Financial Services Bill

Session 2010 - 12
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Other Bills before Parliament

Financial Services Bill

Financial Services Bill
Schedule 13 — Auditors and actuaries
254

(a)
other persons (whether in the United Kingdom or elsewhere)
who have functions similar to those of the PRA, and
(b)
other bodies that have functions relevant to financial
stability.
(2)
The persons referred to in subsection (1) do not include the Bank of
5
England or the FCA (but see sections 3D and 3P).
(3)
Co-operation may include the sharing of information which the PRA
is not prevented from disclosing.
354C
PRA’s duty to provide information to Bank of England
(1)
The PRA must disclose to the Bank of England (“the Bank”) any
10
information in its possession that it thinks will or may assist the Bank
in achieving its financial stability objective.
(2)
The duty in subsection (1) applies whether or not the Bank has
requested that the information be disclosed to it.
(3)
Subsection (1) does not require or authorise the disclosure of
15
information whose disclosure—
(a)
is prohibited by or under section 348 or any other enactment;
(b)
is incompatible with any EU obligation;
(c)
would constitute or be punishable as a contempt of court.
(4)
This section is without prejudice to any other power to disclose
20
information.
(5)
The Bank’s financial stability objective is the objective set out in
section 2A(1) of the Bank of England Act 1998.
(6)
In this section “enactment” includes—
(a)
an Act of the Scottish Parliament,
25
(b)
Northern Ireland legislation, and
(c)
a Measure or Act of the National Assembly for Wales.”
Schedule 13
Section 39

Auditors and actuaries
1
FSMA 2000 is amended as follows.
30
2     (1)
Section 340 (appointment) is amended as follows.
      (2)
In subsection (1), for “Rules may require” substitute “The appropriate
regulator may make rules requiring”.
      (3)
In subsection (2), for “Rules may require” substitute “The appropriate
regulator may make rules requiring”.
35
      (4)
In subsection (3), for “Rules may impose” substitute “The appropriate
regulator may make rules imposing”.
      (5)
In subsection (4), for “Authority”, in each place, substitute “regulator
making the rules”.

Financial Services Bill
Schedule 13 — Auditors and actuaries
255

      (6)
After subsection (5) insert—
“(5A)
In subsections (1) and (2) “the appropriate regulator” means—
(a)
in the case of a PRA-authorised person, the PRA;
(b)
in any other case, the FCA.
(5B)
In subsection (3) “the appropriate regulator” means—
5
(a)
in the case of an auditor of, or an actuary acting for, a PRA-
authorised person, the PRA or the FCA;
(b)
in any other case, the FCA.”
      (7)
After subsection (7) insert—
“(8)
The powers conferred by this section enable only the making of such
10
rules as appear to the regulator making them to be necessary or
expedient—
(a)
in the case of the FCA, for the purpose of advancing one or
more of its operational objectives, or
(b)
in the case of the PRA, for the purpose of advancing any of its
15
objectives.”
3     (1)
Section 342 (information given by auditor or actuary) is amended as follows.
      (2)
In subsection (1), after “authorised person” insert “or recognised investment
exchange,”.
      (3)
In subsection (3)—
20
(a)
for “the Authority”, in the first place, substitute “a regulator”,
(b)
after “authorised person” insert “or recognised investment
exchange”, and
(c)
for “the Authority”, in the second place, substitute “that regulator”.
      (4)
In subsection (4), for “Authority” substitute “regulator”.
25
      (5)
In subsection (7), after “authorised person” insert “or recognised investment
exchange”.
      (6)
For “the Authority”, in each other place (including the heading), substitute
“a regulator”.
4     (1)
Section 343 (information given by auditor or actuary: persons with close
30
links) is amended as follows.
      (2)
In subsection (1)—
(a)
in paragraph (a), after “authorised person” insert “or recognised
investment exchange,”, and
(b)
in paragraph (b), after “authorised person” insert “or recognised
35
investment exchange”.
      (3)
In subsection (3)—
(a)
for “the Authority”, in the first place, substitute “a regulator”,
(b)
after “authorised person” insert “or recognised investment
exchange”.
40
(c)
for “the Authority”, in the second place, substitute “that regulator”.
      (4)
In subsection (4), for “Authority” substitute “regulator”.

