The Investment Services Regulations 1995

Regulation 2(1).

SCHEDULE 1 ANNEX TO THE INVESTMENT SERVICES DIRECTIVE

“ANNEX

SECTION A Services

1.— (a) Reception and transmission, on behalf of investors, of orders in relation to one or more of the instruments listed in section B.

(b) Execution of such orders other than for own account.

2.   Dealing in any of the instruments listed in Section B for own account.

3.   Managing portfolios of investments in accordance with mandates given by investors on a discretionary, client-by-client basis where such portfolios include one or more of the instruments listed in section B.

4.   Underwriting in respect of issues of any of the instruments listed in section B and/or the placing of such issues.

SECTION B Instruments

1.— (a) Transferable securities.

(b) Units in collective investment undertakings.

2.   Money market instruments.

3.   Financial-futures contracts, including equivalent cash-settled instruments.

4.   Forward interest-rate agreements (FRAs).

5.   Interest-rate, currency and equity swaps.

6.   Options to acquire or dispose of any instruments falling within this section of the Annex, including equivalent cash-settled instruments. This category includes in particular options on currency and on interest rates.

SECTION C Non-core services

1.   Safekeeping and administration in relation to one or more of the instruments listed in Section B.

2.   Safe custody services.

3.   Granting credits or loans to an investor to allow him to carry out a transaction in one or more of the instruments listed in Section B, where the firm granting the credit or loan is involved in the transaction.

4.   Advice to undertakings on capital structure, industrial strategy and related matters and advice and service relating to mergers and the purchase of undertakings.

5.   Services related to underwriting.

6.   Investment advice concerning one or more of the instruments listed in Section B.

7.   Foreign-exchange service where these are connected with the provision of investment services.”

Regulation 2(3).

SCHEDULE 2 ARTICLE 2.2 OF THE INVESTMENT SERVICES DIRECTIVE

“This Directive shall not apply to:

(a) insurance undertakings as defined in article 1 of Directive 73/239/EEC(1) or Article 1 of Directive 79/267/EEC(2) or undertakings carrying on the reinsurance and retrocession activities referred to in Directive 64/225/EEC(3);

(b) firms which provide investment services exclusively for their parent undertakings, for their subsidiaries or for other subsidiaries of their parent undertakings;

(c) persons providing an investment service where that service is provided in an incidental manner in the course of a professional activity and that activity is regulated by legal or regulatory provisions or a code of ethics governing the profession which do not exclude the provision of that service;

(d) firms that provide investment services consisting exclusively in the administration of employee-participation schemes;

(e) firms that provide investment services that consist in providing both the services referred to in (b) and those referred to in (d);

(f) the central banks of Member States and other national bodies performing similar functions and other public bodies charged with or intervening in the management of the public debt;

(g) firms

• which may not hold clients' funds or securities and which for that reason may not at any time place themselves in debit with their clients, and

• which may not provide any investment service except the reception and transmission of orders in transferable securities and units in collective investment undertakings, and

• which in the course of providing that service may transmit orders only to

  (i)

  investment firms authorized in accordance with this Directive;

  (ii)

  credit institutions authorised in accordance with Directives 77/780/EEC and 89/646/EEC;

  (iii)

  branches of investment firms or of credit institutions which are authorized in a third country and which are subject to and comply with prudential rules considered by the competent authorities as at least as stringent as those laid down in this Directive, in Directive 89/646/EEC or in Directive 93/6/EEC;

  (iv)

  collective investment undertakings authorized under the law of a Member State to market units to the public and to the managers of such undertakings;

  (v)

  investment companies with fixed capital, as defined in article 15(4) of Directive 79/91/EEC(4), the securities of which are listed or dealt in on a regulated market in a Member State;

• the activities of which are governed at national level by rules or by a code of ethics;

(h) collective investment undertakings whether coordinated at Community level or not and the depositaries and managers of such undertakings;

(i) persons whose main business is trading in commodities amongst themselves or with producers or professional users of such products and who provide investment services only for such producers and professional users to the extent necessary for their main business;

(j) firms that provide investment services consisting exclusively in dealing for their own account on financial-futures or options markets or which deal for the accounts of other members of those markets or make prices for them and which are guaranteed by clearing members of the same markets. Responsibility for ensuring the performance of contracts entered into by such firms must be assumed by clearing members of the same markets;

(k) associations set up by Danish funds with the sole aim of managing the assets of pension funds that are members of those associations;

(l) “agenti di cambio” whose activities and functions are governed by Italian Royal Decree No. 222 of 7 March 1925 and subsequent provisions amending it, and who are authorized to carry on their activities under Article 19 of Italian Law No 1 of 2 January 1991.”

Regulation 3(3).

SCHEDULE 3 REQUIREMENTS AS RESPECTS EUROPEAN INVESTMENT FIRMS

Requirements for providing services etc.

1.—(1) In relation to the provision by the provision of services of any listed service, the requirements of this paragraph are—

(a) that the firm has given to the relevant supervisory authority in its home State a notice in accordance with paragraph 2 below; and

(b) that the Board, or, in the case of a listed firm, the Bank, has received from that authority a notice in accordance with paragraph 3 below.

(2) In relation to the establishment of a branch, the requirements of this paragraph are—

(a) that the firm has given to the relevant supervisory authority in its home State a notice in accordance with paragraph 2 below;

(b) that the Board, or, in the case of a listed firm, the Bank, has received from that authority a notice in accordance with paragraph 3 below; and

(c) that either—

(i) the Board or, as the case may be, the Bank has informed the firm that it may establish the branch; or

(ii) the period of two months beginning with the day on which the Board or, as the case may be, the Bank, received the notice mentioned in paragraph (b) above has elapsed.

2.  A notice given by a firm to the relevant supervisory authority in its home State is given in accordance with this paragraph if it states—

(a) the United Kingdom to be an EEA State in which the firm proposes to provide listed services;

(b) whether the firm intends to establish a branch in the United Kingdom; and

(c) the requisite details.

3.—(1) A notice given in respect of a European investment firm or quasi-European investment firm by the relevant supervisory authority in its home State is in accordance with this paragraph if it—

(a) certifies that the firm is an investment firm which is for the time being authorised to act as such a firm by the authority;

(b) contains the information stated in the firm’s notice; and

(c) if the firm intends to establish a branch in the United Kingdom, contains details of any compensation scheme which is intended to protect the branch’s investors.

(2) The Board or, as the case may be, the Bank shall as soon as practicable send a copy of any notice received by it in accordance with this paragraph, and a note of the date of its receipt, to every other authority which it knows is a connected UK authority.

Requirements for changing requisite details where services are provided

4.—(1) Subject to sub-paragraph (2) below, the requirements of this paragraph are that the firm has given a notice to the Board, or, in the case of a listed firm, to the Bank, and to the relevant supervisory authority in its home State, stating the details of the proposed change.

(2) In the case of a change occasioned by circumstances beyond the firm’s control, the requirements of this paragraph are that the firm has, as soon as practicable (whether before or after the change), given a notice to the Board or, as the case may be to the Bank, and to the relevant supervisory authority in its home State, stating the details of the change.

(3) The Board or, as the case may be, the Bank shall as soon as practicable send a copy of any notice received by it in accordance with this paragraph, and a note of the date of its receipt, to every other authority which it knows is a connected UK authority.

Requirements for changing requisite details of branch

5.—(1) Subject to sub-paragraph (2) below, the requirements of this paragraph are—

(a) that the firm has given a notice to the Board or, in the case of a listed firm, to the Bank, and to the relevant supervisory authority in its home State, stating the details of the proposed change;

(b) that the Board or, as the case may be, the Bank has received from that authority a notice stating those details; and

(c) that either the Board or, as the case may be, the Bank has informed the firm that it may make the change, or the period of one month beginning with the day on which it gave the Board or, as the case may be, the Bank the notice mentioned in paragraph (a) above has elapsed.

(2) In the case of a change occasioned by circumstances beyond the firm’s control, the requirements of this paragraph are that the firm has, as soon as practicable (whether before or after the change), given a notice to the Board or, as the case may be to the Bank, and to the relevant supervisory authority in its home State, stating the details of the change.

(3) The Board or, as the case may be, the Bank shall as soon as practicable send a copy of any notice received by it in accordance with this paragraph, and a note of the date of its receipt, to every other authority which it knows is a connected UK authority.

