Financial Services Bill

Session 2010 - 12
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Other Bills before Parliament

Financial Services Bill

Financial Services Bill
Part 1 — Bank of England
13

Power of Bank to require FCA or PRA to provide information
9V
Directions requiring information or documents
(1)
The Bank may exercise the powers conferred by this section where it
considers that information or documents are reasonably required in
connection with the exercise by the Bank of its functions in pursuance
5
of the Financial Stability Objective.
(2)
The Bank may give a direction to the FCA or the PRA (“the regulator”)
requiring the regulator—
(a)
to provide the Bank with specified information or information
of a specified description, or
10
(b)
to produce to the Bank specified documents or documents of a
specified description.
(3)
The direction may relate to information or documents which are held
by persons other than the regulator and which the regulator has power
to obtain or whose production the regulator has power to require.
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(4)
Any information or documents to which the direction relates are—
(a)
where the information or documents are held by a person in
relation to whom the powers conferred by subsections (1) and
(3) of section 165 of FSMA 2000 are exercisable, to be taken to be
information or documents to which that section applies by
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virtue of subsection (4) of that section, and
(b)
where they are held by a person to whom section 165A of FSMA
2000 applies and the direction is given to the PRA, to be taken
to be information or documents to which that section applies by
virtue of subsection (3) of that section.
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(5)
The information or documents must be provided or produced before
the end of such period as may be specified.
(6)
The Bank may require any information provided under this section to
be provided in such form as it may require.
(7)
The Bank may require—
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(a)
any information provided, whether in a document or otherwise,
to be verified in such manner as it may require;
(b)
any document produced to be authenticated in such manner as
it may require.
9W
Further provisions about directions under section 9V
35
(1)
In the exercise of its functions under section 9V, the Bank must have
regard to the principle that a burden or restriction which is imposed on
a person, or on the carrying on of an activity, should be proportionate
to the benefits, considered in general terms, which are expected to
result from the imposition of that burden or restriction.
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(2)
Before giving a direction under section 9V to the FCA or the PRA (“the
regulator”), the Bank must consult the regulator.
(3)
A direction under section 9V must be in writing, and may be revoked
by a notice in writing.

Financial Services Bill
Part 1 — Bank of England
14

(4)
As soon as practicable after giving a direction under section 9V, the
Bank must publish the direction in such manner as it thinks appropriate
for bringing the direction to the attention of persons (other than the
regulator to which it is given) who may be affected by it.
(5)
Subsection (4) does not require the publication of information whose
5
publication at the time required by that subsection would in the
opinion of the Bank be against the public interest.
(6)
Where the Bank decides under subsection (5) that publication of any
information would be against the public interest, it must from time to
time review that decision and if it subsequently decides that
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publication is no longer against the public interest it must comply with
subsection (4).
Supplementary
9X
Interpretation of Part 1A
In this Part—
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“the FCA” means the Financial Conduct Authority;
“financial assistance” has the meaning given by section 257(1) of
the Banking Act 2009;
“the Financial Policy Committee” means the Financial Policy
Committee of the Bank of England;
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“the financial sector” means financial institutions generally;
“FSMA 2000” means the Financial Services and Markets Act 2000;
“the PRA” means the Prudential Regulation Authority;
“systemic risk” has the meaning given by section 9C(5);
“the UK economy” means the economy of the United Kingdom;
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“the UK financial system” means the financial system of the
United Kingdom.”
(2)
After Schedule 2 to the Bank of England Act 1998 insert as Schedule 2A the
Schedule set out in Part 1 of Schedule 1 to this Act.
(3)
The further amendments relating to the Financial Policy Committee in Part 2
30
of Schedule 1 have effect.
(4)
Sections 2B and 2C of the Bank of England Act 1998 (which relate to the
establishment and procedure of the Financial Stability Committee) are
repealed.
4
Further amendments relating to Bank of England
35
Schedule 2 contains further amendments relating to the Bank of England.

