions under regulations 18 and 19 of the 2BCD Regulations and regulations 15 and 16 of the ISD Regulations

53

• (1) Where immediately before commencement a person was subject to a prohibition imposed under regulation 18 of the 2BCD Regulations or regulation 15 of the ISD Regulations—

• (a) the prohibition has effect after commencement as if it were a prohibition imposed on him by the Director General of Fair Trading under section 203(1); and

• (b) the reference in paragraph 15(3) of Schedule 3 to the Director’s having exercised the power conferred by section 203 is to be read accordingly.

• (2) Accordingly, the reference in subsection (5) of section 203 to the notice given under subsection (1) includes a reference to the notice imposing the prohibition.

• (3) Where immediately before commencement a person was subject to a restriction imposed under regulation 19 of the 2BCD Regulations or regulation 16 of the ISD Regulations, the restriction has effect after commencement as if it were a restriction imposed on him under section 204.

• (4) Where paragraph (1) or (3) of this article applies, any direction given under paragraph 2(3) of Schedule 5 to the 2BCD or ISD Regulations which was effective immediately before commencement has effect after commencement as if given under paragraph 2(3) of Schedule 16.

• (5) If a prohibition or restriction imposed before commencement as mentioned in paragraph (1) or (3) has, by reason of paragraph 2(4) of Schedule 5 to the 2BCD or ISD Regulations, not come into force before commencement—

• (a) the fact that it has not come into force does not prevent a person from being treated as subject to the prohibition or restriction for the purposes of paragraph (1) or (as the case may be) (3) of this article; and

• (b) this article is not to be taken to alter the date when the prohibition or restriction takes effect.

Supplemental

Supplemental

54

• (1) Section 43(5) (and, in consequence, (6)) does not apply in relation to a requirement under section 43 or 196 having effect by virtue of any provision of this Part or of article 3(4) or 28(5).

• (2) Where a pre-commencement requirement was framed so as to come into effect at a time after commencement—

• (a) that fact does not prevent a person from being subject to the requirement for the purposes of this Order; and

• (b) nothing in this Order is to be taken as altering the time when the requirement is to come into effect.

• (3) Where—

• (a) a pre-commencement requirement was varied before commencement; but

• (b) the variation had not taken effect before commencement,

the variation takes effect on the date when (but for the repeal or revocation of the provision under which the variation was made) it would have taken effect.

• (4) In this article, “pre-commencement requirement” means any prohibition, requirement, restriction or direction imposed before commencement as mentioned in any provision of this Part, any suspension of authorisation as mentioned in article 3(3) and any direction as mentioned in article 28(1).

PART IV — SCOPE OF PERMISSION: PROCEDURE

Notice of scope of permission

55

• (1) The Authority must give notice in accordance with paragraph (2) (in this Part referred to as a “scope of permission notice”) to each person who has a Part IV permission by virtue of this Order.

• (2) A scope of permission notice must be in writing and must—

• (a) specify the regulated activity or activities the Authority considers the person has a Part IV permission to carry on at commencement, described in such manner as the Authority considers appropriate;

• (b) specify all the requirements (if any) under section 43 to which the Authority considers he is subject at commencement.

• (3) A scope of permission notice must be given as soon as reasonably practicable and, except in respect of a person who gives notice to the Authority in accordance with article 5(3), the Authority must use its best endeavours to send out the notices before commencement.

• (4) For the purpose of determining the description of the Part IV permission in accordance with paragraph (2)—

• (a) the person to whom the notice is given must be treated as satisfying the threshold conditions in relation to all of the regulated activities which he has, by virtue of Chapter I of Part II of this Order, permission to carry on at commencement, having regard to all the requirements under section 43 to which he is subject by virtue of Part III of this Order;

• (b) the Authority must not consider any material relating to the matters set out in section 45(1).

• (5) Subject to paragraph (4), where an authorisation conferred before commencement by a provision referred to in Chapter I of Part II of this Order circumscribed the activity to which the authorisation related in a particular way, the Authority may specify in the scope of permission notice a permission which is not so circumscribed provided that it also specifies in the notice a requirement imposed under section 43 which achieves the same effect.

