101.63-68

Session 2012 - 13
Internet Publications
Other Bills before Parliament

Lords Amendments to the Financial Services Bill

63

(1D)
But a regulated activity may not be designated under subsection

(1B) if the agreement in question is one under which the

obligation of the borrower is secured on land.

(1E)
“Credit” includes any cash loan or other financial

accommodation.

(1F)
A person guilty of an offence under subsection (1A) 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 two years, or a fine, or both.

(1G)
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.”

      (3)
After subsection (3) insert—

“(4)
Subsection (1A) is subject to section 39(1D).

(5)
No proceedings may be brought against a person in respect of an

offence under subsection (1A) in a case where either regulator

has taken action under section 205, 206 or 206A in relation to the

alleged contravention within section 20(1) or (1A).”

      (4)
In the heading to the section, at the end insert “or section 20(1) or (1A)”.

2B
After section 23 insert—

“23A
Parliamentary control in relation to certain orders under section 23

(1)
This section applies to the first order made under section 23(1B).

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

section 23(1B) which contains a statement by the Treasury that, in

their opinion, the effect (or one of the effects) of the proposed

order would be that an activity would become a credit-related

regulated activity.

(3)
An order to which this section applies may not be made unless a

draft of the order has been laid before Parliament and approved

by a resolution of each House.”

2C
After section 26 insert—

“26A
Agreements relating to credit

(1)
An agreement that is made by an authorised person in

contravention of section 20 is unenforceable against the other

party if the agreement is entered into in the course of carrying on

a credit-related regulated activity involving matters falling

within section 23(1C)(a).

(2)
The other party is entitled to recover—

64

(a)
any money or other property paid or transferred by that

party under the agreement, and

(b)
compensation for any loss sustained by that party as a

result of having parted with it.

(3)
In subsections (1) and (2) “agreement” means an agreement—

(a)
which is made after this section comes into force, and

(b)
the making or performance of which constitutes, or is

part of, the credit-related regulated activity.

(4)
If the administration of an agreement involves the carrying on of

a credit-related regulated activity, the agreement may not be

enforced by a person for the time being exercising the rights of

the lender under the agreement unless that person has

permission, given under Part 4A or resulting from any other

provision of this Act, in relation to that activity.

(5)
If the taking of steps to procure payment of debts due under an

agreement involves the carrying on of a credit-related regulated

activity, the agreement may not be enforced by a person for the

time being exercising the rights of the lender under the

agreement unless the agreement is enforced in accordance with

permission—

(a)
given under Part 4A to the person enforcing the

agreement, or

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

3
In section 27 (agreements made through unauthorised persons) for

subsection (1) substitute—

“(1)
This section applies to an agreement that—

(a)
is made by an authorised person (“the provider”) in the

course of carrying on a regulated activity,

(b)
is not made in contravention of the general prohibition,

(c)
if it relates to a credit-related regulated activity, is not

made in contravention of section 20, and

(d)
is made in consequence of something said or done by

another person (“the third party”) in the course of—

(i)
a regulated activity carried on by the third party

in contravention of the general prohibition, or

(ii)
a credit-related regulated activity carried on by

the third party in contravention of section 20.

(1A)
The agreement is unenforceable against the other party.”

4
In section 28 (agreements made unenforceable by section 26 or 27)—

(a)
at the end of subsection (1) insert “, other than an agreement

entered into in the course of carrying on a credit-related

regulated activity”,

(b)
in the heading to the section, at the end insert “: general cases”.

5
After section 28 insert—

“28A
Credit-related agreements made unenforceable by section 26, 26A

or 27

(1)
This section applies to an agreement that—

65

(a)
is entered into in the course of carrying on a credit-related

regulated activity, and

(b)
is unenforceable because of section 26, 26A or 27.

(2)
The amount of compensation recoverable as a result of that

section is—

(a)
the amount agreed by the parties, or

(b)
on the application of either party, the amount specified in

a written notice given by the FCA to the applicant.

(3)
If on application by the relevant firm the FCA is satisfied that it

is just and equitable in the circumstances of the case, it may by

written notice to the applicant allow—

(a)
the agreement to be enforced, or

(b)
money paid or property transferred under the agreement

to be retained.

(4)
In considering whether to allow the agreement to be enforced or

(as the case may be) the money or property paid or transferred

under the agreement to be retained the FCA must—

(a)
if the case arises as a result of section 26 or 26A, have

regard to the issue mentioned in subsection (5), or

(b)
if the case arises as a result of section 27, have regard to

the issue mentioned in subsection (6).

(5)
The issue is whether the relevant firm reasonably believed that

by making the agreement the relevant firm was neither

contravening the general prohibition nor contravening section

20.

(6)
The issue is whether the provider knew that the third party was

(in carrying on the credit-related regulated activity) either

contravening the general prohibition or contravening section 20.

(7)
An application to the FCA under this section by the relevant firm

may relate to specified agreements or to agreements of a

specified description or made at a specified time.

(8)
“The relevant firm” means—

(a)
in a case falling within section 26, the person in breach of

the general prohibition;

(b)
in a case falling within section 26A or 27, the authorised

person concerned.

(9)
If the FCA thinks fit, it may when acting under subsection (2)(b)

or (3)—

(a)
limit the determination in its notice to specified

agreements, or agreements of a specified description or

made at a specified time;

(b)
make the determination in its notice conditional on the

doing of specified acts by the applicant.

28B
Decisions under section 28A: procedure

(1)
A notice under section 28A(2)(b) or (3) must—

(a)
give the FCA’s reasons for its determination, and

(b)
give an indication of—

66

(i)
the right to have the matter referred to the

Tribunal that is conferred by subsection (3), and

(ii)
the procedure on such a reference.

