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The Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018

Type Statutory-Instrument

Publication 2018-11-28

Last updated 2019-04-01

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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Made: 28th November 2018

Coming into force in accordance with article 1(2) and (3)

In accordance with section 429(1), (3), (4) (d) and (e), (7A) and (7B)⁵ of, and paragraph 26(2) of Schedule 2 to, the 2000 Act, a draft of this Order has been laid before and approved by a resolution of each House of Parliament.

PART 1 — Introductory provisions

Citation, commencement, interpretation and extent

1

(1) This Order may be cited as the Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018.

(2) This Order comes into force on the day after the day on which it is made for the purpose only of—

(a) enabling the Financial Conduct Authority—

(i) to make rules;

(ii) to give guidance;

(iii) to impose requirements or make directions;

(iv) to approve rules;

(v) to make a designating instrument pursuant to article 85;

(vi) to claim legal professional privilege or, in Scotland, confidentiality of communications pursuant to article 87; and

(b) enabling the Financial Ombudsman Service—

(i) to make rules;

(ii) to make standard terms; and

(iii) to claim legal professional privilege or, in Scotland, confidentiality of communications pursuant to article 87.

(3) This Order comes into force on 1st April 2019 for all other purposes.

(4) In this Order “the 2000 Act” means the Financial Services and Markets Act 2000.

(5) Subject to paragraph (6), this Order extends to England and Wales and Scotland.

(6) Articles 90, 93, 95, 96, 101, 102 and 103 extend to England and Wales only.

Carrying on a regulated claims management activity in Great Britain

2

(1) A person is to be treated as carrying on a regulated claims management activity in Great Britain when the activity is carried on—

(a) by a person who is—

(i) an individual who is ordinarily resident in Great Britain; or

(ii) a person, other than an individual, who is constituted under the law of England and Wales or Scotland; or

(b) in respect of a claimant or pursuer, or potential claimant or potential pursuer who is—

(i) an individual who is ordinarily resident in Great Britain; or

(ii) a person, other than an individual, who is constituted under the law of England and Wales or Scotland.

(2) For the purposes of this article—

(a) a person is “ordinarily resident” in Great Britain if that person satisfies the requirements of the Statutory Residence Test as set out in Schedule 45 to the Finance Act 2013⁶ either—

(i) at the time of the facts giving rise to the claim or potential claim; or

(ii) at the time when the regulated claims management activity is carried out in respect of that claimant or pursuer or potential claimant or potential pursuer;

(b) the references to the “the UK” in the Statutory Residence Test in Schedule 45 are to be read as if they were expressed as references to “Great Britain”.

PART 2 — Amendments to secondary legislation made under the 2000 Act

The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001

3

The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001⁷ is amended as follows.

4

In article 4 (specified activities: general), after paragraph (2A)⁸ insert—

(2B) The kinds of activity specified in Part 3B are specified for the purposes of section 22(1B) of the Act (and accordingly any activity of one of those kinds, when carried on by way of business in Great Britain, is a regulated activity).

5

In article 64 (agreeing to carry on specified kinds of activity) for “or Part 3A” substitute “, Part 3A or Part 3B”.

6

In article 72A (information society services), after paragraph (1) insert—

(1A) For the purposes of paragraph (1), “activity” includes regulated claims management activities of a kind specified by articles 89G to 89M.

