Financial Services Bill

Session 2010 - 12
Internet Publications
Other Bills before Parliament

Financial Services Bill

Financial Services Bill
Schedule 14 — Amendments of Part 24 of FSMA 2000: insolvency
268

(a)
the bankruptcy order or sequestration award is in force by
virtue of a petition presented by a regulator, and
(b)
the regulator’s petition depended on a contravention by the
individual of the general prohibition.”
      (4)
In the heading, for “to Authority” substitute “to FCA and PRA”.
5
22    (1)
Section 374 (Authority’s powers to participate in proceedings: bankruptcy)
is amended as follows.
      (2)
In subsection (1), omit “other than the Authority”.
      (3)
In subsections (2) to (4), for “Authority” substitute “appropriate regulator”.
      (4)
After subsection (6) insert—
10
“(7)
“The appropriate regulator” means—
(a)
for the purposes of subsections (2) and (3)—
(i)
where the individual or entity is a PRA-regulated
person, each of the FCA and the PRA, and
(ii)
in any other case, the FCA;
15
(b)
for the purposes of subsection (4)—
(i)
where the individual or entity is a PRA-regulated
person, the FCA or the PRA, and
(ii)
in any other case, the FCA.
(8)
But where the petition was presented by a regulator “the appropriate
20
regulator” does not include the regulator which presented the
petition.”
      (5)
In the heading, for “Authority’s powers” substitute “Powers of FCA or
PRA”.
23    (1)
Section 375 (Authority’s right to apply for an order relating to debt
25
avoidance) is amended as follows.
      (2)
In subsection (1), for “Authority” substitute “FCA”.
      (3)
After subsection (1) insert—
“(1A)
The PRA may apply for an order under section 423 of the 1986 Act
(or Article 367 of the 1989 Order) in relation to a debtor if—
30
(a)
at the time the transaction at an undervalue was entered into,
the debtor was carrying on a PRA-regulated activity
(whether or not in contravention of the general prohibition);
and
(b)
a victim of the transaction is or was party to an agreement
35
entered into with the debtor, the making or performance of
which constituted or was part of a PRA-regulated activity
carried on by the debtor.”
      (4)
In subsection (2), after “subsection (1)(b)” insert “or subsection (1A)(b) (as
the case may be)”.
40
      (5)
In the heading, for “Authority’s right” substitute “Right of FCA and PRA”.
24    (1)
Section 376 (continuation of contracts of long-term insurance where insurer
in liquidation) is amended as follows.

Financial Services Bill
Schedule 15 — The consumer financial education body
269

      (2)
In subsection (11)(c), for “Authority” substitute “PRA”.
      (3)
After subsection (11) insert—
“(11A)
The PRA must—
(a)
consult the FCA before making an application under
subsection (10), and
5
(b)
provide the FCA with a copy of any actuary’s report made to
the PRA under that subsection.
(11B)
In the event that the activity of effecting or carrying out long-term
contracts of insurance as principal is not to any extent a PRA-
authorised activity—
10
(a)
the reference in subsection (11)(c) to the PRA is to be read as
a reference to the FCA, and
(b)
subsection (11A) does not apply.”
Schedule 15
Section 42

The consumer financial education body
15
1
Schedule 1A (further provision about the consumer financial education
body) is amended as follows.
2
In paragraph 1 (ensuring exercise of functions) for “Authority”, in each
place, substitute “FCA”.
3
In paragraph 2 (constitution) for “Authority”, in each place, substitute
20
“FCA”.
4
In paragraph 4 (discharge of functions by others), in sub-paragraph (1)(a),
for “section 6A(1)” substitute “section 3R(3)”.
5
In paragraph 5 in sub-paragraph (1), for “section 6A(1)” substitute “section
3R(3)”.
25
6
For paragraph 6 (and the italic heading before it) substitute—
“Discharge of functions: considerations
6
In discharging the consumer financial education function the
consumer financial education body must have regard to the duty
of the FCA to advance its operational objectives.
30
Relationship with the FCA
6A    (1)
The consumer financial education body and the FCA must each
take such steps as it considers appropriate to co-operate with the
other in the exercise of their functions under this Act.
      (2)
The consumer financial education body and the FCA must
35
prepare and maintain a memorandum describing how they intend
to comply with sub-paragraph (1).
      (3)
The consumer financial education body must ensure that the
memorandum as currently in force is published in the way

