Financial Services Bill

Session 2012 - 13
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Financial Services Bill

Financial Services Bill
Schedule 12 — Amendments of Parts 11 and 23 of FSMA 2000
Part 1 — Part 11 of FSMA 2000: information gathering and investigations
251

(a)
in subsections (1) to (3), the FCA, the PRA or the Secretary of
State;
(b)
in subsections (4) and (5), the FCA or the PRA.”
9     (1)
Section 169 (investigations at the request of an overseas regulator) is
amended as follows.
5
      (2)
In subsection (1), for “the Authority” substitute “a regulator”.
      (3)
In subsections (3) and (4), in each place, for “Authority” substitute
“regulator”.
      (4)
In subsection (5), in each place, for “Authority” substitute “regulator”.
      (5)
In subsection (6), for “Authority” substitute “regulator”.
10
      (6)
In subsection (7), for “the Authority” substitute “a regulator”.
      (7)
In subsection (8), for “Authority” substitute “regulator”,
      (8)
In subsection (9), for “The Authority” substitute “Each regulator”.
      (9)
In subsection (11), for “Authority” substitute “regulator”.
10
In section 169A (supporting an overseas regulator regarding financial
15
stability), in subsection (1), for “Authority” substitute “PRA”.
11
In section 170 (investigations: general), in subsection (10), for paragraphs (a)
and (b) substitute—
“(a)
the FCA, if the FCA appointed the investigator;
(aa)
the PRA, if the PRA appointed the investigator;
20
(b)
the Secretary of State, if the Secretary of State appointed the
investigator.”
12
In section 174 (admissibility of statements to investigators), in subsection (2),
for “the Authority” substitute “a regulator”.
13    (1)
Section 175 (information and documents: supplemental) is amended as
25
follows.
      (2)
In subsection (1), for “the Authority” substitute “either regulator”.
      (3)
After subsection (2) insert—
“(2A)
A document so produced may be retained for so long as the person
to whom it is produced considers that it is necessary to retain it
30
(rather than copies of it) for the purposes for which the document
was requested.
(2B)
If the person to whom a document is so produced has reasonable
grounds for believing—
(a)
that the document may have to be produced for the purposes
35
of any legal proceedings, and
(b)
that it might otherwise be unavailable for those purposes,

it may be retained until the proceedings are concluded.”
      (4)
In subsection (3), for “Authority” substitute “regulator”.
14    (1)
Section 176 (entry of premises under warrant) is amended as follows.
40
      (2)
In subsection (1), for “the Authority” substitute “either regulator”.

Financial Services Bill
Schedule 12 — Amendments of Parts 11 and 23 of FSMA 2000
Part 2 — Part 23 of FSMA 2000: public record, disclosure of information and co-operation
252

      (3)
After subsection (5) insert—
“(5A)
A warrant under this section may be executed by any constable.
(5B)
The warrant may authorise persons to accompany any constable
who is executing it.
(5C)
The powers in subsection (5) may be exercised by a person
5
authorised by the warrant to accompany a constable; but that person
may exercise those powers only in the company of, and under the
supervision of, a constable.”
      (4)
In subsection (6), for “16” substitute “16(3) to (12)”.
      (5)
In subsection (7), for “18” substitute “18(3) to (12)”.
10
      (6)
Omit subsection (8).
      (7)
In subsection (11), in paragraph (a), for “the Authority” substitute “a
regulator”.
15
After section 176 insert—
“176A
Retention of documents taken under section 176
15
(1)
Any document of which possession is taken under section 176 (“a
seized document”) may be retained so long as it is necessary to retain
it (rather than copies of it) in the circumstances.
(2)
A person claiming to be the owner of a seized document may apply
to a magistrates’ court or (in Scotland) the sheriff for an order for the
20
delivery of the document to the person appearing to the court or
sheriff to be the owner.
(3)
If on an application under subsection (2) the court or (in Scotland) the
sheriff cannot ascertain who is the owner of the seized document the
court or sheriff (as the case may be) may make such order as the court
25
or sheriff thinks fit.
(4)
An order under subsection (2) or (3) does not affect the right of any
person to take legal proceedings against any person in possession of
a seized document for the recovery of the document.
(5)
Any right to bring proceedings (as described in subsection (4)) may
30
only be exercised within 6 months of the date of the order made
under subsection (2) or (3).”
Part 2
Part 23 of FSMA 2000: public record, disclosure of information and co-
operation
35
16    (1)
Section 347 (record of authorised persons) is amended as follows.
      (2)
In subsections (1) to (6), for “Authority”, in each place, substitute “FCA”.
      (3)
Omit subsection (1)(f).
      (4)
In subsection (2), in paragraph (e)—
(a)
omit “or recognised clearing house,”, and
40