7

After Part 3A⁹ insert—

(89F) (1) A claims management activity is a specified kind of activity when it is an activity specified in any of articles 89G to 89M. (2) For the purposes of this Part— (a) “claimant” includes, in civil proceedings in Scotland, a pursuer; (b) “defendant” includes, in civil proceedings in Scotland, a defender; (c) “personal injury claim” means a claim for personal injury within the meaning of the Civil Procedure Rules 1998¹⁰ in England and Wales and an action for damages for, or arising from, personal injuries within the meaning set out in section 8(7) of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018¹¹ in Scotland; (d) “financial services or financial product claim” includes a claim made under section 75 of the Consumer Credit Act 1974¹²; (e) “housing disrepair claim” means a claim under section 11 of the Landlord and Tenant Act 1985¹³ or section 4 of the Defective Premises Act 1972¹⁴ in England and Wales or an application in respect of the repairing standard under section 22 of the Housing (Scotland) Act 2006¹⁵, or claims in relation to the disrepair of premises under a term of a tenancy agreement or lease or under the common law relating to nuisance or negligence, but does not include claims for statutory nuisance under section 82 of the Environmental Protection Act 1990¹⁶; (f) “a claim for a specified benefit” means a claim for one of the following benefits— (i) industrial injuries benefit, within the meaning given by section 94 of the Social Security Contributions and Benefits Act 1992¹⁷; (ii) any supplement or additional allowance, or increase of benefit or allowance to which a recipient of an industrial injuries benefit may be entitled under that Act or any other Act; (iii) a benefit under a scheme referred to in paragraph 2 or 4 of Schedule 8 to that Act; or (iv) a benefit under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979¹⁸. (g) “criminal injury claim” means a claim under the Criminal Injuries Compensation Scheme established under the Criminal Injuries Compensation Act 1995¹⁹; (h) “employment related claim” includes a claim in relation to wages and salaries and other employment related payments and claims in relation to wrongful or unfair dismissal, redundancy, discrimination and harassment; (i) “investigating” means carrying out an investigation into, or commissioning the investigation of, the circumstances, merits or foundation of a claim; and (j) “representing” means representation in writing or orally, regardless of the tribunal, body or person before which or to whom the representation is made. (3) A person is to be treated as carrying on a regulated claims management activity in Great Britain when the activity is carried on— (a) by a person who is— (i) an individual who is ordinarily resident in Great Britain; or (ii) a person, other than an individual, who is constituted under the law of England and Wales or Scotland; or (b) in respect of a claimant or potential claimant who is— (i) an individual who is ordinarily resident in Great Britain; or (ii) a person, other than an individual, who is constituted under the law of England and Wales or Scotland. (4) For the purposes of this article— (a) a person is “ordinarily resident” in Great Britain if that person satisfies the requirements of the Statutory Residence Test as set out in Schedule 45 to the Finance Act 2013²⁰ either— (i) at the time of the facts giving rise to the claim or potential claim; or (ii) at the time when the regulated claims management activity is carried out in respect of that claimant or potential claimant; (b) the references to the “UK” in the Statutory Residence Test in Schedule 45 are to be read as if they were expressed as references to “Great Britain”. (89G) (1) Each of the following is a specified kind of activity when carried on in relation to a claim of a kind specified in paragraph (2)— (a) seeking out persons who may have a claim, unless that activity constitutes the communication of an invitation or inducement to engagement in claims management activity within the meaning of section 21 (restrictions on financial promotion)²¹ of the Act; (b) referring details of— (i) a claim or potential claim; or (ii) a claimant or potential claimant to another person (including to a person having the right to conduct litigation); and (c) identifying— (i) a claim or potential claim; or (ii) a claimant or potential claimant. (2) The kinds of claim are— (a) a personal injury claim; (b) a financial services or financial product claim; (c) a housing disrepair claim; (d) a claim for a specified benefit; (e) a criminal injury claim; and (f) an employment related claim. (89H) Each of the following activities is a specified kind of activity when carried on in relation to a personal injury claim— (a) advising a claimant or potential claimant; (b) investigating a claim; and (c) representing a claimant. (89I) Each of the following activities is a specified kind of activity when carried on in relation to a financial services or financial product claim— (a) advising a claimant or potential claimant; (b) investigating a claim; and (c) representing a claimant. (89J) Each of the following activities is a specified kind of activity when carried on in relation to a housing disrepair claim— (a) advising a claimant or potential claimant; (b) investigating a claim; and (c) representing a claimant. (89K) Each of the following activities is a specified kind of activity when carried on in relation to a claim for a specified benefit— (a) advising a claimant or potential claimant; (b) investigating a claim; and (c) representing a claimant. (89L) Each of the following activities is a specified kind of activity when carried on in relation to a criminal injury claim— (a) advising a claimant or potential claimant; (b) investigating a claim; and (c) representing a claimant. (89M) Each of the following activities is a specified kind of activity when carried on in relation to an employment related claim— (a) advising a claimant or potential claimant; (b) investigating a claim; and (c) representing a claimant. (89N) (1) There is excluded from articles 89G to 89M any activity which is carried on in England and Wales by— (a) a legal practitioner; (b) a firm, organisation or body corporate that carries on the claims management activity through a legal practitioner; or (c) an individual who carries on the claims management activity at the direction of, and under the supervision of, a legal practitioner who is— (i) that individual’s employer or fellow employee; or (ii) a director of a company, or a member of a limited liability partnership, that provides the service and is that individual’s employer. (2) For the purposes of paragraph (1) “legal practitioner” means— (a) a solicitor or barrister of any part of England and Wales or Northern Ireland; (b) a Fellow of the Chartered Institute of Legal Executives; (c) a European lawyer, as defined in the European Communities (Services of Lawyers) Order 1978²² or the European Communities (Lawyer’s Practice) Regulations 2000²³; (d) a registered foreign lawyer, as defined in section 89(9) of the Courts and Legal Services Act 1990²⁴; (e) any other member of a legal profession, of a jurisdiction other than England and Wales, that is recognised by the Law Society of England and Wales or the General Council of the Bar as a regulated legal profession. (3) There is excluded from articles 89G to 89M any activity which is carried on in Scotland by— (a) a legal practitioner; (b) a firm, organisation or body corporate that carries on the claims management activity through or under the supervision of a legal practitioner where that firm, organisation or body corporate is— (i) a firm of solicitors; (ii) an incorporated practice; or (iii) a licensed legal services provider and the activity is a legal service as defined within section 3 of the Legal Services (Scotland) Act 2010²⁵. (4) For the purposes of paragraph (3) “legal practitioner” means— (a) a person who is qualified to practise as a solicitor under section 4 of the Solicitors (Scotland) Act 1980²⁶; (b) an advocate who is a member of the Faculty of Advocates; (c) a European lawyer as defined in the European Communities (Services of Lawyers) Order 1978 or the European Communities (Lawyer’s Practice) (Scotland) Regulations 2000²⁷; or (d) a registered foreign lawyer within the meaning of section 65 of the Solicitors (Scotland) Act 1980. (5) But an activity mentioned in paragraph (1) or (3) is only excluded from articles 89G to 89M if the legal practitioner concerned carries on the claims management activity in the ordinary course of legal practice pursuant to the professional rules to which that legal practitioner is subject. (6) The exclusions in this article are to be read as if they were expressed as exemptions for the purposes of the following provisions of the Financial Guidance and Claims Act 2018— (a) section 32(5)(b) (PPI claims: interim restriction on charges imposed by legal practitioners after transfer of regulation to the FCA); and (b) section 33(11) (legal services regulators’ rules: charges for claims management services). (89O) (1) There is excluded from articles 89G to 89M any activity carried on by a charity or a not-for-profit agency. (2) In this article “charity” means— (a) a charity as defined by section 1(1) of the Charities Act 2011²⁸ or the Charities and Trustee Investment (Scotland) Act 2005²⁹; or (b) a body registered in the Scottish Charity Register. (3) In this article “not-for-profit agency” means a body that by or under its constitution— (a) is required to apply the whole of its net income, and any expendable capital, after payment of outgoings for charitable or public purposes; and (b) is prohibited from distributing, directly or indirectly, any part of its net income by way of profits or its assets among any of its members. (4) But a body is not prevented from being a not-for-profit agency for the purposes of paragraph (3) if its constitution permits— (a) the payment, out of the body’s funds, of reasonable and proper remuneration for goods or services supplied to the body by a member; or (b) in the case of a not-for-profit body that is a charity, the payment to a member to which the member is eligible because that member is a beneficiary of the charity; or (c) the purchase, out of the body’s funds, of indemnity insurance for trustees of the body. (89P) There is excluded from articles 89G to 89M any activity carried on by— (a) any person established or appointed by virtue of an enactment; (b) an Independent Complaints Reviewer; or (c) an Independent Case Examiner in the course of carrying out that individual’s duties. (89Q) There is excluded from articles 89G to 89M any activity carried on by the Motor Insurers’ Bureau in the course of carrying on its functions (being the company limited by guarantee mentioned in section 95(2) (notification of refusal of insurance on grounds of health) of the Road Traffic Act 1988³⁰). (89R) There is excluded from articles 89G to 89M any activity carried on by— (a) the Medical Protection Society Limited for its members; (b) the Medical Defence Union Limited for its members; or (c) the Medical and Dental Defence Union of Scotland Limited for its members. (89S) (1) There is excluded from articles 89G to 89M any activity carried on by an independent trade union for – (a) a member (including a retired member or a student member) of an independent trade union; (b) a member of the family of a member referred to in sub-paragraph (a); or (c) a former member of the trade union to whom the trade union may, under its rules, provide claims management services, or a member of the family of such a former member. (2) In paragraph (1), “independent trade union” has the same meaning as in the Trade Union and Labour Relations (Consolidation) Act 1992³¹. (3) For the purposes of paragraph (1) – (a) subject to sub-paragraph (b), whether a person is or has been a member (including a retired member or a student member) of a trade union is to be decided in accordance with the rules of that trade union; (b) “member” of a trade union does not include a person who, under those rules, is a member only for the purpose of pursuing a claim or claims; and (c) whether a person is a member of the family of a member of a trade union is to be decided in accordance with the rules of that trade union. (4) An exemption of a trade union under this article is subject to compliance by the trade union with the condition that the trade union, in carrying on a regulated claims management activity, must act in accordance with the code of practice for the provision of regulated claims management activities by trade unions issued by the Treasury. (89T) (1) There is excluded from articles 89G to 89M any activity carried on by a students’ union for a member of that students’ union or a member of a constituent or affiliated association or body. (2) In this article “students’ union” has the meaning given by section 20 (meaning of “students’ union”) of the Education Act 1994³². (89U) There is excluded from articles 89G to 89M any regulated activity of the kind specified in article 21, 25, 39A, 53 or 64 carried on by a person who has permission to carry on that activity in relation to a contract of insurance. (89V) (1) There is excluded from article 89G the activity of referring details of a potential claim or potential claimant to another person if— (a) the person who refers those details (“the introducer”) carries on no other regulated claims management activity; (b) the activity is incidental to the introducer’s main business; (c) the details are only referred to authorised persons, legal practitioners, or a firm, organisation or body corporate that provides the service through legal practitioners; (d) of the claims that the introducer refers to such persons, that introducer is paid, in money or money’s worth, for no more than 25 claims per calendar quarter; and (e) the introducer, in obtaining and referring those details, has complied with the provisions of the Data Protection Act 2018³³, the Privacy and Electronic Communications (EC Directive) Regulations 2003³⁴, the General Data Protection Regulation (EU) of the European Parliament and of the Council 2016/679³⁵ and the Consumer Protection from Unfair Trading Regulations 2008³⁶. (2) Paragraph (1)(e) does not apply in the case of a referral to a legal practitioner or firm, organisation or body corporate that carries on the activity through legal practitioners. (3) In this article “legal practitioner” has the meaning given by article 89N(2) or (4). (89W) There is excluded from articles 89G to 89M any activity carried on in circumstances where— (a) a claim has been made by a person (“the claimant”) against another person (“the defendant”); and (b) the activity being carried on consists of the provision of a service to the defendant in connection with— (i) the making of a counterclaim against the claimant arising out of the same set of facts as the claim referred to in sub-paragraph (a); or (ii) the making of a claim against a third party (whether for contribution, as a subrogated claim, or otherwise) which is incidental to, or consequent on, the claim referred to in sub-paragraph (a).

