Financial Services and Markets Act 2000

Publication Date:January 01, 2000

Financial Services and Markets Act 2000

2000 Chapter 8

An Act to make provision about the regulation of financial services and markets; to provide for the transfer of certain statutory functions relating to building societies, friendly societies, industrial and provident societies and certain other mutual societies; and for connected purposes.

[14th June 2000]

B e it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons in this present Parliament assembled, and by the authority of the same as follows:—

I The Regulator

Part I

The Regulator

S-1 The Financial Services Authority.

1 The Financial Services Authority.

(1) The body corporate known as the Financial Services Authority (‘the Authority’) is to have the functions conferred on it by or under this Act

(2) The Authority must comply with the requirements as to its constitution set out in Schedule 1.

(3) Schedule 1 also makes provision about the status of the Authority and the exercise of certain of its functions.

The Authority's general duties

The Authority's general duties

S-2 The Authority's general duties.

2 The Authority's general duties.

(1) In discharging its general functions the Authority must, so far as is reasonably possible, act in a way—

(a) which is compatible with the regulatory objectives; and

(b) which the Authority considers most appropriate for the purpose of meeting those objectives

(2) The regulatory objectives are—

(a) market confidence

(b) public awareness;

(c) the protection of consumers; and

(d) the reduction of financial crime.

(3) In discharging its general functions the Authority must have regard to—

(a) the need to use its resources in the most efficient and economic way;

(b) the responsibilities of those who manage the affairs of authorised persons;

(c) the principle that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction;

(d) the desirability of facilitating innovation in connection with regulated activities;

(e) the international character of financial services and markets and the desirability of maintaining the competitive position of the United Kingdom;

(f) the need to minimise the adverse effects on competition that may arise from anything done in the discharge of those functions;

(g) the desirability of facilitating competition between those who are subject to any form of regulation by the Authority.

(4) The Authority's general functions are—

(a) its function of making rules under this Act (considered as a whole);

(b) its function of preparing and issuing codes under this Act (considered as a whole);

(c) its functions in relation to the giving of general guidance (considered as a whole); and

(d) its function of determining the general policy and principles by reference to which it performs particular functions.

(5) ‘General guidance’ has the meaning given in section 158(5).

The regulatory objectives

The regulatory objectives

S-3 Market confidence.

3 Market confidence.

(1) The market confidence objective is: maintaining confidence in the financial system.

(2) ‘The financial system’ means the financial system operating in the United Kingdom and includes—

(a) financial markets and exchanges;

(b) regulated activities; and

(c) other activities connected with financial markets and exchanges.

S-4 Public awareness.

4 Public awareness.

(1) The public awareness objective is: promoting public understanding of the financial system.

(2) It includes, in particular—

(a) promoting awareness of the benefits and risks associated with different kinds of investment or other financial dealing; and

(b) the provision of appropriate information and advice.

(3) ‘The financial system’ has the same meaning as in section 3.

S-5 The protection of consumers.

5 The protection of consumers.

(1) The protection of consumers objective is: securing the appropriate degree of protection for consumers.

(2) In considering what degree of protection may be appropriate, the Authority must have regard to—

(a) the differing degrees of risk involved in different kinds of investment or other transaction;

(b) the differing degrees of experience and expertise that different consumers may have in relation to different kinds of regulated activity;

(c) the needs that consumers may have for advice and accurate information; and

(d) the general principle that consumers should take responsibility for their decisions.

(3) ‘Consumers’ means persons—

(a) who are consumers for the purposes of section 138; or

(b) who, in relation to regulated activities carried on otherwise than by authorised persons, would be consumers for those purposes if the activities were carried on by authorised persons.

S-6 The reduction of financial crime.

6 The reduction of financial crime.

(1) The reduction of financial crime objective is: reducing the extent to which it is possible for a business carried on—

(a) by a regulated person, or

(b) in contravention of the general prohibition,

to be used for a purpose connected with financial crime.

(2) In considering that objective the Authority must, in particular, have regard to the desirability of—

(a) regulated persons being aware of the risk of their businesses being used in connection with the commission of financial crime;

(b) regulated persons taking appropriate measures (in relation to their administration and employment practices, the conduct of transactions by them and otherwise) to prevent financial crime, facilitate its detection and monitor its incidence;

(c) regulated persons devoting adequate resources to the matters mentioned in paragraph (b).

(3) ‘Financial crime’ includes any offence involving—

(a) fraud or dishonesty;

(b) misconduct in, or misuse of information relating to, a financial market; or

(c) handling the proceeds of crime.

(4) ‘Offence’ includes an act or omission which would be an offence if it had taken place in the United Kingdom.

(5) ‘Regulated person’ means an authorised person, a recognised investment exchange or a recognised clearing house.

Corporate governance

Corporate governance

S-7 Duty of Authority to follow principles of good governance.

7 Duty of Authority to follow principles of good governance.

In managing its affairs, the Authority must have regard to such generally accepted principles of good corporate governance as it is reasonable to regard as applicable to it.

Arrangements for consulting practitioners and consumers

Arrangements for consulting practitioners and consumers

S-8 The Authority's general duty to consult.

8 The Authority's general duty to consult.

The Authority must make and maintain effective arrangements for consulting practitioners and consumers on the extent to which its general policies and practices are consistent with its general duties under section 2

S-9 The Practitioner Panel.

9 The Practitioner Panel.

(1) Arrangements under section 8 must include the establishment and maintenance of a panel of persons (to be known as ‘the Practitioner Panel’) to represent the interests of practitioners.

(2) The Authority must appoint one of the members of the Practitioner Panel to be its chairman.

(3) The Treasury's approval is required for the appointment or dismissal of the chairman.

(4) The Authority must have regard to any representations made to it by the Practitioner Panel.

(5) The Authority must appoint to the Practitioner Panel such—

(a) individuals who are authorised persons,

(b) persons representing authorised persons,

(c) persons representing recognised investment exchanges, and

(d) persons representing recognised clearing houses,

as it considers appropriate.

S-10 The...

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