Financial Services Bill
Schedule 12 — Amendments of Parts 11 and 23 of FSMA 2000
Part 2 — Part 23 of FSMA 2000: public record, disclosure of information and co-operation
253

(b)
omit “or clearing house”.
      (5)
In subsection (8), for “Authority” substitute “FCA or the PRA”.
17
After section 347 insert—
“347A
Duty of PRA to disclose information relevant to the record
(1)
The PRA must, for the purpose of assisting the FCA to comply with
5
its duty under section 347—
(a)
notify the FCA if the information included in the record as
required under section 347(2)(a) appears to the PRA to be
incomplete or inaccurate,
(b)
if it makes a prohibition order relating to an individual,
10
provide the FCA with information falling within section
347(2)(f) in relation to that order,
(c)
where it is the appropriate regulator in relation to an
approved person, provide the FCA with information falling
within section 347(2)(g) in relation to that approved person,
15
and
(d)
where the FCA has notified the PRA that it considers it
appropriate to include in the record information of a certain
description, disclose to the FCA such information of that
description as the PRA has in its possession.
20
(2)
The duty to provide information under this section does not apply to
information which the PRA reasonably believes is in the possession
of the FCA.
(3)
Subsection (1) does not require or authorise the disclosure of
information whose disclosure is prohibited by or under section 348.
25
(4)
This section is without prejudice to any other power to disclose
information.
(5)
In this section references to the “record” are to the record maintained
under section 347.”
18    (1)
Section 348 (restrictions on disclosure of information) is amended as follows.
30
      (2)
In subsection (2)(b)—
(a)
for “Authority” substitute “FCA, the PRA”, and
(b)
omit “, the competent authority for the purposes of Part VI”.
      (3)
In subsection (5)—
(a)
for paragraph (a) substitute—
35
“(a)
the FCA;
(aa)
the PRA;”,
(b)
omit paragraph (b),
(c)
in paragraph (d), for “139E” substitute “166A”, and
(d)
after paragraph (e) insert—
40
“(ea)
a person who is or has been engaged to provide
services to a person mentioned in those paragraphs;”.
      (4)
In subsection (6)—
(a)
in paragraph (a), for “the competent authority” substitute “the FCA”,
(b)
in paragraph (b), for “Authority” substitute “FCA, the PRA”, and
45

Financial Services Bill
Schedule 12 — Amendments of Parts 11 and 23 of FSMA 2000
Part 2 — Part 23 of FSMA 2000: public record, disclosure of information and co-operation
254

