House of Commons Amendments

Session 2012 - 13
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Other Bills before Parliament

Notices of Amendments: 15 March 2013
32

Financial Services (Banking Reform) Bill, continued

Chris Leslie

Cathy Jamieson

5


Clause  4,  page  12,  line  22,  at end insert—

‘(4A)
If the appropriate regulator is satisfied that—

(a)
a relevant body has contravened a requirement under subsection (1)(a) or

(1)(b) and knew or could reasonably be expected to have known it was

contravening such a requirement; or

(b)
has at any time attempted to contravene such a requirement and knew or

could reasonably be expected to have known it was contravening such a

requirement,


it may impose a penalty on the institution of such amount as it considers

appropriate.’.

Chris Leslie

Cathy Jamieson

32


Clause  4,  page  12,  line  22,  at end insert—

‘( )
If an order under this section includes provision for the grant by a regulator of any

exemption from the requirements imposed by such an order, the order must—

(a)
require a relevant body claiming the exemption to satisfy the regulator

that the exemption should be granted;

(b)
require the regulator, in deciding whether to grant the exemption, to have

regard to all reasonably foreseeable circumstances;

(c)
include provision for reviews of, or appeals from, any decision not to

grant the exemption;

(d)
require the regulator to make to the Treasury a report setting out any

decision to grant the exemption and the terms of the exemption granted,

and

(e)
require the Treasury to lay a copy of such a report before Parliament and

to publish it in such manner as they think fit.’.

Chris Leslie

Cathy Jamieson

18


Clause  4,  page  12,  line  31,  at end insert—

‘( )
section 142H(7A);’.

Chris Leslie

Cathy Jamieson

1


Clause  4,  page  12,  line  33,  at end insert ‘and

(ba)
section 142C.’.

Chris Leslie

Cathy Jamieson

2


Clause  4,  page  13,  line  7,  at end add—

‘(7)
A Treasury statement referred to in subsection (3) may only be made if the

Treasury considers that the statement is necessary—

(a)
to protect the continuity of provision in the UK of core services; or

(b)
to secure an appropriate degree of protection for depositors, or

Notices of Amendments: 15 March 2013
33

Financial Services (Banking Reform) Bill, continued

(c)
to ensure the continuing stability of the UK financial service market.’.

Chris Leslie

Cathy Jamieson

19


Clause  4,  page  13,  line  7,  at end insert—

‘142NA
Enhanced scrutiny procedure for certain affirmative procedure orders

(1)
This section applies if—

(a)
an order under section 142A(2)(b) exempts a class of UK institutions

from being ring-fenced bodies,

(b)
an order under sections 142B(2) or 142B(5) makes provision for a

regulated activity to be or cease to be a core activity or varies the

circumstances in which a regulated activity is a core activity,

(c)
an order under section 142D(2) varies the circumstances in which the

regulated activity of dealing in investments as principal is an excluded

activity,

(d)
an order under section 142D(4) provides for an activity to be or cease to

be an excluded activity or varies the circumstances in which an activity

is an excluded activity, or

(e)
an order under section 142E varies the scope of what ring-fenced bodies

are prohibited from doing by virtue of that section (including by varying

exemptions or conditions),

(f)
an order is made under section 142M,


and the order is not made in reliance on section 142N(4).

(2)
The Treasury must, before laying a draft of the order before either House of

Parliament for approval, consult such persons as the Treasury considers

appropriate in relation to the proposed draft.

(3)
If, after the consultation required by subsection (2), the Treasury considers that it

is appropriate to proceed with the making of an order, the Treasury must lay

before each House of Parliament a draft of the order together with an explanatory

document—

(a)
explaining the provisions in the draft order, and

(b)
giving details of the consultation under subsection (2), any

representations received as a result of the consultation and any changes

made to the proposed draft as a result of the representations.

(4)
If a joint committee of both Houses of Parliament is charged with reporting on the

draft order—

(a)
the chairman of the Treasury Committee of the House of Commons is to

be the chairman of the joint committee, and

(b)
the Treasury must have regard to any recommendations of the joint

committee made during the 60-day period.

(5)
If, after the expiry of the 60-day period, the Treasury wish to make an order

including material changes from the draft order, they must lay before

Parliament—

(a)
a revised draft order, and

(b)
a statement giving details of the revisions

(6)
After the expiry of the 60-day period (and, if subsection (5) applies, after

complying with that subsection) the Treasury may make the order in the terms of

the draft, or revised draft, if it is approved by a resolution of each House of

Parliament (as required by section 142N(2)(a)).