• (6) In relation to a person falling within article 5(1), the scope of permission notice may take into account any indication given by that person which is contained in the notice given pursuant to paragraph (5) of that article.

Responding to the scope of permission notice

56

• (1) A scope of permission notice must specify a period of not less than three months from the date on which the notice is given as the period within which the recipient must notify the Authority either—

• (a) that he agrees with the matters stated in the notice; or

• (b) that for specified reasons he disagrees with the matters stated in the notice.

• (2) A person who receives a scope of permission notice must notify the Authority in accordance with paragraph (1) within the period specified in the notice.

• (3) A scope of permission notice may be withdrawn and replaced by another such notice at any time before notification has been given under paragraph (2) as respects the first notice.

Scope of permission where person agrees with notice

57

• (1) Where a scope of permission notice has been given to a person under article 55 and he notifies the Authority that he agrees with the matters stated in the notice then—

• (a) the regulated activities the person has permission under Part IV to carry on at commencement, and

• (b) the requirements (if any) to which he is subject under section 43 at commencement,

are, notwithstanding anything in any other provision of this Order, to be taken to be as stated in the scope of permission notice.

• (2) If a scope of permission notice given to a person under article 55 is withdrawn before he notifies agreement, paragraph (1) does not apply in relation to that notice.

Final view notices

58

• (1) Where a scope of permission notice has been given to a person and either—

• (a) he notifies the Authority that he disagrees with any of the matters stated in the notice; or

• (b) he fails to notify the Authority as required by article 56(2),

the Authority must within a reasonable period after receiving the notification or the expiry of the period allowed for notification (whichever is earlier) give the person a further notice (a “final view notice”).

• (2) A final view notice must set out the Authority’s final view on—

• (a) the regulated activity or activities the Authority considers the person has a Part IV permission to carry on at commencement, described in such manner as the Authority considers appropriate; and

• (b) the requirements (if any) under section 43 to which he is subject at commencement.

• (3) Article 55(4) to (6) applies to a final view notice as it applies to a scope of permission notice.

• (4) The person may refer the final view notice to the Tribunal.

• (5) A final view notice must be in writing and must give an indication of the person’s right to have the matter referred to the Tribunal and of the procedure on such a reference.

• (6) Sections 133 and 137 apply in relation to a reference under this article, but as if—

• (a) the reference in section 133(1) to the Act were a reference to this article;

• (b) the reference in section 133(1)(a) to the decision notice or supervisory notice were a reference to the final view notice; and

• (c) section 133(4) to (12) were omitted.

Scope of permission following final view notice

59

• (1) This article applies where a final view notice is given under article 58(1) and either the person notifies the Authority that he agrees with the final view notice, or no reference to the Tribunal is made under article 58(4) within the period allowed for such a reference.

• (2) In a case where this article applies, with effect from the date on which the person notifies his agreement with the final view notice or from the end of the period allowed for reference to the Tribunal (whichever is earlier)—

• (a) the regulated activities the person has permission under Part IV to carry on at commencement; and

• (b) the requirements (if any) to which he is subject under section 43 at commencement,

are, notwithstanding anything in any other provision of this Order, to be taken to be as stated in the final view notice.

Scope of permission where reference is made to the Tribunal

60

• (1) On a reference under article 58 the Tribunal must determine the question whether the Authority’s view as stated in the final view notice was appropriate having regard to article 55(4) to (6).

• (2) Where the Tribunal determines that the Authority’s view as stated in the final view notice was appropriate, with effect from the date of that determination—

• (a) the regulated activities the person has permission under Part IV to carry on at commencement; and

• (b) the requirements (if any) to which he is subject under section 43 at commencement,

are, notwithstanding anything in any other provision of this Order, to be taken to be as stated in the final view notice.

• (3) Where the Tribunal determines that the Authority’s view, as stated in the final view notice was not appropriate, the Tribunal must remit the matter to the Authority with such directions as the Tribunal thinks fit as to the scope of the person’s permission.

