Financial Services Bill

Session 2012 - 13
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Financial Services Bill

Financial Services Bill
Schedule 14 — Amendments of Part 24 of FSMA 2000: insolvency
265

      (4)
For subsection (3) substitute—
“(3)
Subsection (2) does not apply where—
(a)
the administration arises out of an administration order
made on an application made or petition presented by a
regulator, and
5
(b)
the regulator’s application or petition depended on a
contravention by the company or partnership of the general
prohibition.”
      (5)
In the heading, for “Authority” substitute “FCA and PRA”.
8     (1)
Section 362 (powers to participate in proceedings: administration orders) is
10
amended as follows.
      (2)
In subsection (1), omit “other than the Authority”.
      (3)
After subsection (1A) insert—
“(1B)
This section also applies in relation to—
(a)
the appointment under paragraph 22 of Schedule B1 to the
15
1986 Act (as applied by order under section 420 of the 1986
Act), or under paragraph 23 of Schedule B1 to the 1989 Order
(as applied by order under Article 364 of the 1989 Order), of
an administrator of a partnership of a kind described in
subsection (1)(a) to (c), or
20
(b)
the filing with the court of a copy of notice of intention to
appoint an administrator under either of those paragraphs
(as so applied).”
      (4)
In subsections (2) to (6), for “Authority” substitute “appropriate regulator”,
      (5)
After subsection (6) insert—
25
“(7)
“The appropriate regulator” means—
(a)
for the purposes of subsections (2) to (4) and (6)—
(i)
where the company or partnership is a PRA-
regulated person, each of the FCA and the PRA, and
(ii)
in any other case, the FCA;
30
(b)
for the purposes of subsection (5)—
(i)
where the company or partnership is a PRA-
regulated person, the FCA or the PRA, and
(ii)
in any other case, the FCA.
(8)
But where the administration application was made by a regulator
35
“the appropriate regulator” does not include that regulator.”
      (6)
In the heading, for “Authority’s powers” substitute “Powers of FCA and
PRA”.
9     (1)
Section 362A (administrator appointed by company or directors) is
amended as follows.
40
      (2)
In subsection (1), after “company” insert “or partnership”.

Financial Services Bill
Schedule 14 — Amendments of Part 24 of FSMA 2000: insolvency
266

      (3)
For subsection (2) substitute—
“(2)
An administrator of the company or partnership may not be
appointed under a provision specified in subsection (2A) without the
consent of the appropriate regulator.
(2A)
Those provisions are—
5
(a)
paragraph 22 of Schedule B1 to the 1986 Act (including that
paragraph as applied in relation to partnerships by order
under section 420 of that Act);
(b)
paragraph 23 of Schedule B1 to the 1989 Order (including that
paragraph as applied in relation to partnerships by order
10
under article 364 of that Order).
(2B)
“The appropriate regulator” means—
(a)
where the company or partnership is a PRA-regulated
person, the PRA, and
(b)
in any other case, the FCA.”
15
10    (1)
Section 363 (powers to participate in proceedings: receivership) is amended
as follows.
      (2)
In subsections (2) to (5), for “Authority” substitute “appropriate regulator”.
      (3)
After subsection (5) insert—
“(6)
“The appropriate regulator” means—
20
(a)
for the purposes of subsections (2) to (4)—
(i)
where the company is a PRA-regulated person, each
of the FCA and the PRA, and
(ii)
in any other case, the FCA;
(b)
for the purposes of subsection (5)—
25
(i)
where the company is a PRA-regulated person, the
FCA or the PRA, and
(ii)
in any other case, the FCA.”
      (4)
In the heading, for “Authority’s powers” substitute “Powers of FCA and
PRA”.
30
11
In section 364 (receiver’s duty to report to Authority)—
(a)
for “to the Authority without delay” substitute “without delay to the
FCA and, if the regulated activity concerned is a PRA-regulated
activity, to the PRA”, and
(b)
in the heading, for “Authority” substitute “FCA and PRA”.
35
12    (1)
Section 365 (powers to participate in proceedings: voluntary winding up) is
amended as follows.
      (2)
In subsections (2) to (7), for “Authority” substitute “appropriate regulator”.
      (3)
After subsection (7) insert—
“(8)
“The appropriate regulator” means—
40
(a)
for the purposes of subsections (2) to (4), (6) and (7)—
(i)
where the company is a PRA-authorised person, each
of the FCA and the PRA, and
(ii)
in any other case, the FCA;