Meaning of “listed firm”

6.  In this Schedule, references to a “listed firm” are references to a European investment firm which is admitted, or is seeking admission, to the list maintained by the Bank for the purposes of section 43 of the Financial Services Act and is not carrying on, or proposing to carry on home-regulated investment business in the United Kingdom otherwise than by means of transactions or arrangements to which Schedule 5 to that Act applies.

Regulation 9(5).

SCHEDULE 4 PROHIBITIONS BY THE BOARD

Notice of prohibition

1.—(1) Where the Board proposes—

(a) to impose a prohibition on a European investment firm under regulation 9 of these Regulations; or

(b) to refuse an application made by a European investment firm under paragraph (3) of that regulation,

it shall give the firm on which it proposes to impose the prohibition, or whose application it proposes to refuse, written notice of its intention to do so, stating the reasons for which it proposes to act.

(2) In the case of a proposed prohibition the notice shall state the date on which it is proposed that the prohibition should take effect and, in the case of a limited prohibition, its proposed duration.

(3) Where the reasons stated in a notice under this paragraph relate specifically to matters which—

(a) refer to a person identified in the notice other than the firm concerned; and

(b) are in the opinion of the Board prejudicial to that person in relation to any office or employment,

the Board shall, unless it considers it impracticable to do so, serve a copy of the notice on that person.

(4) A notice under this paragraph shall give particulars of the right to require the case to be referred to the Financial Services Tribunal under section 97 of the Financial Services Act.

(5) Where a case is not required to be referred to that Tribunal by a person on whom a notice is served under this paragraph, the Board shall, at the expiration of the period within which such a requirement can be made—

(a) give that person written notice of the prohibition or refusal; or

(b) give that person written notice that the prohibition is not to be imposed or, as the case may be, written notice of the grant of the application;

and the Board may give public notice of any decision notified by it under paragraph (a) or (b) above and the reasons for the decision, except that it shall not do so in the case of a decision notified under paragraph (b) unless the person concerned consents to its doing so.

(6) Where the Board gives a notice under sub-paragraph (1) or (5)(a) or (b) above, it shall serve a copy of the notice on the relevant supervisory authority in the firm’s home State.

References to the Financial Services Tribunal

2.  Section 97 of the Financial Services Act(5) (references to the Tribunal) shall have effect as if—

(a) any reference to a notice served under section 29 of that Act included a reference to a notice served under paragraph 1 above;

(b) any reference to a copy of a notice served under that section included a reference to a copy of a notice served under sub-paragraph (3) of that paragraph;

(c) any reference to the withdrawal of an authorisation included a reference to the imposition of an absolute prohibition under regulation 9 of these Regulations; and

(d) any reference to the suspension of an authorisation included a reference to the imposition of a limited prohibition under regulation 9 of these Regulations;

and any reference in that section to a decision not to withdraw or suspend an authorisation shall be construed accordingly.

3.—(1) Section 98 of the Financial Services Act (decisions on references by applicant or authorised person etc.) shall have effect as if—

(a) the applications mentioned in paragraph (a) of subsection (2) included an application for the variation of a limited prohibition imposed under regulation 9 of these Regulations; but

(b) the applications mentioned in paragraph (b) of that subsection did not include an application for the rescission of any prohibition imposed under that regulation.

(2) Subsection (3)(b) of that section shall have effect as if the provisions there referred to included regulation 9 of these Regulations.

(3) That section shall have effect as if it included provision that paragraph 1 above shall not apply to any action taken by the Board in accordance with the Tribunal’s report.

4.—(1) Section 100(2) of the Financial Services Act (withdrawal of references) shall have effect as if the reference to the provisions mentioned in section 97(1)(a) of that Act included a reference to paragraph 1 above.

(2) Section 100 of the Financial Services Act shall also have effect as if it included provision that where a person on whom a notice was served under paragraph 1 above withdraws a case from the Tribunal, sub-paragraph (5) of that paragraph shall apply to him as if he had not required the case to be referred.

Regulation 15(6).

SCHEDULE 5 PROHIBITIONS AND RESTRICTIONS BY THE DIRECTOR

Preliminary

1.  In this Schedule—

• “appeal period” has the same meaning as in the Consumer Credit Act(6);

• “prohibition” means a prohibition under regulation 15 of these Regulations;

• “restriction” means a restriction under regulation 16 of these Regulations.

Notice of prohibition or restriction

2.—(1) This paragraph applies where the Director proposes, in relation to a European investment firm—

(a) to impose a prohibition;

(b) to impose a restriction; or

(c) to vary a restriction otherwise than with the agreement of the firm.

(2) The Director shall, by notice—

(a) inform the firm that, as the case may be, the Director proposes to impose the prohibition or restriction or vary the the restriction, stating his reasons; and

(b) invite the firm to submit representation as to the proposal in accordance with paragraph 4 below.

(3) If he imposes the prohibition or restriction or varies the restriction, the Director may give directions authorising the firm to carry into effect agreements made before the coming into force of the prohibition, restriction or variation.

(4) A prohibition, restriction or variation shall not come into force before the end of the appeal period.

(5) Where the Director imposes a prohibition or restriction or varies a restriction, he shall serve a copy of the prohibition, restriction or variation—

(a) on the Board; and

(b) on the relevant supervisory authority in the firm’s home State.

Application to revoke prohibition or restriction

3.—(1) This paragraph applies where the Director proposes to refuse an application made by a European investment firm for the revocation of a prohibition or restriction.

(2) The Director shall, by notice—

(a) inform the firm that the Director proposes to refuse the application, stating his reasons; and

(b) invite the firm to submit representations in support of the application in accordance with paragraph 4 below.

Representations to Director

4.—(1) Where this paragraph applies to an invitation by the Director to a firm to submit representations, the Director shall invite the firm, within 21 days after the notice containing the invitation is given to it, or such longer period as the Director may allow—

(a) to submit its representations in writing to the Director; and

(b) to give notice to the Director, if it thinks fit, that it wishes to make representations orally;

and where notice is given under paragraph (b) above the Director shall arrange for the oral representations to be heard.

(2) In reaching his determination the Director shall take into account any representations submitted or made under this paragraph.

(3) The Director shall give notice of his determination to the firm.

Appeals

5.  Section 41 of the Consumer Credit Act(7) (appeals to the Secretary of State) shall have effect as if—

(a) the following determinations were mentioned in column 1 of the table set out at the end of that section, namely—

(i) imposition of a prohibition or restriction or the variation of a restriction; and

(ii) refusal of an application for the revocation of a prohibition or restriction; and

(b) the European investment firm concerned were mentioned in column 2 of that table in relation to those determinations.

Regulation 20.

SCHEDULE 6 REQUIREMENTS AS RESPECTS UK AUTHORISED INVESTMENT FIRMS

Requirements for providing listed services etc.

1.—(1) In relation to the provision by the provision of services of any listed service, the requirements of this paragraph are that the firm has given to the Board, or, in the case of a listed person, to the Bank, a notice in accordance with paragraph 2 below.

(2) In relation to the establishment of a branch, the requirements of this paragraph are—

(a) that the firm has given to the Board, or, in the case of a listed firm, to the Bank, a notice in accordance with paragraph 2 below;

(b) that the Board or, as the case may be, the Bank has given to the relevant supervisory authority in the EEA State concerned the notice which, subject to paragraph 4(2) below, it is required by paragraph 3 below to give; and

(c) that either—

(i) the relevant supervisory authority has informed the firm that it may establish the branch; or

(ii) the period of two months beginning with the day on which the Board or, as the case may be, the Bank gave the relevant supervisory authority the notice mentioned in paragraph (b) above has elapsed.

2.  A notice given by a firm to the Board or, as the case may be, to the Bank is given in accordance with this paragraph if it states—

(a) the EEA State in which the firm proposes to carry on listed services;

(b) whether the firm intends to establish a branch in that EEA State; and

(c) in either case, the requisite details.

3.  The notice which, subject to paragraph 4(2) below, the Board or, as the case may be, the Bank, is required to give in respect of a UK authorised investment firm is a notice which is addressed to the relevant supervisory authority in the EEA State identified in the firm’s notice under paragraph 2 above and which—

(a) certifies that the firm is an authorised person, or, as the case may be, an exempted person, under the Financial Services Act;

(b) contains the information stated in the firm’s notice; and

(c) if the firm intends to establish a branch in the EEA State, contains details of any compensation scheme which is intended to protect the branch’s investors.

