Financial Services Bill

Session 2012 - 13
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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;

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(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—

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Part 2 — Amendments of Financial Services and Markets Act 2000
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(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.

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Part 2 — Amendments of Financial Services and Markets Act 2000
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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

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

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(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
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(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 section 166A.
40
(5)
In this section—
“authorised person”, in relation to rules of the PRA, means a PRA-
authorised person;
“specified” means specified in the rules.