Problem communicating with remote server...

Session 2010 - 12
Internet Publications
Other Bills before Parliament

Financial Services Bill


Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

79

 

137B    

FCA general rules: clients’ money, right to rescind etc.

(1)   

Rules relating to the handling of money held by an authorised person

in specified circumstances (“clients’ money”) may—

(a)   

make provision which results in that clients’ money being held

on trust in accordance with the rules,

5

(b)   

treat 2 or more accounts as a single account for specified

purposes (which may include the distribution of money held in

the accounts),

(c)   

authorise the retention by the authorised person of interest

accruing on the clients’ money, and

10

(d)   

make provision as to the distribution of such interest which is

not to be retained by the authorised person.

(2)   

An institution with which an account is kept in pursuance of rules

relating to the handling of clients’ money does not incur any liability as

constructive trustee if the money is wrongfully paid from the account,

15

unless the institution permits the payment—

(a)   

with knowledge that it is wrongful, or

(b)   

having deliberately failed to make enquiries in circumstances in

which a reasonable and honest person would have done so.

(3)   

Rules may—

20

(a)   

confer rights on persons to rescind agreements with, or

withdraw offers to, authorised persons within a specified

period, and

(b)   

make provision, in respect of authorised persons and persons

exercising those rights, for the restitution of property and the

25

making or recovery of payments where those rights are

exercised.

(4)   

“Rules” means general rules of the FCA.

(5)   

“Specified” means specified in the rules.

137C    

FCA general rules: product intervention

30

(1)   

The power of the FCA to make general rules includes power to make

such rules (“product intervention rules”) prohibiting authorised

persons from doing anything mentioned in subsection (2) as appear to

it to be necessary or expedient for the purpose of advancing—

(a)   

the consumer protection objective or the competition objective,

35

or

(b)   

if the Treasury by order provide for this paragraph to apply, the

integrity objective.

(2)   

Those prohibited things are—

(a)   

entering into specified agreements with any person or specified

40

person;

(b)   

entering into specified agreements with any person or specified

person unless requirements specified in the rules have been

satisfied;

(c)   

doing anything that would or might result in the entering into

45

of specified agreements by persons or specified persons, or the

holding by them of a beneficial or other kind of economic

interest in specified agreements;

 
 

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

80

 

(d)   

doing anything within paragraph (c) unless requirements

specified in the rules have been satisfied.

(3)   

“Specified agreements” means agreements of a description specified in

general rules made by the FCA.

(4)   

“Specified persons” means persons of a description specified in general

5

rules made by the FCA.

(5)   

It is of no relevance—

(a)   

whether the entering into of a specified agreement itself

constitutes the carrying on of a regulated activity, or

(b)   

whether, in a case within subsection (2)(c) or (d), the specified

10

agreements are with the authorised persons concerned or

anyone else.

(6)   

The requirements that may be specified under subsection (2)(b) or (d)

include in particular—

(a)   

requirements as to the terms and conditions that are to be, or are

15

not to be, included in specified or other agreements, and

(b)   

requirements limiting invitations or inducements to enter into

specified or other agreements to those made to specified

persons.

(7)   

In relation to contraventions of product intervention rules, the rules

20

may—

(a)   

provide for a relevant agreement or obligation to be

unenforceable against any person or specified person;

(b)   

provide for the recovery of any money or other property paid or

transferred under a relevant agreement or obligation by any

25

person or specified person;

(c)   

provide for the payment of compensation for any loss sustained

by any person or specified person as a result of paying or

transferring any money or other property under a relevant

agreement or obligation.

30

(8)   

“A relevant agreement or obligation” means—

(a)   

a specified agreement;

(b)   

an agreement entered into in contravention of any rule made as

a result of subsection (2)(c) or (d);

(c)   

an obligation to which a person is subject as a result of

35

exercising a right conferred by an agreement within paragraph

(a) or (b) of this subsection.

(9)   

The provision that may be made as a result of subsection (7) includes

provision corresponding to that made by section 30 (enforceability of

agreements resulting from unlawful communications).

40

(10)   

In this section—

(a)   

any reference to entering into an agreement includes inviting or

inducing persons to enter into an agreement, and

(b)   

any reference to an agreement includes an arrangement.

137D    

Orders under s.137C(1)(b)

45

(1)   

No order may be made under section 137C(1)(b) unless—

 
 

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

81

 

(a)   

a draft of the order has been laid before Parliament and

approved by a resolution of each House, or

(b)   

subsection (3) applies.

(2)   

Subsection (3) applies if an order under section 137C(1)(b) contains a

statement that the Treasury are of the opinion that, by reason of

5

urgency, it is necessary to make the order without a draft being so laid

an approved.

(3)   

Where this subsection applies the order—

(a)   

must be laid before Parliament after being made, and

(b)   

ceases to have effect at the end of the relevant period unless

10

before the end of that period the order is approved by a

resolution of each House of Parliament (but without that

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

15

which the order is made.