• (4) The Authority must issue a further notice in accordance with the determination of, and any direction given by, the Tribunal setting out—

• (a) the regulated activity or activities the person has permission under Part IV to carry on at commencement, described in such manner as the Authority considers appropriate;

• (b) the requirements (if any) to which he is subject under section 43 at commencement,

and, with effect from the date of that notice, those matters are to be taken to be as stated in that notice, notwithstanding anything in any other provision of this Order.

Information for public file of mutual society

61

• (1) The Authority must keep in the public file of a society a copy of any—

• (a) scope of permission notice;

• (b) notification by the society under article 56;

• (c) final view notice;

• (d) further notice given by the Authority under article 60(4),

given to the society in accordance with this Part.

• (2) The Authority must make a note on the public file of a society to the effect that any future changes in the society’s Part IV permission will be recorded on the public record which the Authority is required to keep under section 347.

• (3) In this article, the “public file” means—

• (a) for a friendly society, the file maintained pursuant to section 104 of the Friendly Societies Act;

• (b) for a building society, the file maintained pursuant to section 106 of the Building Societies Act.

Application of section 20

62

• (1) Subject to paragraphs (2) and (5), where—

• (a) the period specified in a scope of permission notice for the purposes of article 56(1) expires on a date which falls more than two months after commencement; and

• (b) the recipient of the notice notifies the Authority that he agrees or disagrees in accordance with article 56(2),

section 20 does not apply to the carrying on by that recipient of a regulated activity during the period between commencement and the date on which the recipient so notifies the Authority.

• (2) Paragraph (1) applies only to a regulated activity which the recipient of the notice was carrying on before commencement.

• (3) Subject to paragraphs (4) and (5), where an authorised person notifies the Authority under article 56(2) that he disagrees with the scope of permission notice given to him, section 20 does not apply to the carrying on by that person of a regulated activity—

• (a) during the period between commencement and the date when the right to refer the final view notice to the Tribunal under article 58(4) expires (in a case where no such reference is made); or

• (b) during the period between commencement and the issue of the Authority’s notice under article 60(4) (in a case where the final view notice is referred to the Tribunal).

• (4) Paragraph (3) applies only where the person reasonably believed that the final view notice or the notice given under article 60(4) (as the case may be) would specify that he had permission to carry on that regulated activity.

• (5) This article does not apply (and therefore section 20 does apply) to the carrying on of a regulated activity in contravention of a provision which was included in the recipient’s Part IV permission by virtue of a variation of that permission under section 44, 45 or 46.

Requirement to reapply for Part IV permission

63

• (1) At any time during the period of two years beginning with commencement, the Authority may give a direction under this article in relation to a class of persons—

• (a) which is specified in the direction; and

• (b) which is a class of persons who have a Part IV permission by virtue of this Order.

• (2) A direction under this article is a direction that each person falling within the class specified in the direction must, before a date so specified, apply to the Authority under section 40 for a fresh permission to carry on the regulated activities which he wishes to carry on.

• (3) Section 40(2) does not apply in relation to an application made in pursuance of the direction.

• (4) If a person falling within the specified class fails to comply with the direction, his Part IV permission ceases to have effect on the date specified under paragraph (2).

• (5) If a person complies with the direction but the application which he makes in pursuance of it is refused, his Part IV permission ceases to have effect when the application is decided.

• (6) If a person complies with the direction and in response to his application the Authority gives him a Part IV permission, that permission has effect, from the time when the application is decided, in place of the Part IV permission which he had by virtue of this Order.

• (7) For the purposes of this article, an application is decided when it has been determined and there is no possibility (or no further possibility) of the determination being reversed or varied on a reference to a tribunal or an appeal.

Requirement to reapply: procedure

64

• (1) A direction given under article 63 must state the reasons why it has been given to the class of persons specified in the direction.

• (2) The date specified in the direction under article 63(2) must be such as to allow a reasonable time for compliance, and in any event must fall after the end of three months beginning with the date when the direction is given.

• (3) If the Authority gives a direction under article 63, it must as soon as practicable, and in any event not later than the due date, give a copy to each person falling within the class specified in the direction.

• (4) “The due date” means the date three months before the date specified in the direction.

