House of Commons Amendments

Session 2012 - 13
Internet Publications
Other Bills before Parliament

25

House of Commons

Notices of Amendments

given up to and including

Friday 15 March 2013

New Amendments handed in are marked thus

Amendments which will comply with the required notice period at their next appearance

Public Bill Committee

Financial Services (Banking Reform) Bill

Note

The Amendments have been arranged in accordance with the Order to be

proposed by Greg Clark.

Greg Clark

To move, That the Bill be considered in the following order, namely, Clauses 1 to 7;

the Schedule; Clauses 8 to 20; new Clauses; new Schedules; remaining proceedings on

the Bill.

Greg Clark

That, subject to the discretion of the Chair, any written evidence received by the

Committee shall be reported to the House for publication.

Notices of Amendments: 15 March 2013
26

Financial Services (Banking Reform) Bill, continued

Chris Leslie

Cathy Jamieson

11


Clause  1,  page  1,  line  11,  after ‘that’, insert ‘reduces the risk of ring-fenced bodies

assuming disproportionate exposure, enhances their capacity to cope with other exposure

and otherwise’.

Chris Leslie

Cathy Jamieson

12


Clause  1,  page  1,  line  18,  after ‘services,’, insert ‘in particular by securing the

orderly handling of circumstances in which ring-fenced bodies have encountered or may

encounter financial difficulties,’.

Chris Leslie

Cathy Jamieson

13


Clause  2,  page  2,  line  42,  after ‘that’, insert ‘reduces the risk of ring-fenced bodies

assuming disproportionate exposure, enhances their capacity to cope with other exposure

and otherwise’.

Chris Leslie

Cathy Jamieson

14


Clause  2,  page  3,  line  6,  after ‘services,’, insert ‘in particular by securing the

orderly handling of circumstances in which ring-fenced bodies have encountered or may

encounter financial difficulties,’.

Chris Leslie

Cathy Jamieson

15


Clause  4,  page  3,  line  33,  leave out from ‘order’ to end of line 35 and insert—

‘(a)
would significantly enhance the stability of the UK financial system or

provide other significant benefit to the economy of the United Kingdom,

and

(b)
would not pose a risk to the continuity of the provision in the United

Kingdom of core services.’.

Chris Leslie

Cathy Jamieson

26


Clause  4,  page  3,  line  35,  at end insert—

‘(3A)
In making an order under subsection (2)(b) which—

(a)
provides an exemption for UK institutions holding deposits below a

specified amount, or

(b)
varies the amount previously specified for the purposes of such an

exemption,

Notices of Amendments: 15 March 2013
27

Financial Services (Banking Reform) Bill, continued


the Treasury must aim to enhance competition among UK institutions which have

a Part 4A permission relating to one or more core activities (in particular by

having regard to the likely effect on the number of UK institutions applying for

or obtaining such a permission for the first time).’.

Chris Leslie

Cathy Jamieson

16


Clause  4,  page  5,  line  13,  leave out from ‘circumstances’ to end of line 15 and

insert—

‘(a)
would significantly enhance the stability of the UK financial system or

provide other significant benefit to the economy of the United Kingdom,

and

(b)
would not pose a risk to the continuity of the provision in the United

Kingdom of core services.’.

Chris Leslie

Cathy Jamieson

6


Clause  4,  page  5,  line  35,  at end add—

‘(8)
Within six months of this Act receiving Royal Assent the Treasury shall carry out

a review of the regulated activities of dealing in investments as principal, the

purposes of which review shall include consideration of—

(a)
safeguards that may be required to prevent the mis-selling of investments

as principal as part of the core services of each ring-fenced body;

(b)
a definition of “simple derivatives”, will reference to their size, maturity

and basis, the dealing of which will be permitted under section 142C;

(c)
the establishment of a maximum ratio, relevant to the size of the balance

sheet of a ring-fenced body which provides core services, for the value of

investments as principal held as financial assets or liabilities on its

balance sheet;

(d)
the establishment of a maximum gross volume on the balance sheet of a

ring-fenced body which provides core services, for the value of

investments as principal held as financial assets or liabilities on its

balance sheet; and

(e)
the information that may be required for an independent valuation of a

financial institutions’s assets or liabilities in respect of relevant

investments as principal.

(9)
The Chancellor of the Exchequer will—

(a)
lay before Parliament a report of the review in subsection (8); and

(b)
provide, by Order subject to an affirmative resolution of both Houses of

Parliament, such safeguards as may be set out in the review in subsection

(8).’.

Chris Leslie

Cathy Jamieson

3


Clause  4,  page  6,  line  24,  at end insert—

‘(1B)
If the order confers powers on a regulator or authorises or requires the making of

rules or other instruments by a regulator, then those power’s rules or instruments

are to be subject to annulment in pursuance of a resolution of either House of

Parliament.’.

