101.56-62

Session 2012 - 13
Internet Publications
Other Bills before Parliament

Lords Amendments to the Financial Services Bill

56
184
Page 182, line 27, at end insert—

“(3A)
Neither section 1A(6)(d) nor the definition of “functions” in

paragraph 1 applies for the purposes of sub-paragraph (2).”
185
Page 183, line 16, leave out from “as,” to end of line 18 and insert “a member, officer

or member of staff of the FCA;”
186
Page 183, line 21, at end insert—

  “(1A)
Anything done or omitted by a person mentioned in sub-paragraph

(1)(a) or (b) while acting, or purporting to act, as a result of an

appointment under any of sections 166 to 169 is to be taken for the

purposes of sub-paragraph (1) to have been done or omitted in the

discharge, or as the case may be purported discharge, of the FCA’s

functions.”
187
Page 183, line 33, leave out “or a member of its governing body”
188
Page 184, line 39, after “by” insert “the court of directors of”
189
Page 185, line 1, after “by” insert “the court of directors of”
190
Page 185, line 3, leave out “Bank” and insert “court of directors”
191
Page 185, line 10, leave out “Bank” and insert “court of directors”
192
Page 185, line 12, leave out “Bank” and insert “court of directors”
193
Page 185, line 34, after first “The” insert “court of directors of the ”
194
Page 185, line 43, after “by” insert “the Oversight Committee of”
195
Page 185, line 45, leave out “the Bank” and insert “that Committee”
196
Page 186, leave out lines 1 to 4
197
Page 186, line 9, after “functions” insert “or its functions under section 2DA

(strategy)”
198
Page 186, line 25, at end insert—

“Budget

17A(1)
The PRA must, for each of its financial years, adopt an annual

budget which has been approved by the Bank.

      (2)
The budget must be adopted before the start of the financial

year to which it relates, except that the first budget must be

adopted as soon as reasonably practicable after the coming

into force of this paragraph.

      (3)
The PRA may, with the approval of the Bank, vary the budget

for a financial year at any time after its adoption.

      (4)
The PRA must publish each budget, and each variation of a

budget, in such manner as the PRA thinks fit.”
199
Page 186, leave out line 32
200
Page 186, line 33, at end insert “and of the matter mentioned in section 2G(1)(b)”
201
Page 186, line 35, after “3I” insert “or 3IA”

57
202
Page 187, line 20, at end insert “and the matter mentioned in section 2G(1)(b)”
203
Page 189, leave out lines 1 to 4 and insert—

“26A (1)
The PRA must in respect of each of its financial years pay to the Treasury

its penalty receipts after deducting its enforcement costs.

      (2)
The PRA’s “penalty receipts” in respect of a financial year are any

amounts received by it during the year by way of penalties imposed

under this Act.

      (3)
The PRA’s “enforcement costs” in respect of a financial year are the

expenses incurred by it during the year in connection with—

(a)
the exercise, or consideration of the possible exercise, of any of its

enforcement powers in particular cases, or

(b)
the recovery of penalties imposed under this Act.

      (4)
For this purpose the PRA’s enforcement powers are—

(a)
its powers under any of the provisions mentioned in section

133(7A),

(b)
its powers under section 56 (prohibition orders),

(c)
its powers under Part 25 of this Act (injunctions and restitution),

(d)
its powers under any other enactment specified by the Treasury

by order,

(e)
its powers in relation to the investigation of relevant offences,

and

(f)
its powers in England and Wales or Northern Ireland in relation

to the prosecution of relevant offences.

      (5)
“Relevant offences” are—

(a)
offences under FSMA 2000,

(b)
offences under subordinate legislation made under that Act, and

(c)
any other offences specified by the Treasury by order.

      (6)
The Treasury may give directions to the PRA as to how the PRA is to

comply with its duty under sub-paragraph (1).

      (7)
The directions may in particular—

(a)
specify descriptions of expenditure that are, or are not, to be

regarded as incurred in connection with either of the matters

mentioned in sub-paragraph (3),

(b)
relate to the calculation and timing of the deduction in respect of

the PRA’s enforcement costs, and

(c)
specify the time when any payment is required to be made to the

Treasury.

      (8)
The directions may also require the PRA to provide the Treasury at

specified times with information relating to—

(a)
penalties that the PRA has imposed under FSMA 2000, or

(b)
the PRA’s enforcement costs.

      (9)
The Treasury must pay into the Consolidated Fund any sums received

by them under this paragraph.

