101.20-25

Session 2012 - 13
Internet Publications
Other Bills before Parliament

Lords Amendments to the Financial Services Bill

20

““credit-related regulated activity” has the meaning

given in section 23(1B);””
Clause 46
105
Page 130, line 8, after “3B(4),” insert “3F(6),”
106
Page 130, line 15, after “22B” insert “or 23A”
Clause 48
107
Page 131, line 47, leave out subsection (3)
108
Page 132, line 7, leave out “subsections (2) and (3)” and insert “subsection (2)”
109
Page 132, line 12, leave out “or (3)”
After Clause 48
110
Insert the following new Clause—


“Power to apply or disapply provision made by or under FSMA 2000

(1)
The Treasury may by order provide—

(a)
for any relevant provision that would not otherwise apply in

relation to transferred functions to apply in relation to those

functions with such modifications as may be specified;

(b)
for any relevant provision that would otherwise apply in relation to

transferred functions not to apply in relation to them or to apply

with such modifications as may be specified.

(2)
“Relevant provision” means a provision of, or made under, FSMA 2000.

(3)
“Transferred function” means a function that has been or is being

transferred by an order under section 47; and section 48(4) applies for the

purpose of this subsection.”
Clause 73
111
Page 145, line 6, leave out from beginning to “give” in line 7 and insert—

“(1)
This section applies where—

(a)
the Treasury consider that it is in the public interest that either

regulator should undertake an investigation into any relevant

events, and

(b)
it does not appear to the Treasury that the regulator has undertaken

or is undertaking an investigation (under this Part or otherwise)

into those events.

(1A)
The Treasury must”
112
Page 145, line 18, leave out “(1)” and insert “(1A)”
After Clause 76
113
Insert the following new Clause—

21


“Publication of directions

(1)
This section applies to a direction given by the Treasury under any of the

following provisions—

(a)
section 69(4);

(b)
section 70(5);

(c)
section 74(5).

(2)
As soon as practicable after giving the direction, the Treasury must—

(a)
lay before Parliament a copy of the direction, and

(b)
publish the direction in such manner as the Treasury think fit.

(3)
Subsection (2) does not apply where the Treasury consider that publication

of the direction would be against the public interest.”
Clause 80
114
Page 149, line 13, leave out “, 318 or 328” and insert “or 318”
After Clause 83
115
Insert the following new Clause—

“PART 6A

OFFENCES RELATING TO FINANCIAL SERVICES

Misleading statements

(1)
Subsection (2) applies to a person (“P”) who—

(a)
makes a statement which P knows to be false or misleading in a

material respect,

(b)
makes a statement which is false or misleading in a material respect,

being reckless as to whether it is, or

(c)
dishonestly conceals any material facts whether in connection with

a statement made by P or otherwise.

(2)
P commits an offence if P makes the statement or conceals the facts with the

intention of inducing, or is reckless as to whether making it or concealing

them may induce, another person (whether or not the person to whom the

statement is made)—

(a)
to enter into or offer to enter into, or to refrain from entering or

offering to enter into, a relevant agreement, or

(b)
to exercise, or refrain from exercising, any rights conferred by a

relevant investment.

(3)
In proceedings for an offence under subsection (2) brought against a person

to whom that subsection applies as a result of paragraph (a) of subsection

(1), it is a defence for the person charged (“D”) to show that the statement

was made in conformity with—

(a)
price stabilising rules,

(b)
control of information rules, or

(c)
the relevant provisions of Commission Regulation (EC) No 2273/

2003 of 22 December 2003 implementing Directive 2003/6/EC of

the European Parliament and of the Council as regards exemptions

22

for buy-back programmes and stabilisation of financial

instruments.