Notices of Amendments: 15 March 2013
28

Financial Services (Banking Reform) Bill, continued

Chris Leslie

Cathy Jamieson

4


Clause  4,  page  6,  line  38,  at end insert—

‘(c)
has attempted to carry out an excluded activity or to contravene any

provision of an order under section 142E.’.

Chris Leslie

Cathy Jamieson

28


Clause  4,  page  7,  line  45,  at end insert—

‘( )
provision requiring that shares or voting power in a ring-fenced body are

held only by another member of the ring-fenced body’s group which is

not carrying on an excluded activity or by other members of that group

none of which is carrying on such an activity;’.

Chris Leslie

Cathy Jamieson

17


Clause  4,  page  8,  line  34,  at end insert—

‘(7A)
The Treasury must make regulations prescribing requirements with which ring-

fencing rules made for the group ring-fencing purposes must comply.’

Chris Leslie

Cathy Jamieson

24


Clause  4,  page  9,  leave out lines 8 to 21 and insert—

‘Reviews

142J
Reviews of ring-fencing

(1)
The Treasury must make arrangements for the carrying out of reviews of the

effects of the operation of the provision made by or under this Part in relation to

ring-fenced bodies, including ring-fencing rules made by the PRA and the FCA.

Such arrangements shall be set out in a statutory instrument subject to approval

by resolution of both Houses of Parliament.

(2)
The first review must be completed before the end of the period of two years

beginning with the date on which section 4 of the Financial Services (Banking

Reform) Act 2013, so far as it inserts this section, comes into force.

(3)
Subsequent reviews must be completed before the end of the period of two years

beginning with the date on which the previous review was completed.

(4)
Not less than nine months, nor more than 12 months, before the date on which a

review is due to be completed, the PRA and the FCA must publish a joint

assessment of the impact of the operation of their ring-fence rules.

(5)
For the purposes of this section a review is completed when the report of it is

published.

142JA
Persons by whom reviews are to be conducted

(1)
The Treasury shall appoint not fewer than five persons to conduct a review of

whom one is to chair it.

(2)
A person may not be appointed to chair a review unless the chairman of the

Treasury Committee of the House of Commons has notified the Treasury that, in

Notices of Amendments: 15 March 2013
29

Financial Services (Banking Reform) Bill, continued

the chairman‘s opinion, the person is likely to act independently of the Treasury,

the PRA and the FCA in carrying out the review.

(3)
The persons appointed to conduct a review must include at least one person with

substantial experience in central banking or financial regulation at a senior level.

(4)
The reference in subsection (2) to the Treasury Committee of the House of

Commons—

(a)
if the name of that Committee is changed, is to be treated as a reference

to that Committee by its new name, and

(b)
if the functions of that Committee (or substantially corresponding

functions) become functions of a different Committee of the House of

Commons, is to be treated as a reference to the Committee by which the

functions are exercisable;


and any question arising under paragraph (a) or (b) is to be determined by the

Speaker of the House of Commons.

142JB
Reports of review

(1)
The persons appointed to conduct a review must give the Treasury a report of the

review.

(2)
The report must include an assessment of the extent to which the provision made

by or under this Part in relation to ring-fenced bodies, including ring-fencing rules

made by the PRA and by the FCA, are facilitating the advancement by the PRA

of the objective in section 2B(3)(c) and by the FCA of the continuity objective.

(3)
If the report is made before section 4 of the Financial Services (Banking Reform)

Act 2013, so far as it inserts section 142JD, has come into force it must also

include a recommendation as to whether or not section 4 of that Act should be

brought into force to that extent.

(4)
The report must include—

(a)
recommendations to the Treasury as to the provision that should be

included in orders and regulations under this Part, and

(b)
recommendations to the PRA and the FCA about the provision that

should be included in ring-fencing rules.

(5)
The Treasury must lay a copy of the report before Parliament and publish it in

such manner as it thinks fit.’.

Chris Leslie

Cathy Jamieson

20


Clause  4,  page  9,  line  21,  at end insert—

‘Power to order full separation

142JC
Power to order separation in case of particular groups

(1)
Where—

(a)
the members of a group include one or more ring-fenced bodies and one

or more other bodies, and

(b)
it appears to the appropriate regulator that the conduct of any one or more

of the members of the group is such that there is a significant risk that the

appropriate regulator will not be able to advance the objective in section

2B(3)(c) (in the case of the PRA) or the continuity objective (in the case

of the FCA) otherwise than by acting under this section,


the appropriate regulator may give a notice to each of the members of the group.

Notices of Amendments: 15 March 2013
30

Financial Services (Banking Reform) Bill, continued

(2)
The notice must state that the appropriate regulator proposes to require the taking

of relevant steps in relation to the group before the date specified in the notice.