4.—(1) Where the firm’s notice under paragraph 2 above states that the firm does not intend to establish a branch in the EEA State, the notice referred to in paragraph 3 above shall be given within the period of one month beginning with the date on which the firm’s notice was received by the Board or, as the case may be, the Bank.

(2) Where the firm’s notice under paragraph 2 above states that the firm intends to establish a branch in the EEA State, the Board or, as the case may be, the Bank shall, within the period of three months beginning with the date on which the firm’s notice was received—

(a) give the notice referred to in paragraph 3 above; or

(b) refuse to give such a notice.

(3) The Board or, as the case may be, the Bank may not refuse to give such a notice unless, having regard to the listed services proposed to be provided, the Board or, as the case may be, the Bank doubts the adequacy of the administrative structure or the financial situation of the firm.

(4) Before determining to give or to refuse to give such a notice, the Board or, as the case may be, the Bank—

(a) shall seek and take into account the views of every other authority which it knows is a connected UK authority in relation to any of the listed services proposed to be provided; and

(b) may regard itself as satisfied in relation to any matter relating to those services which is relevant to the decision if any such authority informs the Board or, as the case may be, the Bank that it is so satisfied.

(5) In reaching a determination as to the adequacy of the administrative structure, the Board or, as the case may be, the Bank may have regard to the adequacy of management, systems and controls and the presence of relevant skills needed for the services proposed to be provided.

(6) Where the firm’s notice under paragraph 2 above states that the firm proposes to establish a branch, the Board or, as the case may be, the Bank, shall, within the period of three months referred to in sub-paragraph (2) above, notify the firm—

(a) that it has given the notice referred to in paragraph 3 above, stating the date on which it did so; or

(b) that it has refused to give the notice, stating the reasons for the refusal and giving particulars of the right to refer the case to the Financial Services Tribunal under section 97 of the Financial Services Act or, as the case may be, of any relevant arrangements made by the Bank for a review of its decision.

Requirements for changing requisite details where services are provided

5.—(1) Subject to sub-paragraph (2) below, the requirements of this paragraph are that the firm has given a notice to the Board, or, in a case in which the firm is a listed person, to the Bank, and to the relevant supervisory authority in the relevant EEA State, stating the details of the proposed change.

(2) In the case of a change occasioned by circumstances beyond the firm’s control, the requirements of this paragraph are that the firm has, as soon as practicable (whether before or after the change), given a notice to the Board or, in the case of a firm which is a listed person, the Bank, and to the relevant supervisory authority in the EEA State in which the services are provided by the branch, stating the details of the change.

Requirements for changing requisite details of branch

6.—(1) Subject to sub-paragraph (2) below, the requirements of this paragraph are—

(a) that the firm has given a notice to the Board or, in the case of a firm which is a listed person, to the Bank and to the relevant supervisory authority in the EEA State in which it has established the branch, stating the details of the proposed change;

(b) that that authority has received from the Board or, as the case may be, the Bank a notice under paragraph 7(1) below; and

(c) that either that authority has informed the firm that it may make the change, or the period of one month beginning with the day on which it gave that authority the notice mentioned in paragraph (a) above has elapsed.

(2) In the case of a change occasioned by circumstances beyond the firm’s control, the requirements of this paragraph are that the firm has, as soon as practicable (whether before or after the change), given a notice to the Board or, in the case of a firm which is a listed person, to the Bank, and to the relevant supervisory authority in the EEA State in which it has established the branch, stating the details of the change.

7.—(1) The Board or, as the case may be, the Bank shall, within the period of one month beginning with the date on which the notice under paragraph 6(1) above was received—

(a) give a notice to the relevant supervisory authority informing it of the details of the proposed change; or

(b) refuse to give such a notice.

(2) The Board or, as the case may be, the Bank may not refuse to give a notice under sub-paragraph (1) above unless, having regard to the changes and to the listed services proposed to be provided, it doubts the adequacy of the administrative structure or the financial situation of the firm.

(3) Before determining to give or to refuse to give such a notice, the Board or, as the case may be, the Bank—

(a) shall seek and take into account the views of any UK authority which it knows is a connected UK authority in relation to any changes to the listed services proposed to be provided; and

(b) may regard itself as satisfied in relation to any matter relating to those services which is relevant to the decision if any such authority informs the Board or, as the case may be, the Bank that it is so satisfied.

(4) In reaching a determination as to the adequacy of the administrative structure, the Board or, as the case may be, the Bank may have regard to the adequacy of management, systems and controls and the presence of relevant skills needed for the services proposed to be provided.

(5) The Board or, as the case may be, the Bank shall, within the period of one month referred to in sub-paragraph (1) above, notify the firm—

(a) that it has given the notice referred to in that sub-paragraph, stating the date on which it did so; or

(b) that it refused to give the notice, stating the reasons for the refusal and giving particulars of the right to refer the case to the Financial Services Tribunal under section 97 of the Financial Services Act or, as the case may be, of any relevant arrangements made by the Bank for a review of its decision.

References to the Financial Services Tribunal

8.  Section 97 of the Financial Services Act (references to the Tribunal) shall have effect as if the decisions mentioned in subsection (1) included a decision of the Board to refuse to give a notice under paragraph 3 or 7(1) above.

References to “listed person”

9.  In this Schedule, references to a listed person are references to a UK authorised investment firm which is an exempted person by virtue of its inclusion in the list maintained by the Bank for the purposes of section 43 of the Financial Services Act and which is not an authorised person.

Regulation 32.

SCHEDULE 7 OTHER AMENDMENTS OF FINANCIAL SERVICES ACT

Preliminary

1.  In this Schedule—

“the Act” means the Financial Services Act(8);

“investment agreement” has the same meaning as in the Act.

Restriction on carrying on business

2.  Section 5 of the Act (agreements made by or through unauthorised persons) shall have effect as if the persons mentioned in subsection (1)(b)(i) included a European investment firm acting in the course of home-regulated investment business carried on by it in the United Kingdom.

Authorised persons

3.  Section 10 of the Act (grant and refusal of recognition of self-regulating organisations) shall have effect as if the excepted cases mentioned in subsection (3) included the case where the member is a European investment firm and the business is home-regulated investment business.

4.  Section 13 of the Act(9) (alteration of rules of recognised self-regulating organisation for protection of investors) shall have effect as if the excepted cases mentioned in subsection (2) (both as amended and as originally enacted) included the case where the member is a European investment firm and the business is home-regulated investment business.

5.  Section 28 of the Act (withdrawal and suspension of authorisation) shall have effect in relation to an authorisation granted to a European investment firm as if the reference in subsection (1)(a) to the investment business which the holder of the authorisation is carrying on or proposing to carry on did not include a reference to any home-regulated investment business.

6.  Section 32 of the Act (notice of commencement of business) shall have effect in relation to a notice given under subsection (1) by a European investment firm or quasi-European investment firm as if the reference in subsection (2)(a) to the investment business which is proposed to be carried on did not include a reference to any home-regulated investment business.

Exempted persons

7.  Section 44 of the Act (appointed representatives) shall have effect as if any reference to an authorised person included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

8.  Section 45 of the Act (miscellaneous exemptions) shall have effect as if the reference in subsection (2) to a partnership which is an authorised person included a reference to a partnership which is or was a European investment firm carrying on home-regulated investment business in the United Kingdom.

Conduct of business

9.—(1) Section 47A of the Act(10) (statements of principle) shall have effect as if—

(a) the reference in subsection (1) to the conduct expected of persons authorised to carry on investment business included a reference to the conduct expected of European investment firms carrying on home-regulated investment business in the United Kingdom; and

(b) the reference in subsection (4) to the withdrawal or suspension of authorisation under section 28 of the Act included a reference to the imposition of a prohibition under regulation 9 of these Regulations.

(2) That section shall also have effect as if it included provision that a statement of principle issued under that section shall not include, as respects any European investment firm—

(a) provision as to the fitness of the firm to carry on any home-regulated investment business; or

(b) provision as to any other matter for which, under the Investment Services Directive, responsibility is reserved to the relevant supervisory authority in the firm’s home State.