Financial Services Bill
Schedule 13 — Auditors and actuaries
256

      (5)
in subsection (7), after “authorised person” insert “or recognised investment
exchange”.
      (6)
In subsection (8), after “authorised person” insert “or recognised investment
exchange”.
      (7)
For “the Authority”, in each other place (including the heading), substitute
5
“a regulator”.
5     (1)
Section 344 (duty of auditor or actuary resigning to give notice) is amended
as follows.
      (2)
In each place for “Authority” substitute “appropriate regulator”.
      (3)
In subsection (2)(a), after “authorised person” insert “or recognised
10
investment exchange”.
      (4)
In subsection (3)(a), for “Authority’s” substitute “regulator’s”.
      (5)
After subsection (3) insert—
“(4)
In this section “the appropriate regulator” means—
(a)
in the case of an auditor of, or an actuary acting for, a PRA-
15
authorised person, the PRA;
(b)
in any other case, the FCA.”
6     (1)
For section 345 (disqualification of auditor or actuary) and the italic heading
before it substitute—
“Disciplinary measures
20
345
Disciplinary measures: FCA
(1)
Subsection (2) applies if it appears to the FCA that an auditor or
actuary to whom section 342 applies—
(a)
has failed to comply with a duty imposed on the auditor or
actuary by rules made by the FCA, or
25
(b)
has failed to comply with a duty imposed under this Act to
communicate information to the FCA.
(2)
The FCA may do one or more of the following—
(a)
disqualify the auditor or actuary from being the auditor of, or
(as the case may be) from acting as an actuary for, any
30
authorised person or any particular class of authorised
person;
(b)
disqualify the auditor from being the auditor of any
recognised investment exchange or any particular class of
recognised investment exchange;
35
(c)
publish a statement to the effect that it appears to the FCA
that the auditor or (as the case may be) actuary has failed to
comply with the duty;
(d)
impose on the auditor or actuary a penalty, payable to the
FCA, of such amount as the FCA considers appropriate.
40
(3)
If an auditor or actuary has been disqualified by the PRA under
section 345A(4)(a), the FCA may disqualify the auditor or actuary, so
long as the disqualification under that provision remains in force,

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Schedule 13 — Auditors and actuaries
257

from being the auditor of, or (as the case may be) from acting as an
actuary for—
(a)
any FCA-authorised person,
(b)
any particular class of FCA-authorised person,
(c)
any recognised investment exchange, or
5
(d)
any particular class of recognised investment exchange.
(4)
In subsection (3) “FCA-authorised person” means an authorised
person who is not a PRA-authorised person.
(5)
Where under subsection (2) or (3) the FCA disqualifies a person from
being the auditor of an authorised person or recognised investment
10
exchange or class of authorised person or recognised investment
exchange and that authorised person or recognised investment
exchange is also, or any person within that class is also, a recognised
clearing house, the FCA must —
(a)
notify the Bank of England, and
15
(b)
notify the disqualified person that it has made a notification
under paragraph (a).
(6)
The FCA may remove any disqualification imposed under
paragraph (a) or (b) of subsection (2) if satisfied that the disqualified
person will in future comply with the duty in question.
20
(7)
The FCA may at any time remove any disqualification imposed
under subsection (3).
345A
Disciplinary measures: PRA
(1)
The following provisions of this section have effect only if the
Treasury, by order made after consultation with the PRA, so provide.
25
(2)
Subsection (3) applies if it appears to the PRA that an auditor or
actuary to whom section 342 applies—
(a)
has failed to comply with a duty imposed on the auditor or
actuary by rules made by the PRA, or
(b)
has failed to comply with a duty imposed under this Act to
30
communicate information to the PRA.
(3)
The PRA may exercise one or more of the specified powers.
(4)
The specified powers are such one or more of the following as may
be specified in the order under subsection (1)—
(a)
to disqualify the auditor or actuary from being the auditor of,
35
or (as the case may be) from acting as an actuary for, any
PRA-authorised person or any particular class of PRA-
authorised person;
(b)
to publish a statement to the effect that it appears to the PRA
that the auditor or (as the case may be) actuary has failed to
40
comply with the duty;
(c)
to impose on the auditor or actuary a penalty, payable to the
PRA, of such amount as the PRA considers appropriate.
(5)
Where the PRA disqualifies a person under subsection (4)(a) it
must—
45
(a)
notify the FCA, and

Financial Services Bill
Schedule 13 — Auditors and actuaries
258

(b)
notify the person concerned that it has made a notification
under paragraph (a).
(6)
Where the PRA disqualifies a person from being the auditor of a
PRA-authorised person or class of PRA-authorised person, and that
PRA-authorised person is also, or any person within that class is also,
5
a recognised clearing house, the PRA must, in addition to complying
with subsection (5)—
(a)
notify the Bank of England, and
(b)
notify the disqualified person that it has made a notification
under paragraph (a).
10
(7)
The PRA may remove any disqualification imposed under
subsection (4)(a) if satisfied that the disqualified person will in future
comply with the duty in question.
345B
Procedure and right to refer to Tribunal
(1)
If the FCA proposes to act under section 345(2) or the PRA proposes
15
to act under section 345A(3), it must give the auditor or actuary to
whom the action would relate a warning notice.
(2)
A warning notice about a proposal to impose a penalty must state the
amount of the penalty.
(3)
A warning notice about a proposal to publish a statement must set
20
out the terms of the statement.
(4)
If the FCA decides to act under section 345(2) or the PRA decides to
act under section 345A(3), it must give the auditor or actuary to
whom the action would relate a decision notice.
(5)
A decision notice about the imposition of a penalty must state the
25
amount of the penalty.
(6)
A decision notice about the publication of a statement must set out
the terms of the statement.
(7)
If the FCA decides to act under section 345(2) or the PRA decides to
act under section 345A(3), the auditor or actuary concerned may
30
refer the matter to the Tribunal.
345C
Duty on publication of statement
After a statement under section 345(2)(c) or 345A(4)(b) is published,
the regulator that published it must send a copy of the statement to—
(a)
the auditor or actuary, and
35
(b)
any person to whom a copy of the decision notice was given
under section 393(4).
345D
Imposition of penalties on auditors or actuaries: statement of policy
(1)
The FCA must prepare and issue a statement of its policy with
respect to—
40
(a)
the imposition of penalties under section 345(2)(d), and
(b)
the amount of penalties under that provision.