• (5) If there is a person falling within that class to whom the Authority fails to give a copy by the due date, the direction does not apply to him (and therefore article 63(4) does not apply to him) but if the Authority gives him a copy of the direction after the due date, the direction has effect in relation to him as if the date specified in it under article 63(2) were three months after the date on which the copy was given to him, and the copy must indicate that fact.

• (6) Any failure by the Authority to comply with paragraph (3) does not invalidate the direction in relation to any person to whom a copy is given in accordance with that paragraph.

PART V — COLLECTIVE INVESTMENT SCHEMES

CHAPTER 1 — authorisation and recognition of schemes

Authorised unit trust schemes

65

• (1) Where—

• (a) immediately before commencement, an order made under section 78(1) of the Financial Services Act (or having effect as if so made) was in force as respects a scheme; and

• (b) that scheme is a unit trust scheme within the meaning of section 237,

the order has effect after commencement as if it were an authorisation order made under section 243(1).

• (2) In relation to any such order, the reference in section 254(1)(a) to the requirements for the making of the order are to be read as a reference to the requirements for the making of an order under section 243.

• (3) Any certificate issued under—

• (a) section 78(8) of the Financial Services Act; or

• (b) the Financial Services (Authorised Unit Trust Scheme) (Certificate of Compliance) Regulations 1989³¹,

which was in force immediately before commencement has effect after commencement as if it had been issued under section 246.

Schemes constituted in other EEA States

66

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

Schemes authorised in designated countries or territories

67

• (1) An order under section 87(1) of the Financial Services Act which was in force immediately before commencement has effect after commencement as if it were an order made by the Treasury under section 270(1).

• (2) Where—

• (a) immediately before commencement a scheme was a recognised scheme for the purposes of section 87 of the Financial Services Act;

• (b) that scheme is managed in and authorised under the law of a country or territory which is designated for the purposes of section 270 by an order made under section 270(1) (including an order having effect as so made by reason of paragraph (1)); and

• (c) the scheme is of a class specified in the order referred to in sub-paragraph (b),

the scheme is to be treated after commencement as a recognised scheme under section 270.

• (3) Without prejudice to article 70, where immediately before commencement, a scheme would have been a recognised scheme under section 87 of the Financial Services Act but for a direction given under section 91(5) of that Act, this article applies as if the direction had not been given.

Individually recognised overseas schemes

68

• (1) Where—

• (a) immediately before commencement, an order made under section 88(1) of the Financial Services Act was in force in relation to a scheme; and

• (b) that scheme is a collective investment scheme which is managed in a country or territory outside the United Kingdom within the meaning of section 272,

the order has effect after commencement as if it were an order made under section 272(1) declaring the scheme to be a recognised scheme under section 272.

• (2) In relation to any such order, the reference in section 279(c) to the requirements for the making of the order are to be read as a reference to the requirements for the making of an order under section 272.

• (3) Without prejudice to article 71, where immediately before commencement, a scheme would have been a recognised scheme under section 88 of the Financial Services Act but for a direction given under section 91(5) of that Act, this article applies as if the direction had not been given.

CHAPTER II — directions imposed on schemes

Directions imposed on authorised unit trust schemes

69

• (1) Where—

• (a) a direction under section 91(2) of the Financial Services Act was in force in relation to a unit trust scheme immediately before commencement (whether or not the authorisation order has been revoked before commencement); and

• (b) the scheme to which the direction relates is a unit trust scheme within the meaning of section 237,

that direction has effect after commencement as if it were a direction given under section 257(1) to the same effect.

• (2) Where a direction was imposed under section 91(2) of the Financial Services Act and the notice imposing it (given under section 92(1) of that Act) specifies that the direction is to take effect on a date falling after commencement—

• (a) that fact does not prevent the operation of paragraph (1); and

• (b) the repeal of the Financial Services Act does not alter the date on which the direction takes effect.