The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005

8

The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005³⁷ is amended as follows.

9

In article 2 (interpretation: general), in the appropriate place, insert—

“controlled claims management activity” has the meaning given in article 4(3);

10

In article 4—

(a) in the heading of the article, after “controlled activities” insert “, controlled claims management activities”;

(b) after paragraph (2) insert—

(3) For the purposes of section 21(10B)³⁸ of the Act, a controlled claims management activity is an activity carried on in Great Britain of a kind specified in paragraph 11A of Schedule 1.

11

In article 8 (interpretation: solicited and unsolicited real time communications)—

(a) in paragraph (3), in sub-paragraph (b) after “controlled activities or investments” insert “or controlled claims management activities”; and

(b) in paragraph (4), in sub-paragraph (b) after “any investment activity” insert “or any claims management activity”.

12

In paragraph (1) of article 11 (combination of different exemptions) in sub-paragraph (b) for “11” substitute “11A”.

13

In article 12 (communications to overseas recipients)—

(a) in paragraph (1) for “paragraphs (2) and (7)” substitute “paragraphs (2), (7) and (8)”; and

(b) after paragraph (7) insert—

(8) Paragraph (1) does not apply to any communication in respect of a controlled claims management activity.

14

In paragraph (1) of article 13 (communications from customers and potential customers)—

(a) in sub-paragraph (a)—

(i) after “controlled investment” insert “or controlled claims management activity”;

(ii) omit “or”;

(b) at the end of sub-paragraph (b) insert “; or”; and

(c) in order that the customer can be supplied with services in respect of a controlled claims management activity by that supplier.

15

In paragraph (2) of article 14 (follow up non-real time communications and solicited real time communications) in sub-paragraph (d) after “and the same controlled investment” insert “or relates to the same controlled claims management activity”.

16

In paragraph (1A) of article 15 (introductions) after sub-paragraph (c) insert—

(d) paragraph 11A of that Schedule.

17

In article 16 (exempt persons) in paragraph (1) sub-paragraph (c) after “controlled activity” insert “or controlled claims management activity”.

18

In article 17 (generic promotions)—

(a) at the end of sub-paragraph (a) omit “and”;

(b) at the end of sub-paragraph (b) insert “; and”;

(c) does not identify (directly or indirectly) any person as a person who carries on a controlled claims management activity.

19

In article 19 (investment professionals) after paragraph (6) insert —

(7) Paragraph (1) does not apply to any communication in respect of a controlled claims management activity.

20

In article 20 (communications by journalists) in paragraph (3)—

(a) in sub-paragraph (b) after “paragraph (4)” insert “or to a controlled claims management activity”;

(b) in sub-paragraph (c) after “controlled investment” insert “or who carries on or engages in the controlled claims management activity”.

21

In article 27 (application of exemptions in Part 6) after sub-paragraph (b) insert—

(c) a controlled claims management activity.

22

In article 28 (one off non-real time communications and solicited real time communications) in paragraph (3) sub-paragraph (a) after “investment activity” insert “or controlled claims management activity”.

23

In article 28A (one off unsolicited real time communications) after paragraph (3) insert—

(4) Paragraph (1) does not apply to any communication in respect of a controlled claims management activity.

24

In article 30 (overseas communicators: solicited real time communications) after paragraph (2) insert—

(3) Paragraph (1) does not apply to any communication in respect of a controlled claims management activity.

25

In article 31 (overseas communicators: non-real time communications to previously overseas customers) after paragraph (3) insert—

(4) Paragraph (1) does not apply to any communication in respect of a controlled claims management activity.

26

In article 32 (overseas communicators: unsolicited real time communications to previously overseas customers) after paragraph (3) insert—

(4) Paragraph (1) does not apply to any communication in respect of a controlled claims management activity.

27

In article 33 (overseas communicators: unsolicited real time communications to knowledgeable customers) after paragraph (4) insert—

(5) Paragraph (1) does not apply to any communication in respect of a controlled claims management activity.

28

Article 36 (nationals of EEA States other than United Kingdom) is renumbered as paragraph (1) of that article and after the renumbered paragraph (1) insert—

(2) Paragraph (1) does not apply to any communication in respect of a controlled claims management activity.

29

In article 39 (joint enterprises) in paragraph (2) after “controlled activity” insert “or controlled claims management activity”.

30

In article 47 (persons in the business of disseminating information) in paragraph (2)(a) after “controlled activities” insert “or controlled claims management activities”.

31

In article 49 (high net worth companies, unincorporated associations etc) after paragraph (7) insert—

(8) Paragraph (1) does not apply to any communication in respect of a controlled claims management activity.

32

In article 55A (non-real time communication by members of professions)—

(a) in paragraph (2) after “investment and consumer credit-related” insert “and claims management-related”;

(b) in paragraph (3) after “investment and consumer credit-related” insert “and claims management-related”.

33

In article 59 (annual accounts and directors’ report) in paragraph (3) in sub-paragraph (a) for “11” substitute “11A”.

34

In article 61 (sale of goods and supply of services) in paragraph (1) in the definition of “supplier”—

(a) after “controlled activities” insert “or controlled claims management activities”;

(b) for “and 10BB” substitute “, 10BB and 11A”.

35

In article 73 (advice centres) in paragraph (2)—

(a) at the end of sub-paragraph (e) omit “or”;

(b) at the end of sub-paragraph (f) insert—

; or (g) a controlled claims management activity.

