Financial Services Bill (HC Bill 2)

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(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) 5In subsection (4)(a)—

(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) 10in paragraph (a), for “the Authority” substitute “the regulator by
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) 15in paragraph (a), omit the words from “by virtue of” to “Authority”,
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) 20After that subsection insert—

(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
25individual of the general prohibition.

(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) 30In subsections (2) to (4), for “Authority” substitute “appropriate regulator”.

(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
35person, each of the FCA and the PRA, and

(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) 40in any other case, the FCA.

(8) But where the petition was presented by a regulator “the appropriate
regulator” does not include the regulator which presented the
petition.

Financial Services BillPage 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) 5In subsection (1), for “Authority” substitute “FCA”.

(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,
10the debtor was carrying on a PRA-regulated activity
(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
15which constituted or was part of a PRA-regulated activity
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) 20Section 376 (continuation of contracts of long-term insurance where insurer
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) 25consult the FCA before making an application under
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
30contracts of insurance as principal is not to any extent a PRA-
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.

Section 42

35SCHEDULE 15 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
40place, substitute “FCA”.

Financial Services BillPage 272

3 In paragraph 2 (constitution) for “Authority”, in each place, substitute
“FCA”.

4 In paragraph 4 (discharge of functions by others), in sub-paragraph (1)(a),
for “section 6A(1)” substitute “section 3R(3)”.

5 5In paragraph 5 in sub-paragraph (1), for “section 6A(1)” substitute “section
3R(3)”.

6 For paragraph 6 (and the italic heading before it) substitute—

Discharge of functions: considerations

6 10In discharging the consumer financial education function the
consumer financial education body must have regard to the duty
of the FCA to advance its operational objectives.

Relationship with the FCA

6A (1) 15The consumer financial education body and the FCA must each
take such steps as it considers appropriate to co-operate with the
other in the exercise of their functions under this Act.

(2) The consumer financial education body and the FCA must
prepare and maintain a memorandum describing how they intend
20to comply with sub-paragraph (1).

(3) The consumer financial education body must ensure that the
memorandum as currently in force is published in the way
appearing to it to be best calculated to bring it to the attention of
the public.

6B 25If the consumer financial education body considers that it has
information that, in its opinion, would or might be of assistance to
the FCA in advancing one or more of the FCA’s operational
objectives, it must disclose that information to the FCA.

7 In paragraph 7 (budget) for “Authority”, in each place, substitute “FCA”.

8 30In paragraph 8 (annual plan)—

(a) for “Authority”, in each place, substitute “FCA”, and

(b) in sub-paragraph (6), after paragraph (d) insert—

(da) the Smaller Business Practitioner Panel;.

9 In paragraph 9 (annual reports)—

(a) 35for “Authority”, in each place, substitute “FCA”, and

(b) at the end insert—

(5) The Treasury may—

(a) require the consumer financial education body to
comply with any provision of the Companies Act
402006 about accounts and their audit which would
not otherwise apply to it, or

(b) direct that any provision of that Act about accounts
and their audit is to apply to the consumer financial
education body with such modifications as are

Financial Services BillPage 273

specified in the direction, whether or not the
provision would otherwise apply to it.

(6) Compliance with any requirement under sub-paragraph
(5)(a) or (b) is enforceable by injunction or, in Scotland, an
5order for specific performance under section 45 of the
Court of Session Act 1988.

(7) Proceedings under sub-paragraph (6) may be brought only
by the Treasury.

10 After paragraph 9 insert—

10

Audit of accounts

9A (1) The consumer financial education body must send a copy of its
annual accounts to the Comptroller and Auditor General and the
Treasury as soon as is reasonably practicable.

(2) 15The Comptroller and Auditor General must—

(a) examine, certify and report on accounts received under
this paragraph, and

(b) send a copy of the certified accounts and the report to the
Treasury.

(3) 20The Treasury must lay the copy of the certified accounts and the
report before Parliament.

(4) The consumer financial education body must send a copy of the
certified accounts and the report to the FCA.

(5) Except as provided for by paragraph 9(5), the consumer financial
25education body is exempt from the requirements of Part 16 of the
Companies Act 2006 (audit) and its balance sheet must contain a
statement to that effect.

(6) In this paragraph “annual accounts” has the meaning given by
section 471 of the Companies Act 2006.

11 30In paragraph 11 (meaning of “relevant costs”) for “Authority” substitute
“FCA”.

12 In paragraph 12 (funding) for “Authority”, in each place, substitute “FCA”.

13 In paragraph 13 (funding by consumer credit licensees), in sub-paragraph
(5)(a), for “Authority” substitute “FCA”.

14 35In paragraph 15 (reviews of use of resources), for “Authority”, in each place,
substitute “FCA”.

