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GEN 2.1 3Introduction3

Application

GEN 2.1.1 G

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GEN 2.1.2

This chapter applies to every person to whom any provision in the Handbook applies. In relation to a provision other than a rule, the rules in this chapter apply as if they were part of that provision.3

GEN 2.1.3 P

[deleted]3

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GEN 2.1.4 E

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GEN 2.1.5 D

[deleted]3

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GEN 2.1.6 G

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GEN 2.1.7 R

[deleted]3

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GEN 2.1.8 R

This chapter applies to all rules made by FOS Ltd.4

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GEN 2.1.9 G

The effect of GEN 2.1.8 R is that this chapter applies with respect to those provisions in DISP 2 (Jurisdiction of the Financial Ombudsman Service), DISP 3 (Complaint handling procedures of the Financial Ombudsman Service), DISP 4 (Standard terms) and FEES 5 (Financial Ombudsman Service Funding) made by FOS Ltd.4

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3The Reader's Guide3

GEN 2.1.10 G

The Reader's Guide supplements this chapter. It provides an introduction to the structure and contents of the Handbook and its related materials, explaining how the different modules fit together and how to interpret and use the Handbook.3

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GEN 2.2 Interpreting the Handbook

Purposive interpretation

GEN 2.2.1 R

Every provision in the Handbook must be interpreted in the light of its purpose.

GEN 2.2.2 G

The purpose of any provision in the Handbook is to be gathered first and foremost from the text of the provision in question and its context among other relevant provisions. The guidance given on the purpose of a provision is intended as an explanation to assist readers of the Handbook. As such, guidance may assist the reader in assessing the purpose of the provision, but it should not be taken as a complete or definitive explanation of a provision's purpose.

Evidential provisions

GEN 2.2.3 R

Any rule in the Handbook which has the status letter "E" in the margin or heading:

  1. (1)

    is to be taken also to provide that contravention of the rule does not give rise to any of the consequences provided for by provisions of the Act other than section 138C21 (Evidential provisions); and

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  2. (2)

    incorporates the status letter "E" in the margin or heading as part of the rule.

GEN 2.2.4 G
  1. (1)

    The rules to which section 138C21 of the Act applies ("evidential provisions") are identified in the Handbook by the status letter "E" in the margin or heading.

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  2. (2)

    Other provisions in the Handbook, although also identified by the status letter "E" in the margin or heading, are actually not rules but provisions in codes and GEN 2.2.3 R does not apply to them.17

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GEN 2.2.5 G

Chapter 6 of the Reader's Guide contains an explanation of the significance of the status letters R, E, G, D, UK, EU, P and C6, and includes further information on Handbook provisions, including6 evidential provisions.1

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Use of defined expressions

GEN 2.2.6 G

Expressions with defined meanings appear in italics in the Handbook, unless otherwise stated in individual sourcebooks or manuals11.

GEN 2.2.7 R

In the Handbook (except IPRU, unless otherwise indicated2):

  1. (1)

    an expression in italics which is defined in the Glossary has the meaning given there; and

  2. (2)

    an expression in italics which relates to an expression defined in the Glossary must be interpreted accordingly.

GEN 2.2.8 G

Examples of related expressions are:

  1. (1)

    "advice on investments" and "advise on investments", which should be interpreted by reference to "advising on investments";

  2. (2)

    "closely linked", which should be interpreted by reference to "close links";

  3. (3)

    "controls" and "controlled", which should be interpreted by reference to "control";19

  4. (4)

    "effect", as for example in "effect a life policy", which should be interpreted by reference to "effecting contracts of insurance"; and19

  5. (5)

    employment”, which should be interpreted by reference to “employee”.19

GEN 2.2.9 G

Unless the context otherwise requires or unless otherwise stated in a particular sourcebook or manual11, where italics have not been used, an expression bears its natural meaning (subject to the Interpretation Act 1978; see GEN 2.2.11 R to GEN 2.2.12 G).

GEN 2.2.10 G

The Interim Prudential sourcebooks (IPRU) have individual arrangements for defined terms and each contains rules or guidance on its own arrangements. In respect of those sourcebooks, reliance should not be placed on the definitions which appear in the Glossary unless otherwise indicated.

Application of the Interpretation Act 1978

GEN 2.2.11 R

The Interpretation Act 1978 applies to the Handbook.

GEN 2.2.12 G

The application of the Interpretation Act 1978 to the Handbook has the effect, in particular, that:

  1. (1)

    expressions in the Handbook used in the Act have the meanings which they bear in the Act, unless the contrary intention appears;

  2. (2)

    where reference is made in the Handbook to an enactment, it is a reference to that enactment as amended, and includes a reference to that provision as extended or applied by or under any other enactment, unless the contrary intention appears; and

  3. (3)

    unless the contrary intention appears:

    1. (a)

      words in the Handbook importing the masculine gender include the feminine and words importing the feminine gender include the masculine;

    2. (b)

      words in the Handbook in the singular include the plural and words in the plural include the singular.