Financial Services Bill
Schedule 15 — The consumer financial education body
270

appearing to it to be best calculated to bring it to the attention of
the public.
6B
If the consumer financial education body considers that it has
information that, in its opinion, would or might be of assistance to
the FCA in advancing one or more of the FCA’s operational
5
objectives, it must disclose that information to the FCA.”
7
In paragraph 7 (budget) for “Authority”, in each place, substitute “FCA”.
8
In paragraph 8 (annual plan)—
(a)
for “Authority”, in each place, substitute “FCA”, and
(b)
in sub-paragraph (6), after paragraph (d) insert—
10
“(da)
the Smaller Business Practitioner Panel;”.
9
In paragraph 9 (annual reports)—
(a)
for “Authority”, in each place, substitute “FCA”, and
(b)
at the end insert—
    “(5)
The Treasury may—
15
(a)
require the consumer financial education body to
comply with any provision of the Companies Act
2006 about accounts and their audit which would
not otherwise apply to it, or
(b)
direct that any provision of that Act about accounts
20
and their audit is to apply to the consumer financial
education body with such modifications as are
specified in the direction, whether or not the
provision would otherwise apply to it.
      (6)
Compliance with any requirement under sub-paragraph
25
(5)(a) or (b) is enforceable by injunction or, in Scotland, an
order for specific performance under section 45 of the
Court of Session Act 1988.
      (7)
Proceedings under sub-paragraph (6) may be brought only
by the Treasury.”
30
10
After paragraph 9 insert—
“Audit of accounts
9A    (1)
The consumer financial education body must send a copy of its
annual accounts to the Comptroller and Auditor General and the
Treasury as soon as is reasonably practicable.
35
      (2)
The Comptroller and Auditor General must—
(a)
examine, certify and report to the Treasury on accounts
received under this paragraph, and
(b)
send a copy of the certified accounts and the report to the
Treasury.
40
      (3)
The Treasury must lay the copy of the certified accounts and the
report before Parliament.
      (4)
The consumer financial education body must send a copy of the
certified accounts and the report to the FCA.

Financial Services Bill
Schedule 16 — Provision of financial services by members of the professions
271

      (5)
Except as provided for by paragraph 9(5), the consumer financial
education body is exempt from the requirements of Part 16 of the
Companies Act 2006 (audit) and its balance sheet must contain a
statement to that effect.
      (6)
In this paragraph “annual accounts” has the meaning given by
5
section 471 of the Companies Act 2006.”
11
In paragraph 11 (meaning of “relevant costs”) for “Authority” substitute
“FCA”.
12
In paragraph 12 (funding) for “Authority”, in each place, substitute “FCA”.
13
In paragraph 13 (funding by consumer credit licensees), in sub-paragraph
10
(5)(a), for “Authority” substitute “FCA”.
14
In paragraph 15 (reviews of use of resources), for “Authority”, in each place,
substitute “FCA”.
15
In the title to the Schedule, in the marginal reference, for “Section 6A”
substitute “Section 3R”.
15
Schedule 16
Section 43

Provision of financial services by members of the professions
1
In section 325 (general duty)—
(a)
for “Authority”, in each place, substitute “FCA”, and
(b)
in the heading, for “Authority’s” substitute “FCA’s”.
20
2
In section 328 (directions relating to the general prohibition), for
“Authority”, in each place, substitute “FCA”.
3
In section 329 (orders relating to the general prohibition), for “Authority”, in
each place, substitute “FCA”.
4
In section 330 (consultation)—
25
(a)
for “Authority”, in each place, substitute “FCA”, and
(b)
for subsection (10) substitute—
“(10)
“Cost benefit analysis” means—
(a)
an analysis of the costs together with an analysis of
the benefits that will arise—
30
(i)
if the proposed direction is given, or
(ii)
if subsection (5)(b) applies, from the direction
that has been given, and
(b)
subject to subsection (10A), an estimate of those costs
and of those benefits.
35
(10A)
If, in the opinion of the FCA—
(a)
the costs or benefits referred to in subsection (10)
cannot reasonably be estimated, or
(b)
it is not reasonably practicable to produce an
estimate,
40

Financial Services Bill
Schedule 17 — Amendments of Banking Act 2009 related to Part 2 of this Act
Part 1 — Amendments of Part 1 of the Act
272


the cost benefit analysis need not estimate them, but must
include a statement of the FCA’s opinion and an explanation
of it.”
5
In section 331 (procedure for making orders), for “Authority”, in each place,
substitute “FCA”.
5
6
In section 332 (rules relating to persons to whom the general prohibition
does not apply), for “Authority”, in each place, substitute “FCA”.
Schedule 17
Section 90

Amendments of Banking Act 2009 related to Part 2 of this Act
Part 1
10
Amendments of Part 1 of the Act
1
Part 1 of the Banking Act 2009 is amended as follows.
2     (1)
Section 1 (overview) is amended as follows.
      (2)
In subsection (5), for paragraph (c) and the “and” before it, substitute—
“(c)
the Prudential Regulation Authority, and
15
(d)
the Financial Conduct Authority.”
      (3)
In the Table, after the entry relating to sections 82 and 83, insert—

“Section 83A
Banks not regulated by the PRA”.

