FINANCIAL SERVICES AND MARKETS ACT 2000: RECENT DEVELOPMENTS

Consultation and Legislation: Bulletin 14

Bulletin number 14 from HM Treasury

This is the fourteenth bulletin covering developments on the Financial Services and Markets Act 2000 (FSMA). Previous bulletins can be found on the Treasury Website.

Scope of Permission Notices

During the grandfathering process scope of permission notices sent to firms currently regulated by the Personal Investment Authority contained a technical error. In many cases these notices have been agreed by the firms concerned which means that they will have the wrong scope of permission under FSMA.

We do not consider this to be in the interests either of the firms concerned or of the FSA. The Government will therefore be legislating to allow the FSA to replace the incorrect scope of permission notices with revised notices which reflect their existing entitlements under the Financial Services Act.

On this occasion the firms affected will have the right to object to the revised scope of permission notice, in which case they will revert to the original, albeit incorrect, scope of permission notice they agreed to.

If in future different reasons emerge for which scope of permission notices need to be revised then legislation may on further occasions specify a different procedure.

Appointed Representatives

We will be seeking parliamentary approval of a new exemption to the Financial Promotion Order which will allow appointed representatives to make unsolicited real time communications in the following circumstances:

i. promotion only of those regulated activities for which appointed representatives are exempt from the general prohibition: arranging deals, arranging the safeguarding or administering of assets, advising on investments, and agreeing to do any of these;
ii. promotions only to the same extent as their authorised principal, who will be subject to FSA rules;
iii. the principal must accept full responsibility for unsolicited real time communications by the appointed representative.

A draft of the exemption follows:

Financial promotion exemption for appointed representatives

2. --(1) The Financial Services and Markets Act 2000 (Financial Promotion) Order 2001(b) is amended as follows.

(2) In article 16 (exempt persons), the current text is numbered as paragraph (1) and after that paragraph insert -

(2) The financial promotion restriction does not apply to any unsolicited real time communication made by a person (AR) who is an appointed representative (within the meaning of section 39(2) of the Act) where -

(a) the communication is made by AR in carrying on the business -

(i) for which his principal (P) has accepted responsibility for the purposes of section 39 of the Act; and

(ii) in relation to which AR is exempt from the general prohibition by virtue of that section; and

(b) the communication is one which, if it were made by P, would comply with any rules made by the Authority under section 145 of the Act (financial promotion rules) which are relevant to a communication of that kind.

(b) This Order has been amended by S.I. 2001/2633.

Method of receipt

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HM Treasury

November 2001