(c)
omit paragraph (c).
      (5)
In the heading for “Authority” substitute “FCA, PRA”.
19    (1)
Section 349 (exceptions from section 348) is amended as follows.
      (2)
In subsection (2)(c), for “Authority” substitute “FCA or the PRA”.
      (3)
In subsection (3A)(a), for “Authority” substitute “FCA or the PRA”.
5
      (4)
In subsection (3B)(c), for “Authority’s functions” substitute “functions of the
FCA or the PRA”.
20    (1)
Section 350 (disclosure of information by HMRC) is amended as follows.
      (2)
For subsection (1) substitute—
“(1)
No obligation as to secrecy imposed by statute or otherwise prevents
10
the disclosure of Revenue information to—
(a)
the FCA or the PRA, if the disclosure is made for the purpose
of assisting or enabling that regulator to discharge its
functions under this or any other Act, or
(b)
the Secretary of State, if the disclosure is made for the
15
purpose of assisting in the investigation of a matter under
section 168 or with a view to the appointment of an
investigator under that section.”
      (3)
In subsection (4), for “subsection (1)” substitute “subsection (1)(b)”.
      (4)
In subsection (5)(b), at the beginning insert “where the information is
20
obtained as a result of subsection (1)(b),”.
21
Omit section 351 (competition information).
22
In section 351A (disclosure under the UCITS directive), in subsection (1), for
“the Authority” substitute “the FCA or the PRA”.
23    (1)
In section 353 (removal of other restrictions on disclosure), in subsection
25
(1)(b)—
(a)
for “Authority”, in the first place, substitute “FCA or the PRA”, and
(b)
for “Authority”, in the second place, substitute “either of them”.
24
After section 353 insert—
“Information received from Bank of England
30
353A
Information received from Bank of England
(1)
A regulator must not disclose to any person specially protected
information.
(2)
“Specially protected information” is information in relation to which
the first and second conditions are met.
35
(3)
The first condition is that the regulator received the information
from—
(a)
the Bank of England (“the Bank”), or
(b)
the other regulator where that regulator had received the
information from the Bank.
40

Financial Services Bill
Schedule 12 — Amendments of Parts 11 and 23 of FSMA 2000
Part 2 — Part 23 of FSMA 2000: public record, disclosure of information and co-operation
255

(4)
The second condition is that the Bank notified the regulator to which
it disclosed the information that the Bank held the information for
the purpose of its functions with respect to any of the following—
(a)
monetary policy;
(b)
financial operations intended to support financial
5
institutions for the purposes of maintaining stability;
(c)
the provision of private banking services and related
services.
(5)
The notification referred to in subsection (4) must be—
(a)
in writing, and
10
(b)
given before, or at the same time as, the Bank discloses the
information.
(6)
The prohibition in subsection (1) does not apply—
(a)
to disclosure by one regulator to the other regulator where
the regulator making the disclosure informs the other
15
regulator that the information is specially protected
information by virtue of this section;
(b)
where the Bank has consented to disclosure of the
information;
(c)
to information which has been made available to the public
20
by virtue of being disclosed in any circumstances in which, or
for any purposes for which, disclosure is not precluded by
this section;
(d)
to information which the regulator is required to disclose in
pursuance of any EU obligation.
25
(7)
In this section references to disclosure by or to a regulator or by the
Bank include references to disclosure by or to—
(a)
persons who are, or are acting as,—
(i)
officers of, members of the staff of, or members of the
governing body of, the regulator, or
30
(ii)
directors, officers, employees or agents of the Bank, or
(b)
auditors, experts, contractors or investigators appointed by
the regulator or the Bank under powers conferred by this Act
or otherwise.
(8)
References to disclosure by a regulator do not include references to
35
disclosure between persons who fall within any paragraph of
subsection (7)(a) or (b) in relation to that regulator.
(9)
Each regulator must take such steps as are reasonable in the
circumstances to prevent the disclosure of specially protected
information, in cases not excluded by subsection (6), by those who
40
are or have been—
(a)
its officers or members of staff (including persons acting as its
officers or members of staff) or members of its governing
body;
(b)
auditors, experts, contractors or investigators appointed by
45
the regulator under powers conferred by this Act or
otherwise;
(c)
persons to whom the regulator has delegated any of its
functions.”