36

After article 73 (advice centres) insert—

(73A) The exemptions in this Part apply to any communication which relates to a controlled claims management activity of a kind specified in paragraph 11A of Schedule 1. (73B) (1) The financial promotion restriction does not apply to any communication which relates to a controlled claims management activity when that communication is made in England and Wales by— (a) a legal practitioner; (b) a firm, organisation or body corporate that carries on the controlled claims management activity through a legal practitioner; or (c) an individual who carries on the controlled claims management activity at the direction of, and under the supervision of, a legal practitioner who is— (i) that individual’s employer or fellow employee; or (ii) a director of a company, or a member of a limited liability partnership, that provides the service and is that individual’s employer. (2) In paragraph (1) “legal practitioner” means— (a) a solicitor or barrister of any part of England and Wales or Northern Ireland; (b) a Fellow of the Chartered Institute of Legal Executives; (c) a European lawyer, as defined in the European Communities (Services of Lawyers) Order 1978³⁹ or the European Communities (Lawyer’s Practice) Regulations 2000⁴⁰; (d) a registered foreign lawyer, as defined in section 89(9) of the Courts and Legal Services Act 1990⁴¹; (e) any other member of a legal profession, of a jurisdiction other than England and Wales, that is recognised by the Law Society of England and Wales or the General Council of the Bar as a regulated legal profession. (3) The financial promotion restriction does not apply to a communication which relates to a controlled claims management activity when that communication is made in Scotland by— (a) a legal practitioner; (b) a firm, organisation or body corporate that carries on the controlled claims management activity through or under the supervision of a legal practitioner where that firm, organisation or body corporate is— (i) a firm of solicitors; (ii) an incorporated practice; or (iii) a licensed legal services provider and the activity is a legal service as defined within section 3 of the Legal Services (Scotland) Act 2010⁴². (4) In paragraph (3) “legal practitioner” means— (a) a person who is qualified to practise as a solicitor under section 4 of the Solicitors (Scotland) Act 1980⁴³; (b) an advocate who is a member of the Faculty of Advocates; (c) a European lawyer as defined in the European Communities (Services of Lawyers) Order 1978 or the European Communities (Lawyer’s Practice) (Scotland) Regulations 2000⁴⁴; or (d) a registered foreign lawyer within the meaning of section 65 of the Solicitors (Scotland) Act 1980. (5) A communication mentioned in paragraph (1) or (3) is only excluded from the financial promotion restriction if the legal practitioner concerned carries on the controlled claims management activity in the ordinary course of legal practice pursuant to the professional rules to which that legal practitioner is subject. (73C) (1) The financial promotion restriction does not apply to any communication which relates to a controlled claims management activity when that communication is made by a charity or not-for-profit agency. (2) In this article “charity” means— (a) a charity as defined by section 1(1) of the Charities Act 2011⁴⁵ or the Charities and Trustee Investment (Scotland) Act 2005⁴⁶; or (b) a body registered in the Scottish Charity Register. (3) In this article “not-for-profit agency” means a body that by or under its constitution– (a) is required to apply the whole of its net income, and any expendable capital, after payment of outgoings for charitable or public purposes; and (b) is prohibited from distributing, directly or indirectly, any part of its net income by way of profits or its assets among any of its members. (4) But a body is not prevented from being a not-for-profit agency for the purposes of paragraph (3) if its constitution permits— (a) the payment, out of the body’s funds, of reasonable and proper remuneration for goods or services supplied to the body by a member; or (b) in the case of a not-for-profit body that is a charity, the payment to a member to which the member is eligible because that member is a beneficiary of the charity; or (c) the purchase, out of the body’s funds, of indemnity insurance for trustees of the body. (73D) The financial promotion restriction does not apply to any communication which relates to a controlled claims management activity when that communication is made by— (a) any person established or appointed by virtue of an enactment; (b) an Independent Complaints Reviewer; or (c) an Independent Case Examiner when the communication is made in the course of carrying out that individual’s duties. (73E) The financial promotion restriction does not apply to any communication which relates to a controlled claims management activity when that communication is made by the Motor Insurers’ Bureau in the course of carrying its functions (being the company limited by guarantee mentioned in section 95(2) (notification of refusal of insurance on grounds of health) of the Road Traffic Act 1988⁴⁷). (73F) The financial promotion restriction does not apply to any communication which relates to a controlled claims management activity when that communication is made by— (a) the Medical Protection Society Limited for its members; (b) the Medical Defence Union Limited for its members; or (c) the Medical and Dental Defence Union of Scotland Limited for its members. (73G) (1) The financial promotion restriction does not apply to any communication which relates to a controlled claims management activity when that communication is made by an independent trade union for — (a) a member (including a retired member or a student member) of an independent trade union; (b) a member of the family of a member referred to in sub-paragraph (a); or (c) a former member of the trade union to whom the trade union may, under its rules, provide claims management services, or a member of the family of such a former member. (2) In paragraph (1) “independent trade union” has the same meaning as in the Trade Union and Labour Relations (Consolidation) Act 1992⁴⁸. (3) For the purposes of paragraph (1)— (a) subject to sub-paragraph (b), whether a person is or has been a member (including a retired member or a student member) of a trade union is to be decided in accordance with the rules of that trade union; (b) “member” of a trade union does not include a person who, under those rules, is a member only for the purpose of pursuing a claim or claims; and (c) whether a person is a member of the family of a member of a trade union is to be decided in accordance with the rules of that trade union. (4) An exemption of a trade union under this article is subject to compliance by the trade union with the condition that the trade union, in making a communication which relates to a controlled claims management activity, must act in accordance with the code of practice for the provision of regulated claims management activities by trade unions issued by the Treasury. (73H) (1) The financial promotion restriction does not apply to any communication which relates to a controlled claims management activity when that communication is made by a students’ union for a member of that students’ union or a member of a constituent or affiliated association or body. (2) In this article “students’ union” has the meaning given by section 20 (meaning of “students’ union”) of the Education Act 1994⁴⁹. (73I) The financial promotion restriction does not apply to any communication which relates to a controlled claims management activity when that communication is made by a person who has permission to carry out a regulated activity of the kind specified in article 21, 25, 39A, 53 or 64 of the Regulated Activities Order in relation to a contract of insurance. (73J) (1) The financial promotion restriction does not apply to any communication which relates to the controlled claims management activity falling within paragraph 11A(2) of Schedule 1 of referring the details of a potential claim or potential claimant to another person if – (a) the person who refers those details (“the introducer”) carries on no other regulated claims management service; (b) the activity is incidental to the introducer’s main business; (c) the details are only referred to authorised persons, legal practitioners, or a firm, organisation or body corporate that provides the service through legal practitioners; (d) of the claims that the introducer refers to such persons, that introducer is paid, in money or money’s worth, for no more than 25 claims per calendar quarter; and (e) the introducer, in obtaining and referring those details has complied with the provisions of the Data Protection Act 2018⁵⁰, the Privacy and Electronic Communications (EC Directive) Regulations 2003⁵¹, the General Data Protection Regulation (EU) of the European Parliament and of the Council 2016/679⁵² and the Consumer Protection from Unfair Trading Regulations 2008⁵³. (2) Paragraph 1(e) does not apply in the case of a referral to a legal practitioner or firm, organisation or body corporate that carries on the activity through legal practitioners. (3) In this article “legal practitioner” has the meaning given by article 73B(2) or (4).

