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ENF 19.3 The FSA's power to make an electronic commerce activity direction

ENF 19.3.1G

Under regulation 6 of the ECD Regulations, provided certain policy and procedural conditions are met (see ENF 19.3.2 G to ENF 19.3.3 G), the FSA may direct that an incoming ECA provider may no longer carry on a specified incoming electronic commerce activity, or may only carry it on subject to specified requirements. The requirements may include a requirement that the provider must comply with one or more rules (with such modifications, if any, as may be specified) with respect to the carrying on of the activity. If an assets requirement of a kind mentioned in section 48(3) of the Act is specified in a direction, the requirement has the same effect in relation to the provider to whom the direction applies as if it had been imposed on that provider by the FSA acting under section 45 of the Act.

Grounds for exercising the power

ENF 19.3.2G

The policy conditions for the making of an electronic commerce activity direction are that:

  1. (1)

    the FSA considers:

    1. (a)

      the making of the direction to be necessary for:

      1. (i)

        the prevention, investigation, detection or prosecution of criminal conduct; or

      2. (ii)

        the protection of consumers; or

      3. (iii)

        other reasons of public policy relevant to the regulatory objectives; and

    2. (b)

      that the carrying on of the incoming electronic commerce activity by the person to whom the direction is to apply prejudices, or presents a serious and grave risk of prejudice to, any of the objectives referred to in (a); and

  2. (2)

    the direction appears to the FSA to be a proportionate means of achieving, or addressing the prejudice or risk of prejudice to, any of those objectives.

ENF 19.3.3G

The procedural conditions are that:

  1. (1)

    the FSA has requested the relevant EEA regulator to take measures to remedy the situation giving rise to the request;

  2. (2)

    the relevant EEA regulator:

    1. (a)

      has not, within what appears to the FSA to be a reasonable time, taken such measures; or

    2. (b)

      has taken such measures, but the measures appear to the FSA to be inadequate in the circumstances;

  3. (3)

    the FSA has notified the Commission and the relevant EEA regulator of its intention to make the direction; and

  4. (4)

    the FSA has notified the person to whom the direction is to apply of its proposal to make the direction, and given the person the opportunity to make representations to the FSA in such manner, and within such period, as the FSA may determine.

ENF 19.3.4G

However, where the case appears to it to be one of urgency, the FSA may make a direction regardless of whether the procedural conditions in ENF 19.3.3 G are met provided it:

  1. (1)

    notifies the Commission and the relevant EEA regulator as soon as possible of the direction; and

  2. (2)

    gives each of these bodies a statement of its reasons for the urgency.

Procedures

ENF 19.3.5G

Regulation 6(2) of the ECD Regulations states that an electronic commerce activity direction must be in writing.

ENF 19.3.6G

The FSA may vary or revoke a direction on its own initiative, or on the application of the incoming ECA provider to whom the direction applies. Under regulation 10(4) of the ECD Regulations, the FSA must not vary a direction on its own initiative unless it has given the provider concerned the opportunity to make representations to the FSA in such manner, and within such period, as the FSA may determine. However, this requirement does not apply where the case appears to the FSA to be one of urgency.

Right to refer to the Tribunal

ENF 19.3.7G

Where the FSA makes a direction, varies a direction on its own initiative, or refuses to vary or revoke a direction on the application of the incoming ECA provider, the incoming ECA provider to whom the direction applies may refer the matter to the Tribunal.