Financial Services and Markets Act 2000
2000 Chapter c.8
PART XIX LLOYD'S
General
Authority's general duty.
314. –
(1) The Authority must keep itself informed about-
(a) the way in which the Council supervises
and regulates the market at Lloyd's; and
(b) the way in which regulated activities
are being carried on in that market.
(2) The Authority must keep under review the
desirability of exercising-
(a) any of its powers under this Part;
(b) any powers which it has in relation to
the Society as a result of section 315.
Excerpts from Lloyd's Sourcebook
5 Guidance on the conduct of the Society’s
regulatory functions
(page 15)
5.1 In the June 1999 response paper we discussed
the FSA’s future relationship with Lloyd’s and said that, in some areas of
the new regime, we intended to pursue our objectives by requiring the Society
to exercise its powers under the Lloyd’s Acts under our direction. Many of
these powers relate to the Society’s role as a regulator of the Lloyd’s market,
its members and the firms that the Council permits to act as underwriting
agents.
5.2 Because of the reliance that the FSA expects
to place on the Society’s regulatory functions, we said in paragraph 16 of
the response paper that we would give guidance to the Society on two aspects
of how it should carry out its regulatory functions. We would expect the Council
to maintain appropriate internal governance of its regulatory functions and
to ensure that the FSA had direct access to those charged with responsibility
for them.
5.3 The guidance in chapter 1 of the draft LLD seeks
to implement this policy and to give certain other guidance to the Society
on the carrying out of its regulatory functions. This guidance will be given
under clause 153 of the Bill.
5.4 Section 1.3 of chapter 1 of the LLD includes
guidance to the Society on delegation by the Council of authority to carry
out regulatory functions, both to individuals and committees. All delegation
of such functions should be clear, appropriate and adequately monitored (1.3.1G
and 1.3.3G). Any committee to which authority is delegated should be composed
of an appropriate number of fit and proper individuals and it should make
and retain proper records (1.3.4G). The Society should also deal with the
FSA in an open and co-operative way with respect to its regulatory functions,
and the FSA should have direct access to those with delegated responsibilities
for these (1.3.6G, 1.3.7G and 1.3.8G).
5.5 The Society’s disciplinary procedures should
ensure a prompt, fair and impartial hearing for any person accused of a breach
of its byelaws. Here, as elsewhere in the draft LLD, ‘byelaws’ include all
instruments made using the powers of the Council under section 6 of the Lloyd’s
Act 1982.
Excerpts from Lloyd's
Sourcebook
5 Guidance on the conduct of the Society’s
regulatory functions
(page 15)
5.1 In the June 1999 response paper we discussed
the FSA’s future relationship with Lloyd’s and said that, in some areas of
the new regime, we intended to pursue our objectives by requiring the Society
to exercise its powers under the Lloyd’s Acts under our direction. Many of
these powers relate to the Society’s role as a regulator of the Lloyd’s market,
its members and the firms that the Council permits to act as underwriting
agents.
5.2 Because of the reliance that the FSA expects
to place on the Society’s regulatory functions, we said in paragraph 16 of
the response paper that we would give guidance to the Society on two aspects
of how it should carry out its regulatory functions. We would expect the Council
to maintain appropriate internal governance of its regulatory functions and
to ensure that the FSA had direct access to those charged with responsibility
for them.
5.3 The guidance in chapter 1 of the draft LLD seeks
to implement this policy and to give certain other guidance to the Society
on the carrying out of its regulatory functions. This guidance will be given
under clause 153 of the Bill.
5.4 Section 1.3 of chapter 1 of the LLD includes
guidance to the Society on delegation by the Council of authority to carry
out regulatory functions, both to individuals and committees. All delegation
of such functions should be clear, appropriate and adequately monitored (1.3.1G
and 1.3.3G). Any committee to which authority is delegated should be composed
of an appropriate number of fit and proper individuals and it should make
and retain proper records (1.3.4G). The Society should also deal with the
FSA in an open and co-operative way with respect to its regulatory functions,
and the FSA should have direct access to those with delegated responsibilities
for these (1.3.6G, 1.3.7G and 1.3.8G).