37

After article 73J (inserted by article 36) insert—

38

After paragraph 11 of Schedule 1 (controlled activities) insert—

(11A) (1) A claims management activity carried out in Great Britain is a controlled claims management activity. (2) For the purposes of this paragraph, a claims management activity is one of the following activities: (a) seeking out persons who may have a claim, referring details of a claim or potential claim or a claimant or potential claimant to another person (including a person having the right to conduct litigation), or identifying a claim or potential claim or a claimant or potential claimant in respect of— (i) a personal injury claim; (ii) a financial services or financial product claim; (iii) a housing disrepair claim; (iv) a claim for a specified benefit; (v) a criminal injury claim; or (vi) an employment related claim. (b) advising a claimant or potential claimant, investigating a claim or representing a claimant in respect of a personal injury claim; (c) advising a claimant or potential claimant, investigating a claim or representing a claimant in respect of a financial services or financial product claim; (d) advising a claimant or potential claimant, investigating a claim or representing a claimant in respect of a housing disrepair claim; (e) advising a claimant or potential claimant, investigating a claim or representing a claimant in respect of a claim for a specified benefit; (f) advising a claimant or potential claimant, investigating a claim or representing a claimant in respect of a criminal injury claim; or (g) advising a claimant or potential claimant, investigating a claim or representing a claimant in respect of an employment related claim. (3) In this paragraph— (a) “claimant” includes, in civil proceedings in Scotland, a pursuer; (b) “defendant” includes, in civil proceedings in Scotland, a defender; (c) “personal injury claim” means a claim for personal injury within the meaning of the Civil Procedure Rules 1998⁵⁴ in England and Wales and an action for damages for, or arising from, personal injuries within the meaning set out in section 8(7) of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018⁵⁵ in Scotland; (d) “financial services or financial product claim” includes a claim made under section 75 of the Consumer Credit Act 1974⁵⁶; (e) “housing disrepair claim” means a claim under section 11 of the Landlord and Tenant Act 1985⁵⁷ or section 4 of the Defective Premises Act 1972⁵⁸ in England and Wales or an application in respect of the repairing standard under section 22 of the Housing (Scotland) Act 2006⁵⁹, or claims in relation to the disrepair of premises under a term of a tenancy agreement or lease or under the common law relating to nuisance or negligence but does not include claims for statutory nuisance under section 82 of the Environmental Protection Act 1990⁶⁰; (f) “a claim for a specified benefit” means a claim for one of the following benefits— (i) industrial injuries benefit, within the meaning given by section 94 of the Social Security Contributions and Benefits Act 1992⁶¹; (ii) any supplement or additional allowance, or increase of benefit or allowance to which a recipient of an industrial injuries benefit may be entitled under that Act or any other Act; (iii) a benefit under a scheme referred to in paragraph 2 or 4 of Schedule 8 to that Act; or (iv) a benefit under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979⁶². (g) “criminal injury claim” means a claim under the Criminal Injuries Compensation Scheme established under the Criminal Injuries Compensation Act 1995⁶³; (h) “employment related claim” includes a claim in relation to wages and salaries and other employment related payments and claims in relation to wrongful or unfair dismissal, redundancy, discrimination and harassment; (i) “investigating” means carrying out an investigation into, or commissioning the investigation of, the circumstances, merits or foundation of a claim; and (j) “representing” means representation in writing or orally, regardless of the tribunal, body or person before which or to whom the representation is made. (4) In this paragraph, a person is to be treated as carrying on a controlled claims management activity in Great Britain when the activity is carried on— (a) by a person who is— (i) an individual who is ordinarily resident in Great Britain; or (ii) a person, other than an individual, who is constituted under the law of England and Wales or Scotland; or (b) in respect of a claimant or potential claimant who is— (i) an individual who is ordinarily resident in Great Britain; or (ii) a person, other than an individual, who is constituted under the law of England and Wales or Scotland. (5) For the purposes of sub-paragraph (4) a person is “ordinarily resident” in Great Britain if that person satisfies the requirements of the Statutory Residence Test as set out in Schedule 45 to the Finance Act 2013⁶⁴ either— (a) at the time of the facts giving rise to the claim or potential claim; or (b) at the time when the controlled claims management activity is carried out in respect of that claimant or potential claimant.

PART 3 — Transitional provisions

CHAPTER 1 — Interpretation

Interpretation

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(1) In this Part—

“the 2006 Act” means the Compensation Act 2006⁶⁵;

“the 2007 Act” means the Legal Services Act 2007⁶⁶;

“the 2001 Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001⁶⁷;

“the 2006 Regulations” means the Compensation (Claims Management Services) Regulations 2006⁶⁸;

“a 2000 Act authorised person” means a person given a Part 4A permission;

“a 2006 Act authorised person” means an authorised person within the meaning given by section 4(2)(a) of the 2006 Act;

“Part 4A permission” means a permission given under Part 4A of the 2000 Act (permission to carry on regulated activities);

“the Regulator” means the Secretary of State⁶⁹.

(2) A reference to the Regulator includes a reference to a person acting on behalf of the Regulator or with the Regulator’s authority.

(3) An appeal submitted to the First-tier Tribunal under section 13 of the 2006 Act has not been determined when—

(a) such an appeal is awaiting determination by the First-tier Tribunal;

(b) an application for permission to appeal under section 11, 13, 14A or 14B of the Tribunals, Courts and Enforcement Act 2007⁷⁰ (“the Tribunals Act 2007”) could be made or is awaiting determination (other than an application out of time with permission);

(d) an appeal decision has been reviewed by the First-tier Tribunal under section 9 or by the Upper Tribunal under section 10 of the Tribunals Act 2007 and is awaiting a further determination.

CHAPTER 2 — Authorisation and regulation of 2006 Act authorised persons

Meaning of “relevant person”

40

(1) In this Chapter “relevant person” means a person who—

(a) immediately before 1st April 2019, was a 2006 Act authorised person; and

(b) on 1st April 2019, is treated, by virtue of article 80(5), as having a Part 4A permission to carry on a regulated claims management activity.

(2) Where the conditions set out in paragraph (3) are met, the reference in paragraph (1)(a) to a 2006 Act authorised person includes a person (“P”) who received from the Regulator written notice given under regulation 47 of the 2006 Regulations of a decision to cancel P’s authorisation (“the cancellation decision”).

(3) The conditions are that the cancellation decision had effect before 1st April 2019, and—

(a) where, before 1st April 2019, P submitted notice of an appeal to the First-tier Tribunal under section 13 of the 2006 Act with respect to the cancellation decision, the appeal—

(i) has not been determined; or

(ii) has been determined by a remittal of the cancellation decision to the Regulator under section 13(3)(e) of the 2006 Act but a further decision by the Regulator in relation to the cancellation decision has not been taken; or

(b) where, before 1st April 2019, P did not submit such notice of appeal, the period within which an appeal may be made has not ended on that date.