• (3) Where—

• (a) an application has been made under section 91(8) of the Financial Services Act to revoke or vary a direction given under section 91(2) of that Act;

• (b) that application has not been decided before commencement;

• (c) the direction to which it relates is one having effect after commencement as a direction given under section 257(1) by virtue of paragraph (1),

the application has effect after commencement as an application under section 257(6) to revoke or vary a direction given under section 257.

• (4) For the purposes of paragraph (3) an application is decided when it has been determined and there is no possibility (or no further possibility) of the determination being reversed or varied on a review or appeal.

Directions imposed on schemes authorised in designated countries or territories

70

Where—

• (a) a direction given under section 91(5) of the Financial Services Act is in force immediately before commencement in relation to a scheme recognised under section 87 of that Act; and

• (b) the scheme is by virtue of article 67 treated as a scheme recognised under section 270,

that direction has effect after commencement as a direction given under section 281 that the scheme is not to be a recognised scheme under section 270 for the period specified in the notice, or until the occurrence of the event specified in the notice or until the conditions specified in the notice are complied with (taking into account any variation of the direction made under section 91(8) of the Financial Services Act).

Directions imposed on individually recognised schemes

71

Where—

• (a) a direction given under section 91(5) of the Financial Services Act is in force immediately before commencement in relation to a scheme recognised under section 88 of that Act;

• (b) the scheme is by virtue of article 68 treated as a scheme recognised under section 272,

that direction takes effect after commencement as a direction given under section 281 that the scheme is not to be a recognised scheme under section 272 for the period specified in the notice, or until the occurrence of the event specified in the notice or until the conditions specified in the notice are complied with (taking into account any variation of the direction made under section 91(8) of the Financial Services Act).

PART VI — APPROVED PERSONS

General rule

72

• (1) Subject to paragraph (2), where at commencement a person (“E”) is performing a function for a person (“A”) under an arrangement entered into by A or by a contractor of A, then if E’s continued performance of that function after commencement would, but for this article, require the approval of the Authority under section 59(1) or (2), then that continued performance by E of that function after commencement is to be taken to have been approved by the Authority for the purposes of section 59.

• (2) Paragraph (1) does not apply if—

• (a) a notice of objection had been served on the person under—

• (i) regulation 42 of the ISD Regulations;

• (ii) section 22(1) or 24(1) of the Banking Act;

• (iii) paragraph 2(2) or 4(1) of Schedule 2D to the Insurance Companies Act;

• (iv) paragraph 4(2) or 6(1) of Schedule 13A to the Friendly Societies Act;

• (b) immediately before commencement, the performance by E of that function would have constituted a contravention of a rule of a recognised self-regulating organisation to which either E or A was subject.

Persons previously approved subject to conditions

73

• (1) This article applies in relation to an arrangement falling within article 72(1) if—

• (a) the performance by E of the function to which the arrangement relates was approved by a recognised self-regulating organisation subject to conditions and that approval was effective immediately before commencement; or

• (b) the Authority had served a notice under paragraph 3(2) or (3) of Schedule 2D to the Insurance Companies Act or under paragraph 5(2) of Schedule 13A to the Friendly Societies Act specifying conditions with which E or A must comply and those conditions were effective immediately before commencement.

• (2) An arrangement falling within paragraph (1)(a) is not to be taken to be excluded from article 72 by paragraph (2)(b) of that article, even if there has been a breach of the conditions mentioned in paragraph (1) of this article.

• (3) But where this article applies, any approval which has effect by virtue of article 72(1) is not to be taken to extend to approval of anything that, had it been done before commencement, would have breached any of the conditions mentioned in paragraph (1) of this article.

Appointment approved but not taken up before commencement: section 60 of the Insurance Companies Act

74

• (1) This article applies to an appointment where—

• (a) a notice has been given under section 60(1)(a) of the Insurance Companies Act in respect of a proposed appointment;

• (b) the notice has not, before commencement, ceased to be effective for the purposes of section 60(1) of that Act;

• (c) the appointment has not taken effect before commencement; and

• (d) the performance, after commencement, by the proposed managing director or chief executive of the functions of that post requires the approval of the Authority under section 59.