26B
The PRA must prepare and operate a scheme (“the financial penalty

scheme”) for ensuring that the amounts that, as a result of the deduction

for which paragraph 26A(1) provides, are retained by the PRA in respect

58

of amounts paid to it by way of penalties imposed under this Act are

applied for the benefit of PRA-authorised persons.”
204
Page 189, line 6, leave out “authorised” and insert “PRA-authorised”
205
Page 189, line 6, at end insert—

    “( )
The financial penalty scheme must ensure that those who have become

liable to pay a penalty to the PRA in any financial year of the PRA do not

receive any benefit under the scheme in the following financial year.”
206
Page 190, line 6, after “Act” insert “or any of the other Acts mentioned in section

2A(6)”
207
Page 190, line 22, at end insert—

“(3A)
Neither section 2A(6)(d) nor the definition of “functions” in

paragraph 1 applies for the purposes of sub-paragraph (2).”
208
Page 191, line 8, leave out from “as,” to end of line 10 and insert “a member, officer

or member of staff of the PRA;”
209
Page 191, line 13, at end insert—

  “(1A)
Anything done or omitted by a person mentioned in sub-paragraph

(1)(a) or (b) while acting, or purporting to act, as a result of an

appointment under any of sections 97, 166 to 169 and 284 is to be taken

for the purposes of sub-paragraph (1) to have been done or omitted in

the discharge, or as the case may be purported discharge, of the PRA’s

functions.”
210
Page 191, line 25, leave out “or a member of its governing body”
Schedule 4
211
Page 198, line 39, leave out sub-paragraph (2) and insert—

    “(2)
For “the Authority” or “the Authority’s”, in each place, substitute “the

appropriate regulator” or “the appropriate regulator’s”.”
212
Page 199, line 1, leave out “(7)” and insert “(8)”
213
Page 199, line 2, leave out “(8)” and insert “(9)”
214
Page 199, line 10, leave out “(9)” and insert “(10)”
215
Page 199, line 13, at end insert—

    “( )
In the heading, for “Authority” substitute “appropriate regulator”.”
216
Page 199, line 32, leave out sub-paragraph (2) and insert—

    “(2)
For “the Authority” or “the Authority’s”, in each place, substitute “the

appropriate regulator” or “the appropriate regulator’s”.”
217
Page 199, line 34, leave out “(11)” and insert “(11A)”
218
Page 199, line 35, leave out “(11A)” and insert “(11B)”
219
Page 200, line 39, leave out sub-paragraph (4) and insert—

    “(4)
In subsections (3) to (11), for “the Authority” substitute “the regulator”.”
220
Page 201, line 1, leave out “(10)” and insert “(11)”

59
221
Page 201, line 2, leave out “(11)” and insert “(12)”
Schedule 5
222
Page 204, line 5, at end insert—

“(b)
after subsection (5) insert—

“(5A)
“The appropriate regulator”—

(a)
in relation to a controlled function which is of a

description specified in rules made by the FCA,

means the FCA, and

(b)
in relation to a controlled function which is of a

description specified in rules made by the PRA,

means the PRA.”, and

(c)
in subsection (6), after “Any” insert “other”.”
Schedule 7
223
Page 215, leave out lines 44 to 48 and insert—

“(a)
the general condition in subsection (2) were that the Bank

considers that it is desirable to give the direction for the purpose

of the effective regulation of one or more recognised clearing

houses in the group of the qualifying parent undertaking,”
224
Page 217, line 42, at end insert—

“Insolvency

23A(1)
The following provisions of Part 24 of this Act are to apply in relation to

the Bank—

(a)
section 356 (powers to participate in proceedings: company

voluntary arrangements);

(b)
section 358 (powers to participate in proceedings: trust deeds for

creditors in Scotland);

(c)
section 359 (administration order);

(d)
section 362 (powers to participate in administration

proceedings);

(e)
section 362A (consent to appointment of administrator);

(f)
section 363 (powers to participate in proceedings: receivership);

(g)
section 365 (powers to participate in proceedings: voluntary

winding-up);

(h)
section 367 (winding-up petitions);

(i)
section 371 (powers to participate in proceedings: winding-up).

      (2)
Those provisions are to apply as if any reference to an authorised person

or recognised UK investment exchange were a reference to a recognised

clearing house.

23B
In the case of any regulated activity which is carried on for the purposes

of, or in connection with, the provision of clearing services, the reference

to the FCA in section 375(1) is to be read as including a reference to the

Bank.”
225
Page 219, line 41, at end insert—

60

“Part 2A

Winding up, administration or insolvency of UK clearing houses

Notice to Bank of England of preliminary steps

31A(1)
An application for an administration order in respect of a UK clearing

house may not be determined unless the conditions below are satisfied.

      (2)
A petition for a winding up order in respect of a UK clearing house may

not be determined unless the conditions below are satisfied.

      (3)
A resolution for voluntary winding up of a UK clearing house may not

be made unless the conditions below are satisfied.

      (4)
An administrator of a UK clearing house may not be appointed unless

the conditions below are satisfied.

      (5)
Condition 1 is that the Bank of England has been notified—

(a)
by the applicant for an administration order, that the application

has been made,

(b)
by the petitioner for a winding up order, that the petition has

been presented,

(c)
by the UK clearing house, that a resolution for voluntary

winding up may be made, or

(d)
by the person proposing to appoint an administrator, of the

proposed appointment.