(5)   

In calculating the relevant period no account is to be taken of any time

during which Parliament is dissolved or prorogued or during which

both Houses are adjourned for more than 4 days.

137E    

The PRA’s general rules

20

(1)   

The PRA may make such rules applying to PRA-authorised persons—

(a)   

with respect to the carrying on by them of regulated activities,

or

(b)   

with respect to the carrying on by them of activities which are

not regulated activities,

25

   

as appear to the PRA to be necessary or expedient for the purpose of

advancing any of its objectives.

(2)   

Rules made under this section are referred to in this Act as the PRA’s

general rules.

(3)   

The PRA’s general rules may make provision applying to PRA-

30

authorised persons even though there is no relationship between the

PRA-authorised persons to whom the rules will apply and the persons

whose interests will be protected by the rules.

(4)   

The PRA’s general rules may contain requirements which take into

account, in the case of a PRA-authorised person who is a member of a

35

group, any activity of another member of the group.

(5)   

The PRA’s general rules may not—

(a)   

make provision prohibiting an EEA firm from carrying on, or

holding itself out as carrying on, any activity which it has

permission conferred by Part 2 of Schedule 3 to carry on in the

40

United Kingdom;

(b)   

make provision, as respects an EEA firm, about any matter for

which responsibility is, under any of the single market

directives, reserved to the firm’s home state regulator.

 
 

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

82

 

137F    

General rules about remuneration

(1)   

This section applies where either regulator exercises its power to make

general rules so as to make rules prohibiting persons, or persons of a

specified description, from being remunerated in a specified way.

(2)   

The rules may—

5

(a)   

provide that any provision of an agreement that contravenes

such a prohibition is void, and

(b)   

provide for the recovery of any payment made, or other

property transferred, in pursuance of a provision that is void by

virtue of paragraph (a).

10

(3)   

A provision that, at the time the rules are made, is contained in an

agreement made before that time may not be rendered void under

subsection (2)(a) unless it is subsequently amended so as to contravene

a prohibition referred to in that subsection.

137G    

Remuneration policies: Treasury direction to consider compliance

15

(1)   

This section applies where either regulator exercises its power to make

general rules so as to make rules requiring authorised persons, or

authorised persons of a description specified in the rules, to act in

accordance with a remuneration policy.

(2)   

A “remuneration policy” is a policy about the remuneration by an

20

authorised person of—

(a)   

officers,

(b)   

employees, or

(c)   

other persons,

   

of a description specified in the rules.

25

(3)   

The Treasury may direct the regulator to consider whether the

remuneration policies of authorised persons specified in the direction

(or of authorised persons of a description so specified) comply with

requirements imposed by rules made by that regulator as to the

contents of the policies.

30

(4)   

Before giving a direction under subsection (3), the Treasury must

consult the regulator concerned.

(5)   

If the regulator considers that a remuneration policy of an authorised

person fails to make provision which complies with the requirements

mentioned in subsection (3), the regulator must take such steps as it

35

considers appropriate to deal with the failure.

(6)   

The steps that the regulator may take include requiring the

remuneration policy to be revised.

(7)   

“Authorised person”, in relation to the PRA, means PRA-authorised

person.

40

137H    

Rules about recovery plans: duty to consult

(1)   

Before either regulator prepares a draft of any general rules that require

each relevant person (or each relevant person of a specified description)

to prepare a recovery plan, the regulator must consult—

(a)   

the Treasury, and

45

 
 

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

83

 

(b)   

the Bank of England.

(2)   

A “relevant person” is an authorised person in relation to whom any

power under Part 1 of the Banking Act 2009 (special resolution regime)

is exercisable.

(3)   

A “recovery plan” is a document containing information within

5

subsection (4) or (5).

(4)   

Information is within this subsection if it relates to action to be taken to

secure that, in the event of specified circumstances affecting the

carrying on of the business (or any part of the business) of an

authorised person—

10

(a)   

the business of the authorised person, or

(b)   

a specified part of that business,

   

is capable of being carried on (whether or not by the authorised person

and whether or not in the same way as previously).

(5)   

Information is within this subsection if it would facilitate the carrying

15

on of the business (or any part of the business) of an authorised person

by any other person.

(6)   

In this section—

“authorised person”, in relation to the PRA, means PRA-

authorised person;

20

“specified” means specified in the rules.

137I    

PRA rules about resolution plans: duty to consult

(1)   

Before the PRA prepares a draft of any general rules that require each

relevant person (or each relevant person of a specified description) to

prepare a resolution plan, the PRA must consult—

25

(a)   

the Treasury, and

(b)   

the Bank of England.

(2)   

A “relevant person” is a PRA-authorised person in relation to whom

any power under Part 1 of the Banking Act 2009 (special resolution

regime) is exercisable.

30

(3)   

A “resolution plan” is a document containing information within

subsection (4) or (5).

(4)   

Information is within this subsection if it relates to action to be taken in

the event of—

(a)   

circumstances arising in which it is likely that the business (or

35

any part of the business) of an authorised person will fail, or

(b)   

the failure of the business (or any part of the business) of an

authorised person.