10.—(1) Section 48 of the Act(11) (conduct of business rules) shall have effect as if—

(a) the reference in subsection (1) to the conduct of investment business by authorised persons included a reference to the conduct of home-regulated investment business carried on in the United Kingdom by European investment firms; and

(b) the reference in subsection (2) to an authorised person included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

(2) That section shall have effect as if it included provision that rules under that section shall not include, as respects any European investment firm—

(a) provision prohibiting the firm from carrying on, or holding itself out as carrying on, any home-regulated investment business; or

(b) provision as to any matter for which, under the Investment Services Directive, responsibility is reserved to the relevant supervisory authority in the firm’s home State.

11.—(1) Section 49 of the Act(12) (financial resources rules) shall have effect as if it included provision that rules under that section shall not include, as respects any European investment firm which is a member of a recognised self-regulating organisation, provision requiring the firm to have and maintain financial resources in respect of any home-regulated investment business carried on by it.

(2) Subsection (2) of that section shall also have effect in relation to an authorised person who is a European investment firm as if the reference in paragraph (b) to any business (whether or not investment business) carried on by the person concerned did not include a reference to any home-regulated investment business.

12.—(1) Section 51 of the Act (cancellation rules) shall have effect as if the reference in subsection (1) to a person who has entered or offered to enter into an investment agreement with an authorised person included a reference to a person who has entered or offered to enter into an investment agreement to which sub-paragraph (2) below applies.

(2) This sub-paragraph applies to an investment agreement which is made by a European investment firm in the course of the carrying on by it of home-regulated investment business in the United Kingdom.

13.—(1) Section 52 of the Act(13) (notification regulations) shall have effect as if any reference to authorised persons, or an authorised person, included a reference to European investment firms, or a European investment firm, carrying on home-regulated investment business in the United Kingdom.

(2) That section shall also have effect as if it included provision that regulations under that section shall not require European investment firms to furnish information which is not reasonably required for purposes connected with the exercise of functions under the Act or these Regulations.

14.  Section 53 of the Act (indemnity rules) shall have effect as if the reference in subsection (1) to civil liability incurred by an authorised person in connection with his investment business included a reference to civil liability incurred by a European investment firm in connection with home-regulated investment business carried on by it in the United Kingdom.

15.  Section 54 of the Act(14) (compensation fund) shall have effect as if—

(a) it included provision that rules establishing a scheme under that section may include in the scheme provision for compensating investors in cases where persons who are or have been European investment firms are unable, or likely to be unable, to satisfy claims in respect of any civil liability incurred by them in connection with home-regulated investment business carried on by them in the United Kingdom; and

(b) any reference in subsection (2) to authorised persons included a reference to European investment firms carrying on home-regulated investment business in the United Kingdom.

16.  Section 55 of the Act(15) (clients' money) shall have effect as if any reference to authorised persons, or an authorised person, included a reference to European investment firms, or a European investment firm, carrying on home-regulated investment business in the United Kingdom.

17.  Section 57 of the Act (restrictions on advertising) shall have effect as if any reference to an authorised person included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

18.  Section 59 of the Act (employment of prohibited persons) shall have effect as if any reference to authorised persons, or an authorised person, included a reference to European investment firms, or a European investment firm, carrying on home-regulated investment business in the United Kingdom.

19.  Section 60 of the Act (public statement as to a person’s misconduct) shall have effect as if—

(a) the reference in subsection (1) to a person who is or was an authorised person by virtue of section 25 of that Act included a reference to a person who is or was a European investment firm carrying on home-regulated investment business in the United Kingdom; and

(b) the reference in subsection (3) to the authorised person included a reference to the European investment firm.

20.  Section 64 of the Act (scope of powers of intervention) shall have effect in relation to an authorised person who is a European investment firm as if the reference in subsection (1) to investment business of a particular kind did not include a reference to any home-regulated investment business which the authorised person is carrying on or proposing to carry on.

21.  Section 65 of the Act (restriction of business) shall have effect as if the reference in subsection (1) to an authorised person included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

Collective investment schemes

22.  Section 75 of the Act(16) (collective investment schemes: interpretation) shall have effect as if the reference in subsection (6) to an authorised person included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

23.  Section 76 of the Act (restrictions on promotion) shall have effect as if and reference to an authorised person included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

24.  Section 93 of the Act (applications to the court) shall have effect as if the reference in subsection (1) to an authorised person included a reference to a European investment firm.

Information

25.  Section 102 of the Act (register of authorised persons etc) shall have effect as if it included provision that—

(a) the register kept under that section shall contain an entry in respect of each firm which appears to the Board to be a European investment firm carrying on home-regulated investment business in the United Kingdom;

(b) the entry in respect of each such firm shall consist of—

(i) information as to the services which the firm holds itself out as able to provide; and

(ii) such other information as the Board may determine;

(c) where it appears to the Board that any person in respect of whom there is an entry in the register by virtue of paragraph (a) above has ceased to be a European investment firm carrying on home-regulated investment business in the United Kingdom, the Board shall make a note to that effect in the entry together with the reason why the person in question is no longer such a firm; and

(d) an entry in respect of which a note is made by virtue of paragraph (c) above may be removed from the register at the end of such period as the Board thinks fit.

26.  Section 104 of the Act (power to call for information) shall have effect as if—

(a) the reference in subsection (1) to a person who is authorised to carry on investment business by virtue of any of the provisions there mentioned included a reference to a European investment firm carrying on home-related investment business in the United Kingdom; and

(b) references to functions under the Act included references to functions under these Regulations.

27.  Section 106 of the Act(17) (exercise of investigation powers by officer etc.) shall have effect as if it included provision that—

(a) where the Secretary of State or the Board authorises a person other than one of his or its officers to exercise any powers under section 105 of the Act (investigation powers) in relation to any home-regulated investment business of a European investment firm, the Secretary of State or, as the case may be, the Board may determine that subsection (3) of section 106 shall not apply; and

(b) where such a determination is made, the person authorised to exercise the powers shall make a report to the relevant supervisory authority in the firm’s home State, in such manner as that authority may require, on the exercise of those powers and the results of exercising them.

Auditors

28.  Subsection (3) of section 107 of the Act(18) (appointment of auditors) shall have effect in relation to an auditor appointed by an authorised person which is a European investment firm as if the reference to the accounts of the authorised person did not include a reference to any accounts relating to home-regulated investment business.

29.  Section 109 of the Act (communication by auditor with supervisory authorities) shall have effect as if in subsection (1)—

(a) the reference to an authorised person included a reference to a European investment firm; and

(b) the reference to functions under the Act included a reference to functions under these Regulations.

30.  Subsection (3) of section 110 of the Act (overseas business) shall have effect in relation to a European investment firm as if any reference to investment business did not include a reference to home-regulated investment business; and the reference in paragraph (b) of that subsection to the powers and duties of an auditor shall be construed accordingly.

Fees

31.  Section 113 of the Act (periodical fees) shall have effect as if it included provision that a European investment firm carrying on home-regulated investment business in the United Kingdom shall pay such periodical fees to the Board as may be prescribed by regulations made under that section.

Prevention of restrictive practices

32.  Section 119 of the Act(19) (recognised self-regulating organisations, investment exchanges and clearing houses) shall have effect as if any reference in subsections (1) and (2) to the protection of investors included a reference to compliance with the Investment Services Directive.

33.  Section 121 of the Act(20) (designated agencies) shall have effect as if any reference in subsections (1) and (2) to the protection of investors included a reference to compliance with the Investment Services Directive.

Relations with other regulatory authorities

34.—(1) Section 128C of the Act(21) (enforcement in support of overseas regulatory authority) shall have effect as if it—

(a) required the powers mentioned in subsection (1) to be exercised at the request of the relevant supervisory authority in another EEA State if their exercise is necessary for the purposes of complying with the Investment Services Directive; and

(b) included provision that, in relation to the exercise of those powers in such a case, subsections (4) and (5) shall not apply and the Board shall notify the action taken by it to that authority.

(2) That section shall also have effect as if the reference in subsection (2) to the power to withdraw or suspend authorisation under section 28 of the Act included a reference to the power to impose a prohibition under regulation 9 of these Regulations.

Official listing of securities

35.  Section 142 of the Act (official listing) shall have effect as if—

(a) transferable shares in a body incorporated under the law of, or of any part of, the United Kingdom relating to industrial and provident societies; and

(b) bills of exchange accepted by a banker,

were not investments to which that section applies(22).

36.  Section 154 of the Act (advertisements etc. in connection with listing applications) shall have effect as if—

(a) it included provision that, where a European investment firm carrying on home-regulated investment business in the United Kingdom contravenes that section, it shall be treated as having contravened rules made under Chapter V of Part I of the Act, or in the case of a firm which is a member of a recognised self-regulating organisation, the rules of that organisation; and

(b) the reference in subsection (3) to a person other than an authorised person did not include a reference to such a firm.