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
15

Part 2
Amendments of Financial Services and Markets Act 2000
Financial Conduct Authority and Prudential Regulation Authority
5
The new Regulators
(1)
For sections 1 to 18 of the Financial Services and Markets Act 2000 (in this Act
5
referred to as “FSMA 2000”) substitute—
“Part 1A
The Regulators
Chapter 1
The Financial Conduct Authority
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The Financial Conduct Authority
1A
The Financial Conduct Authority
(1)
The body corporate previously known as the Financial Services
Authority is renamed as the Financial Conduct Authority.
(2)
The Financial Conduct Authority is in this Act referred to as “the FCA”.
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(3)
The FCA is to have the functions conferred on it by or under this Act.
(4)
The FCA must comply with the requirements as to its constitution set
out in Schedule 1ZA.
(5)
Schedule 1ZA also makes provision about the status of the FCA and the
exercise of certain of its functions.
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(6)
References in this Act or any other enactment to functions conferred on
the FCA by or under this Act include references to functions conferred
on the FCA by or under—
(a)
the Insolvency Act 1986,
(b)
the Banking Act 2009, or
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(c)
the Financial Services Act 2012.
The FCA’s general duties
1B
The FCA’s general duties
(1)
In discharging its general functions the FCA must, so far as is
reasonably possible, act in a way which—
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(a)
is compatible with its strategic objective, and
(b)
advances one or more of its operational objectives.
(2)
The FCA’s strategic objective is: ensuring that the relevant markets (see
section 1F) function well.
(3)
The FCA’s operational objectives are—
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Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
16

(a)
the consumer protection objective (see section 1C);
(b)
the integrity objective (see section 1D);
(c)
the competition objective (see section 1E).
(4)
The FCA must, so far as is compatible with acting in a way which
advances the consumer protection objective or the integrity objective,
5
discharge its general functions in a way which promotes effective
competition in the interests of consumers.
(5)
In discharging its general functions the FCA must have regard to—
(a)
the regulatory principles in section 3B, and
(b)
the importance of taking action intended to minimise the extent
10
to which it is possible for a business carried on—
(i)
by an authorised person or a recognised investment
exchange, or
(ii)
in contravention of the general prohibition,

to be used for a purpose connected with financial crime.
15
(6)
For the purposes of this Chapter, the FCA’s general functions are—
(a)
its function of making rules under this Act (considered as a
whole),
(b)
its function of preparing and issuing codes under this Act
(considered as a whole),
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(c)
its functions in relation to the giving of general guidance under
this Act (considered as a whole), and
(d)
its function of determining the general policy and principles by
reference to which it performs particular functions under this
Act.
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(7)
Except to the extent that an order under section 47 of the Financial
Services Act 2012 (orders relating to mutual societies functions) so
provides, the FCA’s general functions do not include functions that are
transferred functions within the meaning of section 48 of that Act.
(8)
“General guidance” has the meaning given in section 139B(5).
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1C
The consumer protection objective
(1)
The consumer protection objective is: securing an appropriate degree of
protection for consumers.
(2)
In considering what degree of protection for consumers may be
appropriate, the FCA must have regard to—
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(a)
the differing degrees of risk involved in different kinds of
investment or other transaction;
(b)
the differing degrees of experience and expertise that different
consumers may have;
(c)
the needs that consumers may have for the timely provision of
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information and advice that is accurate and fit for purpose;
(d)
the general principle that consumers should take responsibility
for their decisions;
(e)
the general principle that those providing regulated financial
services should be expected to provide consumers with a level
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of care that is appropriate having regard to the degree of risk

Financial Services Bill
Part 2 — Amendments of Financial Services and Markets Act 2000
17

involved in relation to the investment or other transaction and
the capabilities of the consumers in question;
(f)
any information which the consumer financial education body
has provided to the FCA in the exercise of the consumer
financial education function;
5
(g)
any information which the scheme operator of the ombudsman
scheme has provided to the FCA pursuant to section 232A.
1D
The integrity objective
(1)
The integrity objective is: protecting and enhancing the integrity of the
UK financial system.
10
(2)
The “integrity” of the UK financial system includes—
(a)
its soundness, stability and resilience,
(b)
its not being used for a purpose connected with financial crime,
(c)
its not being affected by behaviour that amounts to market
abuse,
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(d)
the orderly operation of the financial markets, and
(e)
the transparency of the price formation process in those
markets.
1E
The competition objective
(1)
The competition objective is: promoting effective competition in the
20
interests of consumers in the markets for—
(a)
regulated financial services, or
(b)
services provided by a recognised investment exchange in
carrying on regulated activities in respect of which it is by virtue
of section 285(2) exempt from the general prohibition.
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(2)
The matters to which the FCA may have regard in considering the
effectiveness of competition in the market for any services mentioned
in subsection (1) include—
(a)
the needs of different consumers who use or may use those
services, including their need for information that enables them
30
to make informed choices,
(b)
the ease with which consumers who obtain those services can
change the person from whom they obtain them,
(c)
the ease with which new entrants can enter the market, and
(d)
how far competition is encouraging innovation.
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Interpretation of terms used in relation to FCA’s general duties
1F
Meaning of “relevant markets” in strategic objective
In section 1B(2) “the relevant markets” means—
(a)
the financial markets,
(b)
the markets for regulated financial services (see section 1H(2)),
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and
(c)
the markets for services that are provided by persons other than
authorised persons in carrying on regulated activities but are
provided without contravening the general prohibition.