In regulation 3 of the principal Regulations (application for recognition as a fund-holding practice)—
(a) for paragraph (1), substitute—
(1) Subject to paragraph (5), an application shall be made in writing and shall be sent to the relevant FHSA.
(b) in paragraph (2A)—
(i) for “Regional Health Authority” substitute “relevant FHSA”, and
(ii) at the end insert “and where the relevant FHSA receives such a notice after it has forwarded the application to the Regional Health Authority pursuant to paragraph (2B), it shall forward the notice to the Regional Health Authority”.
(c) after paragraph (2A), insert the following new paragraphs—
(2B) The relevant FHSA shall consider the application and, subject to paragraphs (4) and (5), forward it to the Regional Health Authority together with a notice stating whether the practice—
(a) complies with the relevant condition set out in paragraph 1(a) or (b) of Schedule 1 or, in the opinion of the relevant FHSA, is likely to do so by the date on which any recognition would take effect;
(b) will, in the opinion of the relevant FHSA, be capable of managing an alltted sum effectively and efficiently; and
(c) complies with the conditions set out in paragraphs 2, 5 and 6 of Schedule 1.
(2C) Where the notice mentioned in paragraph (2B) states that in the opinion of the FHSA the practice will not be capable of managing an allotted sum effectively and efficiently, the FHSA shall include with the notice a statement of the reasons for its opinion.
(2D) The relevant FHSA shall send a copy of the notice mentioned in paragraph (2B), together with any statement of reasons as mentioned in paragraph (2C), to the members of the practice.
(2E) Where the notice mentioned in paragraph (2B) states—
(a) that the practice does not comply with the relevant condition specified in paragraph 1(a) or (b) of Schedule 1 and that, in the opinion of the relevant FHSA, it is not likely to do so by the date on which any recognition would take effect; or
(b) that the practice will not, in the opinion of the relevant FHSA, be capable of managing an allotted sum effectively and efficiently; or
(c) that the practice does not comply with one or more of the conditions specified in paragraphs 2, 5 or 6 of Schedule 1,
the Regional Health Authority (or, as the case may be, the Secretary of State) shall invite the practice to comment upon the relevant FHSA’s observations before deciding whether or not to grant recognition as a fund-holding practice in accordance with regulation 5.
(d) paragraph (4), shall be omitted.