(4)
Subsections (1) and (2) do not apply unless—

(a)
the statement is made in or from, or the facts are concealed in or

from, the United Kingdom or arrangements are made in or from the

United Kingdom for the statement to be made or the facts to be

concealed,

(b)
the person on whom the inducement is intended to or may have

effect is in the United Kingdom, or

(c)
the agreement is or would be entered into or the rights are or would

be exercised in the United Kingdom.”
116
Insert the following new Clause—

“Misleading impressions

(1)
A person (“P”) who does any act or engages in any course of conduct which

creates a false or misleading impression as to the market in or the price or

value of any relevant investments commits an offence if—

(a)
P intends to create the impression, and

(b)
the case falls within subsection (2) or (3) (or both).

(2)
The case falls within this subsection if P intends, by creating the

impression, to induce another person to acquire, dispose of, subscribe for

or underwrite the investments or to refrain from doing so or to exercise or

refrain from exercising any rights conferred by the investments.

(3)
The case falls within this subsection if—

(a)
P knows that the impression is false or misleading or is reckless as

to whether it is, and

(b)
P intends by creating the impression to produce any of the results

in subsection (4) or is aware that creating the impression is likely to

produce any of the results in that subsection.

(4)
Those results are—

(a)
the making of a gain for P or another, or

(b)
the causing of loss to another person or the exposing of another

person to the risk of loss.

(5)
References in subsection (4) to gain or loss are to be read in accordance with

subsections (6) to (8).

(6)
“Gain” and “loss”—

(a)
extend only to gain or loss in money or other property of any kind;

(b)
include such gain or loss whether temporary or permanent.

(7)
“Gain” includes a gain by keeping what one has, as well as a gain by getting

what one does not have.

(8)
“Loss” includes a loss by not getting what one might get, as well as a loss

by parting with what one has.

(9)
In proceedings brought against any person (“D”) for an offence under

subsection (1) it is a defence for D to show—

(a)
to the extent that the offence results from subsection (2), that D

reasonably believed that D’s conduct would not create an

23

impression that was false or misleading as to the matters mentioned

in subsection (1),

(b)
that D acted or engaged in the conduct—

(i)
for the purpose of stabilising the price of investments, and

(ii)
in conformity with price stabilising rules,

(c)
that D acted or engaged in the conduct in conformity with control

of information rules, or

(d)
that D acted or engaged in the conduct in conformity with the

relevant provisions of Commission Regulation (EC) No 2273/2003

of 22 December 2003 implementing Directive 2003/6/EC of the

European Parliament and of the Council as regards exemptions for

buy-back programmes and stabilisation of financial instruments.

(10)
This section does not apply unless—

(a)
the act is done, or the course of conduct is engaged in, in the United

Kingdom, or

(b)
the false or misleading impression is created there.”
117
Insert the following new Clause—

“Misleading statements etc in relation to benchmarks

(1)
A person (“A”) who makes to another person (“B”) a false or misleading

statement commits an offence if—

(a)
A makes the statement in the course of arrangements for the setting

of a relevant benchmark,

(b)
A intends that the statement should be used by B for the purpose of

the setting of a relevant benchmark, and

(c)
A knows that the statement is false or misleading or is reckless as to

whether it is.

(2)
A person (“C”) who does any act or engages in any course of conduct which

creates a false or misleading impression as to the price or value of any

investment or as to the interest rate appropriate to any transaction commits

an offence if—

(a)
C intends to create the impression,

(b)
the impression may affect the setting of a relevant benchmark,

(c)
C knows that the impression is false or misleading or is reckless as

to whether it is, and

(d)
C knows that the impression may affect the setting of a relevant

benchmark.

(3)
In proceedings for an offence under subsection (1), it is a defence for the

person charged (“D”) to show that the statement was made in conformity

with—

(a)
price stabilising rules,

(b)
control of information rules, or

(c)
the relevant provisions of Commission Regulation (EC) No 2273/

2003 of 22 December 2003 implementing Directive 2003/6/EC of

the European Parliament and of the Council as regards exemptions

for buy-back programmes and stabilisation of financial

instruments.