Applications for authorisation made to the Regulator: authorisation by the FCA

41

(1) This article applies to an application under regulation 8 of the 2006 Regulations (application for authorisations) received by the Regulator before 1st April 2019, where on 1st April 2019—

(a) the applicant (“A”) has not withdrawn the application; and

(b) the Regulator has not given A a written instrument of authorisation in accordance with regulation 13(1) of the 2006 Regulations.

(2) Paragraphs (3) to (8) apply where the Regulator has not approved the grant of an authorisation to A.

(3) Where—

(a) the conditions set out in paragraph (5) are met; and

(b) immediately before 1st April 2019, A is a 2000 Act authorised person,

A’s application to the Regulator is to be treated as an application to the FCA under section 55H⁷¹ of the 2000 Act (variation by FCA at request of authorised person) to vary A’s Part 4A permission by adding regulated claims management activity to the activities to which the permission relates.

(4) Where—

(a) the conditions set out in paragraph (5) are met; and

(b) immediately before 1st April 2019, A is not a 2000 Act authorised person,

A’s application to the Regulator is to be treated as an application to the FCA under section 55A⁷² (application for permission) of the 2000 Act for permission to carry on regulated claims management activity.

(5) The conditions are that A—

(a) submits to the FCA such further application form as may be specified in a direction given by the FCA; and

(b) pays to the FCA any further fee payable under its rules by any person making an application of a kind specified in paragraphs (3) or (4).

(6) If, before 1st April 2019, the Regulator notified A that the Regulator was minded to grant or refuse A’s application, that fact is immaterial for the purposes of the determination of the application by the FCA.

(7) Section 55U(1) to (4)⁷³ of the 2000 Act (applications under Part 4A) does not apply to A’s application.

(8) For the purposes of section 55V⁷⁴ of the 2000 Act (determination of applications) A’s application is to be treated as if it had been received by the FCA on the date on which A met the conditions set out in paragraph (5).

(9) Paragraph (10) applies where—

(a) the Regulator has on A’s application approved the grant of an authorisation to A; and

(b) A has not paid to the Regulator the fee referred to in regulation 13(1) of the 2006 Regulations.

(10) That fee is payable to the FCA, and on payment of that fee A is to be treated for the purposes of article 80 as if—

(a) immediately before 1st April 2019, A was a 2006 Act authorised person; and

(b) during the period referred to in paragraph (1)(b) of that article, A had notified the FCA of A’s desire to be registered for temporary permission under that article and paid the fee payable by any person desiring to be so registered.

Applications for authorisation made to the Regulator: appeal of decision

42

(1) This article applies where—

(a) the Regulator gave notice to a person (“A”) under regulation 13(5) of the 2006 Regulations of the Regulator’s decision—

(i) to refuse to grant an authorisation to A; or

(ii) to grant an authorisation to A subject to a condition not sought by A; and

(b) on 1st April 2019, the period within which an appeal relating to that decision may be made has not ended.

(2) The Regulator’s notice is to be treated as a decision notice given under section 55X(4)(f) of the 2000 Act⁷⁵, and the notice is to be read for that purpose—

(a) as if any reference to the Regulator were a reference to the FCA; and

(b) with any other necessary modifications.

(3) If, before 1st April 2019, A submitted notice of an appeal to the First-tier Tribunal under section 13 of the 2006 Act in respect of the Regulator’s decision, section 55Z3(1) of the 2000 Act⁷⁶ (right to refer matters to the Tribunal) does not apply.

Proposal by the Regulator to vary authorisation: determination by the FCA

43

(1) This article applies where the Regulator—

(a) gave written notice to a relevant person (“A”) under regulation 46(4) of the 2006 Regulations (cancellation, suspension and variation of authorisations) that the Regulator proposed to vary A’s authorisation; and

(b) did not, on or before 1st April 2019, give written notice under regulation 47(1) of the 2006 Regulations (procedure for cancellation etc) of a decision to vary A’s authorisation.

(2) The Regulator’s notice is to be treated as written notice given by the FCA under section 55Y(4) of the 2000 Act⁷⁷, and for this purpose—

(a) subsection (2) of that section does not apply to the notice;

(b) the notice is taken to comply with subsection (5) of that section;

(i) as if the period specified in it for making a written submission (including any further period allowed under regulation 46(5) of the 2006 Regulations) were the period for making representations specified in accordance with section 55Y(5)(c) of the 2000 Act;

(ii) as if a reference to the Regulator were a reference to the FCA; and

(iii) with any other necessary modifications.

Variation of authorisation by the Regulator: appeal of decision

44

(1) This article applies where—

(a) the Regulator gave written notice to a relevant person (“B”) under regulation 47(1) of the 2006 Regulations of a decision to vary B’s authorisation; and

(b) on 1st April 2019—

(i) the period within which an appeal relating to that decision may be made has not ended; or

(ii) an appeal submitted to the First-tier Tribunal by B before that date has not been determined.

(2) The Regulator’s notice is to be treated as written notice given by the FCA under section 55Y(7) of the 2000 Act, and for this purpose—

(a) it is immaterial that the notice does not comply with subsection (9) of that section; and

(b) the notice is to be read—

(i) as if a reference to the Regulator were a reference to the FCA; and

(ii) with any other necessary modifications.

(3) If, before 1st April 2019, B submitted notice of an appeal to the First-tier Tribunal under section 13 of the 2006 Act in respect of the Regulator’s decision, section 55Z3(1) of the 2000 Act does not apply.

Proposal by the Regulator to cancel authorisation: determination by the FCA

45

(1) This article applies where the Regulator—

(a) gave written notice to a relevant person (“A”) under regulation 46(4) of the 2006 Regulations that the Regulator proposed to cancel A’s authorisation; and

(b) did not, on or before 1st April 2019, give written notice under regulation 47(1) of the 2006 Regulations of a decision to cancel A’s authorisation.

(2) Where, immediately before 1st April 2019, A is not a 2000 Act authorised person, the Regulator’s notice is to be treated as a warning notice given under section 55Z(1)⁷⁸ of the 2000 Act, and for this purpose—

(a) the notice is taken to comply with section 387(1) (warning notices) of the 2000 Act;

(b) the notice is to be read—

(i) as if a reference to the Regulator were a reference to the FCA;

(ii) as if the period specified in it for making a written submission (including any further period allowed under regulation 46(5) of the 2006 Regulations) were the period for making representations specified in accordance with section 387(2) of the 2000 Act; and

(iii) with any other necessary modifications.

(3) Where, immediately before 1st April 2019, A is a 2000 Act authorised person, the Regulator’s notice is to be treated as written notice given by the FCA under section 55Y(4) of the 2000 Act, and for this purpose—

(a) subsection (2) of that section does not apply to the notice;

(b) the notice is taken to comply with subsection (5) of that section; and

(i) as if a reference to the Regulator were a reference to the FCA;

(ii) as if the period specified in it for making a written submission (including any further period allowed under regulation 46(5) of the 2006 Regulations) were the period for making representations specified in accordance with section 55Y(5)(c) of the 2000 Act; and

(iii) with any other necessary modifications.

