Financial Services Bill

Session 2010 - 12
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Other Bills before Parliament

Financial Services Bill

Financial Services Bill
Schedule 6 — Control of business transfers
207

(a)
in the case of an insurance business transfer scheme, is to be
read in accordance with section 105(2);
(b)
in the case of a banking business transfer scheme, is to be read
in accordance with section 106(2);
(c)
in the case of a reclaim fund business transfer scheme, means
5
the reclaim fund to whose business the scheme relates.”
3     (1)
Section 109 (scheme reports) is amended as follows.
      (2)
For “Authority”, in each place, substitute “appropriate regulator”.
      (3)
After subsection (3) insert—
“(4)
Where the appropriate regulator is the PRA, it must consult the FCA
10
before—
(a)
nominating or approving a person under subsection (2)(b), or
(b)
approving a form under subsection (3).
(5)
Subsection (6) applies where the appropriate regulator is the FCA
and either—
15
(a)
the transferee is a PRA-authorised person, or
(b)
the authorised person concerned or the transferee has as a
member of its immediate group a PRA-authorised person.
(6)
The FCA must consult the PRA before—
(a)
nominating or approving a person under subsection (2)(b), or
20
(b)
approving a form under subsection (3).”
4     (1)
Section 110 (right to participate in proceedings) is amended as follows.
      (2)
The existing provision becomes subsection (1).
      (3)
For paragraph (a) of that subsection substitute—
“(a)
the FCA,
25
(aa)
in the case of a scheme falling within subsection (2), the PRA,
and”.
      (4)
After that subsection insert—
“(2)
A scheme falls within this subsection if—
(a)
the authorised person concerned or the transferee is a PRA-
30
authorised person, or
(b)
the authorised person concerned or the transferee has as a
member of its immediate group a PRA-authorised person.”
5
In section 112 (effect of order sanctioning business transfer scheme), in
subsections (10) and (11), for “Authority” substitute “appropriate regulator”.
35
6
After section 112 insert—
“112ZA
Duty of regulator to provide copy of order
(1)
Where the PRA receives under section 112(10) a copy of an order it
must, without delay, give a copy of it to the FCA.
(2)
Where the FCA receives under section 112(10) a copy of an order it
40
must, without delay, give a copy of it to the PRA if the order relates
to a scheme in respect of which—

Financial Services Bill
Schedule 6 — Control of business transfers
208

(a)
the transferee is a PRA-authorised person, or
(b)
the authorised person concerned or the transferee has as a
member of its immediate group a PRA-authorised person.”
7     (1)
Section 113 (appointment of actuary) is amended as follows.
      (2)
In subsection (2)—
5
(a)
for “the Authority”, in the first place, substitute “either regulator”,
and
(b)
for “Authority”, in the second place, substitute “regulator which
made the application”.
      (3)
After that subsection insert—
10
“(3)
An application under subsection (2) may be made by the PRA only
if—
(a)
the authorised person concerned or the transferee is a PRA-
authorised person, or
(b)
the authorised person concerned or the transferee has as a
15
member of its immediate group a PRA-authorised person.”
8
In section 115 (certificates for purposes of insurance business transfers
overseas), for “Authority” substitute “appropriate regulator”.
9
Schedule 12 to FSMA (transfer schemes: certificates) is amended as follows.
10
In paragraph 1, for “the Authority”, in each place, substitute “the
20
appropriate regulator”.
11    (1)
Paragraph 2 is amended as follows.
      (2)
In the following places, for “Authority” substitute “appropriate regulator”—
(a)
sub-paragraph (1)(b);
(b)
in the first place in sub-paragraph (3).
25
      (3)
In sub-paragraph (3), after “transferred” insert “certification”.
      (4)
In sub-paragraph (6)(c), for “, the Authority” substitute “—
(i)
the PRA, if the transferee is a PRA-authorised
person with a Part 4A permission or with
permission under Schedule 4;
30
(ii)
the FCA, if the transferee is a person with a Part 4A
permission or with permission under Schedule 4
but is not a PRA-authorised person.”
12
In paragraph 3, for “Authority” substitute “appropriate regulator”.
13
In paragraph 4, for “Authority”, in the first place, substitute “appropriate
35
regulator”.
14
In paragraph 5, for “Authority”, in the first place, substitute “appropriate
regulator”.
15
In paragraph 5A, for “the Authority” substitute “the appropriate regulator”.
16
In paragraph 8(2)—
40

Financial Services Bill
Schedule 7 — Application of provisions of FSMA 2000 to Bank of England etc
209