Insider dealing

37.—(1) Section 178 of the Act (penalty for failure to co-operate with section 177 investigations) shall have effect as if—

(a) the reference in subsection (3) to an authorised person included a reference to a European investment firm; and

(b) the notices which may be served on a European investment firm under that subsection included a notice—

(i) directing that regulation 5(1)(a) of these Regulations shall not apply in relation to the firm after the expiry of a specified period after the service of the notice; or

(ii) directing that during a specified period that provision shall apply in relation to the firm only as respects the performance of contracts entered into before the notice comes into force;

(c) the reference in subsection (4) to the period mentioned in paragraphs (a) and (c) of subsection (3) included a reference to the period mentioned in paragraph (b)(i) and (ii) above;

(d) any reference in subsection (5) to an unauthorised person did not include a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom; and

(e) the reference in that subsection to any authorised person included a reference to such a European investment firm.

(2) That section shall also have effect as if it included provision that, if it appears to the Secretary of State—

(a) that a person on whom he serves a notice under subsection (3) is a European investment firm carrying on home-regulated investment business in the United Kingdom; or

(b) that a person on whom he serves a revocation notice under subsection (7) was such a firm at the time when the notice which is being revoked was served,

he shall serve a copy of the notice on the Board or, in the case of a firm which is a member of a recognised self-regulating organisation, that organisation.

Restrictions on disclosure of information

38.  Section 180 of the Act(23) (exceptions from restriction on disclosure of information) shall have effect as if—

(a) the reference in section 180(1)(e) to functions under the Act included functions under these Regulations; and

(b) the reference in section 180(1) to an authorised person included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

Miscellaneous and supplementary

39.  Section 191 of the Act (occupational pension schemes) shall have effect as if any reference to an authorised person included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

40.  Section 206 of the Act(24) (publication of information and advice) shall have effect as if the reference in subsection (1) to authorised persons included a reference to European investment firms.

41.  Section 207(5) of the Act (interpretation: definition of controller) as it has effect in relation to a UK investment firm shall have effect as if the reference in section 207(5)(a) to 15 per cent were a reference to 10 per cent.

Activities constituting investment business

42.—(1) Paragraph 17 of Schedule 1 to the Act(25) (investments and investment business) shall have effect as if any reference to authorised persons, or an authorised person, included a reference to European investment firms, or a European investment firm, carrying on home-regulated investment business in the United Kingdom.

(2) Paragraph 18 of that Schedule shall have effect as if the reference in sub-paragraph (2) to an authorised person included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

(3) Paragraph 26 of that Schedule shall have effect as if any reference to an authorised person, or authorised persons, included a reference to a European investment firm, or European investment firms, carrying on home-regulated investment business in the United Kingdom.

Requirements for recognition of self-regulating organisation

43.—(1) Paragraph 2 of Schedule 2 to the Act (requirements for recognition of self-regulating organisation) shall have effect as if it included provision that the rules and practices of the organisation must be such as to secure that no European investment firm, other than one on which an absolute prohibition has been imposed under regulation 9 of these Regulations, is refused admission to the organisation, or expelled from it, for reasons relating to the firm’s fitness to carry on any home-regulated investment business.

(2) Paragraph 3 of that Schedule(26) shall have effect as if it included provision that the rules of the organisation must not include, as respects any European investment firm—

(a) provision requiring the firm to have and maintain financial resources in respect of any home-regulated investment business carried on by it; or

(b) provision as to any other matter for which, under the Investment Services Directive, responsibility is reserved to a supervisory authority in the firm’s home State.

(3) That paragraph shall also have effect as if—

(a) the reference in sub-paragraph (3) to Chapter VI of Part I of the Act included a reference to regulation 10 of these Regulations; and

(b) it included provision that the rules of the organisation must be such as to secure that, where a power falling within that sub-paragraph is exercisable by virtue of a European investment firm’s contravention of a requirement of any provision made pursuant to any provision of the Investment Services Directive that confers power on host States, the exercise of the power shall be subject to such restrictions as are necessary for the purposes of complying with article 19 of the Investment Services Directive.

(4) Paragraph 7 of that Schedule shall have effect as if it included provision that, for the purposes of complying with the Investment Services Directive, the organisation must be able and willing to co-operate, by the sharing of information and otherwise, with supervisory authorities in other EEA States.

Qualifications of designated agency

44.—(1) Paragraph 4 of Schedule 7 to the Act(27) (qualifications of designated agency) shall have effect as if any reference to authorised persons included a reference to European investment firms carrying on home-regulated investment business in the United Kingdom.

(2) Paragraph 5 of that Schedule shall have effect as if it included provision that, for the purposes of complying with the Investment Services Directive, the agency must be able and willing to co-operate, by the sharing of information and otherwise, with supervisory authorities in other EEA States.

Principles applicable to designated agency’s legislative provisions

45.  Schedule 8 to the Act(28) (principles applicable to designated agency’s legislative provisions) shall have effect as if any reference to an authorised person included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

Regulation 48(3).

SCHEDULE 8 ARTICLE 25 OF THE INVESTMENT SERVICES DIRECTIVE

“Article 25

1.   Member States shall provide that all persons who work or who have worked for the competent authorities, as well as auditors and experts instructed by the competent authorities, shall be bound by the obligation of professional secrecy. Accordingly, no confidential information which they may receive in the course of their duties may be divulged to any person or authority whatsoever, save in summary or aggregate form such that individual investment firms cannot be identified, without prejudice to cases covered by criminal law.

Nevertheless, where an investment firm has been declared bankrupt or is being compulsorily wound up, confidential information which does not concern third parties involved in attempts to rescue that investment firm may be divulged in civil or commercial proceedings.

2.   Paragraph 1 shall not prevent the competent authorities of different Member States from exchanging information in accordance with this Directive or other Directives applicable to investment firms. That information shall be subject to the conditions of professional secrecy imposed in paragraph 1.

3.   Member States may conclude cooperation agreements providing for exchanges of information with the competent authorities of third countries only if the information disclosed is covered by guarantees of professional secrecy at least equivalent to those provided for in this Article.

4.   Competent authorities receiving confidential information under paragraph 1 or 2 may use it only in the course of their duties:

• to check that the conditions governing the taking up of the business of investment firms are met and to facilitate the monitoring, on a non-consolidated or consolidated basis, of the conduct of that business, especially with regard to the capital adequacy requirements imposed in Directive 93/6/EEC, administrative and accounting procedures and internal-control mechanisms,

• to impose sanctions,

• in administrative appeals against decisions by the competent authorities, or

• in court proceedings initiated under article 26.

5.   Paragraphs 1 and 4 shall not preclude the exchange of information:

(a) within a Member State, where there are two or more competent authorities, or

(b) within a Member State or between Member States, between competent authorities and

• authorities responsible for the supervision of credit institutions, other financial organizations and insurance undertakings and the authorities responsible for the supervision of financial markets,

• bodies responsible for the liquidation and bankruptcy of investment firms and other similar procedures; and

• persons responsible for carrying out statutory audits of the accounts of investment firms and other financial institutions,

in the performance of their supervisory functions, or the disclosure to bodies which administer compensation schemes of information necessary for the performance of their functions. Such information shall be subject to the conditions of professional secrecy imposed in paragraph 1.

6.   This Article shall not prevent a competent authority from disclosing to those central banks which do not supervise credit institutions or investment firms individually such information as they may need to act as monetary authorities. Information received in this context shall be subject to the conditions of professional secrecy imposed in paragraph 1.

7.   This Article shall not prevent the competent authorites from communicating the information referred to in paragraphs 1 to 4 to a clearing house or other similar body recognised under national law for the provision of clearing or settlement services for one of their Member State’s markets if they consider that it is necessary to communicate the information in other to ensure the proper functioning of those bodies in relation to defaults or potential defaults by market participants. The information received shall be subject to the conditions of professional secrecy imposed in paragraph 1. The Member States shall, however, ensure that information received under paragraph 2 may not be disclosed in the circumstances referred to in this paragraph without the express consent of the competent authorities which disclosed it.