Cancellation of authorisation by the Regulator: appeal of decision

46

(1) This article applies where—

(a) the Regulator gave written notice to a relevant person (“B”) under regulation 47(1) of the 2006 Regulations of a decision to cancel B’s authorisation; and

(b) on 1st April 2019—

(i) the period within which an appeal relating to that decision may be made has not ended; or

(ii) an appeal submitted to the First-tier Tribunal by B before that date has not been determined.

(2) For the purposes only of an appeal in respect of the Regulator’s decision, the Regulator’s notice is to be treated—

(a) where, immediately before 1st April 2019, B is not a 2000 Act authorised person, as a decision notice given under section 55Z(2) of the 2000 Act;

(b) where, immediately before 1st April 2019, B is a 2000 Act authorised person, as written notice given by the FCA under section 55Y(7) of that Act.

(3) For the purposes of paragraph (2)—

(a) where the notice is treated as written notice under section 55Y(7) of the 2000 Act, it is immaterial that it does not comply with subsection (9) of that section; and

(b) the notice is to be read—

(i) as if any reference to the Regulator were a reference to the FCA; and

(ii) with any other necessary modifications.

(4) If, before 1st April 2019, B submitted notice of an appeal to the First-tier Tribunal under section 13 of the 2006 Act in respect of the Regulator’s decision, section 55Z3(1) of the 2000 Act does not apply.

Proposal by the Regulator to suspend authorisation: determination by the FCA

47

(1) This article applies where the Regulator—

(a) gave written notice to a relevant person (“A”) under regulation 46(4) of the 2006 Regulations that the Regulator proposed to suspend A’s authorisation; and

(b) on 1st April 2019, has not given written notice under regulation 47(1) of the 2006 Regulations of a decision to suspend A’s authorisation.

(2) The Regulator’s notice is to be treated as a warning notice given by the FCA under section 207(1)(c) of the 2000 Act⁷⁹, and for this purpose—

(a) the notice is taken to comply with section 387(1) of the 2000 Act; and

(b) the notice is to be read—

(i) as if any reference to the Regulator were a reference to the FCA;

(ii) as if the period specified for making a written submission (including any further period allowed under regulation 46(5) of the 2006 Regulations) were the period for making representations specified in accordance with section 387(2) of the 2000 Act;

(iii) as if the period of the proposed suspension specified among the terms set out under regulation 46(4)(b) of the 2006 Regulations were the period for which the suspension is to have effect stated in accordance with section 207(4) of the 2000 Act⁸⁰; and

(iv) with any other necessary modifications.

Suspension of authorisation by the Regulator: appeal of decision

48

(1) This article applies where—

(a) the Regulator gave written notice to a relevant person (“B”) under regulation 47(1) of the 2006 Regulations of a decision to suspend B’s authorisation; and

(b) on 1st April 2019—

(i) the period within which an appeal relating to that decision may be made has not ended; or

(ii) an appeal submitted to the First-tier Tribunal by B before that date has not been determined.

(2) For the purposes only of an appeal in respect of the Regulator’s decision, the Regulator’s notice is to be treated as a decision notice given by the FCA under section 208(1)(c) of the 2000 Act⁸¹, and the notice is to be read for this purpose—

(a) as if any reference to the Regulator were a reference to the FCA; and

(b) with any other necessary modifications.

(3) For the purposes of section 206A(3) of the 2000 Act, the suspension is treated as having taken effect on 1st April 2019.

(4) If, before 1st April 2019, B submitted notice of an appeal to the First-tier Tribunal under section 13 of the 2006 Act in respect of the Regulator’s decision, section 208(4) of the 2000 Act⁸² (right to refer matters to the Tribunal) does not apply.

Notice by the Regulator of proposed direction

49

(1) This article applies where the Regulator—

(a) notified a relevant person under regulation 29(4) of the 2006 Regulations⁸³ (directions of the Regulator about complaints handling and related matters) of a direction that the Regulator proposed to give under paragraph (3) of that regulation; and

(b) on 1st April 2019, has not given the proposed direction.

(2) The Regulator’s notice is to be treated as written notice given by the FCA under section 55Y(4) of the 2000 Act, and for this purpose—

(a) subsection (2) of that section does not apply to the notice;

(b) the notice is taken to comply with subsection (5) of that section; and

(i) as if a reference to the Regulator were a reference to the FCA; and

(ii) with any other necessary modifications.

Compliance with information requirement imposed by the Regulator

50

(1) This article applies where—

(a) the Regulator—

(i) gave notice in writing to a person under—

(aa) regulation 33 of the 2006 Regulations (requirements for information under section 8(4) of the 2006 Act); or

(bb) regulation 36 of the 2006 Regulations (breaches by authorised persons of condition: requirement to provide information etc); or

(ii) made a request to a person under rule 16 of the Conduct of Authorised Persons Rules 2018⁸⁴; and

(b) on 1st April 2019, the period specified in the notice or request within which the information or documents specified or described in the notice or request are to be given to the Regulator, including any extra time allowed under regulation 33(6) or 36(6) of the 2006 Regulations, has not expired.

(2) The Regulator’s notice or request is to be treated as a notice in writing given by the FCA under section 165(1) of the 2000 Act⁸⁵ (regulators’ power to require information: authorised persons etc).

(3) For the purposes of this article, section 165 of the 2000 Act has effect in relation to the Regulator’s notice or request as if—

(a) in subsection (2)(a), the reference to such reasonable period as may be specified is to be read as a reference to the period referred to in paragraph (1)(b) or such longer period as the FCA may allow; and

(b) in subsection (2)(b), the reference to such place as may be specified is to be read as a reference to the place specified in the Regulator’s notice or request at which the information or documents specified or described in the notice or request are to be given to the Regulator.

Penalties for conduct for which the Regulator has not given notice of proposed penalty

51

(1) This article applies where—

(a) the FCA is satisfied that, after 28th December 2014 but before 1st April 2019, a relevant person (“A”)—

(i) failed to comply with any of the conditions of authorisation referred to in regulation 12(5)(a), (b), (d) or (i)⁸⁶ of the 2006 Regulations;

(ii) failed to comply with a notice in writing given by the Regulator under regulation 36 of the 2006 Regulations; or

(iii) in relation to a warrant issued under regulation 40 of the 2006 Regulations (issue of warrants generally)⁸⁷, obstructed an attempt to—

(aa) enter and search premises in accordance with the warrant;

(bb) take possession of written or electronic records in accordance with an authorisation under paragraph (4) of that regulation; or

(cc) take copies of written or electronic records in accordance with regulation 43⁸⁸ of the 2006 Regulations (copying of documents); and

(b) on 1st April 2019, the Regulator has not given written notice to A under regulation 51⁸⁹ of the 2006 Regulations (notice of proposed penalty and written submissions) that the Regulator proposed to impose a penalty on A for the failure or the obstruction concerned (“the relevant default”).