15 In the title to the Schedule, in the marginal reference, for “Section 6A”
substitute “Section 3R”.

Financial Services BillPage 274

Section 43

SCHEDULE 16 Provision of financial services by members of the professions

1 In section 325 (general duty)—

(a) for “Authority”, in each place, substitute “FCA”, and

(b) 5in the heading, for “Authority’s” substitute “FCA’s”.

2 In section 328 (directions relating to the general prohibition), for
“Authority”, in each place, substitute “FCA”.

3 In section 329 (orders relating to the general prohibition), for “Authority”, in
each place, substitute “FCA”.

4 10In section 330 (consultation)—

(a) for “Authority”, in each place, substitute “FCA”, and

(b) for subsection (10) substitute—

(10) Cost benefit analysis” means—

(a) an analysis of the costs together with an analysis of
15the benefits that will arise—

(i) if the proposed direction is given, or

(ii) if subsection (5)(b) applies, from the direction
that has been given, and

(b) subject to subsection (10A), an estimate of those costs
20and of those benefits.

(10A) If, in the opinion of the FCA—

(a) the costs or benefits referred to in subsection (10)
cannot reasonably be estimated, or

(b) it is not reasonably practicable to produce an
25estimate,

the cost benefit analysis need not estimate them, but must
include a statement of the FCA’s opinion and an explanation
of it.

5 In section 331 (procedure for making orders), for “Authority”, in each place,
30substitute “FCA”.

6 In section 332 (rules relating to persons to whom the general prohibition
does not apply), for “Authority”, in each place, substitute “FCA”.

Section 90

SCHEDULE 17 Amendments of Banking Act 2009 related to Part 2 of this Act

35Part 1 Amendments of Part 1 of the Act

1 Part 1 of the Banking Act 2009 is amended as follows.

Financial Services BillPage 275

2 (1) Section 1 (overview) is amended as follows.

(2) In subsection (5), for paragraph (c) and the “and” before it, substitute—

(c) the Prudential Regulation Authority, and

(d) the Financial Conduct Authority.

(3) 5In the Table, after the entry relating to sections 82 and 83, insert—

Section 83A Banks not regulated by the PRA.

3 In section 2 (interpretation: “bank”), for “Part 4” substitute “Part 4A”.

4 In section 3 (interpretation: other expressions), for the definition of “the
FSA” and the “and” following it, substitute—

  • 10“the PRA” means the Prudential Regulation Authority,

  • “the FCA” means the Financial Conduct Authority, and.

5 In section 4 (special resolution objectives), in subsection (3), for paragraph
(b) and the “and” following it, substitute—

(b) the PRA,

(ba) 15the FCA, and.

6 In section 5 (code of practice), in subsection (5), for paragraph (b) and the
“and” following it, substitute—

(b) the PRA,

(ba) the FCA, and.

7 (1) 20Section 6 (code of practice: procedure) is amended as follows.

(2) Omit subsections (1) and (2).

(3) For subsection (4) substitute—

(4) Before re-issuing the code of practice the Treasury must consult—

(a) the PRA,

(b) 25the FCA,

(c) the Bank of England, and

(d) the scheme manager of the Financial Services Compensation
Scheme (established under Part 15 of the Financial Services
and Markets Act 2000).

(5) 30As soon as is reasonably practicable after re-issuing the code of
practice the Treasury shall lay a copy before Parliament.

8 (1) Section 7 (general conditions) is amended as follows.

(2) In subsection (1), for “FSA” substitute “PRA”.

(3) In subsection (2), omit the words from “(within” to the end.

(4) 35In subsection (4), for “FSA” substitute “PRA”.

(5) After that subsection insert—

(4A) The threshold conditions” means the threshold conditions, as
defined by subsection (1) of section 55B of the Financial Services and

Financial Services BillPage 276

Markets Act 2000, for which the PRA is treated as responsible under
subsection (2) of that section.

(6) In subsection (5)—

(a) for “FSA” substitute “PRA”, and

(b) 5at the end of paragraph (a) insert—

(aa) the FCA,.

9 In section 8 (specific conditions: private sector purchaser and bridge bank),
in subsection (3), for paragraph (a) and the “and” following it, substitute—

(a) the PRA,

(aa) 10the FCA, and.

10 In section 9 (specific conditions: temporary public ownership), in subsection
(4), for paragraph (a) and the “and” following it, substitute—

(a) the PRA,

(aa) the FCA, and.

11 15In section 10 (Banking Liaison Panel), in subsection (3), for paragraph (c)
substitute—

(c) a member appointed by the PRA,

(ca) a member appointed by the FCA,.

12 In section 24 (procedure: instruments), in subsection (1), for paragraph (c)
20and the “and” following it, substitute—

(c) the PRA,

(ca) the FCA, and.

13 In section 25 (procedure: orders), in subsection (2), for paragraph (c) and the
“and” following it, substitute—

(c) 25the PRA,

(ca) the FCA, and.

14 In section 26 (supplemental instruments), in subsection (5), for paragraph (a)
and the “and” following it, substitute—

(a) the PRA,

(aa) 30the FCA, and.