4Civil partnership - references to stepchildren etc

GEN 2.2.12A R

4Any reference in a provision of the Handbook made before 5 December 2005 to a stepchild, step-parent, stepdaughter, stepson, stepbrother or stepsister is to be interpreted in accordance with section 246 of the Civil Partnership Act 2004.

GEN 2.2.12B G

4 GEN 2.2.12A R and sections 246 and 247 of the Civil Partnership Act 2004 amend each reference in the Handbook to a stepchild, step-parent and certain related expressions to take account of civil partnerships. As a result a reference (for example) to a stepchild of a person (A) includes a reference to the child of the civil partner of A where that child is not A's child.

Cross-references in the Handbook

GEN 2.2.13 R
  1. (1)

    A reference in the Handbook to another provision in the Handbook is a reference to that provision as amended from time to time.13

  2. (2)

    Unless a contrary intention appears, a reference in the Handbook to a provision in the PRA Rulebook is a reference to that provision as amended from time to time.13

GEN 2.2.13A R

21Unless a contrary intention appears, to the extent that a provision made by the FCA15 ('the referring provision') contains a cross-reference to another provision that is not made by the FCA including a provision formerly made by the PRA which the PRA has now deleted15 ('the referred provision'), the referred provision as amended from time to time (excepting deletion in its entirety)15 is to be treated as having15 been made by the FCA15 to the extent necessary to make the referring provision function with the full effect indicated by the reference.

GEN 2.2.13B G

15The purpose of GEN 2.2.13AR is to ensure that cross references in the FCA Handbook to provisions outside the FCA Handbook are effective, including cross references to material that was formerly in the PRA Handbook but which the PRA has now deleted.

References to writing

GEN 2.2.14 R

If a provision in the Handbook refers to a communication, notice, agreement or other document "in writing" then, unless the contrary intention appears, it means in legible form and capable of being reproduced on paper, irrespective of the medium used. Expressions related to writing must be interpreted accordingly.

GEN 2.2.15 G

GEN 2.2.14 R means that, for example, electronic media may be used to make communications which are required by a provision of the Handbook to be "in writing", unless a contrary intention appears, or the use of electronic media would contravene some other requirement. GEN 2.2.14 R does not, however, affect any other legal requirement which may apply in relation to the form or manner of executing a document or agreement.

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GEN 2.2.15A G

21An example of a requirement relevant to whether a communication required by a provision of the Handbook to be "in writing" may be made by use of electronic media is the requirement to treat customers fairly under Principle 6.

GEN 2.2.16 G

"Document" is a defined term in the Glossary, the definition of which includes information recorded in any form, including electronic form.

Activities covered by general rules

GEN 2.2.17 R

A general rule (that is a rule made by the FCA18 the general rule making powers21) is to be interpreted as:

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  1. (1)

    applying to a firm with respect to the carrying on of all regulated activities, except to the extent that a contrary intention appears; and

  2. (2)

    not applying to a firm with respect to the carrying on of unregulated activities, unless and then only to the extent that a contrary intention appears.

Continuity of authorised partnerships and unincorporated associations

GEN 2.2.18 R
  1. (1)

    If a firm, which is a partnership7 or unincorporated association, is dissolved, but its authorisation continues to have effect under section 32 of the Act (Partnerships and unincorporated associations) in relation to any partnership or unincorporated association7 which succeeds to the business of the dissolved firm, the successor partnership or unincorporated association7 is to be regarded as the same firm for the purposes of the Handbook unless the context otherwise requires7.

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  2. (2)

    [deleted]7

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  3. (3)

    [deleted]7

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GEN 2.2.19 G

In principle, it is possible to view a change of partners7 in a partnership7, or a change in the membership of the unincorporated association, as the formation of a new partnership7 or association. GEN 2.2.18 R reflects section 32 of the Act (Partnerships and unincorporated associations), which provides for the continuing authorisation of partnerships7 and unincorporated associations following a change in partners7 or members if certain conditions are satisfied. GEN 2.2.18 R ensures a similar effect to section 327 in relation to the status of the partnership7 or unincorporated associations as a "firm" or "authorised person" for the purposes of the Handbook.

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3Designated investment exchanges3

GEN 2.2.20 G

In the Glossary, the definition of designated investment exchange lists certain investment exchanges. Further information on designated investment exchanges, including guidance on the addition of an investment exchange to the list, is set out in GEN 2 Annex 1 G and the obligation to pay the application fee is set out in 53FEES 3.25.

European Economic Area (EEA)

GEN 2.2.21 G

10The agreement on the European Economic Area, signed at Oporto on 2 May 1992, extends certain EU legislation to those EEA States which are not Member States of the EU, namely Norway, Iceland and Liechtenstein. References in the Handbook concerning the territorial scope of EU law should therefore be read as extending throughout the EEA where the context requires.

