The Financial Services and Markets Act 2000 (Exemption) (Amendment) Order 2025, effective March 31, 2025, amends the 2001 Exemption Order.
It expands the exemption from the general prohibition on unregulated financial activities to include National Wealth Fund Limited.
This is achieved by inserting a new Article 3A granting a general exemption and creating a Part 1A to the Schedule, listing exempted entities, while removing the fund from the previous list.
Arguments For
Broadening regulatory flexibility: The amendment provides greater flexibility in regulating financial activities, potentially fostering innovation and economic growth by exempting specific entities like the National Wealth Fund Limited.
Supporting specific national initiatives: The exemption may facilitate the operations of the National Wealth Fund Limited, supporting its strategic goals and contributing to the national economy.
Streamlining regulatory processes: By clarifying the exemptions, the order could simplify compliance for the National Wealth Fund Limited and reduce administrative burdens.
Legal basis in existing legislation: The amendment is made under the powers granted by Section 38 of the Financial Services and Markets Act 2000, providing a solid legal foundation for the changes.
Arguments Against
Potential for regulatory arbitrage: The exemption could create opportunities for regulatory arbitrage, where entities might seek to exploit loopholes to avoid appropriate oversight.
Increased risk to the Financial System: Exempting entities could increase the risk to the financial system if there is insufficient transparency or oversight.
Lack of transparency in decision-making: There is lack of explanation around decision-making processes for selecting entities to receive exemptions.
Unintended consequences: The amendment might lead to unforeseen implications that could negatively affect market stability and investor protection.
Citation, commencement and extent 1.
(1) This Order may be cited as the Financial Services and Markets Act 2000 (Exemption) (Amendment) Order 2025.
(2) This Order comes into force on 31st March 2025.
(3) This Order extends to England and Wales, Scotland, and Northern Ireland.
This section details the order's official title, effective date (March 31, 2025), and geographical scope, encompassing England, Wales, Scotland and Northern Ireland.
Amendment of the Financial Services and Markets Act 2000 (Exemption) Order 2001 2.
(1) The Financial Services and Markets Act 2000 (Exemption) Order 20012 is amended as follows.
(2) After article 3 insert—
“Persons exempt in respect of any regulated activity 3A.
Each of the persons listed in Part 1A of the Schedule is exempt from the general prohibition in respect of any regulated activity.”.
(3) In Part I of the Schedule (persons exempt in respect of any regulated activity other than insurance business), omit paragraph 15D3.
(4) After Part I of the Schedule, insert—
“Part 1A PERSONS EXEMPT IN RESPECT OF ANY REGULATED ACTIVITY
15E. National Wealth Fund Limited4.”.
This section outlines the specific amendments made to the 2001 Financial Services and Markets Act 2000 (Exemption) Order.
It adds a new Article 3A that creates a general exemption for regulated activities.
A new Part 1A to the Schedule is included, listing the exempt persons.
Paragraph 15D from Part I is removed and National Wealth Fund Limited is added to the new Part 1A.
Explanatory Note (This note is not part of the Order)
This Order amends the Financial Services and Markets Act 2000 (Exemption) Order 2001 (S.I. 2001/1201) (“the Exemption Order”).
The Exemption Order exempts certain persons from the general prohibition set out in section 19 of the Financial Services and Markets Act 2000 (c. 8), which provides that no person may carry on a regulated activity within the UK without being an authorised person or an exempt person.
This Order broadens the scope of the existing exemption for National Wealth Fund Limited by amending the Exemption Order to: (a) insert a new article 3A, which provides an exemption from the general prohibition in respect of any regulated activity; (b) insert a new Part 1A of the Schedule, which lists persons exempt under article 3A; (c) remove National Wealth Fund Limited from Part I of the Schedule and add it to the list of persons in Part 1A of the Schedule.
An impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.
The explanatory note summarizes the order's purpose, which is to expand the exemption from the restrictions on unregulated financial activities to include National Wealth Fund Limited.
This is done by adding an article providing a broad exemption and creating a new list of exempted entities.
The note also states that no significant impact assessment was deemed necessary.
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