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FINANCIAL SERVICES AND MARKETS ACT 2000: RECENT DEVELOPMENTS

Bulletin number 13 from HM Treasury

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

DEALING AS PRINCIPAL

Firms which are unauthorised under the Financial Services Act 1986 – including unauthorised banks, building societies and insurance companies - can currently take advantage of an exclusion in the Financial Services Act for dealing as principal in certain investments when this is done with or through an authorised person.

The single authorisation under FSMA means that that exclusion will no longer be available to firms previously authorised under banking and insurance legislation which are authorised by the FSA. Nor, currently, does the Authorised Persons Order provide for the grandfathering of this activity in affected firms’ FSMA permission. They will therefore have had either to have applied for interim authorisation or will have to apply for a variation of permission. In the latter case that would mean stopping the relevant business until this is determined.

The Government has therefore decided to amend the Authorised Persons Order so that affected firms which are being grandfathered, and could have taken advantage of the exclusion under current legislation, will have their Part IV permission extended to the activity of dealing in investments as principal to the extent permitted by the exclusion in Article 16 of the Regulated Activities Order.

Method of receipt

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HM Treasury

31 October 2001