FINANCIAL SERVICES AND MARKETS Citation, commencement and interpretation 1 1 These Regulations may be cited as the Financial Services and Markets Act 2000 (Appointed Representatives) Regulations 2001, and come into force on the day on which section 19 of the Act comes into force. 2 In these Regulations— “buy”, “sell”, “security” ,“contract of insurance”, “qualifying contract of insurance” , “relevant investment” and “structured deposit” have the same meaning as in the Regulated Activities Order ; “contract of long-term care insurance” means a contract of insurance in respect of which the following conditions are met— the purpose (or one of the purposes) of the policy is to protect the policyholder against the risk of becoming unable to live independently without assistance in consequence of a deterioration of mental or physical health, injury, sickness or other infirmity; benefits under the contract are payable in respect of— services, accommodation, or goods, which are (or which is) necessary or desirable due to a deterioration of mental or physical health, injury, sickness or other infirmity; the contract is expressed to be in effect until the death of the policyholder (except that the contract may give the policyholder the option to surrender the policy); and the benefits under the contract are capable of being paid throughout the life of the policyholder; ... ... “funeral plan contract” has the same meaning as in article 59 of the Regulated Activities Order; “home purchaser” has the same meaning as in article 63F(3) of the Regulated Activities Order ; “other counterparties” means persons other than the principal; “plan provider” has the meaning given by paragraph (3) of article 63B of the Regulated Activities Order , read with paragraphs (7) and (8) of that article; “the principal”, in relation to a contract, means the party who is an authorised person, and “the representative” means the other party; “the Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ; “regulated home purchase plan” has the same meaning as in article 63F(3) of the Regulated Activities Order ; “regulated home reversion plan” has the same meaning as in article 63B(3) of the Regulated Activities Order ; “regulated mortgage contract”, and “borrower” in relation to such a contract, have the same meaning as in article 61(3) of the Regulated Activities Order ; “reversion seller” has the same meaning as in article 63B(3) of the Regulated Activities Order . Descriptions of business for which appointed representatives are exempt 2 1 Subject to paragraph (2), any business which comprises— za an activity of the kind specified by article 21 of the Regulated Activities Order (dealing in investments as agent), where the transaction relates to— i a contract of insurance which is not a qualifying contract of insurance or a contract of long-term care insurance; or ii a funeral plan contract. zb an activity of the kind specified by article 24A of the Regulated Activities Order (bidding in emissions auctions), where that activity does not consist either of a person dealing on his own account or of the execution of orders on behalf of clients within the meaning of Part 3 of Schedule 2 to that Order; a an activity of the kind specified by article 25 of that Order (arranging deals in investments), where the arrangements are for or with a view to transactions relating to securities , relevant investments or structured deposits ; ab an activity of the kind specified by article 25A of that Order (arranging regulated mortgage contracts); aba an activity of the kind specified by article 25B of that Order (arranging regulated home reversion plans); abb an activity of the kind specified by article 25C of that Order (arranging regulated home purchase plans); abc an activity of the kind specified by article 36A of that Order (credit broking); abd an activity of the kind specified by article 36H (operating an electronic system in relation to lending) of that Order; ac an activity of the kind specified by article 39A of that Order (assisting in the administration and performance of a contract of insurance); ad an activity of the kind specified by article 39D of that Order (debt adjusting); ae an activity of the kind specified by article 39E of that Order (debt-counselling); af an activity of the kind specified by article 39F of that Order (debt-collecting); ag an activity of the kind specified by article 39G of that Order (debt administration); b an activity of the kind specified by article 40 of that Order (safeguarding and administering investments), where the activity consists of arranging for one or more other persons to safeguard and administer assets; ba an activity of the kind specified by article 52B of that Order (providing basic advice on stakeholder products); c an activity of the kind specified by article 53 of that Order (advising on investments); ... ca an activity of the kind specified by article 53A of that Order (advising on regulated mortgage contracts); ... cb an activity of the kind specified by article 53B of that Order (advising on regulated home reversion plans); cc an activity of the kind specified by article 53C of that Order (advising on regulated home purchase plans); ... cca an activity of the kind specified by article 53DA of that Order (advising on regulated credit agreements for the acquisition of land); ccb an activity of the kind specified by article 53E of that Order (advising on conversion or transfer of pension benefits); cd an activity of the kind specified by article 60B of that Order (regulated credit agreements) when carried on in relation to a credit agreement (within the meaning of that Order) under which the credit is provided free of interest and without any other charges; ce an activity of the kind specified by article 60N of that Order (regulated consumer hire agreements); d an activity of the kind specified by article 64 of that Order (agreeing to carry on activities), so far as relevant to an activity falling within sub-paragraph (za) , (a), (ab), (ac) (ad), (ae), (af), (ag), (aba), (abb), (abc), (b), (c), (ca), (cb) , (cc), (cd) or (ce) ; or e an activity of the kind specified by article 89A of that Order (providing credit information services); is prescribed for the purposes of subsection (1)(a)(i) of section 39 of the Act (exemption of appointed representatives). 