(a)
for paragraph (a) substitute—
“(a)
if the transferee is a PRA-authorised person with a
Part 4A permission or with permission under
Schedule 4, the PRA;
(aa)
if the transferee is a person with Part 4A permission
5
or with permission under Schedule 4 but is not a
PRA-authorised person, the FCA;”, and
(b)
in paragraph (c), after “(a)” insert “, (aa)”.
17
In paragraph 9, for “Authority” substitute “appropriate regulator”.
18    (1)
Paragraph 9A is amended as follows.
10
      (2)
The existing provision becomes sub-paragraph (1).
      (3)
In that sub-paragraph, for “Authority” substitute “relevant regulator”.
      (4)
After that sub-paragraph insert—
    “(2)
In this paragraph the “relevant regulator” means—
(a)
if the transferee is a PRA-authorised person, the PRA;
15
(b)
in any other case, the FCA.”
19    (1)
Paragraph 10 is amended as follows.
      (2)
In sub-paragraph (2), for “Authority” substitute “FCA or the PRA”.
      (3)
In sub-paragraph (5), for “Authority” substitute “regulator which supervises
the transferee’s margin of solvency”.
20
      (4)
In sub-paragraph (6), for “Authority” substitute “FCA or the PRA”.
Schedule 7
Section 27

Application of provisions of FSMA 2000 to Bank of England etc

This is the Schedule 17A to be inserted in FSMA 2000 after Schedule 17—
“Schedule 17A
25
Section 285A

Further provision in relation to exercise of Part 18 functions by Bank
of England
Part 1
Co-operation between appropriate regulators
Memorandum of understanding between appropriate regulators and PRA
30
1     (1)
The appropriate regulators must prepare and maintain a
memorandum describing how they intend to work together in
exercising their functions in relation to persons who are
recognised bodies.
      (2)
The memorandum must in particular make provision about—
35

Financial Services Bill
Schedule 7 — Application of provisions of FSMA 2000 to Bank of England etc
210

(a)
the need for each party when exercising a function in
relation to any person (“A”) who is a recognised body, or
any member of A’s group, to have regard to the exercise
(or possible exercise) of any function by the other party in
relation to A or any member of A’s group;
5
(b)
the role of each party in cases where they are both
exercising functions in relation to the same persons;
(c)
the obtaining and disclosure of information;
(d)
the co-ordination by the parties of the exercise of their
powers to appoint competent persons under Part 11
10
(information gathering and investigations) to conduct
investigations on their behalf.
      (3)
In this paragraph any reference to a function is to any function
whether conferred by or under any provision of this Part of this
Act or any other provision of this Act or otherwise.
15
2     (1)
The appropriate regulators and the PRA must prepare and
maintain a memorandum describing how they intend to work
together in exercising their functions in relation to persons who
are recognised bodies and who—
(a)
are PRA-authorised persons; or
20
(b)
are members of a group of which a member is a PRA-
authorised person.
      (2)
The memorandum must in particular make provision about—
(a)
the need for each party when exercising a function in
relation to any person (“A”) who is a recognised body, or
25
any member of A’s group, to have regard to the exercise
(or possible exercise) of any function by the other party in
relation to A or any member of A’s group;
(b)
the role of each party in cases where they are both
exercising functions in relation to the same persons;
30
(c)
the obtaining and disclosure of information;
(d)
the co-ordination by the parties of the exercise of their
powers to appoint competent persons under Part 11
(information gathering and investigations) to conduct
investigations on their behalf.
35
      (3)
In this paragraph any reference to a function is to any function
whether conferred by or under any provision of this Part of this
Act or any other provision of this Act or otherwise.
3
The parties to a memorandum under paragraph 1 or 2 must
review the memorandum at least once in each calendar year.
40
4
The parties to a memorandum under paragraph 1 or 2 must give
the Treasury a copy of the memorandum and any revised
memorandum.
5
The Treasury must lay before Parliament a copy of any document
received by them under paragraph 4.
45
6
The parties to a memorandum under paragraph 1 or 2 must ensure
that the memorandum as currently in force is published in the way

Financial Services Bill
Schedule 7 — Application of provisions of FSMA 2000 to Bank of England etc
211

appearing to them to be best calculated to bring it to the attention
of the public.
Notification by FCA of action in relation to recognised clearing houses
7
The FCA must notify the Bank of England of any direction given
by it under section 128 to a recognised clearing house (market
5
abuse: suspension of investigations).
8
The FCA must notify the Bank of England of any requirement
imposed by it under section 313A on a recognised clearing house
(power to require suspension or removal of financial instruments
from trading).
10
Part 2
Application of provisions of this Act in relation to Bank of England
Introduction
9     (1)
The provisions of this Act mentioned in this Part of this Schedule
are to apply in relation to the Bank of England in accordance with
15
the provision made by this Part of this Schedule.
      (2)
In any case where sub-paragraph (1) applies—
(a)
any reference in this Act to the FCA or the PRA which is
contained in, or relates to, any of those provisions
(however expressed) is to be read as a reference to the
20
Bank; and
(b)
this Act has effect with any other necessary modifications.
Rules
10    (1)
The following provisions of Part 9A of this Act are to apply in
relation to rules made by the Bank under any provision made by
25
or under this Act—
(a)
section 137R (general supplementary powers);
(b)
sections 138A and 138B (modification or waiver of rules),
but with the omission of subsection (4)(b) of section 138A
and subsection (4) of section 138B;
30
(c)
section 138C (evidential provisions);
(d)
section 138D (actions for damages), but with the omission
of subsection (2);
(e)
section 138E (limits on effect of contravening rules);
(f)
section 138F (notification of rules);
35
(g)
section 138G (rule-making instruments);
(h)
section 138H (verification of rules);
(i)
section 138J (consultation), but with the omission of
subsections (1)(a), (2)(c) and (5)(b); and
(j)
section 138L (consultation: general exemptions), but with
40
the omission of subsections (1) and (3).
      (2)
Any reference in any of those provisions to an authorised person
is to be read as a reference to a recognised clearing house.