Financial Services Bill
Schedule 12 — Amendments of Parts 11 and 23 of FSMA 2000
Part 2 — Part 23 of FSMA 2000: public record, disclosure of information and co-operation
256

25
For section 354 substitute—
“354A
  FCA’s duty to co-operate with others
(1)
The FCA must take such steps as it considers appropriate to co-
operate with other persons (whether in the United Kingdom or
elsewhere) who have functions—
5
(a)
similar to those of the FCA, or
(b)
in relation to the prevention or detection of financial crime.
(2)
The persons referred to in subsection (1) do not include the Bank of
England or the PRA (but see sections 3D and 3P).
(3)
The FCA must take such steps as it considers appropriate to co-
10
operate with—
(a)
the Panel on Takeovers and Mergers;
(b)
an authority designated as a supervisory authority for the
purposes of Article 4.1 of the Takeovers Directive;
(c)
any other person or body that exercises functions of a public
15
nature, under legislation in any country or territory outside
the United Kingdom, that appear to the FCA to be similar to
those of the Panel on Takeovers and Mergers.
(4)
Co-operation may include the sharing of information which the FCA
is not prevented from disclosing.
20
(5)
“Financial crime” has the meaning given in section 1H(3).
354B
PRA’s duty to co-operate with others
(1)
The PRA must take such steps as it considers appropriate to co-
operate with—
(a)
other persons (whether in the United Kingdom or elsewhere)
25
who have functions similar to those of the PRA, and
(b)
other bodies that have functions relevant to financial
stability.
(2)
The persons referred to in subsection (1) do not include the Bank of
England or the FCA (but see sections 3D and 3P).
30
(3)
Co-operation may include the sharing of information which the PRA
is not prevented from disclosing.
354C
PRA’s duty to provide information to Bank of England
(1)
The PRA must disclose to the Bank of England (“the Bank”) any
information in its possession that it thinks will or may assist the Bank
35
in achieving its financial stability objective.
(2)
The duty in subsection (1) applies whether or not the Bank has
requested that the information be disclosed to it.
(3)
Subsection (1) does not require or authorise the disclosure of
information whose disclosure—
40
(a)
is prohibited by or under section 348 or any other enactment;
(b)
is incompatible with any EU obligation;
(c)
would constitute or be punishable as a contempt of court.

Financial Services Bill
Schedule 13 — Auditors and actuaries
257

(4)
This section is without prejudice to any other power to disclose
information.
(5)
The Bank’s financial stability objective is the objective set out in
section 2A(1) of the Bank of England Act 1998.
(6)
In this section “enactment” includes—
5
(a)
an Act of the Scottish Parliament,
(b)
Northern Ireland legislation, and
(c)
a Measure or Act of the National Assembly for Wales.”
Schedule 13
Section 39

Auditors and actuaries
10
1
FSMA 2000 is amended as follows.
2     (1)
Section 340 (appointment) is amended as follows.
      (2)
In subsection (1), for “Rules may require” substitute “The appropriate
regulator may make rules requiring”.
      (3)
In subsection (2), for “Rules may require” substitute “The appropriate
15
regulator may make rules requiring”.
      (4)
In subsection (3), for “Rules may impose” substitute “The appropriate
regulator may make rules imposing”.
      (5)
In subsection (4), for “Authority”, in each place, substitute “regulator
making the rules”.
20
      (6)
After subsection (5) insert—
“(5A)
In subsections (1) and (2) “the appropriate regulator” means—
(a)
in the case of a PRA-authorised person, the PRA;
(b)
in any other case, the FCA.
(5B)
In subsection (3) “the appropriate regulator” means—
25
(a)
in the case of an auditor of, or an actuary acting for, a PRA-
authorised person, the PRA or the FCA;
(b)
in any other case, the FCA.”
      (7)
After subsection (7) insert—
“(8)
The powers conferred by this section enable only the making of such
30
rules as appear to the regulator making them to be necessary or
expedient—
(a)
in the case of the FCA, for the purpose of advancing one or
more of its operational objectives, or
(b)
in the case of the PRA, for the purpose of advancing any of its
35
objectives.”
3     (1)
Section 342 (information given by auditor or actuary) is amended as follows.
      (2)
In subsection (1), after “authorised person” insert “or recognised investment
exchange,”.