• (2) If, before commencement, in relation to an appointment to which this article applies—

• (a) a notice was given under paragraph (b) of section 60(1) of the Insurance Companies Act stating that there is no objection to the appointment; or

• (b) the period mentioned in that paragraph elapsed without a notice of objection being given in relation to the appointment,

the appointment is to be taken to have been approved by the Authority under section 59 provided that the person takes up the appointment within the period mentioned in paragraph 1(4) of Schedule 2D to the Insurance Companies Act.

Appointment approved but not taken up before commencement: section 61 of the Insurance Companies Act

75

• (1) This article applies to a controllership where—

• (a) a notice has been given under section 61(1)(a) of the Insurance Companies Act in respect of the proposed controllership;

• (b) the notice has not, before commencement, ceased to be effective for the purposes of section 61(1) of that Act;

• (c) the controllership has not taken effect before commencement; and

• (d) the performance, after commencement, by the proposed controller of the functions of that post requires the approval of the Authority under section 59.

• (2) If, before commencement—

• (a) a notice was given under paragraph (b) of section 61(1) of the Insurance Companies Act stating that there is no objection to the controllership; or

• (b) the period mentioned in that paragraph elapsed without a notice of objection being given in relation to the controllership,

that controllership is to be taken to have been approved by the Authority under section 59(1) provided that the person takes up the controllership within the period mentioned in paragraph 1(4) of Schedule 2D to the Insurance Companies Act.

Appointment of partner approved but not taken up before commencement

76

• (1) This article applies where—

• (a) a notice was served under section 21(2) of the Banking Act or regulation 41(2) of the ISD Regulations in respect of the proposed appointment of a partner;

• (b) the appointment had not taken effect before commencement; and

• (c) the performance, after commencement, by the proposed partner of the functions of that post requires the approval of the Authority under section 59.

• (2) If, before commencement—

• (a) a notice was given under section 21(1)(b) of the Banking Act or regulation 41(1)(b)(i) of the ISD Regulations stating that there was no objection to the appointment;

• (b) the period mentioned in that section or regulation had elapsed without notice of objection being given in relation to the appointment; or

• (c) a notice of objection had been served but had been quashed on appeal,

the appointment is to be taken to have been approved by the Authority under section 59 provided that the person takes up the appointment within the period mentioned in section 21(5) of the Banking Act or regulation 41(5) of the ISD Regulations (as the case may be).

PART VII — OTHER TRANSITIONAL STATUS AFTER COMMENCEMENT

UK firms with “passports” before commencement

77

• (1) This article applies to a UK firm within the meaning of Schedule 3.

• (2) If, before commencement, the requirements of—

• (a) paragraph 1 of Schedule 6 to the 2BCD Regulations;

• (b) paragraph 1 of Schedule 6 to the ISD Regulations;

• (c) paragraph 1 of Schedule 2G to the Insurance Companies Act; or

• (d) paragraph 1 of Schedule 13B to the Friendly Societies Act,

were complied with in relation to the establishment of a branch by the firm in an EEA State, the conditions in sub-paragraphs (2) to (5) of paragraph 19 of Schedule 3 are to be treated as satisfied in relation to the establishment of the branch (subject to any pre-commencement changes).

• (3) In paragraph (2), “pre-commencement changes” means any changes relating to the branch in respect of which the requirements of—

• (a) paragraph 5 of Schedule 6 to the 2BCD Regulations;

• (b) paragraph 6 of Schedule 6 to the ISD Regulations;

• (c) paragraph 2 or 3 of Schedule 2G to the Insurance Companies Act; or

• (d) paragraph 2 or 3 of Schedule 13B to the Friendly Societies Act,

were complied with before commencement.

• (4) If, before commencement, the requirements of—

• (a) paragraph 1 of Schedule 6 to the 2BCD Regulations;

• (b) paragraph 1 of Schedule 6 to the ISD Regulations;

• (c) paragraph 5 of Schedule 2G to the Insurance Companies Act; or

• (d) paragraph 5 of Schedule 13B to the Friendly Societies Act,

were complied with in relation to the firm’s provision of services in an EEA State, the condition in paragraph 20(1) of Schedule 3 is to be treated as satisfied in relation to its provision of those services in that State (subject to any pre-commencement changes).