Financial Services Bill
Schedule 7 — Application of provisions of FSMA 2000 to Bank of England etc
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      (3)
Section 138J(2)(d) has effect in relation to rules proposed to be
made by the Bank as if the reference to the compatibility of the
proposed rules with the provisions mentioned in section
138J(2)(d) were a reference to their compatibility with the Bank’s
financial stability objective.
5
      (4)
Section 138L(2) has effect as if for paragraphs (a) and (b) there
were substituted “be prejudicial to financial stability”.
Information gathering and investigations
11    (1)
The powers conferred by section 165(1) and (3) (power to require
information) are exercisable by the Bank or (as the case may be) its
10
officers to impose requirements on—
(a)
a recognised clearing house;
(b)
a person who for the purposes of section 165 is connected
with a recognised clearing house.
      (2)
The information or documents that the Bank may require to be
15
provided or produced are limited to—
(a)
information or documents reasonably required in
connection with the exercise by the Bank of functions
conferred on it by or under this Part of this Act;
(b)
information or documents reasonably required in
20
connection with the exercise by the Bank of any of its other
functions in pursuance of its financial stability objective;
and
(c)
information or documents which the Bank reasonably
considers may enable or assist the FCA in discharging
25
functions conferred on the FCA by or under this Act.
      (3)
In consequence of the provision made by sub-paragraph (2),
section 165(4) is not to apply in relation to section 165(1) and (3) as
applied by this paragraph.
12
The power conferred by section 166 (reports by skilled person) is
30
exercisable by the Bank as if references in that section to an
authorised person were to a recognised clearing house.
13    (1)
The powers conferred by section 167 (appointment of persons to
carry out general investigations) are exercisable by the Bank as if
references in that section to an authorised person were to any
35
recognised clearing house other than an overseas clearing house.
      (2)
In addition to the powers conferred by section 171, a person
conducting an investigation under section 167 as a result of this
paragraph is to have the powers conferred by sections 172 and 173
(and for this purpose the references in those sections to an
40
investigator are to be read accordingly).
14    (1)
The power conferred by section 168(5) (appointment of persons to
carry out investigations in particular cases) is exercisable by the
Bank.
      (2)
That power is exercisable if it appears to the Bank that there are
45
circumstances suggesting that—

Financial Services Bill
Schedule 7 — Application of provisions of FSMA 2000 to Bank of England etc
213

(a)
a clearing house may be guilty of an offence under section
398(1) or an offence under prescribed regulations relating
to money laundering;
(b)
a clearing house may have contravened a rule made by the
Bank under Part 18 of this Act;
5
(c)
a clearing house may have contravened the recognition
requirements;
(d)
a clearing house may have contravened any qualifying EU
provision that is specified, or of a description specified, for
the purposes of this sub-paragraph by the Treasury by
10
order;
(e)
a clearing house may have breached the general
prohibition.
      (3)
In addition to the powers conferred by section 171, a person
conducting an investigation under section 168(5) as a result of this
15
paragraph is to have the powers conferred by sections 172 and 173
(and for this purpose the references in those sections to an
investigator are to be read accordingly).
15
An overseas regulator may, in accordance with section 169,
request the Bank to exercise the power conferred by section 165 (as
20
applied by paragraph 11 of this Schedule).
16
The power to give information under section 176(1) (entry of
premises under warrant) is exercisable by the Bank, or an
investigator appointed by the Bank, as if the reference to the
second set of conditions were omitted.
25
Powers in relation to parent undertakings
17    (1)
The following provisions of Part 12A of this Act are to apply in
relation to the Bank—
(a)
section 192C (power to direct qualifying parent
undertaking);
30
(b)
section 192D (requirements that may be imposed);
(c)
section 192E (direction: procedure);
(d)
section 192G (references to Tribunal);
(e)
section 192H (statement of policy);
(f)
section 192I (statement of policy: procedure);
35
(g)
section 192J (rules requiring provision of information);
(h)
sections 192K to 192N (enforcement).
      (2)
For the purposes of those provisions section 192B (meaning of
“qualifying parent undertaking”) is to apply as if the reference in
subsection (1) to a qualifying authorised person or recognised UK
40
investment exchange were a reference to a recognised clearing
house other than an overseas clearing house.
      (3)
Section 192C has effect as if—
(a)
the reference in subsection (2) to the regulation of one or
more qualifying authorised persons or recognised
45
investment exchanges in pursuance of any of the
regulator’s objectives were a reference to the regulation of
one or more recognised clearing houses,