Financial Services Bill
Schedule 14 — Amendments of Part 24 of FSMA 2000: insolvency
267

(b)
for the purposes of subsection (5)—
(i)
where the company is a PRA-authorised person, the
FCA or the PRA, and
(ii)
in any other case, the FCA.”
      (4)
In the heading, for “Authority’s powers” substitute “Powers of FCA and
5
PRA”.
13    (1)
Section 366 (insurers effecting or carrying out long-term contracts of
insurance) is amended as follows.
      (2)
In subsections (1), (2) and (5), for “Authority” substitute “PRA”.
      (3)
At the end insert—
10
“(9)
Before giving or refusing consent under subsection (1), the PRA must
consult the FCA.
(10)
In the event that the activity of effecting or carrying out long-term
contracts of insurance as principal is not to any extent a PRA-
regulated activity—
15
(a)
references to the PRA in subsections (1), (2) and (5) are to be
read as references to the FCA, and
(b)
subsection (9) does not apply.”
14    (1)
Section 367 (winding-up petitions) is amended as follows.
      (2)
In subsection (1), for “Authority” substitute “FCA”.
20
      (3)
After that subsection insert—
“(1A)
The PRA may present a petition to the court for the winding up of a
body which is a PRA-regulated person.”
      (4)
In subsection (2), for “subsection (1)” substitute “subsections (1) and (1A)”.
      (5)
In subsection (6), after “(1)” insert “or (1A)”.
25
15    (1)
Section 368 (winding-up petitions: EEA and Treaty firms) is amended as
follows.
      (2)
The existing provision becomes subsection (1).
      (3)
In that subsection—
(a)
for “The Authority” substitute “A regulator”, and
30
(b)
after “it” insert “or the other regulator”.
      (4)
After that subsection insert—
“(2)
If a regulator receives from the home state regulator of a body falling
within subsection (1)(a) or (b) a request to present a petition to the
court under section 367 for the winding up of the body, it must—
35
(a)
notify the other regulator of the request, and
(b)
provide the other regulator with such information relating to
the request as it thinks fit.”
16    (1)
Section 369 (insurers: service of petition etc. on Authority) is amended as
follows.
40
      (2)
In subsection (1)—

Financial Services Bill
Schedule 14 — Amendments of Part 24 of FSMA 2000: insolvency
268

(a)
for “the Authority” substitute “a regulator”, and
(b)
for “on the Authority” substitute “on the appropriate regulator”.
      (3)
In subsection (2)—
(a)
for “the Authority” substitute “a regulator”, and
(b)
for “on the Authority” substitute “on the appropriate regulator”.
5
      (4)
After that subsection insert—
“(3)
“The appropriate regulator” means—
(a)
in relation to a PRA-authorised person, the FCA and the PRA,
and
(b)
in any other case, the FCA.
10
(4)
If either regulator—
(a)
presents a petition for the winding up of a PRA-authorised
person with permission to effect or carry out contracts of
insurance, or
(b)
applies to have a provisional liquidator appointed under
15
section 135 of the 1986 Act (or Article 115 of the 1989 Order)
in respect of a PRA-authorised person with permission to
effect or carry out contracts of insurance,