3
In section 2 (interpretation: “bank”), for “Part 4” substitute “Part 4A”.
4
In section 3 (interpretation: other expressions), for the definition of “the
20
FSA” and the “and” following it, substitute—
““the PRA” means the Prudential Regulation Authority,
“the FCA” means the Financial Conduct Authority, and”.
5
In section 4 (special resolution objectives), in subsection (3), for paragraph
(b) and the “and” following it, substitute—
25
“(b)
the PRA,
(ba)
the FCA, and”.
6
In section 5 (code of practice), in subsection (5), for paragraph (b) and the
“and” following it, substitute—
“(b)
the PRA,
30
(ba)
the FCA, and”.
7     (1)
Section 6 (code of practice: procedure) is amended as follows.
      (2)
Omit subsections (1) and (2).
      (3)
For subsection (4) substitute—
“(4)
Before re-issuing the code of practice the Treasury must consult—
35

Financial Services Bill
Schedule 17 — Amendments of Banking Act 2009 related to Part 2 of this Act
Part 1 — Amendments of Part 1 of the Act
273

(a)
the PRA,
(b)
the FCA,
(c)
the Bank of England, and
(d)
the scheme manager of the Financial Services Compensation
Scheme (established under Part 15 of the Financial Services
5
and Markets Act 2000).
(5)
As soon as is reasonably practicable after re-issuing the code of
practice the Treasury shall lay a copy before Parliament.”
8     (1)
Section 7 (general conditions) is amended as follows.
      (2)
In subsection (1), for “FSA” substitute “PRA”.
10
      (3)
In subsection (2), omit the words from “(within” to the end.
      (4)
In subsection (4), for “FSA” substitute “PRA”.
      (5)
After that subsection insert—
“(4A)
“The threshold conditions” means the threshold conditions, as
defined by subsection (1) of section 55B of the Financial Services and
15
Markets Act 2000, for which the PRA is treated as responsible under
subsection (2) of that section.”
      (6)
In subsection (5)—
(a)
for “FSA” substitute “PRA”, and
(b)
at the end of paragraph (a) insert—
20
“(aa)
the FCA,”.
9
In section 8 (specific conditions: private sector purchaser and bridge bank),
in subsection (3), for paragraph (a) and the “and” following it, substitute—
“(a)
the PRA,
(aa)
the FCA, and”.
25
10
In section 9 (specific conditions: temporary public ownership), in subsection
(4), for paragraph (a) and the “and” following it, substitute—
“(a)
the PRA,
(aa)
the FCA, and”.
11
In section 10 (Banking Liaison Panel), in subsection (3), for paragraph (c)
30
substitute—
“(c)
a member appointed by the PRA,
(ca)
a member appointed by the FCA,”.
12
In section 24 (procedure: instruments), in subsection (1), for paragraph (c)
and the “and” following it, substitute—
35
“(c)
the PRA,
(ca)
the FCA, and”.
13
In section 25 (procedure: orders), in subsection (2), for paragraph (c) and the
“and” following it, substitute—
“(c)
the PRA,
40
(ca)
the FCA, and”.
14
In section 26 (supplemental instruments), in subsection (5), for paragraph (a)

Financial Services Bill
Schedule 17 — Amendments of Banking Act 2009 related to Part 2 of this Act
Part 1 — Amendments of Part 1 of the Act
274

and the “and” following it, substitute—
“(a)
the PRA,
(aa)
the FCA, and”.
15
In section 27 (supplemental orders), in subsection (5), for paragraph (a) and
the “and” following it, substitute—
5
“(a)
the PRA,
(aa)
the FCA, and”.
16
In section 28 (onward transfer), in subsection (6), for paragraph (a) and the
“and” following it, substitute—
“(a)
the PRA,
10
(aa)
the FCA, and”.
17
In section 29 (reverse share transfer), in subsection (6), for paragraph (a) and
the “and” following it, substitute—
“(a)
the PRA,
(aa)
the FCA, and”.
15
18
In section 30 (bridge bank: share transfers), in subsection (5), for paragraph
(a) and the “and” following it, substitute—
“(a)
the PRA,
(aa)
the FCA, and”.
19
In section 31 (bridge bank: reverse share transfer), in subsection (5), for
20
paragraph (a) and the “and” following it, substitute—
“(a)
the PRA,
(aa)
the FCA, and”.
20
In section 41 (procedure), in subsection (1), for paragraph (c) and the “and”
following it, substitute—
25
“(c)
the PRA,
(ca)
the FCA, and”.
21
In section 42 (supplemental instruments), in subsection (5), for paragraph (a)
and the “and” following it, substitute—
“(a)
the PRA,
30
(aa)
the FCA, and”.
22
In section 43 (onward transfer), in subsection (7), for paragraph (a) and the
“and” following it, substitute—
“(a)
the PRA,
(aa)
the FCA, and”.
35
23
In section 44 (reverse property transfer), in subsection (6), for paragraph (a)
and the “and” following it, substitute—
“(a)
the PRA,
(aa)
the FCA, and”.
24
In section 45 (temporary public ownership: property transfer), in subsection
40
(8), for paragraph (a) and the “and” following it, substitute—
“(a)
the PRA,
(aa)
the FCA, and”.
25
In section 46 (temporary public ownership: reverse property transfer), in