(4)
In proceedings brought against any person (“D”) for an offence under

subsection (2) it is a defence for D to show—

24

(a)
that D acted or engaged in the conduct—

(i)
for the purpose of stabilising the price of investments, and

(ii)
in conformity with price stabilising rules,

(b)
that D acted or engaged in the conduct in conformity with control

of information rules, or

(c)
that D acted or engaged in the conduct in conformity with the

relevant provisions of Commission Regulation (EC) No 2273/2003

of 22 December 2003 implementing Directive 2003/6/EC of the

European Parliament and of the Council as regards exemptions for

buy-back programmes and stabilisation of financial instruments.

(5)
Subsection (1) does not apply unless the statement is made in or from the

United Kingdom or to a person in the United Kingdom.

(6)
Subsection (2) does not apply unless—

(a)
the act is done, or the course of conduct is engaged in, in the United

Kingdom, or

(b)
the false or misleading impression is created there.”
118
Insert the following new Clause—

“Penalties

(1)
A person guilty of an offence under this Part is liable—

(a)
on summary conviction, to imprisonment for a term not exceeding

the applicable maximum term or a fine not exceeding the statutory

maximum, or both;

(b)
on conviction on indictment, to imprisonment for a term not

exceeding 7 years or a fine, or both.

(2)
For the purpose of subsection (1)(a) “the applicable maximum term” is—

(a)
in England and Wales, 12 months (or 6 months, if the offence was

committed before the commencement of section 154(1) of the

Criminal Justice Act 2003);

(b)
in Scotland, 12 months;

(c)
in Northern Ireland, 6 months.”
119
Insert the following new Clause—

“Interpretation of Part 6A

(1)
This section has effect for the interpretation of this Part.

(2)
“Investment” includes any asset, right or interest.

(3)
“Relevant agreement” means an agreement—

(a)
the entering into or performance of which by either party

constitutes an activity of a kind specified in an order made by the

Treasury, and

(b)
which relates to a relevant investment.

(4)
“Relevant benchmark” means a benchmark of a kind specified in an order

made by the Treasury.

(5)
“Relevant investment” means an investment of a kind specified in an order

made by the Treasury.

25

(6)
Schedule 2 to FSMA 2000 (except paragraphs 25 and 26) applies for the

purposes of subsections (3) and (5) with references to section 22 of that Act

being read as references to each of those subsections.

(7)
Nothing in Schedule 2 to FSMA 2000, as applied by subsection (6), limits

the power conferred by subsection (3) or (5).

(8)
“Price stabilising rules” and “control of information rules” have the same

meaning as in FSMA 2000.

(9)
In this section “benchmark” has the meaning given in section 22(6) of

FSMA 2000.”
120
Insert the following new Clause—

“Affirmative procedure for certain orders

(1)
This section applies to the first order made under section (“Interpretation of

Part 6A”).

(2)
This section also applies to any subsequent order made under that section

which contains a statement by the Treasury that the effect of the proposed

order would include one or more of the following—

(a)
that an activity which is not specified for the purposes of subsection

(3)(a) of that section would become one so specified,

(b)
that an investment which is not a relevant investment would

become a relevant investment;

(c)
that a benchmark which is not a relevant benchmark would become

a relevant benchmark.

(3)
A statutory instrument containing (alone or with other provisions) an

order to which this section applies may not be made unless a draft of the

instrument has been laid before Parliament and approved by a resolution

of each House.”
121
Insert the following new Clause—

“Consequential repeal

Section 397 of FSMA 2000 (which relates to misleading statements and

practices and is superseded by the provisions of this Part) is repealed.”
Before Clause 84
122
Insert the following new Clause—

“Objectives and conditions

(1)
The Banking Act 2009 is amended as follows.

(2)
In section 3 (interpretation: other expressions), after “this Part—” insert—

““client assets” means assets which an institution has

undertaken to hold for a client (whether or not on trust, and

whether or not the undertaking has been complied with),”.

(3)
In section 4 (special resolution objectives), after subsection (8) insert—