• (5) In paragraph (4), “pre-commencement changes” means any changes relating to the provision of the services in respect of which the requirements of—

• (a) paragraph 5 of Schedule 6 to the ISD Regulations;

• (b) paragraph 6 of Schedule 2G to the Insurance Companies Act; or

• (c) paragraph 6 of Schedule 13B to the Friendly Societies Act,

were complied with before commencement.

• (6) Where paragraph (4) applies by reason of compliance with the requirements of—

• (a) paragraph 5 of Schedule 2G to the Insurance Companies Act; or

• (b) paragraph 5 of Schedule 13B to the Friendly Societies Act;

then a consent notice is deemed to have been given by the Authority under paragraph 20(3A)(a) of Schedule 3 and the notice required by paragraph 20(4B) of that Schedule³² is deemed to have been received by the firm.

• (7) References in this article to compliance with any requirements of Schedule 6 to the 2BCD or ISD Regulations, Schedule 2G to the Insurance Companies Act or Schedule 13B to the Friendly Societies Act include references to deemed compliance by virtue of—

• (a) paragraph 2 of Schedule 11 to the 2BCD Regulations or ISD Regulations;

• (b) regulation 70 of the 31D Regulations;

• (c) regulation 15 of the Friendly Societies Act 1992 (Amendment) Regulations 1994³³; or

• (d) regulation 7 of the Friendly Societies (Amendment) Regulations 1997³⁴.

Disqualification of auditors

78

Where, at commencement, an auditor has been disqualified pursuant to section 111(3) of the Financial Services Act or section 21A(5) of the Insurance Companies Act, the disqualification has effect after commencement as disqualifying the auditor under section 345 from acting as auditor for any person—

• (a) for whom he was disqualified from acting immediately before commencement; and

• (b) who is an authorised person on commencement.

Employment of prohibited persons: disqualification directions

79

• (1) Where, at commencement—

• (a) a person (“A”) is the subject of a disqualification direction made under section 59 of the Financial Services Act;

• (b) the kinds of investment business which A is prohibited from engaging in by that direction include functions in relation to regulated activities within the meaning of section 56; and

• (c) the persons by whom A is prohibited from being employed include one or more persons authorised under the Act,

the direction has effect after commencement as a prohibition order made under section 56.

• (2) A prohibition order having effect under paragraph (1)—

• (a) is to be treated as prohibiting A from performing any functions in relation to regulated activities which correspond to the kinds of investment business covered by the disqualification direction before commencement;

• (b) is to be treated as prohibiting A from performing those functions for any person who was covered by the disqualification direction before commencement and is an authorised person after commencement,

taking into account, in both cases, any consent given by the Authority under section 59(3) of the Financial Services Act.

• (3) Paragraph (4) applies where—

• (a) a person (“I”) is subject to a prohibition order having effect under paragraph (1); and

• (b) information about I has been placed on the record maintained in accordance with section 347(1)(g) as required by section 347(2) (“transitional information”).

• (4) Subsections (5) and (6) of section 347 apply to the record to the extent that it comprises transitional information—

• (a) as if subsection (5)(a) required the Authority to exclude the transitional information from the record made available for inspection unless—

• (i) the person seeking to inspect the record has asked the Authority whether I is subject to a prohibition order; or

• (ii) the Authority is otherwise satisfied that the person has a good reason for seeking to inspect the transitional information;

• (b) as if subsection (5)(b) required the Authority to exclude the transitional information from any certified copy of the record provided in accordance with that subsection;

• (c) as if subsection (5)(b) further provided that the Authority may only provide a certified copy of the part of the record containing the transitional information if—

• (i) the person requesting the copy of that part has asked the Authority whether I is subject to a prohibition order; or

• (ii) the Authority is otherwise satisfied that the person has good reason for requesting a copy of the part of the record which includes the transitional information;

• (d) as if subsection (6) did not apply to the record in so far as it contains the transitional information.

