Session 2012 - 13
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25

 

House of Commons

 
 

Notices of Amendments

 

given up to and including

 

Friday 15 March 2013

 

New Amendments handed in are marked thus Parliamentary Star

 

Parliamentary Star - whiteAmendments 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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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

 

Parliamentary Star - white    

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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Revised 18 March 2013