PART 1 continued
Contents page 1-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90-99 100-109 110-119 Last page
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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
If the recommendations are expressed to be recommendations to which
this subsection applies, the body to which they are made must as soon
as reasonably practicable—
(a) act in accordance with the recommendations, or
if to any extent it does not, notify the Committee of the extent to
which it has not acted in accordance with the recommendations
and of the reasons for its decision.
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.
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.
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.
The record must specify any decisions taken at the meeting (including
decisions to take no action) and must set out, in relation to each
decision, a summary of the Committee’s deliberations.
The decisions referred to in subsection (2) include in particular a
(a) to give or revoke a direction under section 9G;
(b) to make recommendations under any of sections 9N to 9Q.
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.
Where a decision has been made to make recommendations under any
of sections 9N to 9Q, the record must include the recommendations.
Where since the previous meeting the Committee has received a
notification under section 9P(3)(b), the record must include the
The information required by subsections (1) and (2) does not include
information identifying particular members of the Committee.
(8) Subsections (1) to (6) do not require the publication of—
(a) information about any recommendations made under 9N(2)(a);
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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);
information about a decision to give a direction under section
9G which has been revoked before the record of the meeting at
which it was given is published;
information about the decision to revoke a direction where
information about the direction is withheld under paragraph
Publication under this section or section 9S is to be in such manner as
the Bank thinks fit.
Where the Financial Policy Committee decides under subsection (8)(b)
of section 9R that publication of information within the time required
by subsection (1) of that section would be against the public interest—
it must consider whether to fix a date as the earliest date on
which the information may be published, and
if it does not fix a date, it must keep under consideration the
question whether publication of the information would still be
against the public interest.
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—
fixes a date under subsection (1)(a) as the earliest date on which
any information may be published, or
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.
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.
(3) A financial stability report must include—
the Committee’s view of the stability of the UK financial system
at the time when the report is prepared,
an assessment of the developments that have influenced the
an assessment of the strengths and weaknesses of the UK
an assessment of risks to the stability of the UK financial system,
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the Committee’s view of the outlook for the stability of the UK
(4) A financial stability report must also include—
a summary of the activities of the Committee in the reporting
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.
The reporting period is the period since the date of the previous
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.
Nothing in subsection (3) or (4) is to be regarded as requiring the
Committee to include in a financial stability report any information
whose publication would in the Committee’s opinion be against the
The Committee must give a copy of each financial stability report to the
The Treasury must lay before Parliament a copy of each financial
Publication of a financial stability report is to be in such manner as the
Bank thinks fit.
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.
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.
Publication under subsection (2) is to be in such manner as the Treasury
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.
Before publishing the record of a meeting required by subsection (1), or
deciding under subsection (4) not to publish such a record, the
Treasury must consult the Bank about the record and its publication.
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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
of the Financial Stability Objective.
The Bank may give a direction to the FCA or the PRA (“the regulator”)
requiring the regulator—
to provide the Bank with specified information or information
of a specified description, or
to produce to the Bank specified documents or documents of a
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.
(4) Any information or documents to which the direction relates are—
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
virtue of subsection (4) of that section, and
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.
The information or documents must be provided or produced before
the end of such period as may be specified.
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—
any information provided, whether in a document or otherwise,
to be verified in such manner as it may require;
any document produced to be authenticated in such manner as
it may require.
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.
Before giving a direction under section 9V to the FCA or the PRA (“the
regulator”), the Bank must consult the regulator.
A direction under section 9V must be in writing, and may be revoked
by a notice in writing.
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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.
Subsection (4) does not require the publication of information whose
publication at the time required by that subsection would in the
opinion of the Bank be against the public interest.
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
publication is no longer against the public interest it must comply with
In this Part—
“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;
“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;
“the UK financial system” means the financial system of the
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.
The further amendments relating to the Financial Policy Committee in Part 2
of Schedule 1 have effect.
Sections 2B and 2C of the Bank of England Act 1998 (which relate to the
establishment and procedure of the Financial Stability Committee) are
Schedule 2 contains further amendments relating to the Bank of England.
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For sections 1 to 18 of the Financial Services and Markets Act 2000 (in this Act
referred to as “FSMA 2000”) substitute—
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”.
(3) The FCA is to have the functions conferred on it by or under this Act.
The FCA must comply with the requirements as to its constitution set
out in Schedule 1ZA.
Schedule 1ZA also makes provision about the status of the FCA and the
exercise of certain of its functions.
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
(c) the Financial Services Act 2012.
In discharging its general functions the FCA must, so far as is
reasonably possible, act in a way which—
(a) is compatible with its strategic objective, and
(b) advances one or more of its operational objectives.
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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(a) the consumer protection objective (see section 1C);
(b) the integrity objective (see section 1D);
(c) the competition objective (see section 1E).
The FCA must, so far as is compatible with acting in a way which
advances the consumer protection objective or the integrity objective,
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
the importance of taking action intended to minimise the extent
to which it is possible for a business carried on—
by an authorised person or a recognised investment
(ii) in contravention of the general prohibition,
to be used for a purpose connected with financial crime.