8.   In addition, notwithstanding the provisions referred to in paragraphs 1 and 4, Member States may, by virtue of provisions laid down by law, authorize the disclosure of certain information to other departments of their central government administrations responsible for legislation on the supervision of credit institutions, financial institutions, investment firms and insurance undertakings and to inspectors instructed by those departments.

Such disclosures may, however, be made only where necessary for reasons of prudential control.

Member States shall, however, provide that information received under paragraphs 2 and 5 and that obtained by means of the on-the-spot verifications referred to in Article 24 may never be disclosed in the cases referred to in this paragraph except with the express consent of the competent authorities which disclosed the information or of the competent authorities of the Member State in which the on-the-spot verification was carried out.

9.   If, at the time of adoption of this Directive, a Member State provides for the exchange of information between authorities in order to check compliance with the laws on prudential supervision, on the organization, operation and conduct of commercial companies and on the regulation of financial markets, that Member State may continue to authorize the forwarding of such information pending coordination of all the provisions governing the exchange of information between authorities for the entire financial sector but not in any case after 1 July 1996.

Member States shall, however, ensure that, where information comes from another Member State, it may not be disclosed in the circumstances referred to in the first sub-paragraph without the express consent of the competent authorities which disclosed it and it may be used only for the purpose for which those authorities gave their agreement.

The Council shall effect the coordination referred to in the first sub-paragraph on the basis of a Commission proposal. The Council notes the Commission’s statement to the effect that it will submit proposals by 31 July 1993 at the latest. The Council will act on those proposals within the shortest possible time with the intention of bringing the rules proposed into effect on the same date as this Directive.”

Regulation 55.

SCHEDULE 9 POSITION OF EUROPEAN SUBSIDIARIES

1.  In this Schedule—

“the Banking Regulations” means the Banking Coordination (Second Council Directive) Regulations 1992(29);

“financial institution” has the same meaning as in the Banking Regulations;

“listed activity” has the same meaning as in the Banking Regulations;

“non-ISD activity” means any listed activity other than a listed service.

Modifications of the Banking Regulations

2.  Regulation 3(3) of the Banking Regulations (requirements for being European subsidiary) shall cease to have effect except in so far as it relates to any financial institution—

(a) which immediately before the commencement date, is a European subsidiary and which, after that date, carries on in the United Kingdom (by whatever means and whether or not in conjunction with the provision by it of any listed service) any non-ISD activity in relation to which the requirements of paragraph 1 of Schedule 2 to those Regulations continue to be complied with; or

(b) which after the commencement date satisfies (and continues to satisfy) the requirements of regulation 3(3) in relation to the carrying on by it (by whatever means and whether or not in conjunction with the provision by it of any listed service) of any non-ISD activity;

and the meaning of “European institution” given by regulation 3(1) of those Regulations shall be modified accordingly.

3.  The following provisions of the Banking Regulations, that is to say—

(a) the definitions of “authorised or permitted”, “connected UK authority” and “home-regulated investment business” in regulation 2(1) (interpretation: general);

(b) regulation 3(7) (meaning of home-regulated activity);

(c) regulation 4(2) (permitted activities);

(d) regulation 5(1) (authorisations and licences not required);

(e) regulation 65 (application of Part II of the Insurance Companies Act 1982);

(f) regulation 66 (meaning of insurance business),

shall have effect, in relation to any financial institution falling within paragraph (a) or (b) of paragraph 2 above, as if any reference to a listed activity were a reference to any non-ISD activity.

Procedural requirements for existing European subsidiaries carrying on listed services

4.  Nothing in regulation 6(1) of these Regulations shall require a European investment firm which, immediately before the commencement date, is a European subsidiary to give further notice of any matter of which it has already given notice under paragraph 1 of Schedule 2 to the Banking Regulations.

5.  In respect of any listed service (whether or not provided in conjunction with the carrying on of any listed activity), regulation 6(3) of these Regulations (and not regulation 6(2) of the Banking Regulations) applies in respect of changes to the requisite details of any branch established in the United Kingdom by a European investment firm which, immediately before the commencement date, is a European subsidiary.

Regulation 57.

SCHEDULE 10 MINOR AND CONSEQUENTIAL AMENDMENTS

PART I PRIMARY LEGISLATION

Superannuation Act 1972 (c. 11)

1.  Sections 1, 9 and 10 of the Superannuation Act 1972(30) (superannuation of civil servants etc.) shall each have effect as if the reference in subsection (2A) to any authorised provider included a reference to any European investment firm acting in the course of home-regulated investment business carried on by it in the United Kingdom.

Superannuation (Northern Ireland) Order 1972 (S.I. 1972/1073 (N.I. 10))

2.  Articles 3, 11 and 12 of the Superannuation (Northern Ireland) Order 1972 (superannuation of civil servants etc.) shall each have effect as if the reference in paragraph (1A) or, as the case may be, paragraph (2A) to any authorised provider included a reference to any European investment firm acting in the course of home-regulated investment business carried on by it in the United Kingdom.

Data Protection Act 1984 (c. 35)

3.  Section 30 of the Data Protection Act 1984 (exemption for regulation of financial services etc.) shall have effect as if—

(a) the reference in subsection (1) to prejudicing the proper discharge of statutory functions to which that section applies included a reference to contravening regulation 48 of these Regulations; and

(b) the reference in subsection (2) to any enactment included a reference to these Regulations.

Companies Act 1985 (c. 6)

4.  Section 446 of the Companies Act 1985(31) (investigation of share dealings) shall have effect as if the references in subsection (4)(c) to (e) to an authorised person within the meaning of the Financial Services Act included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

Building Societies Act 1986 (c. 53)

6.  Section 43 of the Building Societies Act 1986(32) (revocation of authorisation) shall have effect as if the reference in sub-paragraph (f) of subsection (1A) to any rule of law in force in another member State for purposes connected with the implementation of the Second Council Directive included a reference to any rule of law in force in another EEA State for purposes connected with the implementation of the Investment Services Directive.

7.  Section 45A of the Building Societies Act 1986(33) (exercise of powers on information from supervisory authority) shall have effect as if the reference in subsection (1) to any rule of law in force in another member State for purposes connected with the implementation of the Second Council Directive included a reference to any rule of law in force in another EEA State for purposes connected with the implementation of the Investment Services Directive.

Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I.6))

8.  Article 439 of Companies (Northern Ireland) Order 1986(34) (investigation of share dealings) shall have effect as if the references in paragraph (4)(c) to (e) to an authorised person within the meaning of the Financial Services Act included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

Banking Act 1987 (c. 22)

9.  Section 11 of the Banking Act 1987(35) (revocation of authorisation) shall have effect as if the reference in sub-paragraph (f) of subsection (1A) to any rule of law in force in another member State for purposes connected with the implementation of the Second Council Directive included a reference to any rule of law in another EEA State for purposes connected with the implementation of the Investment Services Directive.

10.  Section 12A of the Banking Act 1987(36) (revocation and restriction on information from supervisory authority) shall have effect as if the reference in subsection (i) to any rule of law in force for purposes connected with the implementation of the Second Council Directive included a reference to any rule of law in force in another EEA State for purposes connected with the implementation of the Investment Services Directive.

11.  Section 82 of the Banking Act 1987(37) shall have effect as if amongst the functions specified in the second column of the Table set out in that section—

(a) in relation to a designated agency (within the meaning of the Financial Services Act); and

(b) in relation to a recognised self-regulating organisation (within the meaning of the Financial Services Act),

were any functions of such an agency or such an organisation as a competent authority designated by the United Kingdom for the purposes of Article 22 of the Investment Services Directive or for the purposes of Article 9 of the Capital Adequacy Directive.

Consumer Protection Act 1987 (c. 43)

12.  Section 22 of the Consumer Protection Act 1987 (application to provision of services and facilities) shall have effect as if it included provision that references in Part III of that Act to services or facilities shall not include references to services or facilities which are provided by a European investment firm in the course of carrying on home-regulated investment business in the United Kingdom.

Consumer Protection (Northern Ireland) Order 1987 (S.I. 1987/2049 (N.I.20))

13.  Article 15 of the Consumer Protection (Northern Ireland) Order 1987 (application to provision of services and facilities) shall have effect as if it included provision that references in Part III of that Order to services or facilities shall not include references to services or facilities which are provided by a European investment firm in the course of carrying on home-regulated investment business in the United Kingdom.