Notices of Amendments: 15 March 2013
34

Financial Services (Banking Reform) Bill, continued

(7)
In this section “the 60-day period” means the period of 60 days beginning with

the day on which the draft order is laid before Parliament under subsection (3).

(8)
In calculating the 60-day period no account is to be taken of any time during

which Parliament is dissolved or prorogued or during which either House is

adjourned for more than 4 days.

(9)
The references in this section 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.”.’.

Chris Leslie

Cathy Jamieson

10


Clause  5,  page  13,  line  36,  at end insert—

‘(7D)
In relation to the directors of a ring-fenced body, the following arrangements shall

apply—

(a)
Half of the board of directors of the ring-fenced body, both executive and

non-executive, will be made up of independent persons.

(b)
In this section an “independent person” means a person who—

(i)
has not been an employee of the group within the previous five

years;

(ii)
does not have a material business relationship with the group and

has not had one within the previous three years, including an

indirect relationship as a partner, director, senior employee or

shareholder or an adviser or major customer or supplier;

(iii)
does not receive remuneration from the group other than

remuneration in their capacity as an independent person does not

participate in the group’s share option or performance-related

pay schemes and is not a member of the pension scheme;

(iv)
does not have close family ties with any of the company’s

advisers, directors or senior employees;

(v)
does not hold cross-directorships or have significant links with

other directors through involvement in other companies or

bodies;

(vi)
does not represent a significant shareholder; and

(vii)
has not served on the board of any body in the group for more

than nine years.

(c)
The board of directors of the ring-fenced body, both executive and non-

executive, will have no formal, business or family relationship with the

directors of the rest of the group, other than by virtue of their appointment

to the same group.

(d)
The primary objective of the board of directors of the ring-fenced body,

both executive and non-executive, shall be on the performance and

Notices of Amendments: 15 March 2013
35

Financial Services (Banking Reform) Bill, continued

functions of the ring-fenced body and they will have no responsibility for

the performance and functions of the remainder of group.

(e)
All directors of the ring-fenced body shall have a duty to preserve the

integrity of the ring-fence between the group and its subsidiary.’.

Chris Leslie

Cathy Jamieson

25


Clause  6,  page  14,  line  7,  at end insert—

‘( )
the nature and extent of the dealings by ring-fenced bodies in derivative

products (including options, futures, contracts for differences and similar

products);’.

Chris Leslie

Cathy Jamieson

27


Clause  6,  page  14,  line  7,  at end insert ‘and

( )
developments affecting the appropriateness of the amount for the time

being specified for the purposes of any exemption under section

142A(2)(b) for UK institutions holding deposits below that specified

amount.’.

Chris Leslie

Cathy Jamieson

29


Schedule,  page  24,  line  9,  at end insert—

‘( )
After subsection (3) insert—

“(4)
Without prejudice to the generality of subsection (3), in the case of a ring-

fencing transfer scheme the court must not make an order sanctioning the

scheme if it considers that it might lead to the dissolution of a company

or to the transfer of liabilities owed to any persons in a manner that may

prejudice the interests of those persons.”.’.

Chris Leslie

Cathy Jamieson

7


Clause  9,  page  15,  line  25,  at end insert—

‘Category 8: Deposits of charitable bodies

15D
Any amount owed at the relevant date by the debtor in respect of deposits made

by charitable bodies up to the amount of nine tenths of the amount owed to the

persons to whom the amount is owed.

Notices of Amendments: 15 March 2013
36

Financial Services (Banking Reform) Bill, continued

Interpretation for category 8

15E(1)
In paragraph 15D “charitable body” means any organisation with charitable

status under section 1 of the Charities Act 2006.

      (2)
For this purpose a “deposit” means rights of the kind described in—

(a)
paragraph 22 of Schedule 2 to the Financial Services and Markets Act

2000 (deposits), or

(b)
section 1(2)(b) of the Dormant Bank and Building Society Accounts

Act 2008.’.

Chris Leslie

Cathy Jamieson

8


Clause  9,  page  15,  line  35,  after ‘Financial Services Compensation Scheme’, insert

‘and deposits of charitable bodies’.