1A In its application to a contract with a principal who is a CRR firm, or a relevant investment firm or credit institution, the list in paragraph (1) shall be treated as including in addition— a the activity of placing financial instruments or structured deposits , b the activity of providing advice to clients or potential clients in relation to the placing of financial instruments or structured deposits . 1B In paragraph (1A)— “ clients ” has the meaning given in Article 2.1.7 of the markets in financial instruments regulation; “ CRR firm ” has the meaning given in Article 4.1.2A of the capital requirements regulation, except that it does not include an investment firm; “ financial instruments ” has the meaning given in Article 2.1.9 of the markets in financial instruments regulation; “ relevant investment firm or credit institution ” means a person falling within Article 1.2(a)(i) of the markets in financial instruments regulation. 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Requirements applying to contracts between authorised persons and appointed representatives 3 1 It is a prescribed requirement for the purposes of section 39(1)(a)(ii) of the Act that a contract between a principal and a representative must (unless it prohibits the representative from representing other counterparties) contain a provision enabling the principal to— a impose such a prohibition; or b impose restrictions as to the other counterparties which the representative may represent, or as to the types of investment in relation to which the representative may represent other counterparties. 1A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 For the purposes of paragraph (1) a representative is to be treated as representing other counterparties where he— aa he enters into investment transactions as agent (in circumstances constituting the carrying on of an activity of the kind specified by article 21 of the Regulated Activities Order) for other counterparties; a makes arrangements (in circumstances constituting the carrying on of an activity of the kind specified by article 25 of that Order ) for persons to enter (or with a view to persons entering) into investment transactions with other counterparties; ab he assists in the administration and performance of a contract of insurance (in circumstances constituting the carrying on of an activity of the kind specified by article 39A of that Order) for other counterparties; b arranges (in circumstances constituting the carrying on of an activity of the kind specified by article 40 of that Order) for other counterparties to safeguard and administer assets; or c gives advice (in circumstances constituting the carrying on of an activity of the kind specified by article 53(1) of that Order) on the merits of entering into investment transactions with other counterparties; where an “investment transaction” means a transaction to buy, sell, subscribe for or underwrite an investment which is a security , a relevant investment or a structured deposit . 3 A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where he— a makes arrangements (in circumstances constituting the carrying on of an activity of the kind specified by article 25A of that Order)— i for persons to enter (or with a view to persons entering) as borrowers into regulated mortgage contracts with other counterparties, or ii for a person to vary a regulated mortgage contract entered into by a person as borrower after the coming into force of article 61 of that Order with other counterparties; ... b gives advice (in circumstances constituting the carrying on of an activity of the kind specified by article 53A of that Order) on the merits of— i persons entering as borrowers into regulated mortgage contracts with other counterparties, or ii persons varying regulated mortgage contracts entered into by them as borrower after the coming into force of article 61 of that Order with other counterparties; or c gives advice (in circumstances constituting the carrying on of an activity of the kind specified by article 53DA of that Order) which consists of the provision of personal recommendations to a person in respect of one or more transactions with other counterparties. 3A A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where he— a makes arrangements (in circumstances constituting the carrying on of an activity of the kind specified by article 25B of that Order)— i for a person to enter (or with a view to a person entering) as reversion seller or plan provider into a regulated home reversion plan with other counterparties, or ii for a person to vary a regulated home reversion plan entered into on or after 6th April 2007 by him as reversion seller or plan provider with other counterparties; or b gives advice (in circumstances constituting the carrying on of an activity of the kind specified by article 53B of that Order) on the merits of— i a person entering as reversion seller or plan provider into a regulated home reversion plan with other counterparties, or ii a person varying a regulated home reversion plan entered into on or after 6th April 2007 by him as reversion seller or plan provider with other counterparties. 3B A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where he— a makes arrangements (in circumstances constituting the carrying on of an activity of the kind specified by article 25C of that Order)— i for a person to enter (or with a view to a person entering) as home purchaser into a regulated home purchase plan with other counterparties, or ii for a person to vary a regulated home purchase plan entered into on or after 6th April 2007 by a person as home purchaser with other counterparties; or b gives advice (in circumstances constituting the carrying on of an activity of the kind specified by article 53C of that Order) on the merits of— i a person entering as home purchaser into a regulated home purchase plan with other counterparties, or ii a person varying a regulated home purchase plan entered into on or after 6th April 2007 by him as home purchaser with other counterparties. 3C A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where the representative effects introductions (in circumstances constituting the carrying on of an activity of the kind specified by article 36A of that Order) of individuals or relevant recipients of credit (within the meaning of that Order) to other counterparties. 