Companies Act 1989 (c. 40)

14.  Section 176 of the Companies Act 1989 (power to make provision about certain charges) shall have effect as if the reference in subsection (2) to an authorised person within the meaning of the Financial Services Act included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

Companies (No.2) (Northern Ireland) Order 1990 (S.I. 1990/1504 (N.I.10))

15.  Article 98 of the Companies (No. 2) (Northern Ireland) Order 1990 (power to make provision about certain charges) shall have effect as if the reference in paragraph (2) to an authorised person within the meaning of the Financial Services Act included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

PART II SUBORDINATE LEGISLATION

Data Protection (Regulation of Financial Services etc.) (Subject Access Exemption) Order 1987 (S.I. 1987/1905)

16.—(1) Schedule 1 to the Data Protection (Regulation of Financial Services etc.) (Subject Access Exemption) Order 1987(38) (functions designated for purposes of section 30 of Data Protection Act 1984) shall have effect as if the reference in the last but one entry relating to the Financial Services Act to any person authorised under that Act included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

(2) That Schedule shall also have effect as if at the end there were inserted the following entry—

“Investment Services Regulations 1995

Functions of the Securities and Investments Board under Regulations.”

Banking Act 1987 (Advertisements) Regulations 1988 (S.I. 1988/645)

17.  Regulation 2 of the Banking Act 1987 (Advertisements) Regulations 1988 (application of Regulations) shall have effect as if the reference in paragraph (7) to a person authorised under Chapter III of Part I of the Financial Services Act included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

Banking Act 1987 (Exempt Transactions) Regulations 1988 (S.I. 1988/646)

18.  Regulation 14 of the Banking Act 1987 (Exempt Transactions) Regulations 1988(39) shall have effect as if—

(a) the reference in subsection (1) to a person who is an authorised person under the Financial Services Act included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom; and

(b) the reference in paragraph (2) to such an authorised person included a reference to a European investment firm.

Control of Misleading Advertisements Regulations 1988 (S.I. 1988/915)

19.  Regulation 3 of the Control of Misleading Advertisements Regulations 1988 (application) shall have effect as if—

(a) the reference in paragraph (a) to an authorised person (within the meaning of the Financial Services Act) included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom; and

(b) the reference in that paragraph to the authorised person in question included a reference to the European investment firm in question.

Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 (S.I. 1995/1266)

20.  Article 11 of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 (advertisements issued to persons sufficiently expert to understand the risks involved) shall have effect as if any reference to an authorised person (within the meaning of the Financial Services Act) included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

Financial Services Act 1986 (Investment Advertisements) (Exemptions) (No. 2) Order 1995 (S.I. 1995/1536)

21.  Article 7 of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) (No. 2) Order 1995 (advertisements issued to persons of particular kinds) shall have effect as if the reference in paragraph (1) to an authorised person (within the meaning of the Financial Services Act) included a reference to a European investment firm carrying on home-regulated investment business in the United Kingdom.

The Public Offers of Securities Regulations 1995 (S.I. 1995/1537)

22.  Regulation 3 of the Public Offers of Securities Regulations 1995 (investments to which Part II of the Regulations apply) shall have effect as if—

(a) transferable shares in a body incorporated under the law of, or of any part of, the United Kingdom relating to industrial and provident societies; and

(b) bills of exchange accepted by a banker,

were not investments to which Part II of those Regulations are applied(40).

Regulation 58.

SCHEDULE 11 TRANSITIONAL PROVISIONS AND SAVINGS

PART I RECOGNITION OF INVESTMENT FIRMS

European investment firms

1.—(1) This paragraph applies to an investment firm (other than a European authorised institution) incorporated in or formed under the law of another EEA State which before the commencement date—

(a) has commenced providing any listed service in the United Kingdom by the provision of services; or

(b) has established in the United Kingdom for the purpose of providing any such service a branch which immediately before that date is in existence.

(2) An investment firm to which this paragraph applies and which appears on the list communicated by the supervisory authorities of its home State in accordance with article 30.3 of the Investment Services Directive shall be treated for all purposes of these Regulations as if the requirements of paragraph 1 of Schedule 3 to these Regulations had been complied with in relation to its provision of the service or, as the case may be, its establishment of the branch.

(3) An investment firm to which this paragraph applies and which does not appear on the list communicated by the supervisory authorities of its home State in accordance with the provisions of article 30.3 of the Investment Services Directive shall if it is an authorised person or an exempted person, cease, with effect from whichever first occurs of 1st January 1997 or the firm becoming authorised in its home State in accordance with the provisions of the Investment Services Directive, to be such a person as respects listed services, and any standard licence granted to the firm under the Consumer Credit Act shall cease to cover any consumer credit business falling within the Annex to the Investment Services Directive.

(4) An investment firm to which this paragraph applies and which does not appear on the list communicated to the Board by the supervisory authorities of its home State in accordance with the provisions of article 30.3 of the Investment Services Directive shall (upon its becoming authorised in its home State in accordance with the provisions of the Investment Services Directive before 1st January 1997) be treated for the purposes of these Regulations as if the requirements of paragraph 1 of Schedule 3 to these Regulations had been complied with in relation to its provision of the service or, as the case may be, its establishment of the branch.

UK authorised investment firms

2.—(1) This paragraph applies to an investment firm incorporated in or formed under the law of any part of the United Kingdom which immediately before the commencement date is an authorised person under the Financial Services Act or is an exempted person by reason of its inclusion in the list maintained by the Bank for the purposes of section 43 of that Act.

(2) If an investment firm to which this paragraph applies—

(a) has, before the commencement date, commenced providing any listed service in another EEA State by the provision of services; or

(b) has established in another EEA State for the purpose of providing any such service a branch which immediately before that date is in existence,

it shall be treated for all purposes of these Regulations as if the requirements of paragraph 1 of Schedule 6 to these Regulations had been complied with in relation to its provision of the service or, as the case may be, its establishment of the branch.

PART II AMENDMENTS OF FINANCIAL SERVICES ACT

Preliminary

3.—(1) Any reference in this Part of this Schedule to a statement of principle or to rules or regulations is a reference to a statement of principle issued, or to rules or regulations made, before the commencement date.

(2) Expressions used in this Part of this Schedule which are also used in Schedule 7 to these Regulations have the same meanings as in that Schedule.

Statements of principle

4.—(1) A statement of principle issued under section 47A of the Financial Services Act(41) (statements of principle with respect to conduct and financial standing) shall, unless the contrary intention appears, apply to a European investment firm carrying on home-regulated investment business in the United Kingdom to the same extent as it would apply if the investment firm were an authorised person as respects that business.

(2) If the Board is satisfied that it is necessary to do so for the purpose of implementing the Investment Services Directive or the Capital Adequacy Directive so far as relating to any particular European investment firm, the Board may, on the application or with the consent of the firm, by order direct that all or any of the provisions of such a statement—

(a) shall not apply to the firm; or

(b) shall apply to it with such modifications as may be specified in the order.

Conduct of business rules

5.—(1) Rules made under section 48 of the Financial Services Act(42) (conduct of business rules) shall, unless the contrary intention appears, apply in relation to the conduct of home-regulated investment business carried on by a European investment firm in the United Kingdom to the same extent as they would apply if the investment firm were an authorised person as respects that business.

(2) If the Board is satisfied that it is necessary to do so for the purpose of implementing the Investment Services Directive so far as relating to any particular European investment firm, the Board may, on the application or with the consent of the firm, by order direct that all or any of the provisions of such rules—

(a) shall not apply in relation to the conduct of home-regulated investment business carried on by the firm; or

(b) shall apply in relation to the conduct of such business with such modifications as may be specified in the order.

(3) A member of a recognised self-regulating organisation who contravenes a rule applying to him by virtue of this paragraph shall be treated as having contravened the rules of the organisation.

Financial resources rules

6.  If the Board is satisfied that it is necessary to do so for the purpose of implementing the Capital Adequacy Directive so far as relating to any particular firm which is a European investment firm and an authorised person, the Board may, on the application or with the consent of the firm, by order direct that all or any of the provisions of rules under section 49 of the Financial Services Act(43) (financial resources rules)—

(a) shall not apply to the firm; or

(b) shall apply to it with such modifications as may be specified in the order.

Cancellation rules

7.—(1) Rules made under section 51 of the Financial Services Act (cancellation rules) shall, unless the contrary intention appears, apply in relation to a person who has entered or offered to enter into an investment agreement to which sub-paragraph (2) below applies as they apply in relation to a person mentioned in that section.