Chris Leslie

Cathy Jamieson

9


Clause  9,  page  15,  line  36,  at end insert—

‘Deposits of charitable bodies

(6C)
Any amount owed at the relevant date by the debtor in respect of deposits made

by charitable bodies up to the amount of nine tenths of the amount owed to the

persons to whom the amount is owed.’.

Chris Leslie

Cathy Jamieson

30


Clause  16,  page  20,  line  28,  after ‘ring-fencing)’ insert ‘or section (Bank bail-in

regime)(2) (bank bail-in regime)’.

Chris Leslie

Cathy Jamieson

21


Clause  20,  page  21,  line  23,  at end insert—

‘( )
No order may be made appointing a day for the coming into force of section 4 so

far as it inserts section 142JC of FSMA 2000 unless the day is later than that on

which the report of the first review under section 142J of that Act is published.’.

Chris Leslie

Cathy Jamieson

23


Clause  20,  page  21,  line  23,  at end insert—

‘( )
No order may be made appointing a day for the coming into force of section 4 so

far as it inserts section 142JD of FSMA 2000 unless—

Notices of Amendments: 15 March 2013
37

Financial Services (Banking Reform) Bill, continued

(a)
the day is later than that on which there is published the report of a review

under section 142J of that Act containing a recommendation that section

4 should be brought into force to that extent, and

(b)
a draft of the order has been laid before, and approved by a resolution of,

each House of Parliament.’.

New Clauses

Leverage ratio

Chris Leslie

Cathy Jamieson

NC1


To move the following Clause:—

‘(1)
The Treasury may by order make provision about the tier 1 leverage ratio

applicable to a relevant body so as to require the relevant body to maintain a

minimum tier 1 leverage ratio.

(2)
The Treasury may by order make provision about the tier 1 leverage ratio

applicable to a ring-fenced body so as to require the Financial Policy Committee

to create differing minimum leverage ratios for different classes of ring-fenced

bodies, based upon the risk profile of their balance sheet.’.

FSCS review of company savings schemes

Chris Leslie

Cathy Jamieson

NC2


To move the following Clause:—

‘(1)
The Chief Executive of the Financial Services Compensation Scheme shall,

within six months of Royal Assent of this Act, publish a review of the protections

necessary for customers who make payments to any bodies corporate on the

understanding that such payments are deposits in a saving scheme.

(2)
The review in subsection (1) shall include consideration of any consequential

reform to creditor preference arrangements so that any payments made in advance

as part of a contract for the receipt of goods or services (such as gift vouchers,

certificates or other forms of pre-payment) in expectation that those sums would

be redeemable in a future exchange for such goods or services might be

considered as preferential debts in the event of insolvency.’.

Notices of Amendments: 15 March 2013
38

Financial Services (Banking Reform) Bill, continued

Professional standards

Chris Leslie

Cathy Jamieson

NC3


To move the following Clause:—

‘After section 65 of FSMA 2000 insert—

“Section 65A

Professional Standards

(5)
The regulator will raise standards of professionalism in financial services

by mandating a licensing regime based on training and competence. This

must—

(a)
apply to all approved persons exercising controlled functions,

regardless of financial sector;

(b)
specify minimum thresholds of competence including integrity,

professional qualifications, continuous professional

development and adherence to a recognised code of conduct;

(c)
make provisions in connection with—

(i)
the granting of a licence;

(ii)
the refusal of a licence;

(iii)
the withdrawal of a licence; and

(iv)
the revalidation of a licensed person of a prescribed

description whenever the appropriate regulator sees fit,

either as a condition of the person’s continuing to hold a

licence or of the person’s licence being restored.

(d)
be evidenced by individuals holding an annual validation of

competence.

(6)
In the Financial Services and Markets Act 2000, section 59, remove

“authorised” and insert “licensed” throughout the section.’.

Code of conduct

Chris Leslie

Cathy Jamieson

NC4


To move the following Clause:—

‘After section 64(6) of FSMA 2000 insert—

“(6A)
A code issued under subsection (2) shall—

(a)
apply to all approved persons exercising controlled functions in

the financial sector;

(b)
specify a framework of certain permitted and prohibited actions

with which approved persons must agree in writing to comply;

(c)
mandate individual financial penalties, and the terms of

temporary and permanent suspension of persons’ licence to



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