(5)   

Information is within this subsection if it would facilitate anything

falling to be done by any person in consequence of that failure.

40

(6)   

An example of information within subsection (5) is information that, in

the event of that failure, would facilitate—

(a)   

planning by the Treasury in relation to the possible exercise of

any of its powers under Part 1 of the Banking Act 2009, or

 
 

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

84

 

(b)   

planning by the Bank of England in relation to the possible

exercise of any of its powers under Part 1, 2 or 3 of that Act.

137J    

Interpretation of sections 137H and 137I

(1)   

This section has effect for the interpretation of sections 137H and 137I.

(2)   

References to the taking of action include the taking of action by—

5

(a)   

the authorised person,

(b)   

any other person in the same group as the authorised person, or

(c)   

a partnership of which the authorised person is a member.

(3)   

In subsection (2)(b) the definition of “group” in section 421 applies with

the omission of subsection (1)(e) and (f) of that section.

10

(4)   

References to the business of an authorised person include the business

of—

(a)   

any person in the same group as the authorised person, and

(b)   

a partnership of which the authorised person is a member.

(5)   

For the purposes of section 137I the cases in which the business (or any

15

part of the business) of the authorised person (“A”) is to be regarded as

having failed include those where—

(a)   

A enters insolvency,

(b)   

any of the stabilisation options in Part 1 of the Banking Act 2009

is achieved in relation to A, or

20

(c)   

A falls to be taken for the purposes of the compensation scheme

to be unable, or likely to be unable, to satisfy claims against A.

(6)   

In subsection (5)(a) “insolvency” includes—

(a)   

bankruptcy,

(b)   

liquidation,

25

(c)   

bank insolvency,

(d)   

administration,

(e)   

bank administration,

(f)   

receivership,

(g)   

a composition between A and A’s creditors, and

30

(h)   

a scheme of arrangement of A’s affairs.

137K    

Special provision relating to adequacy of resolution plans

(1)   

This section applies where the PRA has exercised its power to make

general rules so as to make rules requiring PRA-authorised persons, or

PRA-authorised persons of a specified description, to prepare a

35

resolution plan.

(2)   

The PRA must consult the Treasury and the Bank of England (“the

Bank”) about the adequacy of resolution plans required to be prepared

by those rules, so far as relating to any matter which may be relevant to

the exercise by the Treasury or the Bank of any power under Part 1, 2

40

or 3 of the Banking Act 2009.

(3)   

After being consulted under subsection (2)—

(a)   

the Treasury or the Bank may notify the PRA that, in the

opinion of the Treasury or the Bank, a resolution plan fails to

make satisfactory provision in relation to any such matter, and

45

 
 

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000

85

 

(b)   

if the Treasury or the Bank give a notification under paragraph

(a), the Treasury or the Bank must give reasons for being of that

opinion to the PRA.

(4)   

The PRA must have regard to any notification given under subsection

(3)(a) before considering whether any resolution plan makes

5

satisfactory provision in relation to any such matter.

(5)   

If—

(a)   

a notification is given under subsection (3)(a), but

(b)   

the PRA is nonetheless of the opinion that the resolution plan

makes satisfactory provision in relation to any such matter,

10

   

the PRA must give reasons for being of that opinion to the person who

gave the notification.

(6)   

In this section—

“resolution plan” has the same meaning as in section 137I;

“specified” means specified in the rules.

15

137L    

Recovery plans and resolution plans: restriction on duty of confidence

(1)   

A contractual or other requirement imposed on a person (“P”) to keep

information in confidence does not apply if—

(a)   

the information is or may be relevant to anything required to be

done as a result of a requirement imposed by general rules

20

made by either regulator to prepare a recovery plan or a

resolution plan,

(b)   

an authorised person or a skilled person requests or requires P

to provide the information for the purpose of securing that

those things are done, and

25

(c)   

the regulator in question has approved the making of the

request or the imposition of the requirement before it is made or

imposed.

(2)   

An authorised person may provide information (whether received

under subsection (1) or otherwise) that would otherwise be subject to a

30

contractual or other requirement to keep it in confidence if it is

provided for the purposes of anything required to be done as a result of

a requirement imposed by general rules to prepare a recovery plan or a

resolution plan.

(3)   

In this section, references to preparing a recovery plan or a resolution

35

plan include—

(a)   

keeping that plan up to date, and

(b)   

collecting specified information for the purposes of that plan.

(4)   

In this section, references to a skilled person are to a person appointed,

in accordance with a requirement imposed by either regulator, by an

40

authorised person whom the regulator considers to have contravened

a relevant requirement of rules made by that regulator.

(5)   

A person appointed under subsection (4) must be a person—

(a)   

nominated or approved by the regulator that made the rules

imposing the relevant requirement, and

45

(b)   

appearing to that regulator to have the skills necessary to collect

or update the information in question.

 
 

 
previous section contents continue
 

© Parliamentary copyright
Revised 27 January 2012