(2) This sub-paragraph applies to an investment agreement which is made by a European investment firm in the course of the carrying on by it of home-regulated investment business in the United Kingdom.

Notification regulations

8.—(1) Regulations made under section 52 of the Financial Services Act(44) (notification regulations) shall, unless the contrary intention appears, apply in relation to a European investment firm carrying on home-regulated investment business in the United Kingdom to the same extent as they would apply if the investment firm were an authorised person as respects that business.

(2) If the Board is satisfied that it is necessary to do so for the purpose of implementing the Investment Services Directive or the Capital Adequacy Directive so far as relating to any particular European investment firm, the Board may, on the application or with the consent of the firm, by order direct that all or any of the provisions of such regulations—

(a) shall not apply to the firm; or

(b) shall apply to it with such modifications as may be specified in the order.

Compensation fund

9.—(1) Rules under section 54 of the Financial Services Act (compensation fund) shall, unless the contrary intention appears, apply in cases where a person who is or has been a European investment firm is unable, or likely to be unable, to satisfy claims in respect of any description of civil liability incurred by it in connection with home-regulated investment business carried on by it in the United Kingdom to the same extent as they would apply if the investment firm were an authorised person as respects that business.

(2) If the Board is satisfied that it is necessary to do so for the purpose of implementing the Investment Services Directive so far as relating to any particular person who is or has been a European investment firm, the Board may, on the application or with the consent of that person, by order direct that all or any of the provisions of such rules—

(a) shall not apply in relation to cases where that person is unable, or likely to be unable, to satisfy claims in respect of any description of civil liability incurred by it in connection with home-regulated investment business carried on by it; or

(b) shall apply in relation to such cases with such modifications as may be specified in the order.

Unsolicited calls

10.—(1) Regulations under section 56 of the Financial Services Act(45) (unsolicited calls) shall, unless the contrary intention appears, apply in relation to a European investment firm carrying on home-regulated investment business in the United Kingdom to the same extent as they would apply if the investment firm were an authorised person.

(2) A member of a recognised self-regulating organisation who contravenes a regulation applying to him by virtue of this paragraph shall be treated as having contravened the rules of the organisation.

Supplemental

11.—(1) An order under this Part of this Schedule may be subject to conditions.

(2) Such an order may be revoked at any time by the Board; and the Board may at any time vary any such order on the application or with the consent of the European investment firm to which it applies.

(1)

OJ No. L228, 16.8.1973, p. 3. Directive last amended by Directive 90/619/EEC (OJ No L330, 29.11.1990, p. 50).

(2)

OJ No. L63, 13.3.1979, p. 1. Directive last amended by Directive 90/618/EEC (OJ No L330, 29.11.1990, p. 44).

(3)

OJ No 56, 4.4.1964, p. 878/64.

(4)

OJ No L26, 30.1.1977, p. 1. Directive last amended by the Act of Accession of Spain and Portugal.

(5)

1986 c. 60

(6)

1974 c. 39.

(7)

1974 c. 39.

(8)

1986 c. 60.

(9)

Section 13 has been amended by sections 206 and 212 of, and Schedules 23 and 24 to, the Companies Act 1989 (c. 40) subject to the savings provided for in the Companies Act 1989 (Commencement, Transitional Provisions and Transfer of Functions under the Financial Services Act 1986) Order 1990 (S.I. 1990/354).

(10)

Section 47A was inserted by section 192 of the Companies Act 1989 (c. 40).

(11)

Section 48 has been amended by sections 206 and 212 of, and Schedules 23 and 24 to, the Companies Act 1989.

(12)

Section 49 has been amended by section 206 of, and Schedule 23 to, the Companies Act 1989.

(13)

Section 52 has been amended by section 206 of, and Schedule 23 to, the Companies Act 1989.

(14)

Section 54 has been amended by article 389 of, and Schedule 9 to, the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I.19)).

(15)

Section 55 has been amended by section 206 of, and Schedule 23 to, the Companies Act 1989 (c. 40).

(16)

Section 75 has been amended by the Financial Services Act 1986 (Restriction of Scope of Act and Meaning of Collective Investment Scheme) Order 1990 (S.I. 1990/349).

(17)

Section 106 has been amended by section 73 of the Companies Act 1989 (c. 40).

(18)

Section 107 has been amended by section 206 of, and Schedule 23 to, the Companies Act 1989.

(19)

Section 119 has been amended by sections 206 and 212 of, and Schedules 23 and 24 to, the Companies Act 1989.

(20)

Section 121 has been amended by section 206, of, and Schedule 23 to, the Companies Act 1989.

(21)

Section 128C was inserted by section 196 of the Companies Act 1989 (c. 40).

(22)

The shares and bills of exchange in question fall within paragraphs 1 and 2 respectively of Schedule 1 to the Financial Services Act 1986 by virtue of articles 3 and 4 of the Financial Services Act 1986 (Investment Services) (Extension of Scope of Act) Order 1995 (SI 1995/3271). As such, they would be investments to which section 142 of the Financial Services Act applied unless excluded from the scope of that section.

(23)

Section 180 has been amended by section 108 of, and paragraph 27(3) of Schedule 6 to, the Banking Act 1987 (c. 22) and by sections 75 and 212 of, and Schedule 24 to, the Companies Act 1989 (c. 40).

(24)

Section 206 has been amended by section 206 of, and Schedule 23 to, the Companies Act 1989.

(25)

Paragraph 17 has been amended by section 206 of, and Schedule 23 to, to Companies Act 1989 and by the Financial Services Act 1986 (Restriction of Scope of Act and Meaning of Collective Investment Scheme) Order 1990 (S.I. 1990/349).

(26)

Paragraph 3 has been amended by section 203 of the Companies Act 1989 (c. 40).

(27)

Schedule 7 has been amended by sections 204 and 206 of, and Schedule 23 to, the Companies Act 1989.

(28)

Schedule 8 has been amended by section 206 of, and Schedule 23 to, the Companies Act 1989.

(29)

S.I. 1192/3218.

(30)

Sections 1(2A), 9(2A) and 10(2A) were inserted by sections 8(1), 8(3) and 8(5) respectively of the Pensions (Miscellaneous Provisions) Act 1990 (c. 7); other amendments not relevant to these Regulations were also made to sections 1, 9 and 10 of the Superannuation Act 1972 (c. 11) by the Pensions (Miscellaneous Provisions) Act 1990.

(31)

Section 446(4) was substituted by section 212 of, and paragraph 21 of Schedule 16 to, the Financial Services Act 1986 (c. 60).

(32)

Section 43(1A) was inserted by regulation 71 of the Banking Co-ordination (Second Council Directive) Regulations 1992 (S.I. 1992/3218).

(33)

Section 45A was inserted by regulation 74 of the Banking Co-ordination (Second Council Directive) Regulations 1992.

(34)

Article 439 has been amended by paragraph 38 of Schedule 16 to the Financial Services Act 1986.

(35)

Section 11(1A) was inserted by regulation 28 of the Banking Co-ordination (Second Council Directive) Regulations 1992.

(36)

Section 12A was inserted by regulation 29 of the Banking Co-ordination (Second Council Directive) Regulations 1992.

(37)

1987 c. 22, Section 82 of the Banking Act 1987 has been amended by the Banking Coordination (Second Council Directive) Regulations 1992 (S.I. 1992/3218).

(38)

There are amendments not relevant to these Regulations.

(39)

There are amendments not relevant to these Regulations.

(40)

The shares and bills of exchange in question fall within paragraphs 1 and 2 respectively of Schedule 1 to the Financial Services Act 1986 by virtue of articles 3 and 4 of the Financial Services Act 1986 (Investment Services) (Extension of Scope of Act) Order 1995 (S.I. 1995/3271). As such, they would be investments to which Part II of the Public Offers of Securities Regulations applied unless excluded from the scope of regulation 3 of those Regulations.

(41)

Section 47A was inserted by section 192 of the Companies Act 1989 (c. 40).

(42)

Section 48 has been amended by sections 206 and 212 of, and Schedules 23 and 24 to, the Companies Act 1989 (c. 40).

(43)

Section 49 has been amended by section 206 of, and Schedule 23 to, the Companies Act 1989 (c. 40).

(44)

Section 52 has been amended by section 206 of, and Schedule 23 to, the Companies Act 1989.

(45)

Section 56 has been amended by section 206 of, and Schedule 23 to, the Companies Act 1989.