Financial Services Bill

Session 2012 - 13
Internet Publications
Other Bills before Parliament

Lords Amendments to the Financial Services Bill

14
69
Page 50, line 21, at end insert—

“(5A)
The PRA may refuse an application under subsection (5) if it appears to it

that it is desirable to do so in order to advance any of its objectives.”
70
Page 50, line 35, leave out “expires” and insert “may be expressed to expire”
71
Page 50, line 36, leave out “this” and insert “the imposition of a requirement that

expires at the end of a specified period”
72
Page 58, line 40, at end insert—

“Notification

55Z1
Notification of ESMA

A regulator must notify ESMA of—

(a)
the giving by it of a Part 4A permission to an investment firm,

where the regulated activities to which the permission relates are

investment services and activities,

(b)
the giving by it of a Part 4A permission to a management company

(as defined in section 237(2)), where the regulated activities to

which the permission relates fall within paragraph 8 of Schedule 2,

(c)
the cancellation by it of a Part 4A permission of a description falling

within paragraph (b), or

(d)
the cancellation by it of a Part 4A permission under section 55J(6),

in reliance on any one or more of the conditions in section 55K(1)(b)

to (d).

55Z2
Notification of EBA

(1)
A regulator must notify EBA of—

(a)
the giving by it of a Part 4A permission to a credit institution, where

the regulated activity to which the permission relates falls within

paragraph 4 of Schedule 2,

(b)
the cancellation by it of a Part 4A permission of a description falling

within paragraph (a).

(2)
“Credit institution” has the meaning given in section 1H(8).”
Clause 14
73
Page 64, line 1, leave out paragraph (c) and insert—

“( )
section 87B to 87D;”
74
Page 64, line 11, at end insert—

“( )
In section 87A (criteria for approval of prospectus)—

(a)
in subsection (1), for “competent authority” substitute ““FCA”,

(b)
in subsection (7)(a), for “competent authority”, in the first place,

substitute “FCA”, and

(c)
in the heading, for “competent authority” substitute “FCA”.”
75
Page 64, line 25, leave out from “State)” to end of line 26 and insert—

“(a)
in subsection (1), for “competent authority”, in the second and third

places, substitute “FCA”, and

15

(b)
in subsection (3A), for “competent authority” substitute “FCA”.”
76
Page 64, line 32, after ““other”” insert—

“( )
in subsection (1A), for “competent authority”, in the first place,

substitute “FCA”.”
Clause 22
77
Page 78, line 37, after “directives” insert “or the emission allowance auctioning

regulation”
78
Page 79, line 29, at end insert—

“137BA
FCA general rules: cost of credit and duration of credit agreements

(1)
The power of the FCA to make general rules includes power to make rules

prohibiting authorised persons from—

(a)
entering into a regulated credit agreement that provides for—

(i)
the payment by the borrower of charges of a specified

description, or

(ii)
the payment by the borrower over the duration of the

agreement of charges that, taken with the charges paid

under one or more other agreements which are treated by

the rules as being connected with it, exceed, or are capable

of exceeding, a specified amount;

(b)
imposing charges of a specified description or exceeding a specified

amount on a person who is the borrower under a regulated credit

agreement;

(c)
entering into a regulated credit agreement that—

(i)
is capable of remaining in force after the end of a specified

period,

(ii)
when taken with one or more other regulated credit

agreements which are treated by the rules as being

connected with it, would be capable of remaining in force

after the end of a specified period, or

(iii)
is treated by the rules as being connected with a number of

previous regulated credit agreements that exceeds a

specified maximum;

(d)
exercising the rights of the lender under a regulated credit

agreement (as a person for the time being entitled to exercise them)

in a way that enables the agreement to remain in force after the end

of a specified period or enables the imposition on the borrower of

charges within paragraph (a)(i) or (ii).

(2)
“Charges” means charges payable, by way of interest or otherwise, in

connection with the provision of credit under the regulated credit

agreement, whether or not the agreement itself makes provision for them

and whether or not the person to whom they are payable is a party to the

regulated credit agreement or an authorised person.

(3)
“The borrower” includes—

(a)
any person providing a guarantee or indemnity under the

regulated credit agreement, and

16

(b)
a person to whom the rights and duties of the borrower under the

regulated credit agreement or a person falling within paragraph (a)

have passed by assignment or operation of law.

(4)
In relation to an agreement entered into or obligation imposed in

contravention of the rules, the rules may—

(a)
provide for the 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 the agreement or other obligation by any 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 the agreement or obligation.

(5)
The provision that may be made as a result of subsection (4) includes

provision corresponding to that made by section 30 (enforceability of

agreements resulting from unlawful communications).

(6)
A credit agreement is a contract of the kind mentioned in paragraph 23 of

Schedule 2, other than one under which the obligation of the borrower to

repay is secured on land: and a credit agreement is a “regulated credit

agreement” if any of the following is a regulated activity—

(a)
entering into or administering the agreement;

(b)
exercising or being able to exercise the rights of the lender under the

agreement.

(7)
In this section—

(a)
“specified amount” means an amount specified in or determined in

accordance with the rules;

(b)
“specified period” means a period of a duration specified in or

determined in accordance with the rules;

(c)
“specified person” means a person of a description specified in the

rules;

(d)
subject to that, “specified” means specified in the rules.”
79
Page 81, line 19, at end insert—

“137DA
Rules requiring participation in benchmark

(1)
The power of the FCA to make general rules includes power to make rules

requiring authorised persons to take specified steps in connection with the

setting by a specified person of a specified benchmark.