(2)
The FCA must, so far as it is reasonably practicable to do so, give

a copy of the notice to any other person who appears to it to be

affected by the determination to which the notice relates.

(3)
A person who is aggrieved by the determination of an

application under section 28A(2)(b) or (3) may refer the matter to

the Tribunal.””
234
Page 226, line 38, at end insert—

    “( )
In section 130 (guidance), in subsection (1)(b), for “section 397 of this

Act” substitute “Part 6A of the Financial Services Act 2012”.”
235
Page 227, line 43, leave out ““UCITS directive”” and insert ““auctioning

regulation””
236
Page 228, line 24, at end insert—

    “( )
After subsection (1) insert—

“(1A)
Each regulator’s policy with respect to the imposition of

penalties, suspensions or restrictions under this Part must

include policy with respect to their imposition in relation to

conduct which constitutes or may constitute an offence by virtue

of section 23(1A) (authorised persons carrying on credit-related

regulated activities otherwise than in accordance with

permission).””
237
Page 229, line 13, leave out from beginning to “qualifying” in line 14 and insert “for

sub-paragraph (i) (but not the “or” following it) substitute—

“(i)
which is imposed by or under this Act or by a”
238
Page 230, line 11, leave out from beginning to “qualifying” in line 12 and insert “for

sub-paragraph (i) (but not the “or” following it) substitute—

“(i)
which is imposed by or under this Act or by a”
239
Page 231, line 16, leave out ““UCITS directive”” and insert ““auctioning

regulation””
240
Page 233, line 18, leave out “and”
241
Page 233, line 19, at end insert “, and

(c)
for “a final notice” substitute “the notice required by subsection

(2A)”.

      ( )
After that subsection insert—

“(2A)
The notice required by this subsection is—

(a)
in a case where the regulator is acting in accordance with

a direction given by the Tribunal under section 133(6)(b),

or by the court on an appeal from a decision by the

Tribunal under section 133(6), a further decision notice,

and

(b)
in any other case, a final notice.”.”
242
Page 234, line 30, at end insert—

67

    “( )
In subsection (7A), for “the Authority” substitute “a regulator”.”
243
Page 235, line 44, at end insert “, and

(d)
a decision under section 391(1)(c) to publish information about

the matter to which a warning notice relates.”
244
Page 236, line 1, leave out from “from” to end of line 3 and insert ““, that the

decision” to the end and insert “that—

(a)
a decision falling within any of paragraphs (a) to (c) of subsection

(1) is taken—

(i)
by a person not directly involved in establishing the

evidence on which the decision is based, or

(ii)
by 2 or more persons who include a person not directly

involved in establishing that evidence,

(b)
a decision falling within paragraph (d) of subsection (1) is

taken—

(i)
by a person other than the person by whom the decision

was first proposed, or

(ii)
by 2 or more persons not including the person by whom

the decision was first proposed, and

(c)
a decision falling within paragraph (d) of subsection (1) is taken

in accordance with a procedure which is, as far as possible, the

same as that applicable to a decision which gives rise to an

obligation to give a warning notice and which falls within

paragraph (b) or (c) of subsection (1).””
245
Page 237, line 30, at end insert—

“30A
In section 400 (offences by a body corporate etc) after subsection (6)

insert—

“(6A)
References in this section to an offence under this Act include a

reference to an offence under Part 6A of the Financial Services

Act 2012 (offences relating to financial services).””
246
Page 237, line 31, at end insert—

    “( )
For subsection (1) substitute—

“(1)
In this section “offence” means—

(a)
an offence under this Act,

(b)
an offence under subordinate legislation made under this

Act, or

(c)
an offence under Part 6A of the Financial Services Act

2012 (offences relating to financial services).””
247
Page 238, line 17, leave out from “of” to end of line 18 and insert “any other

offence”
248
Page 238, line 23, at end insert—

“32A
In section 403 (jurisdiction and procedure in respect of offences), in

subsection (7), at the end insert “or an offence under Part 6A of the

Financial Services Act 2012 (offences relating to financial services).”
Schedule 10
249
Page 239, line 33, at end insert—

68

    “( )
In subsection (7), omit “board members,”.”
250
Page 242, line 11, at end insert—

“
In section 221 (powers of court), in subsection (2), after “director or”

insert “other”.


In section 222 (statutory immunity), in subsection (1), omit “board

member,”.”
Schedule 11
251
Page 243, line 17, at end insert—

“
In section 232 (powers of court), in subsection (2), after “director or”

insert “other”.”
252
Page 244, line 22, at end insert—

“
In paragraph 6 (status), in sub-paragraph (2), omit “board members,”.”
Schedule 12
253
Page 250, line 22, at end insert—

    “( )
In subsection (2)—

(a)
in paragraph (a), for “or 397” substitute “or under Part 6A of the

Financial Services Act 2012”, and

(b)
after paragraph (b) insert—

“(ba)
an authorised person may have contravened

section 20 in relation to a credit-related regulated

activity;”.”
254
Page 250, line 34, leave out from “for” to end of line 35 and insert ““the Authority”

substitute “a regulator”,”
255
Page 250, leave out line 37 and insert—

“(g)
for paragraph (k) substitute—”
256
Page 254, line 20, leave out sub-paragraph (4)
257
Page 255, leave out lines 29 and 30 and insert—

“(i)
officers of, or members of the staff of, the regulator, or”
258
Page 255, line 31, leave out “directors,”
259
Page 255, line 43, leave out “or members of its governing body”
Schedule 13
260
Page 257, line 11, at end insert—

“1A
In Part 22 (auditors and actuaries), before section 340 (and the italic

heading immediately before it) insert—