Interpreting the Handbook

Part

GEN General Provisions sourcebook

Chapter

Interpreting the Handbook

Printed on: 05/07/2024

Rulebook at: 31/12/2004

GEN 2

Interpreting the Handbook

GEN 2.1

Application and purpose

01/12/2004

Application

GEN 2.1.1

The purpose of GEN 2.1.2, GEN 2.1.3 P, GEN 2.1.4 E, GEN 2.1.5 D and GEN 2.1.6 G is to ensure that GEN 2 applies throughout the Handbook.

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GEN 2.1.2

This chapter applies to every person to whom any rule in the Handbook applies.

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GEN 2.1.3

This chapter applies to every approved person as if the rules in this chapter were part of the Statements of Principle.

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GEN 2.1.4

This chapter applies to every approved person and every person to whom the Code of Market Conduct applies as if the rules in this chapter were part of the Code of Practice for Approved Persons and the Code of Market Conduct respectively.

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GEN 2.1.5

This chapter applies to every person to whom a direction or requirement in the Handbook applies as if the rules in this chapter were part of that direction or requirement.

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GEN 2.1.6

This chapter is also relevant to every person to whom any other guidance (or other provision with the status letter "G" in the margin or heading) in the Handbook is relevant as if the rules in this chapter were part of that guidance (or other provision).

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GEN 2.1.7

Where this chapter refers to a 'provision' in the Handbook, this means every type of provision, including rules, guidance, provisions in codes, and so on.

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GEN 2.1.8

This chapter applies to all rules made by FOS Ltd.

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GEN 2.1.9

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 DISP 5 (Financial Ombudsman Service Funding Rules) made by FOS Ltd.

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Purpose

GEN 2.1.10

The purpose of GEN 2 is to facilitate interpretation of the Handbook, in conjunction with the Reader's Guide.

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GEN 2.2

Interpreting the Handbook

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Purposive interpretation

GEN 2.2.1

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

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GEN 2.2.2

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.

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Evidential provisions

GEN 2.2.3

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

(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 149 (Evidential provisions); and
(2) incorporates the status letter "E" in the margin or heading as part of the rule.

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GEN 2.2.4

(1) The rules to which section 149 of the Act applies ("evidential provisions") are identified in the Handbook by the status letter "E" in the margin or heading.
(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. These code provisions are GEN 2.1.4 E, and those provisions in the Code of Practice for Approved Persons (APER 3 and APER 4) and the Code of Market Conduct (MAR 1) with the status letter "E".

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GEN 2.2.5

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

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Use of defined expressions

GEN 2.2.6

Expressions with defined meanings appear in italics in the Handbook.

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GEN 2.2.7

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

(1) an expression in italics which is defined in the Glossary has the meaning given there; and
(2) an expression in italics which relates to an expression defined in the Glossary must be interpreted accordingly.

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GEN 2.2.8

Examples of related expressions are:

(1) "advice on investments" and "advise on investments", which should be interpreted by reference to "advising on investments";
(2) "closely linked", which should be interpreted by reference to "close links";
(3) "controls" and "controlled", which should be interpreted by reference to "control"; and
(4) "effect", as for example in "effect a life policy", which should be interpreted by reference to "effecting contracts of insurance".

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GEN 2.2.9

Unless the context otherwise requires, 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).

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GEN 2.2.10

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.

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Application of the Interpretation Act 1978

GEN 2.2.11

The Interpretation Act 1978 applies to the Handbook.

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GEN 2.2.12

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

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

(a) words in the Handbook importing the masculine gender include the feminine and words importing the feminine gender include the masculine;
(b) words in the Handbook in the singular include the plural and words in the plural include the singular.

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Cross-references in the Handbook

GEN 2.2.13

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

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References to writing

GEN 2.2.14

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.

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GEN 2.2.15

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 such as the requirement to treat customers fairly under Principle 6. COB 1.8 (Application to electronic media) contains further guidance in respect of electronic communication with or for customers. 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 2.2.16

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

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Activities covered by general rules

GEN 2.2.17

A general rule (that is a rule made section 138 of the Act (General rule-making power)) is to be interpreted as:

(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) 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.

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Continuity of authorised partnerships and unincorporated associations

GEN 2.2.18

(1) If a firm, which is a partnership or unincorporated association, is dissolved, any firm which succeeds to the business of the dissolved firm is to be regarded as the same firm for the purposes of the Handbook.
(2) For the purposes of (1), a firm is to be regarded as succeeding to the business of another firm only if:

(a) the members of the resulting firm are substantially the same as those of the former firm; and
(b) succession is to the whole or substantially the whole of the business of the former firm.

(3) In (1), "partnership" does not include a partnership which is constituted under the law of any place outside the United Kingdom and is a body corporate.

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GEN 2.2.19

In principle, it is possible to view a change of partners in a partnership, or a change in the membership of the unincorporated association, as the formation of a new partnership or association. GEN 2.2.18 R reflects section 32 of the Act (Partnerships and unincorporated associations), which provides for the continuing authorisation of partnerships and unincorporated associations following a change in partners or members GEN 2.2.18 R ensures a similar effect in relation to the status of the partnership or unincorporated associations as a "firm" or "authorised person" for the purposes of the Handbook. This continuity does not apply if a limited liability partnership succeeds to the business of a dissolved partnership; authorisation of the limited liability partnership would need to be applied for.

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Definition of designated investment exchange

GEN 2.2.20

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.

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GEN 2 Annex 1

Designated investment exchanges

01/12/2004

Introduction

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

Benefits of designation

Under certain rules, firms may treat transactions effected on a designated investment exchange in the same way as transactions on RIEs (for example, see COB 5 Annex 1 E CASS 2 and COB 7.11).

Criteria for inclusion in the list of designated investment exchanges

Before adding an investment exchange to the list of designated investment exchanges in the Handbook, the FSA 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.

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

(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.

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

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

(1)

post to:
The Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS; or

(2)

leaving the application at that address.

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

Designated investment exchange questionnaire

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.

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?

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?

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

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

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?

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

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?

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