15 In section 27 (supplemental orders), in subsection (5), for paragraph (a) and
the “and” following it, substitute—

(a) the PRA,

(aa) the FCA, and.

16 35In section 28 (onward transfer), in subsection (6), for paragraph (a) and the
“and” following it, substitute—

(a) the PRA,

(aa) the FCA, and.

17 In section 29 (reverse share transfer), in subsection (6), for paragraph (a) and
40the “and” following it, substitute—

(a) the PRA,

(aa) the FCA, and.

18 In section 30 (bridge bank: share transfers), in subsection (5), for paragraph

Financial Services BillPage 277

(a) and the “and” following it, substitute—

(a) the PRA,

(aa) the FCA, and.

19 In section 31 (bridge bank: reverse share transfer), in subsection (5), for
5paragraph (a) and the “and” following it, substitute—

(a) the PRA,

(aa) the FCA, and.

20 In section 41 (procedure), in subsection (1), for paragraph (c) and the “and”
following it, substitute—

(c) 10the PRA,

(ca) the FCA, and.

21 In section 42 (supplemental instruments), in subsection (5), for paragraph (a)
and the “and” following it, substitute—

(a) the PRA,

(aa) 15the FCA, and.

22 In section 43 (onward transfer), in subsection (7), for paragraph (a) and the
“and” following it, substitute—

(a) the PRA,

(aa) the FCA, and.

23 20In section 44 (reverse property transfer), in subsection (6), for paragraph (a)
and the “and” following it, substitute—

(a) the PRA,

(aa) the FCA, and.

24 In section 45 (temporary public ownership: property transfer), in subsection
25(8), for paragraph (a) and the “and” following it, substitute—

(a) the PRA,

(aa) the FCA, and.

25 In section 46 (temporary public ownership: reverse property transfer), in
subsection (7), for paragraph (a) and the “and” following it, substitute—

(a) 30the PRA,

(aa) the FCA, and.

26 In section 57 (valuation principles), in subsection (4)(a), for “Part 4”
substitute “Part 4A”.

27 (1) Section 82 (temporary public ownership) is amended as follows.

(2) 35In subsection (2), for “the FSA are” substitute “the PRA is”.

(3) In subsection (5), for paragraph (a) and the “and” following it, substitute—

(a) the PRA,

(aa) the FCA, and.

Financial Services BillPage 278

28 After section 83 insert—

Banks not regulated by PRA

83A Modifications of Part

(1) In the application of this Part to an FCA-regulated bank the
5modifications specified in the Table apply.

(2) In this section—

  • “FCA-regulated bank” means a bank which does not carry on
    any activity which is a PRA-regulated activity for the
    purposes of the Financial Services and Markets Act 2000;

  • 10“immediate group” has the meaning given by section 421ZA of
    the Financial Services and Markets Act 2000;

  • “PRA-authorised person” has the meaning given by section
    2B(5) of that Act.

TABLE OF MODIFICATIONS
Provision 15Modification
Section 7
(a)

Treat the references to the PRA in subsections
(1), (4), (4A) and (5) as references to the FCA.

(b)

Ignore subsection (5)(aa).

(c)

If the bank has as a member of its immediate
20group a PRA-authorised person the FCA
must consult the PRA before determining
whether or not Condition 2 is met.


Section 8 Subsection (3)(a) does not apply unless the bank has
25as a member of its immediate group a PRA-
authorised person.
Section 9 Subsection (4)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
authorised person.
Section 24 30Ignore subsection (1)(c).
Section 25 Ignore subsection (2)(c).
Section 26 Subsection (5)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
authorised person.
Section
26A
35Subsection (6)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
authorised person.
Section 27 Subsection (5)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
40authorised person.

Financial Services BillPage 279

Provision Modification
Section 28 Subsection (6)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
authorised person.
Section 29 5Subsection (6)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
authorised person.
Section 30 Subsection (5)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
10authorised person.
Section 31 Subsection (5)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
authorised person.
Section 41 Ignore subsection (1)(c).
Section 42 15Subsection (5)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
authorised person.
Section
42A
Subsection (6)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
20authorised person.
Section 43 Subsection (7)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
authorised person.
Section 44 Subsection (6)(a) does not apply unless the bank has
25as a member of its immediate group a PRA-
authorised person.
Section 45 Subsection (8)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
authorised person.
Section 46 30Subsection (7)(a) does not apply unless the bank has
as a member of its immediate group a PRA-
authorised person.
Section 82
(a)

Treat the reference to the PRA in subsection
(2) as a reference to the FCA.

(b)

35Ignore subsection (5)(a).


Part 2 Amendments of Part 2 of the Act

29 Part 2 of the Banking Act 2009 is amended as follows.

30 40In section 91 (interpretation: “bank”), for “Part 4” substitute “Part 4A”.

31 In section 93 (interpretation: other expressions), for subsection (1)