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Schedule 13 — Auditors and actuaries
259

(2)
If by virtue of an order under section 345A(1), the PRA has power to
impose penalties under section 345A(4)(c), the PRA must prepare
and issue a statement of its policy with respect to—
(a)
the imposition of penalties under section 345A(4)(c), and
(b)
the amount of penalties under that provision.
5
(3)
A regulator’s policy in determining what the amount of a penalty
should be must include having regard to—
(a)
the seriousness of the contravention, and
(b)
the extent to which the contravention was deliberate or
reckless.
10
(4)
A regulator may at any time alter or replace a statement issued under
this section.
(5)
If a statement issued under this section is altered or replaced, the
regulator must issue the altered or replacement statement.
(6)
A regulator must, without delay, give the Treasury a copy of any
15
statement which it publishes under this section.
(7)
A statement issued under this section must be published by the
regulator in the way appearing to the regulator to be best calculated
to bring it to the attention of the public.
(8)
In deciding whether to exercise a power under section 345(2)(d) in
20
the case of any particular contravention, the FCA must have regard
to any statement of policy published by it under this section and in
force at a time when the contravention occurred.
(9)
In deciding whether to exercise a power under section 345A(4)(d) in
the case of any particular contravention, the PRA must have regard
25
to any statement of policy published by it under this section and in
force at a time when the contravention occurred.
(10)
A regulator may charge a reasonable fee for providing a person with
a copy of the statement.
345E
Statements of policy: procedure
30
(1)
Before a regulator issues a statement under section 345D, the
regulator must publish a draft of the proposed statement in the way
appearing to the regulator to be best calculated to bring it to the
attention of the public.
(2)
The draft must be accompanied by notice that representations about
35
the proposal may be made to the regulator within a specified time.
(3)
Before issuing the proposed statement, the regulator must have
regard to any representations made to it in accordance with
subsection (2).
(4)
If the regulator issues the proposed statement it must publish an
40
account, in general terms, of—
(a)
the representations made to it in accordance with subsection
(2), and
(b)
its response to them.

Financial Services Bill
Schedule 14 — Amendments of Part 24 of FSMA 2000: insolvency
260

(5)
If the statement differs from the draft published under subsection (1)
in a way which is, in the opinion of the regulator, significant, the
regulator must (in addition to complying with subsection (4))
publish details of the difference.
(6)
A regulator may charge a reasonable fee for providing a person with
5
a copy of a draft under subsection (1).
(7)
This section also applies to a proposal to alter or replace a statement.”
7     (1)
Section 392 (application of sections 393 and 394) is amended as follows.
      (2)
In paragraph (a), for “345(2) (whether as a result of subsection (1) of that
section” substitute “345B(1) (whether as a result of section 345(2), 345A(3)”.
10
      (3)
In paragraph (b), for “345(3) (whether as a result of subsection (1) of that
section” substitute “345B(4) (whether as a result of section 345(2), 345A(3)”.
Schedule 14
Section 41

Amendments of Part 24 of FSMA 2000: insolvency
1
Part 24 of FSMA 2000 is amended as follows.
15
2
In section 355 (interpretation of Part 24) at the end of subsection (1) insert—
“ “PRA-regulated person” means a person who—
(a)
is or has been a PRA-authorised person,
(b)
is or has been an appointed representative whose
principal (or one of whose principals) is, or was, a
20
PRA-authorised person, or
(c)
is carrying on or has carried on a PRA-regulated
activity in contravention of the general prohibition.”
3     (1)
Section 356 (powers to participate in proceedings: company voluntary
arrangements) is amended as follows.
25
      (2)
In subsections (1) and (2), for “the Authority” substitute “the appropriate
regulator”.
      (3)
In subsection (3)—
(a)
for “the Authority”, in the first place, substitute “a regulator”, and
(b)
for “the Authority”, in the second place, substitute “the appropriate
30
regulator”.
      (4)
After subsection (3) insert—
“(4)
“The appropriate regulator” means—
(a)
in the case of a PRA-authorised person—
(i)
for the purposes of subsections (1) and (2), the FCA or
35
the PRA, and
(ii)
for the purposes of subsection (3), each of the FCA
and the PRA;
(b)
in any other case, the FCA.