(2) For the purposes of the following sections of the 2000 Act, the relevant default is to be treated as a contravention of a relevant requirement (within the meaning given by section 204A(2) of that Act)—

(a) section 206 (financial penalties);

(b) section 206A (suspending permission to carry on regulated activities etc);

(3) For the purposes of paragraph (2), sections 206 and 208 of the 2000 Act are to be read as if a reference to an authorised person included a person who was, at any time before 1st April 2019, a 2006 Act authorised person.

(4) In determining what, if any, financial penalty to impose on A, the FCA must have regard to—

(a) any penalty or fine that has been imposed on A for the relevant default by another body;

(b) any other steps that the Regulator or the FCA has taken, or that the FCA might take, in relation to the relevant default;

(d) the relevant turnover (within the meaning given by regulation 50⁹⁰) of A’s business.

(5) A financial penalty imposed by the FCA for the relevant default—

(a) where the relevant turnover of A’s business is less than £500,000, may not exceed £100,000;

(b) where the relevant turnover of A’s business is £500,000 or more, may not exceed an amount equal to 20 per cent of that turnover.

Penalties for conduct for which the Regulator has given notice of proposed penalty

52

(1) In this article—

(a) a reference to a numbered section is a reference to the section so numbered in the 2000 Act; and

(b) a reference to a numbered regulation is a reference to the regulation so numbered in the 2006 Regulations.

(2) This article applies where the Regulator—

(a) gave written notice to a person (“A”) under regulation 51(1) that the Regulator proposed to impose a penalty on A for a failure or obstruction of a kind specified in article 51(1) (“the relevant default”);

(b) none of the evidence on which the Regulator relies, as set out in the summary of evidence set out in the notice in accordance with regulation 51(1)(e), relates to conduct that occurred on or before 28th December 2014; and

(c) on 1st April 2019, the Regulator has not given written notice to A under regulation 52⁹¹ (procedure for requiring an authorised person to pay a penalty) of a decision to require A to pay a penalty.

(3) The Regulator’s notice is to be treated as a warning notice given by the FCA under section 207(1)(b) (proposal to take disciplinary measures)⁹², and for this purpose—

(a) the notice is taken to comply with section 387(1); and

(b) the notice is to be read—

(i) as if a reference to the Regulator is a reference to the FCA;

(ii) as if the period specified in it for making a written submission (including any further period allowed under regulation 51(2)) is the period for making representations specified in accordance with section 387(2); and

(iii) with any other necessary modifications.

(4) For the purposes of the following sections of the 2000 Act, the relevant default is to be treated as a contravention of a relevant requirement (within the meaning given by section 204A(2))—

(a) section 206 (financial penalties);

(b) section 206A (suspending permission to carry on regulated activities etc);

(d) section 208 (decision notice).

(5) For the purposes of paragraph (4), sections 206, 207 (except subsection (1)(c)), and 208 are to be read as if a reference to an authorised person included a person who was, at any time before 1st April 2019, a 2006 Act authorised person.

(6) In determining what, if any, financial penalty to impose on A, the FCA must have regard to—

(a) the considerations specified in article 51(4); and

(b) any written submissions made by A in relation to the matters in the Regulator’s notice within the period allowed under regulation 51(1)(g)⁹³ or any further period allowed by the Regulator.

(7) A financial penalty imposed by the FCA for the relevant default—

(a) where the relevant turnover of A’s business is less than £500,000, may not exceed £100,000;

(b) where the relevant turnover of A’s business is £500,000 or more, may not exceed an amount equal to 20 per cent of that turnover.

Penalties for conduct for which the Regulator has given penalty decision: appeal of decision

53

(1) This article applies where—

(a) the Regulator gave written notice to a person (“A”) under regulation 52 of the 2006 Regulations of a decision to require A to pay a penalty; and

(b) on 1st April 2019—

(i) the period within which an appeal relating to that decision may be made has not ended; or

(ii) an appeal submitted to the First-tier Tribunal by A before that date has not been determined.

(2) The Regulator’s notice is to be treated as a decision notice given by the FCA under section 208(1)(b) of the 2000 Act, and is to be read for this purpose—

(a) as if any reference to the Regulator were a reference to the FCA; and

(b) with any other necessary modifications.

(3) If, before 1st April 2019, A submitted notice of an appeal to the First-tier Tribunal under section 13 of the 2006 Act, section 208(4) of the 2000 Act⁹⁴ does not apply.

Penalties for conduct for which the Regulator has given penalty decision: penalty due

54

(1) This article applies where, before 1st April 2019—

(a) the Regulator gave written notice to a person (“A”) under regulation 52 of the 2006 Regulations of a decision to require A to pay a penalty; and

(b) on 1st April 2019—

(i) the period within which an appeal relating to that decision may be made has ended, or an appeal has been withdrawn or determined otherwise than in A’s favour; and

(ii) the penalty specified in the Regulator’s notice, or any part of it, is unpaid.

(2) The penalty or unpaid part of the penalty is payable to the FCA rather than to the Regulator.

(3) Where the penalty, or any part of it, is not paid by the date specified in the Regulator’s notice as the date by which it is required to be paid, the FCA may enforce the penalty or that part of it as a debt due to the FCA.

(4) For the purposes of Part 3 of Schedule 1ZA to the 2000 Act (penalties and fees)—

(a) any amounts received by the FCA by virtue of paragraph (2) are to be treated as amounts received by way of penalties imposed under the 2000 Act;

(b) any expenses incurred by the FCA in connection with the recovery of penalties payable to it by virtue of this article are to be treated as expenses incurred in connection with the recovery of penalties imposed under the 2000 Act.

Investigation and prosecution after 1st April 2019 in relation to conduct before that date

55

(1) This article applies for the purposes of—

(a) an investigation on or after 1st April 2019 (“a relevant investigation”)—

(i) to determine whether an offence was committed by a person before that date under Part 2 of the 2006 Act;

(ii) of a complaint about the activities or professional conduct of a relevant person before that date;

(iii) into the professional conduct of a relevant person before that date otherwise than as a result of a complaint, where the FCA is satisfied that the Regulator could reasonably have made a decision to carry out such an investigation under regulation 35(2) of the 2006 Regulations; and

(b) the prosecution on or after 1st April 2019 of an offence committed before that date under Part 2 of the 2006 Act (“a relevant offence”).

(2) The FCA may—

(a) conduct any relevant investigation; or

(b) institute and prosecute criminal proceedings in respect of any relevant offence.

(3) Paragraphs (4) to (9) apply for the purposes of paragraph (2).

(4) The following sections of the 2000 Act are to be read as if a reference to an authorised person included a person who was, at any time before 1st April 2019, a 2006 Act authorised person—

(a) section 165 (regulators’ power to require information), except subsection (7);

(b) section 166 (reports by skilled persons); and

(5) Section 168 of the 2000 Act⁹⁶ is to be read as if, in subsection (4), after paragraph (a) there were inserted—

(ab) a person may be guilty of an offence under section 10, 11(1) or (2) of the Compensation Act 2006; (ac) a person may have contravened section 4(1) of the Compensation Act 2006 or failed to comply with a requirement made under section 8(4) of that Act;

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