(6) For the purposes of this Chapter, the FCA’s general functions are—
its function of making rules under this Act (considered as a
its function of preparing and issuing codes under this Act
(considered as a whole),
its functions in relation to the giving of general guidance under
this Act (considered as a whole), and
its function of determining the general policy and principles by
reference to which it performs particular functions under this
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).
The consumer protection objective is: securing an appropriate degree of
protection for consumers.
In considering what degree of protection for consumers may be
appropriate, the FCA must have regard to—
the differing degrees of risk involved in different kinds of
investment or other transaction;
the differing degrees of experience and expertise that different
consumers may have;
the needs that consumers may have for the timely provision of
information and advice that is accurate and fit for purpose;
the general principle that consumers should take responsibility
for their decisions;
the general principle that those providing regulated financial
services should be expected to provide consumers with a level
of care that is appropriate having regard to the degree of risk
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involved in relation to the investment or other transaction and
the capabilities of the consumers in question;
any information which the consumer financial education body
has provided to the FCA in the exercise of the consumer
financial education function;
any information which the scheme operator of the ombudsman
scheme has provided to the FCA pursuant to section 232A.
The integrity objective is: protecting and enhancing the integrity of the
UK financial system.
(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,
its not being affected by behaviour that amounts to market
(d) the orderly operation of the financial markets, and
the transparency of the price formation process in those
The competition objective is: promoting effective competition in the
interests of consumers in the markets for—
(a) regulated financial services, or
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.
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—
the needs of different consumers who use or may use those
services, including their need for information that enables them
to make informed choices,
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.
In section 1B(2) “the relevant markets” means—
(a) the financial markets,
the markets for regulated financial services (see section 1H(2)),
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.
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(1) In sections 1B to 1E “consumers” means persons who—
(a) use, have used or may use—
(i) regulated financial services, or
services that are provided by persons other than
authorised persons but are provided in carrying on
have relevant rights or interests in relation to any of those
(c) have invested, or may invest, in financial instruments, or
have relevant rights or interests in relation to financial
A person (“P”) has a “relevant right or interest” in relation to any
services within subsection (1)(a) if P has a right or interest—
which is derived from, or is otherwise attributable to, the use of
the services by others, or
which may be adversely affected by the use of the services by
persons acting on P’s behalf or in a fiduciary capacity in relation
If a person is providing a service within subsection (1)(a) as trustee, the
persons who are, have been or may be beneficiaries of the trust are to
be treated as persons who use, have used or may use the service.
A person who deals with another person (“B”) in the course of B
providing a service within subsection (1)(a) is to be treated as using the
A person (“P”) has a “relevant right or interest” in relation to any
financial instrument if P has—
a right or interest which is derived from, or is otherwise
attributable to, investment in the instrument by others, or
a right or interest which may be adversely affected by the
investment in the instrument by persons acting on P’s behalf or
in a fiduciary capacity in relation to P.
The following provisions have effect for the interpretation of sections
1B to 1G.
(2) “Regulated financial services” means services provided—
(a) by authorised persons in carrying on regulated activities;
by authorised persons in carrying on a consumer credit
business in connection with the accepting of deposits;
by authorised persons in communicating, or approving the
communication by others of, invitations to engage in
by authorised persons who are investment firms, or credit
institutions, in providing relevant ancillary services;
(e) by persons acting as appointed representatives;
(f) by payment service providers in providing payment services;
(g) by electronic money issuers in issuing electronic money;
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(h) by sponsors to issuers of securities;
by primary information providers to persons who issue
(3) “Financial crime” includes any offence involving—
(a) fraud or dishonesty,
misconduct in, or misuse of information relating to, a financial
(c) handling the proceeds of crime.
“Offence” includes an act or omission which would be an offence if it
had taken place in the United Kingdom.
“Issuer”, except in the expression “electronic money issuer”, has the
meaning given in section 102A(6).
(6) “Financial instrument” has the meaning given in section 102A(4).
(7) “Securities” has the meaning given in section 102A(2).
(8) In this section—
“accepting”, in relation to deposits, includes agreeing to accept;
“consumer credit business” has the same meaning as in the
Consumer Credit Act 1974;
“credit institution” means—
a credit institution authorised under the banking
consolidation directive, or
an institution which would satisfy the requirements for
authorisation as a credit institution under that directive
if it had its registered office (or if it does not have a
registered office, its head office) in an EEA State;
“electronic money” has the same meaning as in the Electronic
Money Regulations 2011;
“electronic money issuer” means a person who is an electronic
money issuer as defined in regulation 2(1) of the Electronic
Money Regulations 2011 other than a person falling within
paragraph (f), (g) or (j) of the definition;
“engage in investment activity” has the meaning given in section
“financial instrument” has the meaning given in section 102A(4);
“payment services” has the same meaning as in the Payment
Services Regulations 2009;
“payment service provider” means a person who is a payment
service provider as defined in regulation 2(1) the Payment
Services Regulations 2009 other than a person falling within
paragraph (g) or (h) of the definition;
“primary information provider” has the meaning given in section
“relevant ancillary service” means any service of a kind mentioned
in Section B of Annex I to the markets in financial instruments
directive the provision of which does not involve the carrying
on of a regulated activity;
“sponsor” has the meaning given in section 88(2).