Financial Services Act 1986

JurisdictionUK Non-devolved
Citation1986 c. 60


Financial Services Act1986

1986 CHAPTER 60

An Act to regulate the carrying on of investment business; to make related provision with respect to insurance business and business carried on by friendly societies; to make new provision with respect to the official listing of securities, offers of unlisted securities, takeover offers and insider dealing; to make provision as to the disclosure of information obtained under enactments relating to fair trading, banking, companies and insurance; to make provision for securing reciprocity with other countries in respect of facilities for the provision of financial services; and for connected purposes.

[7th November 1986]

Be 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 Regulation of Investment Business

Part I

Regulation of Investment Business

Chapter I

Preliminary

S-1 Investments and investment business.

1 Investments and investment business.

(1) In this Act, unless the context otherwise requires, ‘investment’ means any asset, right or interest falling within any paragraph in Part I of Schedule 1 to this Act.

(2) In this Act ‘investment business’ means the business of engaging in one or more of the activities which fall within the paragraphs in Part II of that Schedule and are not excluded by Part III of that Schedule.

(3) For the purposes of this Act a person carries on investment business in the United Kingdom if he—

(a ) carries on investment business from a permanent place of business maintained by him in the United Kingdom; or

(b ) engages in the United Kingdom in one or more of the activities which fall within the paragraphs in Part II of that Schedule and his doing so constitutes the carrying on by him of a business in the United Kingdom.

(4) Parts I to IV of that Schedule shall be construed in accordance with Part V.

S-2 Power to extend or restrict scope of Act.

2 Power to extend or restrict scope of Act.

(1) The Secretary of State may by order amend Schedule 1 to this Act so as—

(a ) to extend or restrict the meaning of investment for the purposes of all or any provisions of Act; or

(b ) to extend or restrict for the purposes of all or any of those provisions the activities that are to constitute the carrying on of investment business or the carrying on of such business in the United Kingdom.

(2) The amendments that may be made for the purposes of subsection (1)(b ) above include amendments conferring powers on the Secretary of State, whether by extending or modifying any provision of that Schedule which confers such powers or by adding further such provisions.

(3) An order under this section which extends the meaning of investment or extends the activities that are to constitute the carrying on of investment business or the carrying on of such business in the United Kingdom shall be laid before Parliament after being made and shall cease to have effect at the end of the period of twenty-eight days beginning with the day on which it is made (but without prejudice to anything done under the order or to the making of a new order) unless before the end of that period the order is approved by a resolution of each House of Parliament.

(4) In reckoning the period mentioned in subsection (3) above no account shall be taken of any time during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.

(5) Any order under this section to which subsection (3) above does not apply shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(6) An order under this section may contain such transitional provisions as the Secretary of State thinks necessary or expedient.

Chapter II

Restriction on Carrying on Business

S-3 Persons entitled to carry on investment business.

3 Persons entitled to carry on investment business.

No person shall carry on, or purport to carry on, investment business in the United Kingdom unless he is an authorised person under Chapter III or an exempted person under Chapter IV of this Part of this Act.

S-4 Offences.

4 Offences.

(1) Any person who carries on, or purports to carry on, investment business in contravention of section 3 above shall be guilty of an offence and liable—

(a ) on conviction on indictment, to imprisonment for a term not exceeding two years or to to a fine or to both;

(b ) on summary conviction, to imprisonment for a term not exceeding six moths or to a fine not exceeding the statutory maximum or to both.

(2) In proceeding brought against any person for an offence under this section it shall be a defence for him to prove that he took all reasonable precautions and exercised all due diligence to avoid the commission of the offence.

S-5 Agreements made by or through unauthorised persons.

5 Agreements made by or through unauthorised persons.

(1) Subject to subsection (3) below, any agreement to which this subsection applies—

(a ) which is entered into by a person in the course of carrying on investment business in contravention of section 3 above; or

(b ) which is entered into—

(i) by a person who is an authorised person or an exempted person in respect of the investment business in the course of which he enters into the agreement; but

(ii) in consequence of anything said or done by a person in the course of carrying on investment business in contravention of that section,

shall be unenforceable against the other party; and that party shall be entitled to recover any money or other property paid or transferred by him under the agreement, together with compensation for any loss sustained by him as a result of having parted with it.

(2) The compensation recoverable subsection (1) above shall be such as the parties may agree or as the court may, on the application of either party, determine.

(3) A court may allow an agreement to which subsection (1) above applies to be enforced or money and property paid or transferred under it to be retained if it is satisfied—

(a ) in a case within paragraph (a ) of that subsection, that the person mentioned in that paragraph reasonably believed that his entering into agreement did not constitute a contravention of section 3 above;

(b ) in a case within paragraph (b ) of that subsection, that the person mentioned in sub-paragraph (i) of that paragraph did not know that the agreement was entered into as mentioned in sub-paragraph (ii) of that paragraph; and

(c ) in either case, that it is just and equitable for the agreement to be enforced or, as the case may be, for the money or property paid or transferred under it to be retained.

(4) Where a person elects not to perform an agreement which by virtue of this section is unenforceable against him or by virtue of this section recovers money paid or other property transferred by him under an agreement he shall repay any money and return any other property received by him under the agreement.

(5) Where any property transferred under an agreement to which this section applies has passed to a third party the references to that property in subsections (1), (3) and (4) above shall be construed as references to its value at the time of its transfer under the agreement.

(6) A...

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