3CA A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where the representative— a facilitates persons becoming the lender and borrower under an article 36H agreement ... on behalf of other counterparties; aa facilitates a person assuming the rights of the lender under an article 36H agreement by assignment or operation of law on behalf of other counterparties; b carries on any of the other activities specified in article 36H(3) of that Order on behalf of other counterparties in the course of, or in connection with, facilitation as mentioned in sub-paragraph (a) or (aa) . c gives advice (in circumstances constituting the carrying on of activity of the kind specified by article 53(2) of that Order) on the merits of— i a person entering into a relevant article 36H agreement as a lender or assuming the rights of a lender under such an agreement by assignment or operation of law, ii a person providing instructions to an operator with a view to entering into a relevant article 36H agreement as a lender or assuming the rights of a lender under such an agreement by assignment or operation of law, where the instructions involve— aa accepting particular parameters for the terms of the agreement presented by an operator, bb choosing between options governing the parameters of the terms of the agreement presented by an operator, or cc specifying the parameters of the terms of the agreement by other means, iii a person enforcing or exercising the lender's rights under a relevant article 36H agreement, or iv a person assigning rights under a relevant article 36H agreement, on behalf of other counterparties. 3CB In paragraph (3CA)— “ article 36H agreement ” has the meaning given by article 36H of the Regulated Activities Order, “ lender ” has the meaning given by article 36H of the Regulated Activities Order, “ operator ” means a person carrying on an activity of the kind specified by article 36H(1) or (2D), and “ relevant article 36H agreement ” means an article 36H agreement which has been, or is to be, entered into with the facilitation of a person carrying on a regulated activity of the kind specified by article 36H(1) or (2D) not in contravention of the general prohibition. 3D A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where the representative takes steps (in circumstances constituting the carrying on of an activity of the kind specified by article 39D of that Order) on behalf of other counterparties. 3E A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where the representative gives advice to a borrower (in circumstances constituting the carrying on of an activity of the kind specified by article 39E ... of that Order) about the liquidation of a debt due under a credit agreement or consumer hire agreement (in each case, within the meaning of that Order) on behalf of other counterparties. 3F A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where the representative takes steps (in circumstances constituting the carrying on of an activity of the kind specified by article 39F of that Order) to procure the payment of debts on behalf of other counterparties. 3G A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where the representative performs duties (in circumstances constituting the carrying on of an activity of the kind specified by article 39G of that Order) under, or exercises or enforces rights under, an agreement on behalf of other counterparties. 3GA A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where the representative gives advice (in circumstances constituting the carrying on of an activity of the kind specified by article 53E of that Order) on behalf of other counterparties. 3H A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where the representative enters into regulated credit agreements or exercises or has the right to exercise the lender's rights and duties under such agreements (in circumstances constituting the carrying on of an activity of the kind specified by article 60B of that Order) on behalf of other counterparties 3I A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where the representative enters into regulated consumer hire agreements or exercises or has the right to exercise the owner's rights and duties under such agreements (in circumstances constituting the carrying on of an activity of the kind specified by article 60N of that Order) on behalf of other counterparties. 3J A representative is also to be treated as representing other counterparties for the purposes of paragraph (1) where the representative takes steps on behalf of or gives advice to an individual or a relevant recipient of credit in relation to the taking of any steps (in circumstances constituting the carrying on of an activity of the kind specified by article 89A of that Order) on behalf of other counterparties. 4 Where the contract between the principal and the representative permits or requires the representative to carry on business which includes an activity— a of the kind specified by article 21, 25, 39A or 53 of the Regulated Activities Order or an activity of the kind specified by article 64 of that Order, so far as relevant to any of those articles, and b which relates to a contract of insurance, paragraph (5) applies. 5 Where this paragraph applies, it is also a prescribed requirement for the purposes of subsection (1)(a)(ii) of section 39 of the Act that the contract between the principal and the representative contain a provision providing that the representative is not permitted or required to carry on business, so far as it comprises an activity of the kind specified by paragraph (4), unless he is included in the record maintained by the FCA under section 347 of the Act by virtue of article 93 of the Regulated Activities Order (recorded insurance intermediaries). 6 In the case of a representative to whom section 39(1A) or (1AA) of the Act applies (“R”), it is a prescribed requirement for the purposes of section 39(1)(a)(ii) ... that the contract between the principal and R must— a where section 39(1A) of the Act applies to R, contain a provision that R is only permitted to provide the services and carry on the activities referred to in Part 3 of Schedule 2 to the Regulated Activities Order while R is entered on the applicable register; or b where section 39(1AA) of the Act applies to R, contain a provision that R is only permitted to sell, or advise clients on, structured deposits as defined by Article 2.1.23 of the markets in financial instruments regulation while R is entered on the applicable register. Transitional provision in relation to contracts 4 Regulation 3(6) does not apply in relation to a contract made on or before 31st October 2007. Greg Pope Clive Betts Two of the Lords Commissioners of Her Majesty’s Treasury 28th March 2001