(3)
In this section “relevant steps” means steps to secure one of the following

results—

(a)
that there is no member of the group with a Part 4A permission to carry

on a regulated activity of a description specified in the notice;

(b)
that no member of the group is a ring-fenced body;

(c)
that there is no member of the group with a Part 4A permission to carry

on a regulated activity which is not a ring-fenced body.

(4)
The notice must—

(a)
specify a period, of not less than 3 months, during which any member of

the group may make representations to the appropriate regulator in

relation to its proposal, and

(b)
name an independent reviewer who is to report on the conduct of the

members of the group and the appropriateness of the proposal made by

the appropriate regulator.

(5)
A person may not be named as the independent reviewer without the consent of

the chairman of the Treasury Committee of the House of Commons; and the

reference in this subsection to the Treasury Committee of the House of

Commons—

(a)
if the name of that Committee is changed, is to be treated as a reference

to that Committee by its new name, and

(b)
if the functions of that Committee (or substantially corresponding

functions) become functions of a different Committee of the House of

Commons, is to be treated as a reference to the Committee by which the

functions are exercisable;


and any question arising under this paragraph (a) or (b) is to be determined by the

Speaker of the House of Commons.

(6)
After receiving any representations made in relation to the proposal by members

of the group and the report of the independent reviewer, the appropriate regulator

must decide whether it intends to implement the proposal.

(7)
If the appropriate regulator decides that it does intend to implement the proposal,

it must publish notice of the proposal, and of its decision to implement it, at least

60 days before it is implemented.

(8)
A person who is aggrieved by the decision of the appropriate regulator that it

intends to implement the proposal may refer the matter to the Tribunal.

(9)
The proposal may not be implemented without the consent of the Treasury; and

the Treasury must publish their decision on any application made by the

appropriate regulator for consent, together with their reasons for the decision, at

least 60 days before it is implemented.

(10)
Once the Treasury has consented to the implementation of the proposal and

either—

(a)
any reference to the Tribunal under subsection (8) has been dismissed, or

(b)
the period for making such a reference to the Tribunal has expired

without a reference having been made,


the appropriate regulator may implement the proposal by giving notice to the

members of the group requiring the taking of the relevant steps specified in the

proposal before the date so specified.

(11)
If the relevant steps have not been taken by the specified date, the appropriate

regulator may—

(a)
in a case where the relevant steps are aimed at securing the result in

paragraph (a) of subsection (3), take the action specified in subsection

(12),

Notices of Amendments: 15 March 2013
31

Financial Services (Banking Reform) Bill, continued

(b)
in a case where the relevant steps are aimed at securing the result in

paragraph (b) of subsection (3), take the action specified in subsection

(13), or

(c)
in a case where the relevant steps are aimed at securing the result in

paragraph (c) of subsection (3), take the action specified in subsection

(14).

(12)
The action referred to in paragraph (a) of subsection (11) is—

(a)
to cancel the Part 4A permission of any member of the group to carry on

the regulated activity specified in the notice, and

(b)
to refuse to give a Part 4A permission to any member of the group to

carry on that activity.

(13)
The action referred to in paragraph (b) of subsection (11) is—

(a)
to cancel the Part 4A permission of any member of the group that is a

ring-fenced body to the extent that it relates to a core activity, and

(b)
to refuse to give any member of the group a Part 4A permission to carry

on a core activity.

(14)
The action referred to in paragraph (c) of subsection (11) is—

(a)
to cancel the Part 4A permission of any member of the group that is not

a ring-fenced body, and

(b)
to refuse to give a Part 4A permission to any member of the group that is

not a ring-fenced body.’.

Chris Leslie

Cathy Jamieson

22


Clause  4,  page  9,  line  21,  at end insert—

‘Full separation

142JD
General requirement of separation

(1)
Where the members of any group include one or more ring-fenced bodies and one

or more other bodies, the members of the group must, before the end of the period

of five years beginning with the relevant commencement date, take steps to

secure that there are no members of the group that are ring-fenced bodies.

(2)
If in the case of any group steps to secure that there are no members of the group

that are ring-fenced bodies are not taken within the period specified in subsection

(1)—

(a)
at the end of that period the Part 4A permission of each member of the

group that is a ring-fenced body shall be treated as having been cancelled

to the extent that it relates to a core activity, and

(b)
after the end of that period the appropriate regulator must refuse to give

any member of the group a Part 4A permission to carry on a core activity.

(3)
At the end of the period specified in subsection (1)—

(a)
section 142H(1)(b) and (4) to (7), and

(b)
section 142JC,


cease to have effect.

(4)
In subsection (1) “the relevant commencement date” means the day appointed for

the coming into force of section 4 of the Financial Services (Banking Reform) Act

2013 so far as it inserts this section.’.



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