Services

Part 2: UK Market Access: Services

UK Market Access: Services

Section 17: Services overview

• This section sets out the scope of the provisions on the regulation of services in this Part by making provision that limits the application and effect of authorisation requirements for mutual recognition in section 19, and regulatory requirements for non-discrimination in section 20 and section 21.
• Subsection (3) provides a definition for authorisation requirement for the purposes of the mutual recognition principle in section 19.
• Subsection (4) provides a definition for regulatory requirement for the purposes of direct discrimination in section 20 and indirect discrimination in section 21.
• Subsection (5) sets out provisions that are neither an authorisation requirement for the purposes of section 19, nor a regulatory requirement for the purposes of section 20 and 21, meaning that they are not within scope of the principles of mutual recognition and non- discrimination in Part 2.
• Subsection (5)(a) establishes relevant requirements for the purpose of the mutual recognition principle for goods (defined in section 3) are not authorisation requirements or regulatory requirements, for the purpose of Part 2.
• Subsection (5)(b) establishes that provision of the sort described in section 24(1) and 28(1) (professional qualifications and regulation), to the extent it has the effect described in those subsections, is not an authorisation requirement or regulatory requirement for the purposes of Part 2.
• Subsection (5)(c) excludes existing requirements. Subsection (5)(c)(i) provides that legislative requirements in force, or otherwise in effect, the day before the day on which section 17 comes into force are not authorisation requirements or regulatory requirements. Subsection (5)(c)(ii) provides that a requirement that comes into force or otherwise takes effect on or after the day on which section 17 comes into force is not an authorisation requirement or regulatory requirement to the extent that it re-enacts or replicates (without substantive change) a provision that was in force immediately before that day.
• Subsection (5)(d) provides that requirements applying to both service providers and persons that do not provide services are not authorisation requirements or regulatory requirements.
• Subsection (5)(e) provides that a requirement to notify or register with a regulator is not an authorisation requirement or regulatory requirement, for the purpose of Part 2.
• Subsection (5)(f) provides that a requirement to provide evidence of being authorised to provide services in a part of the UK, other than the part in which the requirement applies, is not an authorisation requirement or regulatory requirement for the purposes of Part 2.
• Subsections (6) and (7) provide that subsection 5(c) does not apply if a corresponding authorisation requirement in another part of the UK is substantively changed on or after the day on which section 17 comes into force. This means that an authorisation requirement will be subject to the mutual recognition principle under section 19 where it has not changed but where a corresponding authorisation requirement in another part of the UK has substantively
• Subsection (8) provides that an authorisation requirement will be substantially changed if a legislative requirement that would, if not satisfied, prevent the grant of the authorisation is substantively changed. This means that changing the conditions subject to which authorisation may be granted, may bring the authorisation requirement itself into scope of Part 2.
• Subsection (9) defines “service provider” and “permanent establishment” for the purpose of Part Together they ensure that a service provider will only be within scope of the Part if it is a person that provides services in the course of its own business (i.e., not employees), and has a permanent establishment in the UK.

Section 18: Services exclusions

• This section provides that services or requirement listed in Schedule 2 are excluded from either, or both of the market access principles in Part 2.
• Subsection (1) introduces Schedule 2. It provides: that services in the first column of the table in Part 1 of Schedule 2 are excluded from the principle of mutual recognition in section 19; services in the first column of the table in Part 2 of Schedule 2 are excluded from the principle of non-discrimination in sections 20 and 21; authorisation requirements listed in Part 3 of Schedule 2 are excluded from the principle of mutual recognition in section 19; and, regulatory requirements listed in Part 4 of Schedule 2 are excluded from the principle of non- discrimination in sections 20 and 21.
• Subsection (2) requires the Secretary of State to keep Schedule 2 under review and provides the Secretary of State with a power to add, amend or remove entries from Schedule 2 by regulations. These regulations are subject to the affirmative resolution procedure – see subsection (7).
• Subsection (3) (together with the definition of “common framework agreement” in subsection (4)), makes clear that the power to amend Schedule 2 includes, for example, the power to give effect to a consensus reached between a Minister of the Crown and one or more of the devolved administrations that certain things should be excluded from the application of Part 2 of the Act. In relation to such a consensus, the things that may be excluded are cases, matters, requirements or provisions dealing with the regulation of devolved or transferred matters previously governed by EU law.
• Subsections (5) and (6) make provisions relating to the interpretation of devolved or transferred matters for the purposes of section 18.
• Subsections (8), (9) and (10) provide that before making any regulations under subsection (2), the Secretary of State must seek the consent of the devolved If consent is not provided within one month of it being requested, the Secretary of State may proceed to make the regulations without that consent. If making the regulations in the absence of consent, the Secretary of State must first publish a statement explaining why they chose to proceed.

