Financial Services Bill

Session 2010 - 12
Internet Publications
Other Bills before Parliament

Financial Services Bill

Financial Services Bill
Part 1 — Bank of England
6

Directions by Financial Policy Committee
9G
Directions to FCA or PRA requiring macro-prudential measures
(1)
The Financial Policy Committee may give a direction to the FCA or the
PRA (“the regulator”) requiring the regulator to exercise its functions so
as to ensure the implementation, by or in relation to a specified class of
5
regulated persons, of a macro-prudential measure described in the
direction.
(2)
“Regulated person” means—
(a)
in relation to the FCA—
(i)
an authorised person within the meaning of FSMA 2000,
10
(ii)
a recognised investment exchange within the meaning
of that Act, or
(iii)
an EEA market operator as defined by section 312D of
that Act;
(b)
in relation to the PRA, a PRA-authorised person within the
15
meaning of that Act.
(3)
“Macro-prudential measure” is to be read in accordance with section
9K.
(4)
The direction may relate to all regulated persons or to regulated
persons of a specified description, but may not relate to a specified
20
regulated person.
(5)
The direction—
(a)
may refer to the opinion of the regulator or require or authorise
the exercise of a discretion by the regulator;
(b)
may be expressed to remain in force for a specified period or
25
until revoked.
(6)
The direction may not require its provisions to be implemented by
specified means or within a specified period, but may include
recommendations as to the means to be used and the timing of
implementation.
30
(7)
A recommendation made under subsection (6) may be expressed to be
one to which section 9P(3) (duty to comply or explain) applies.
(8)
The direction may not require the regulator to do anything that it has
no power to do, but the existence of the direction is relevant to the
exercise of any discretion conferred on the regulator.
35
(9)
The direction may specify particular matters to which the regulator is
or is not to have regard in complying with the direction, but those
matters must be specified in relation to all regulated persons or a class
of regulated person rather than a specified regulated person.
(10)
The direction may refer to a publication issued by the FCA, the PRA,
40
another body in the United Kingdom or an international organisation,
as the publication has effect from time to time.
9H
Compliance with directions under section 9G
(1)
The regulator must comply with a direction given to it under section 9G
as soon as reasonably practicable.
45

Financial Services Bill
Part 1 — Bank of England
7

(2)
An order under section 9K may, in relation to cases where the regulator
is complying with a direction under section 9G, exclude or modify any
procedural requirement that would otherwise apply under FSMA 2000
in relation to the exercise by the regulator of its functions in pursuance
of the direction.
5
(3)
The regulator to which a direction under section 9G is given must give
the Financial Policy Committee one or more reports on how it is
complying or has complied with the direction.
(4)
The Financial Policy Committee may give directions to the regulator
specifying the times by which reports required by subsection (3) must
10
be given to the Committee.
(5)
“Regulator” has the same meaning as in section 9G.
9I
Revocation of directions under section 9G
(1)
The Financial Policy Committee may at any time by notice to the
regulator revoke a direction under section 9G.
15
(2)
A direction under section 9G is to be taken to be revoked if the measure
to which it relates ceases to be a macro-prudential measure, but this is
subject to any provision made under section 9K(4)(e).
(3)
The revocation of a direction under section 9G does not affect the
validity of anything previously done in accordance with it.
20
(4)
“Regulator” has the same meaning as in section 9G.
9J
Further provisions about directions under section 9G
(1)
Each of the following must be in writing—
(a)
a direction under section 9G;
(b)
a notice revoking such a direction;
25
(c)
a report under section 9H(3).
(2)
The Financial Policy Committee must give the Treasury a copy of any
direction under section 9G or any notice revoking such a direction.
(3)
The Treasury may, if they think fit, lay before Parliament a copy of a
direction under section 9G or a notice revoking such a direction.
30
(4)
Where a direction under section 9G, or a notice revoking such a
direction, is included in a record published under section 9R, the
Treasury must, if they have not already done so, lay before Parliament
a copy of the direction or notice in the form in which it is published in
the record.
35
9K
Macro-prudential measures
(1)
For the purposes of section 9G a “macro-prudential measure” is a
measure prescribed by the Treasury by order.
(2)
Before making an order under this section, the Treasury must—
(a)
consult the Financial Policy Committee, or
40
(b)
if the Treasury considers that the delay involved in consulting
the Committee would be prejudicial to the stability of the UK
financial system, consult the Governor of the Bank.