      (6)
Condition 2 is that a copy of the notice complying with Condition 1 has

been filed (in Scotland, lodged) with the court (and made available for

public inspection by the court).

      (7)
Condition 3 is that—

(a)
the period of 2 weeks, beginning with the day on which the

notice is received, has ended, or

(b)
the Bank of England has informed the person who gave the

notice that—

(i)
it has no objection to the order, resolution or appointment

being made, and

(ii)
it does not intend to exercise a stabilisation power under

Part 1 of the Banking Act 2009.

      (8)
Arranging for the giving of notice in order to satisfy Condition 1 can be

a step with a view to minimising the potential loss to a UK clearing

house’s creditors for the purpose of section 214 of the Insolvency Act

1986 (wrongful trading).

      (9)
In this paragraph “the court” means—

(a)
in England and Wales, the High Court,

(b)
in Scotland, the Court of Session, and

(c)
in Northern Ireland, the High Court.

Power to give directions to insolvency practitioner

31B(1)
This paragraph applies where a person has been appointed to act as an

insolvency practitioner (within the meaning of section 388 of the

Insolvency Act 1986 or article 3 of the Insolvency (Northern Ireland)

61

Order 1989) in relation to company which is, or has been, a UK clearing

house.

      (2)
The Bank of England may give directions to the person if satisfied that it

is desirable to give the directions, having regard to the public interest

in—

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

(b)
protecting and enhancing public confidence in the stability of the

UK financial system, and

(c)
maintaining the continuity of central counterparty clearing

services.

      (3)
Before giving directions the Bank of England must consult—

(a)
the Treasury,

(b)
(if the clearing house is a PRA-authorised person) the PRA, and

(c)
the FCA.

      (4)
Directions are enforceable, on an application by the Bank of England, by

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

section 45 of the Court of Session Act 1988.

      (5)
A person is not liable for damages in respect of action or inaction in

accordance with directions.

      (6)
The immunity does not extend to action or inaction—

(a)
in bad faith, or

(b)
in contravention of section 6(1) of the Human Rights Act 1998.”
Schedule 8
226
Page 223, line 25, leave out “subsection (5)” and “subsections (5) and (6)”
227
Page 223, line 26, after “procedure)” insert—

“(a)
in subsections (1), (6) and (7), after “section 296” insert “or 296A”,

and

(b)
”
228
Page 223, line 40, leave out from “provision)” to “substitute” in line 41 and insert

“for “Authority” (in each place)”
229
Page 225, line 12, leave out “and (12) (in both places)” and insert “, (12) (in both

places) and (13) (in the first place)”
230
Page 225, line 15, leave out “In section 313 (interpretation)” and insert—

    “(1)
Section 313 (interpretation) is amended as follows.

      (2)
In subsection (1)—

(a)
after the definition of “applicant” insert—

““central counterparty clearing services” has the

same meaning as in section 155 of the Companies

Act 1989 (see subsection (3A) of that section);”,

and

(b)
at the end insert—

“UK clearing house” means a clearing house—

(a)
which has its head office or its registered

office (or both) in the United Kingdom,

62

(b)
which provides central counterparty

clearing services, and

(c)
in relation to which a recognition order is

in force.”

      (3)
”
Schedule 9
231
Page 226, leave out lines 14 and 15 and insert—

    “(4)
For subsection (2) substitute—

“(2)
A contravention within subsection (1) or (1A)—

(a)
does not, except as provided by section 23(1A), make a

person guilty of an offence,

(b)
does not, except as provided by section 26A, make any

transaction void or unenforceable, and

(c)
does not, except as provided by subsection (3), give rise to

any right of action for breach of statutory duty.””
232
Page 226, line 17, at end insert—

    “( )
After subsection (3) insert—

“(4)
Subsections (1) and (1A) are subject to section 39(1D).

(5)
References in this Act to an authorised person acting in

contravention of this section are references to the person acting

in a way that results in a contravention within subsection (1) or

(1A).””
233
Page 226, line 17, at end insert—

“2A(1)
Section 23 (contravention of the general prohibition) is amended as

follows.

      (2)
After subsection (1) insert—

“(1A)
An authorised person (“A”) is guilty of an offence if A carries on

a credit-related regulated activity in the United Kingdom, or

purports to do so, otherwise than in accordance with

permission—

(a)
given to that person under Part 4A, or

(b)
resulting from any other provision of this Act.

(1B)
In this Act “credit-related regulated activity” means a regulated

activity of a kind designated by the Treasury by order.

(1C)
The Treasury may designate a regulated activity under

subsection (1B) only if the activity involves a person—

(a)
entering into or administering an agreement under which

the person provides another person with credit,

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

under an agreement under which another person

provides a third party with credit, or

(c)
taking steps to procure payment of debts due under an

agreement under which another person is provided with

credit.