Section 19: Services: mutual recognition of authorisation requirements

• This section establishes a principle of mutual recognition authorisation to requirements in relation to the provision of services.
• Subsection (1) provides that an authorisation requirement, that is required to be met to carry out a business of providing certain services in one part of the UK (Scotland, Wales, Northern Ireland, England), does not apply if the service provider has been authorised to carry out that business providing that service in another part of the UK.
• The definition of service provider in 17(9) provides that a service provider must be providing services in the course of its own business. As such, section 19 will not apply to employees.
• Subsection (2) sets out that for the purposes of the principle of mutual recognition in subsection (1), a person is authorised to provide services if they have the permission of a regulator, where that regulator has functions that extend to, at least, the whole of a part of the UK. It does not, therefore, apply to authorisations, related to less than the whole of a part of the UK, for example to carry out services in a particular local authority’s area.
• Subsection (3) provides that a person is not authorised to provide services, and therefore the mutual recognition principle does not apply, if the authorisation only allows a service provider to provide their services in relation to a particular premises, location or piece of infrastructure. This would mean, for example, that a licence to provide a certain service from a particular shop premises would not permit that person to provide the service from any shop
• Subsection (4) allows a derogation from the general principle in subsection (1), to the extent that the authorisation requirement in question can reasonably be justified as a response to a public health emergency.

Section 20: Direct discrimination in the regulation of services

• This section sets out provision for direct discrimination in the regulation of
• Subsection (1) sets out that any regulatory requirement that directly discriminates against a service provider will be of no effect in relation to that service provider.
• Subsection (2) provides the test for when a regulatory requirement will directly discriminate against a service provider for the purposes of this It will be discriminatory if it treats, or has the effect of treating, the service provider less favourably because the service provider has a relevant connection, or lacks a relevant connection, to a part of the UK.
• Subsection (3) provides that a regulatory requirement will not directly discriminate against a service provider to the extent that it can be reasonably justified in response to a public health
• Subsection (4) provides the circumstances under which a services provider is considered to have a relevant connection to a part of the UK, for the purposes of section 20. These are:
  1. a registered office, place of business or residence in the part of the UK;
  2. that it provides services from that part of the UK; or
  3. that it has members, partners, officers or staff with a registered office, place of business or residence in that part of the UK.

Section 21: Indirect discrimination in the regulation of services

• This section sets out provisions for indirect discrimination in the regulation of services

• Subsection (1) sets out that any regulatory requirement that indirectly discriminates against an incoming service provider will be of no effect in relation to that incoming service
• Subsection (2) provides the test for when a regulatory requirement will indirectly discriminate against an incoming service provider for the purposes of section 21. A requirement will indirectly discriminate if:
  1. it does not directly discriminate against the incoming service provider (section 20);
  2. it puts the incoming service provider at a relevant disadvantage;
  3. it has an adverse market effect; and
  4. it cannot be reasonably considered a necessary means of achieving a legitimate 215 Subsection (3) provides for the purposes of subsection (2), what constitutes a relevant

disadvantage towards an incoming service provider. This is if it puts an incoming service provider at a disadvantage in the part of the UK in which the requirement applies but does not put local service providers at the same disadvantage.