Treaty of Lisbon

GEN 2.2.22 G

10As a result of the Treaty of Lisbon, the European Union has replaced and succeeded the European Community. References in the Handbook to the European Community should therefore be interpreted as references to the European Union, where the context requires. In particular, references which are copied out directly from EU or UK legislation may contain references to the Community which should be read in conjunction with section 3 of the European Union (Amendment) Act 2008.

Application of provisions where there are commensurate PRA provisions

GEN 2.2.23 R
  1. (1)

    This rule applies to Handbook provisions20 where the PRA have made commensurate provisions in the PRA Rulebook. It may affect their application by the FCA to PRA-authorised persons and PRA approved persons20.

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  2. (2)

    Where a Handbook provision (or part of one) goes beyond the FCA's20 powers or regulatory responsibilities, it is to be interpreted as applied20 to the extent of the FCA’s20 powers and regulatory responsibilities only.

  3. (3)

    The extent of a Handbook provision is to be interpreted as cut back under20 (2) by the minimum degree necessary.

  4. (4)

    [deleted]20

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GEN 2.2.24 G

21The published Memorandum of Understanding between the FCA and the PRA describes their regulatory responsibilities.

GEN 2.2.25 G

An example of a rule20 being interpreted as cut back by GEN 2.2.23R is SYSC 6.1.1R, which requires a firm to maintain adequate policies and procedures to ensure compliance with its obligations under the regulatory system; SYSC 6.1.1R should be interpreted as applied by the FCA in respect of a PRA-authorised person’s compliance with regulatory obligations that are the responsibility of the FCA (for example, in respect of a bank maintaining policies and procedures to ensure compliance with banking conduct requirements in BCOBS).20

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  1. (1)

    [deleted]12

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  2. (2)

    [deleted]20

  3. (3)

    [deleted]20

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GEN 2 Annex 1 Designated investment exchanges

G

Introduction

1.

A designated investment exchange is an exchange appearing in the list of such exchanges in the Glossary.

Benefits of designation

2.

Under certain rules, firms may treat transactions effected on a designated investment exchange in the same way as transactions on RIEs (for example, see 3CASS 2).

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Criteria for inclusion in the list of designated investment exchanges

3.

Before adding an investment exchange to the list of designated investment exchanges in the Handbook, the FCA4 will comply with all the requirements imposed by the Act in relation to the exercise of its rule-making powers. This will include consulting on the proposed amendment to the list.

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4.

In considering compatibility of the proposed addition with the statutory objectives4, the FCA4 will determine whether the investment exchange provides an appropriate degree of protection for consumers having regard in particular to:

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(1)

the relevant law and practice, including the regulatory framework in which the investment exchange operates, in the country or territory in which the investment exchange's head office is situated and any other relevant country or territory; and

(2)

the rules and practices of the investment exchange.

5.

Only investment exchanges which do not carry on a regulated activity in the United Kingdom and are not regulated markets may be added to the list. This is because an investment exchange carrying on a regulated activity in the United Kingdom will need to apply for recognition as an RIE, or authorisation, and because a regulated market is usually treated in the same way as an RIE in the rules.

Applications to be added to the list of designated investment exchanges

6.

An application to be added to the list should be in writing and delivered to the FCA4 by:

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(1)

post to:

The Financial Conduct Authority4

25 The North Colonnade

Canary Wharf

London

E14 5HS; or

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(2)

leaving the application at that address.

7.

In support of the application, an investment exchange should provide information on the questions set out in the table below.

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An application will not be considered by the FCA4 until the application fee has been paid. See 12FEES 3.22

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Designated investment exchange questionnaire

1

In what way are members subject to formal supervision by the exchange or another supervisory or regulatory body? Describe how capital resources of members are monitored on an ongoing basis and how this is related to business done.

2

What powers does the exchange or any other supervisory or regulatory body have to intervene in a member's business in the event of misconduct, financial difficulties or otherwise?

3

What are the clearing arrangements of the exchange? How does the exchange ensure performance of a contract between its members? If relevant, what type of contract guarantee is available?

4

How is price information in respect of contracts effected on the exchange disseminated to investors, particularly those investors in the United Kingdom?

5

What are the exchange's arrangements for reporting and recording of transactions effected on the exchange? Please describe.

6

Does the exchange, or any other supervisory or regulatory body, require members to segregate the money and assets of the member's clients from the money and assets of the member? If so, please describe in outline how this operates. If not, are investors protected in any other way in the event of the insolvency of a member or the exchange?

7

Does the exchange have procedures for the investigation of complaints? Please describe what they are.

8

Does the exchange classify the different contracts traded on it in terms of liquidity? Is it possible to identify certain contracts which are more liquid than others and in which a ready market might be considered to exist?