• (5) Paragraph (4) applies to transitional information until 18 January 2002 or, if on or before that date, I applies to the Authority under section 58 for the revocation of the prohibition order, then until that application is determined and there is no possibility (or no further possibility) of the determination being reversed or varied on a reference to the Tribunal or an appeal.

International securities self-regulating organisations

80

An organisation which was, immediately before commencement, approved under paragraph 25B of Schedule 1 to the Financial Services Act is to be treated after commencement as approved under article 35 of the Regulated Activities Order.

Signed

Anne McGuire — Tony McNulty — Two of the Lords Commissioners of Her Majesty’s Treasury — 2001-07-20

Explanatory note

(This note does not form part of the Order)

This Order sets out the transitional arrangements for ensuring that people who have been authorised to carry on particular business under the various regulatory regimes replaced by the Financial Services and Markets Act 2000 (c. 8) (“the Act”) are treated as authorised persons with the appropriate permission for the purposes of that Act. The current regulatory regimes covered by this Order are the Financial Services Act 1986 (c. 60), the Banking Act 1987 (c. 22), the Insurance Companies Act 1982 (c. 50), the Friendly Societies Act 1992 (c. 40), the Building Societies Act 1986 (c. 53), the Banking Coordination (Second Council Directive) Regulations 1992 (S.I. 1992/3218) and the Investment Services Regulations 1995 (S.I. 1995/3275).

Part I of the Order specifies the commencement dates for different provisions of the Order and defines certain terms used in the Order.

Part II provides that people who are authorised or exempted from the need for authorisation under certain provisions of the current regulatory regimes are treated, on the commencement of the Act, has having permission to carry on the activities they were able lawfully to carry on immediately before commencement by reason of that authorisation or exemption. Chapter II of this Part provides that EEA firms who have complied with the procedure for exercising their passporting rights into the United Kingdom are treated as having complied with the procedures in Schedule 3 to the Act.

Part III provides that prohibitions and restrictions imposed under certain provisions in the current regulatory regimes on authorised people are carried forward after commencement as if they were requirements imposed under section 43 of the Act (in relation to people with a Part IV permission) or under section 196 of the Act (in relation to people with a permission under Schedule 3 or 4 to the Act).

Part IV of the Order sets out the procedure to be undergone before commencement to clarify the scope of any permission conferred on a person by the transitional provisions and to determine any disputes over that scope between the authorised person and the Financial Services Authority. The Authority has a duty to issue notices of scope to each authorised person setting out its view of what permission the person has at commencement. A person who disagrees with the Authority’s view set out in the notice may make representations and, if the issue is not resolved, may refer the matter to the Financial Services and Markets Tribunal. Once the notice of scope is settled either by agreement or by the Tribunal, the content of that notice is conclusive as to the scope of permission at commencement.

Part V covers the status after commencement of collective investment schemes which were authorised or recognised under Chapter VIII of Part I of the Financial Services Act. The authorised or recognised status of such schemes is carried forward as if it had been conferred under the corresponding provision in Part XVII of the Act.

Part VI makes transitional provisions for people working for authorised persons who will be covered by the regime for approved persons in Part V of the Act after commencement. Where someone is working for an authorised person before commencement in a post for which they would need to be approved under Part V after commencement, that person is treated has having been approved for the purpose of working in that post. This deemed approval applies unless the person was working before commencement in contravention of certain provisions of the current regulatory rules or of rules made by a self-regulating organisation. The articles also carry forward approvals given under the Insurance Companies Act 1982 and the Banking Act 1987 where the person approved did not take up the appointment before commencement.

Part VII covers the status of other people covered by the Act. Article 77 concerns firms established in the United Kingdom who have, before commencement, exercised their rights under one of the single market directives to establish a branch or provide services in another EEA member State. Firms who have exercised these rights are treated as if they had exercised rights under the corresponding provisions in Schedule 3 to the Act. Article 78 provides that an auditor who was disqualified from acting under previous legislation is treated as having been disqualified under the Act and similarly, article 51 provides that a person prohibited from working for an authorised person under previous legislation is treated as subject to a prohibition order under section 56 of the Act. Article 80 carries forward the status of international securities self-regulating organisations.

Footnotes

Editorial notes