5.5 The Society’s disciplinary procedures should
ensure a prompt, fair and impartial hearing for any person accused of a breach
of its byelaws. Here, as elsewhere in the draft LLD, ‘byelaws’ include all
instruments made using the powers of the Council under section 6 of the Lloyd’s
Act 1982.
page 42 (Annex C p. 6)
2. Provision of information
2.1 APPLICATION
2.1.1 D This Chapter applies to the Society
and the Directions in it are given to the Council
and to the Society acting through the Council.
2.2 ENABLING PROVISION
2.2.1 G The Directions in this Chapter are given
under section 314 of the Act.
2.3 PURPOSE
2.3.1 D The Directions and guidance
in this Chapter are given in relation to the exercise of the powers of the
Society and of the Council generally, with a view to achieving the objective
of enabling the FSA to:
(1) comply with its general duty under section 310
of the Act;
(2) determine whether underwriting agents or approved
persons acting for or on behalf of such agents are complying with the
requirements imposed on them by or under the Act;
(3) enforce the provisions of the Act, or requirements
made under the Act, by enabling the FSA to consider, where appropriate,
whether it should use its powers to, among other things:
(a) vary or cancel the permission of an underwriting
agent, under section 43 of the Act;
(b) withdraw approval from an approved person
acting for or on behalf of an underwriting agent, under section 62
of the Act (see ENF8);
(c) prohibit an individual acting for or on behalf
of an underwriting agent from involvement in regulated activities,
under section 55 of the Act (see ENF9);
(d) require an underwriting agent to make restitution,
under section 378 of the Act (see ENF10);
(e) discipline an underwriting agent, or an approved
person acting for or on behalf of it, for a breach of a requirement
made under the Act, including the Principles, Principles for Approved
Persons and FSA rules (see ENF12, 13 and 14);
(f) apply to court for an injunction, restitution
order or insolvency order (see ENF7, 10 and 11); and
page 42 (Annex C p. 6)
(g) prosecute any criminal offence that the FSA
has power to prosecute under the Act (see ENF16).
2.3.2 G Information provided to the FSA by the Society
to comply with the Act, requirements under the Act or rules may also be used
by the FSA for the purposes stated in 2.3.1D.
2.4 INFORMATION ON MATTERS OF MATERIAL CONCERN TO THE
FSA
2.4.1 D The Society must immediately inform the FSA in
writing if it becomes aware that any matter likely to be of material concern
to the FSA may have arisen in relation to:
(1) the regulated activities for which the Society
has permission;
(2) underwriting agents; or
(3) approved persons or individuals acting for or
on behalf of underwriting agents.
2.4.2 G 2.4.1D is designed to enable the FSA
to fulfil its monitoring and enforcement obligations under paragraph 6 of
Schedule 1 to the Act, whilst at the same time recognising the Society’s powers
and responsibilities to supervise and regulate the market.
2.4.3 G In view of the Society’s regulatory functions,
the FSA’s monitoring of underwriting agents, and approved persons acting for
or on behalf of such agents, may be less intensive than its monitoring of
firms and approved persons outside the Lloyd’s market. The FSA therefore directs
the Society in 2.4.1D to inform the FSA when it becomes aware, as a result
of carrying out its regulatory functions, of matters of material concern to
the FSA.
2.4.4 G Matters of material concern to the FSA
include but are not limited to:
(1) facts suggesting that an underwriting
agent may no longer satisfy the threshold conditions in relation to a
regulated activity for which it has a Part IV permission;
(2) facts suggesting that an underwriting
agent may have contravened, is contravening, or is likely to contravene
a requirement imposed on it by or under the Act;
(3) facts suggesting that the interests of
consumers are or may be at risk;
(4) facts suggesting that an approved person
acting for or on behalf of an underwriting agent may not be fit and proper
to carry out the functions to which the approval relates;
(5) facts suggesting that an approved person
acting for or on behalf of an underwriting agent may not be fit and proper
to perform controlled functions in relation to a regulated activity carried
on by a firm or exempt person;
(6) facts suggesting that an approved person
acting for or on behalf of an underwriting agent may have failed to comply
with a Principle for Approved Persons, or may have been concerned in the
contravention by an underwriting agent of a requirement imposed on it
by or under the Act; and
page 43 (Annex C p. 7)
(7) facts suggesting that a person may have
committed a criminal offence that the FSA has power to prosecute under
the Act.
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