that regulator must serve a copy of the petition or application (as the
case requires) on the other regulator.”
20
      (5)
In the heading, for “Authority” substitute “FCA and PRA”.
17    (1)
Section 369A (reclaim funds: service of petition etc. on Authority) is
amended as follows.
      (2)
In subsection (1)—
(a)
for “other than the Authority” substitute “other than a regulator”,
25
and
(b)
for “on the Authority” substitute “on the appropriate regulator”.
      (3)
In subsection (2)—
(a)
for “other than the Authority” substitute “other than a regulator”,
and
30
(b)
for “on the Authority” substitute “on the appropriate regulator”.
      (4)
After subsection (3) insert—
“(4)
“The appropriate regulator” means—
(a)
in relation to an authorised reclaim fund that is a PRA-
authorised person, the FCA and the PRA, and
35
(b)
in relation to any other authorised reclaim fund, the FCA.
(5)
If either regulator—
(a)
presents a petition for the winding up of an authorised
reclaim fund that is a PRA-authorised person, or
(b)
applies to have a provisional liquidator appointed under
40
section 135 of the 1986 Act (or Article 115 of the 1989 Order)
in respect of an authorised reclaim fund that is a PRA-
authorised person,

that regulator must serve a copy of the petition or application (as the
case requires) on the other regulator.”
45

Financial Services Bill
Schedule 14 — Amendments of Part 24 of FSMA 2000: insolvency
269

      (5)
In the heading, for “Authority” substitute “FCA and PRA”.
18    (1)
Section 370 (liquidator’s duty to report to Authority) is amended as follows.
      (2)
The existing provision becomes subsection (1).
      (3)
In subsection (1)—
(a)
in paragraph (a), for “a person other than the Authority” substitute
5
“any person”, and
(b)
in paragraph (b), for “to the Authority without delay” substitute
“without delay to the FCA and, if the regulated activity concerned is
a PRA-regulated activity, to the PRA”.
      (4)
After that subsection insert—
10
“(2)
Subsection (1) does not apply where—
(a)
a body is being wound up on a petition presented by a
regulator, and
(b)
the regulator’s petition depended on a contravention by the
body of the general prohibition.”
15
      (5)
In the heading, for “Authority” substitute “FCA and PRA”.
19    (1)
Section 371 (power to participate in proceedings: winding up by the court)
is amended as follows.
      (2)
In subsection (1), omit “other than the Authority”.
      (3)
In subsections (2) to (5), for “Authority” substitute “appropriate regulator”.
20
      (4)
After subsection (5) insert—
“(6)
“The appropriate regulator” means—
(a)
for the purposes of subsections (2), (3) and (5)—
(i)
where the body is a PRA-regulated person, each of
the FCA and the PRA, and
25
(ii)
in any other case, the FCA;
(b)
for the purposes of subsection (4)—
(i)
where the body is a PRA-regulated person, the FCA
or the PRA, and
(ii)
in any other case, the FCA.
30
(7)
But where the petition was presented by a regulator “the appropriate
regulator” does not include the regulator which presented the
petition.”
      (5)
In the heading, for “Authority’s powers” substitute “Powers of FCA and
PRA”.
35
20    (1)
Section 372 (bankruptcy petitions) is amended as follows.
      (2)
In subsection (1), for “Authority” substitute “FCA”.
      (3)
After that subsection insert—
“(1A)
The PRA may present a petition to the court—
(a)
under section 264 of the 1986 Act (or Article 238 of the 1989
40
Order) for a bankruptcy order to be made against an
individual who is a PRA-regulated person;

Financial Services Bill
Schedule 14 — Amendments of Part 24 of FSMA 2000: insolvency
270