Financial Services Bill
Part 1 — Bank of England
8

(3)
In prescribing a measure, the order must specify whether the measure
is prescribed in relation to the FCA, the PRA, or both.
(4)
An order under this section—
(a)
may make different provision for different cases;
(b)
may confer a discretion on the Financial Policy Committee, the
5
FCA or the PRA;
(c)
may refer to rules made by the FCA or the PRA;
(d)
may refer to a publication issued by the FCA, the PRA, another
body in the United Kingdom or an international organisation,
as the publication has effect from time to time;
10
(e)
may contain transitional provisions and savings relating to the
coming into force of any provision of the order or to the ceasing
to be in force of any temporary provision made by the order.
9L
Statements of policy by Financial Policy Committee
(1)
In relation to each macro-prudential measure prescribed under section
15
9K, the Financial Policy Committee must prepare and maintain a
written statement of the general policy that it proposes to follow in
relation to the exercise of its power of direction under section 9G so far
as it relates to that measure.
(2)
The Committee may at any time alter or replace a statement maintained
20
under this section.
(3)
The Bank must publish each statement maintained under this section.
(4)
Publication is to be in such manner as the Bank thinks fit.
(5)
Nothing in this section is to be regarded as preventing the Financial
Policy Committee from exercising its power of direction under section
25
9G in relation to a macro-prudential measure, where it considers it
necessary to do so by reason of urgency, before it has prepared a
statement under this section in relation to that measure.
9M
Parliamentary control of orders under section 9K
(1)
Except as provided by subsection (2), an order under section 9K is not
30
to be made unless a draft of the order has been laid before and
approved by resolution of each House of Parliament.
(2)
An order under section 9K may be made without a draft having been
laid and approved as mentioned in subsection (1) if the order contains
a statement that the Treasury are of the opinion that, by reason of
35
urgency, it is necessary to make the order without a draft being so laid
and approved.
(3)
An order under section 9K made in accordance with subsection (2)—
(a)
must be laid before Parliament after being made, and
(b)
ceases to have effect at the end of the relevant period unless
40
before the end of that period the order is approved by a
resolution of each House of Parliament (but without affecting
anything done under the order or the power to make a new
order).
(4)
The “relevant period” is a period of 28 days beginning with the day on
45
which the order is made.

Financial Services Bill
Part 1 — Bank of England
9

(5)
In reckoning the relevant period no account is to be taken of any time
during which Parliament is dissolved or prorogued or during which
either House is adjourned for more than 4 days.
Recommendations by Financial Policy Committee
9N
Making of recommendations within the Bank
5
(1)
The Financial Policy Committee may make recommendations within
the Bank.
(2)
The recommendations may, in particular, relate to—
(a)
the provision by the Bank of financial assistance to financial
institutions;
10
(b)
the exercise by the Bank of its functions in relation to payment
systems, settlement systems and clearing houses.
(3)
The Committee may not make recommendations about—
(a)
the provision by the Bank of financial assistance in relation to a
particular financial institution, or
15
(b)
the exercise by the Bank of its powers under Parts 1 to 3 of the
Banking Act 2009 in relation to a particular institution.
(4)
The recommendations must be made or confirmed in writing.
9O
Recommendations to Treasury
(1)
The Financial Policy Committee may make recommendations to the
20
Treasury.
(2)
The recommendations may, in particular, relate to the exercise by the
Treasury of their power to make orders under—
(a)
section 9K (macro-prudential measures),
(b)
section 22(1) or (1A) of FSMA 2000 (regulated activities),
25
(c)
section 22A(1) of that Act (designation of activities requiring
prudential regulation by PRA),
(d)
section 137C(1)(b) of that Act (purposes for which FCA may
make product intervention rules), or
(e)
section 165A(2)(d) of that Act (additional persons who may be
30
required by PRA to provide information).
(3)
The recommendations must be made or confirmed in writing.
(4)
The Committee may make a recommendation under subsection (2)(e)
only if it considers that the exercise by the Treasury of their power to
make an order under section 165A(2)(d) of FSMA 2000 in the manner
35
proposed is desirable for the purposes of the exercise by the Committee
of its functions.
(5)
Before giving a recommendation under subsection (2)(e), the
Committee must consult the Treasury.
9P
Recommendations to FCA and PRA
40
(1)
The Financial Policy Committee may make recommendations to the
FCA and the PRA about the exercise of their respective functions.