(2)
The rules may in particular—

(a)
require authorised persons to whom the rules apply to provide

information of a specified kind, or expressions of opinion as to

specified matters, to persons determined in accordance with the

rules;

(b)
make provision about the form in which and the time by which any

information or expression of opinion is to be provided;

(c)
make provision by reference to any code or other document

published by the person responsible for the setting of the

benchmark or by any other person determined in accordance with

the rules, as the code or other document has effect from time to

time.

17

(3)
Rules making provision of the kind mentioned in subsection (2)(c) may

provide that the code or other document is to be capable of affecting

obligations imposed by the rules only if specified requirements are met in

relation to it.

(4)
In this section—

“benchmark” has the meaning given in section 22(6);

“specified” means specified in or determined in accordance with the

rules.”
80
Page 81, line 44, after “directives” insert “or the emission allowance auctioning

regulation”
81
Page 86, line 4, after “in” insert “or specified under”
82
Page 87, line 5, leave out “section 397(5)(b)” and insert “the relevant exemption

provisions”
83
Page 87, line 12, at end insert—

“(4)
“The relevant exemption provisions” are the following provisions of the

Financial Services Act 2012—

(a)
section (Misleading impressions)(9)(b);

(b)
section (Misleading statements etc in relation to benchmarks)(4)(a).”
84
Page 89, line 22, leave out “must” and insert “may”
85
Page 92, leave out line 14
86
Page 92, line 25, after “to” insert—

“(a)
rules made by the FCA under section 137BA, or”
87
Page 97, leave out lines 13 and 14
88
Page 99, leave out lines 20 and 21 and insert “to its functions under the short selling

regulation.”
Clause 23
89
Page 104, line 2, leave out from “Authority”” to end of line 3 and insert “or

“Authority’s” in each place substitute “FCA” or “FCA’s”.”
90
Page 104, line 4, leave out subsection (2) and insert—

“(2)
Subsection (1) does not affect references to “the competent authority”.”
Clause 24
91
Page 105, line 20, at end insert “or 3IA”
Clause 25
92
Page 107, line 27, leave out “any part of”
93
Page 108, leave out line 25 and insert “which—

(a)
is incorporated in the United Kingdom, or

(b)
has a place of business in the United Kingdom.”
94
Page 109, leave out lines 1 to 5 and insert—

18

“(2)
The general condition is that the appropriate regulator considers that it is

desirable to give the direction in order to advance—

(a)
in the case of the FCA, one or more of its operational objectives;

(b)
in the case of the PRA, any of its objectives.”
95
Page 109, line 12, leave out from “that” to end of line 15 and insert “the giving of

the direction is desirable for the purpose of the effective consolidated supervision

of the group”.
96
Page 109, leave out line 31
97
Page 109, leave out lines 43 and 44 and insert—

“( )
A requirement imposed by the direction may be expressed to expire at the

end of a specified period, but the imposition of a requirement that expires

at the end of a specified period does not affect the power to give a further

direction imposing a new requirement.

( )
The direction—

(a)
may be revoked by the regulator which gave it by written notice to

the body to which it is given, and

(b)
ceases to be in force if the body to which it is given ceases to be a

qualifying parent undertaking.”
Clause 27
98
Page 115, line 25, after “Act;” insert—

“(ba)
Part 2A makes provision relating to the winding up, administration

or insolvency of UK clearing houses;”
After Clause 28
99
Insert the following new Clause—

“Additional power to direct UK clearing houses

After section 296 of FSMA 2000 insert—

“296A
Additional power to direct UK clearing houses

(1)
The Bank of England may direct a UK clearing house to take, or

refrain from taking, specified action if the Bank is satisfied that it is

necessary to give the direction, having regard to the public interest

in—

(a)
protecting and enhancing the stability of the UK financial

system,

(b)
maintaining public confidence in the stability of the UK

financial system,

(c)
maintaining the continuity of the central counterparty

clearing services provided by the clearing house, and

(d)
maintaining and enhancing the financial resilience of the

clearing house.

(2)
The direction may, in particular—

(a)
specify the time for compliance with the direction,

(b)
require the rules of the clearing house to be amended, and

19

(c)
override such rules (whether generally or in their

application to a particular case).

(3)
The direction may not require the clearing house—

(a)
to take any steps for the purpose of securing its compliance

with—

(i)
the recognition requirements, or

(ii)
any obligation of a kind mentioned in section

296(1)(b) or (1A), or

(b)
to accept a transfer of property, rights or liabilities of

another clearing house.

(4)
If the direction is given in reliance on section 298(7) the Bank must,

within a reasonable time of giving the direction, give the clearing

house a statement of its reasons—

(a)
for giving the direction, and

(b)
for relying on section 298(7).

(5)
The direction is enforceable, on the application of the Bank, by an

injunction or, in Scotland, by an order for specific performance

under section 45 of the Court of Session Act 1988.

(6)
The Bank may revoke a direction given under this section.””
Clause 34
100
Page 119, line 20, at end insert—

“(2)
If the Treasury consider that it is in the public interest to do so, the Treasury

may by order—

(a)
amend section 391 of FSMA 2000 by substituting for subsections (1)

to (1ZB) the following—

“(1)
Neither the regulator giving a warning notice nor a person

to whom it is given or copied may publish the notice or any

details concerning it.”, and

(b)
repeal section 395(1)(d) and (2)(b) and (c) of that Act.”
Clause 37
101
Page 120, line 20, at end insert—

“(ii)
in paragraph (b), for “section 315” substitute “provision

made by or under this Act”, and”
102
Page 121, line 27, at end insert—

“(ii)
in paragraph (c), for “section 315” substitute “provision

made by or under this Act”,”
103
Page 121, line 38, at end insert—

“( )
In section 317 (the core provisions), in subsection (1), for “X” substitute

“9A”.”
Clause 45
104
Page 128, line 27, at end insert—

“( )
after that definition insert—