(b)
under section 5 of the 1985 Act for the sequestration of the
estate of an individual who is a PRA-regulated person.”
      (4)
In subsection (2), for “such a petition may be presented” substitute “a
petition may be presented by virtue of subsection (1) or (1A)”.
      (5)
In subsection (4)(a)—
5
(a)
for “the Authority”, in the first place, substitute “a regulator”, and
(b)
for “the Authority”, in the second place, substitute “that regulator”.
      (6)
In subsection (6)—
(a)
after “(1)(b)” insert “or (1A)(b)”, and
(b)
in paragraph (a), for “the Authority” substitute “the regulator by
10
which the petition is presented”.
21    (1)
Section 373 (insolvency practitioner’s duty to report to Authority) is
amended as follows.
      (2)
In subsection (1)—
(a)
in paragraph (a), omit the words from “by virtue of” to “Authority”,
15
and
(b)
for “to the Authority without delay” substitute “without delay to the
FCA and, if the regulated activity concerned is a PRA-regulated
activity, to the PRA”.
      (3)
After that subsection insert—
20
“(1A)
Subsection (1) does not apply where—
(a)
the bankruptcy order or sequestration award is in force by
virtue of a petition presented by a regulator, and
(b)
the regulator’s petition depended on a contravention by the
individual of the general prohibition.”
25
      (4)
In the heading, for “to Authority” substitute “to FCA and PRA”.
22    (1)
Section 374 (Authority’s powers to participate in proceedings: bankruptcy)
is amended as follows.
      (2)
In subsection (1), omit “other than the Authority”.
      (3)
In subsections (2) to (4), for “Authority” substitute “appropriate regulator”.
30
      (4)
After subsection (6) insert—
“(7)
“The appropriate regulator” means—
(a)
for the purposes of subsections (2) and (3)—
(i)
where the individual or entity is a PRA-regulated
person, each of the FCA and the PRA, and
35
(ii)
in any other case, the FCA;
(b)
for the purposes of subsection (4)—
(i)
where the individual or entity is a PRA-regulated
person, the FCA or the PRA, and
(ii)
in any other case, the FCA.
40
(8)
But where the petition was presented by a regulator “the appropriate
regulator” does not include the regulator which presented the
petition.”

Financial Services Bill
Schedule 15 — The consumer financial education body
271

      (5)
In the heading, for “Authority’s powers” substitute “Powers of FCA or
PRA”.
23    (1)
Section 375 (Authority’s right to apply for an order relating to debt
avoidance) is amended as follows.
      (2)
In subsection (1), for “Authority” substitute “FCA”.
5
      (3)
After subsection (1) insert—
“(1A)
The PRA may apply for an order under section 423 of the 1986 Act
(or Article 367 of the 1989 Order) in relation to a debtor if—
(a)
at the time the transaction at an undervalue was entered into,
the debtor was carrying on a PRA-regulated activity
10
(whether or not in contravention of the general prohibition);
and
(b)
a victim of the transaction is or was party to an agreement
entered into with the debtor, the making or performance of
which constituted or was part of a PRA-regulated activity
15
carried on by the debtor.”
      (4)
In subsection (2), after “subsection (1)(b)” insert “or subsection (1A)(b) (as
the case may be)”.
      (5)
In the heading, for “Authority’s right” substitute “Right of FCA and PRA”.
24    (1)
Section 376 (continuation of contracts of long-term insurance where insurer
20
in liquidation) is amended as follows.
      (2)
In subsection (11)(c), for “Authority” substitute “PRA”.
      (3)
After subsection (11) insert—
“(11A)
The PRA must—
(a)
consult the FCA before making an application under
25
subsection (10), and
(b)
provide the FCA with a copy of any actuary’s report made to
the PRA under that subsection.
(11B)
In the event that the activity of effecting or carrying out long-term
contracts of insurance as principal is not to any extent a PRA-
30
authorised activity—
(a)
the reference in subsection (11)(c) to the PRA is to be read as
a reference to the FCA, and
(b)
subsection (11A) does not apply.”
Schedule 15
35
Section 42

The consumer financial education body
1
Schedule 1A (further provision about the consumer financial education
body) is amended as follows.
2
In paragraph 1 (ensuring exercise of functions) for “Authority”, in each
place, substitute “FCA”.
40