• Subsection (4) provides what constitutes a disadvantage for subsection (3). A disadvantage will make it in any way more difficult, or less attractive, for the service provider to provide services in that part of the UK.
• Subsection (5) sets out the meaning of adverse market effect is for the purpose of the test for indirect discrimination under subsection (2). A requirement will have an adverse market effect if it puts an incoming service provider at a relevant disadvantage, and it causes a significant adverse effect on competition in the market for the particular service in the UK.
• Subsection (6) sets out the meaning of “incoming service provider,” “local service provider” and “relevant connection” for the purposes of section 21.
• Subsection (6)(a) sets out that an “incoming service provider” provides services in the part of the UK in which the regulatory requirement applies but does not have a relevant connection to that part of the UK.
• Subsection (6)(b) sets out that a “local service provider” provides services in the part of the UK where the regulatory requirement applies, has a relevant connection to that part of the UK, and does not have a relevant connection to another part of the UK.
• Subsection (6)(c) sets the circumstances under which a services provider is considered to have a “relevant connection” to a part of the UK, for the purposes of section 21. These are that it either has:
  1. a registered office, place of business or residence in that part of the UK; or
  2. that it provides services from that part of the
• Subsection (7) provides a list of public policy objectives that could be considered a “legitimate aim” for the purposes of the test for indirect discrimination in subsection (2). These are the protection of the life or health of humans, animals or plants, the protection of public safety or security and the efficient administration of justice.
• Subsection (8) contains a power enabling the Secretary of State by regulations to add to, remove from or vary the list of legitimate aims in subsection (7). Subsection (9) states that regulations are subject to the affirmative resolution procedure.
• Subsections (10), (11) and (12) set out that, before making any regulations under subsection (8), the Secretary of State must seek the consent of the devolved However, if consent is not provided within one month of it being requested, the Secretary of State can proceed to use the power without consent. Before exercising the power in the absence of consent, the Secretary of State must first publish a statement explaining why they have proceeded to use the power.

• Subsection (13) provides that, in considering whether a regulatory requirement can be reasonably considered a necessary means to achieving a legitimate aim under subsection (2)(d), particular consideration has to be given to the effects of the requirement in all circumstances, and to the availability of alternative means of achieving that aim.

Section 22: Duty to review the use of Part 2 amendment powers

• This section places a requirement on the Secretary of State to carry out a review of any use of the powers in Part 2 of the Act. The powers in Part 2 of the Act are the power to amend Schedule 2 in section 18(2) and the power to amend the list of legitimate aims in section 21(8).
• Subsection (2) requires that within three to five years of the passing of the Act, the Secretary of State must conduct a review of the use of the powers, and produce a report of that review, a copy of which must be laid before Parliament.
• Subsection (3)(a) requires that the devolved administrations must be consulted as part of the review. Subsection (3)(b) provides that any relevant reports or advice issued by the Competition and Markets Authority must be considered by the Secretary of State in carrying out the review. Subsection (3)(c) requires the Secretary of State, in carrying out the review, to assess the impact and effectiveness of any changes made under the Part 2 amendment
• Subsection (5) sets out that in the event that the powers to amend have not been used by the time of the review, the Secretary of State must prepare a report containing a statement to that effect, and containing other relevant information that the Secretary of State considers appropriate. Subsection 5(b) provides that the requirements in subsection (3), namely to consult with the devolved administrations, consider any relevant reports or advice from the CMA and to assess the impact and effectiveness of any changes made under the power, do not apply in the event that the power has not been used.

Section 23: Interpretation of Part 2

• Subsection (1) of this section contains definitions of terms contained within Part 2 of the Act, including “authorisation requirement,” “legislative requirement,” “public health emergency,” “regulator” and “regulatory requirement.”
• The definition of “legislative requirement” provides that it is a requirement imposed by, or by virtue of legislation. This therefore includes requirements imposed in the exercise of statutory functions, in addition to those contained in legislation.
• The definition of “regulator” provides that it is a person exercising regulatory functions, and includes a Minister of the Crown, the Scottish Ministers, the Welsh Ministers, and a Northern Ireland department.
• Subsection (2) provides that if a function conferred on a regulator by legislation can only be exercised in a way that would directly or indirectly discriminate against a service provider under section 20 (1) or 21(1), the function of the regulator is to be treated as though it was a regulatory requirement for the purposes of those non-discrimination Such a function would therefore be of no effect if it can only be exercised in a way that would directly or indirectly discriminate against a service provider. This is to prevent regulators being required to impose a discriminatory requirement in circumstances where such a requirement would be rendered of no effect by operation of sections 20 or 21.
• Subsection (3) states that subsection (2) does not affect the continuation in force, or continuing effect, of existing requirements as provided for under subsection 17(5)(c) and not preserved by section 17(6). This means that subsection (2) will not operate to disapply existing requirements made under a function that would, following commencement of the Part, fall within subsection (2).
• Subsection (4) provides that any effect of the direct and indirect discrimination provisions for goods (in section 5) and services (in sections 20 and 21) is to be disregarded when considering whether a person is authorised to provide services in another part of the UK for the purposes of mutual recognition for services in section 19. So, for example, a person may rely on the satisfaction of a discriminatory authorisation requirement for the purposes of mutual recognition (noting that the authorisation requirement may be a regulatory requirement or otherwise require the satisfaction of regulatory requirements).