Financial Services Bill
Part 1 — Bank of England
10

(2)
The recommendations may relate to all regulated persons or to
regulated persons of a specified description, but may not relate to the
exercise of the functions of the FCA or the PRA in relation to a specified
regulated person.
(3)
If the recommendations are expressed to be recommendations to which
5
this subsection applies, the body to which they are made must as soon
as reasonably practicable—
(a)
act in accordance with the recommendations, or
(b)
if to any extent it does not, notify the Committee of the extent to
which it has not acted in accordance with the recommendations
10
and of the reasons for its decision.
(4)
The recommendations, and any notification under subsection (3)(b),
must be made or confirmed in writing.
(5)
“Regulated person” has the same meaning as in section 9G.
9Q
Recommendations to other persons
15
(1)
The Financial Policy Committee may make recommendations to
persons other than those mentioned in sections 9N to 9P.
(2)
The recommendations must be made or confirmed in writing.
Publication of record of meetings
9R
Publication of record of meetings
20
(1)
The Bank must publish a record of each meeting of the Financial Policy
Committee before the end of the period of 6 weeks beginning with the
day of the meeting.
(2)
The record must specify any decisions taken at the meeting (including
decisions to take no action) and must set out, in relation to each
25
decision, a summary of the Committee’s deliberations.
(3)
The decisions referred to in subsection (2) include in particular a
decision—
(a)
to give or revoke a direction under section 9G;
(b)
to make recommendations under any of sections 9N to 9Q.
30
(4)
Where a decision has been made to give or revoke a direction under
section 9G, the record must include the text of the direction or of the
notice of revocation.
(5)
Where a decision has been made to make recommendations under any
of sections 9N to 9Q, the record must include the recommendations.
35
(6)
Where since the previous meeting the Committee has received a
notification under section 9P(3)(b), the record must include the
notification.
(7)
The information required by subsections (1) and (2) does not include
information identifying particular members of the Committee.
40
(8)
Subsections (1) to (6) do not require the publication of—
(a)
information about any recommendations made under 9N(2)(a);

Financial Services Bill
Part 1 — Bank of England
11

(b)
information whose publication within the time required by
subsection (1) would in the opinion of the Committee be against
the public interest;
(c)
information about any decision under paragraph (b);
(d)
information about a decision to give a direction under section
5
9G which has been revoked before the record of the meeting at
which it was given is published;
(e)
information about the decision to revoke a direction where
information about the direction is withheld under paragraph
(d).
10
(9)
Publication under this section or section 9S is to be in such manner as
the Bank thinks fit.
9S
Deferred publication
(1)
Where the Financial Policy Committee decides under subsection (8)(b)
of section 9R that publication of information within the time required
15
by subsection (1) of that section would be against the public interest—
(a)
it must consider whether to fix a date as the earliest date on
which the information may be published, and
(b)
if it does not fix a date, it must keep under consideration the
question whether publication of the information would still be
20
against the public interest.
(2)
The Committee must from time to time determine the procedures that
it will follow in complying with the duty in subsection (1)(b).
(3)
Where the Committee—
(a)
fixes a date under subsection (1)(a) as the earliest date on which
25
any information may be published, or
(b)
decides under subsection (1)(b) that publication of any
information is no longer against the public interest,
the Bank must publish the information at the time when it next
publishes under section 9R(1) the record of a meeting of the Committee.
30
Financial stability reports by Financial Policy Committee
9T
Financial stability reports by Financial Policy Committee
(1)
The Financial Policy Committee must prepare and publish reports
relating to financial stability (“financial stability reports”).
(2)
Two financial stability reports must be published in each calendar year.
35
(3)
A financial stability report must include—
(a)
the Committee’s view of the stability of the UK financial system
at the time when the report is prepared,
(b)
an assessment of the developments that have influenced the
current position,
40
(c)
an assessment of the strengths and weaknesses of the UK
financial system,
(d)
an assessment of risks to the stability of the UK financial system,
and

Financial Services Bill
Part 1 — Bank of England
12

(e)
the Committee’s view of the outlook for the stability of the UK
financial system.
(4)
A financial stability report must also include—
(a)
a summary of the activities of the Committee in the reporting
period, and
5
(b)
an assessment of the extent to which the exercise by the
Committee of its functions (both during the reporting period
and previously) has succeeded during the reporting period in
achieving the Committee’s objectives.
(5)
The reporting period is the period since the date of the previous
10
financial stability report, except that in the case of the first financial
stability report it is the period since the time when this section came
fully into force.
(6)
Nothing in subsection (3) or (4) is to be regarded as requiring the
Committee to include in a financial stability report any information
15
whose publication would in the Committee’s opinion be against the
public interest.
(7)
The Committee must give a copy of each financial stability report to the
Treasury.
(8)
The Treasury must lay before Parliament a copy of each financial
20
stability report.
(9)
Publication of a financial stability report is to be in such manner as the
Bank thinks fit.
Meetings between Governor and Chancellor of the Exchequer
9U
Meetings between Governor and Chancellor of the Exchequer
25
(1)
As soon as reasonably practicable after the publication by the Financial
Policy Committee of a financial stability report, the Governor of the
Bank and the Chancellor of the Exchequer must meet to discuss the
report and any other matters relating to the stability of the UK financial
system that they consider it appropriate to discuss.
30
(2)
The Treasury must publish a record of each meeting required by
subsection (1) before the end of the period of 6 weeks beginning with
the day of the meeting.
(3)
Publication under subsection (2) is to be in such manner as the Treasury
think fit.
35
(4)
Subsection (2) does not require the publication of information whose
publication within the time required by that subsection would in the
opinion of the Treasury be against the public interest.
(5)
Before publishing the record of a meeting required by subsection (1), or
deciding under subsection (4) not to publish such a record, the
40
Treasury must consult the Bank about the record and its publication.