House of Commons Amendments

Session 2013 - 14
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487

House of Commons

Notices of Amendments

given on

Tuesday 2 July 2013

Consideration of Bill

Financial Services (Banking Reform) Bill

Minor amendments

Mr Chancellor of the Exchequer

NC1

To move the following Clause:—

‘Schedule [Minor amendments] (which contains amendments of, or connected

with, the Financial Services Act 2012 and amendments of provisions amended by

that Act) has effect.’.

Mr Chancellor of the Exchequer

1

Clause  1,  page  1,  line  20,  after ‘body’ insert ‘or of a member of a ring-fenced

body’s group’.

Mr Chancellor of the Exchequer

2

Clause  1,  page  2,  line  10,  at end insert—

‘(5)
In section 2J of FSMA 2000 (interpretation of Chapter 2 of Part 1)—

(a)
in subsection (3) for “a PRA-authorised” substitute “an authorised”,

(b)
after that subsection insert—

“(3A)
For the purposes of this Chapter, the cases in which a person

(“P”) other than an authorised person is to be regarded as failing

include any case where P enters insolvency.”, and

(c)
in subsection (4), for “subsection (3)(a)” substitute “subsections (3)(a)

and (3A)”.’.

Mr Chancellor of the Exchequer

3

Clause  2,  page  3,  line  8,  after ‘body’ insert ‘or of a member of a ring-fenced body’s

group’.

Notices of Amendments: 2 July 2013
488

Financial Services (Banking Reform) Bill, continued

Mr Chancellor of the Exchequer

4

Clause  2,  page  3,  line  9,  at end insert—

‘(4)
In subsection (3)(c), “failure” is to be read in accordance with section 2J(3) to

(4).’.

Mr Chancellor of the Exchequer

5

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

‘(3A)
Subject to that, in deciding whether and, if so, how to exercise their powers under

subsection (2)(b), the Treasury must have regard to the desirability of minimising

any adverse effect that the ring-fencing provisions might be expected to have on

competition in the market for services provided in the course of carrying on core

activities, including any adverse effect on the ease with which new entrants can

enter the market.

(3B)
In subsection (3A) “the ring-fencing provisions” means ring-fencing rules and the

duty imposed as a result of section 142G.’.

Mr Chancellor of the Exchequer

6

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

‘Group restructuring powers

142JA
Cases in which group restructuring powers become exercisable

(1)
The appropriate regulator may exercise the group restructuring powers

only if it is satisfied that one or more of Conditions A to D is met in

relation to a ring-fenced body that is a member of a group.

(2)
Condition A is that the carrying on of core activities by the ring-fenced

body is being adversely affected by the acts or omissions of other

members of its group.

(3)
Condition B is that in carrying on its business the ring-fenced body—

(a)
is unable to take decisions independently of other members of its

group, or

(b)
depends on resources which are provided by a member of its

group and which would cease to be available in the event of the

insolvency of the other member.

(4)
Condition C is that in the event of the insolvency of one or more other

members of its group the ring-fenced body would be unable to continue

to carry on the core activities carried on by it.

(5)
Condition D is that the ring-fenced body or another member of its group

has engaged, or is engaged, in conduct which is having, or would apart

from this section be likely to have, an adverse effect on the advancement

by the appropriate regulator—

(a)
in the case of the PRA, of the objective in section 2B(3)(c), or

(b)
in the case of the FCA, of the continuity objective.

(6)
The appropriate regulator may not exercise the group restructuring

powers in relation to any person if—

Notices of Amendments: 2 July 2013
489

Financial Services (Banking Reform) Bill, continued

(a)
either regulator has previously exercised the group restructuring

powers in relation to that person, and

(b)
the decision notice in relation to the current exercise is given

before the second anniversary of the day on which the decision

notice in relation to the previous exercise was given.

(7)
In this section and sections 142JB to 142JG “the appropriate regulator”

means—

(a)
where the ring-fenced body is a PRA-authorised person, the

PRA;

(b)
where it is not, the FCA.

142JB
Group restructuring powers

(1)
In this Part “the group restructuring powers” means one or more of the

powers conferred by this section.

(2)
Where the appropriate regulator is the PRA, the powers conferred by this

section are as follows—

(a)
in relation to the ring-fenced body, power to impose a

requirement on the ring-fenced body requiring it to take any of

the steps mentioned in subsection (5),

(b)
in relation to any member of the ring-fenced body’s group which

is a PRA-authorised person, power to impose a requirement on

the PRA-authorised person requiring it to take any of the steps

mentioned in subsection (6),

(c)
in relation to any member of the ring-fenced body’s group which

is an authorised person but not a PRA-authorised person, power

to direct the FCA to impose a requirement on the authorised

person requiring it to take any of the steps mentioned in

subsection (6), and

(d)
in relation to a qualifying parent undertaking, power to give a

direction under this paragraph to the parent undertaking

requiring it to take any of the steps mentioned in subsection (6).

(3)
Where the appropriate regulator is the FCA, the powers conferred by this

section are as follows—

(a)
in relation to the ring-fenced body, power to impose a

requirement on the ring-fenced body requiring it to take any of

the steps mentioned in subsection (5),

(b)
in relation to any member of the ring-fenced body’s group which

is an authorised person but not a PRA-authorised person, power

to impose a requirement on the authorised person requiring it to

take any of the steps mentioned in subsection (6),

(c)
in relation to any member of the ring-fenced body’s group which

is a PRA-authorised person, power to direct the PRA to impose

a requirement on the authorised person requiring it to take any of

the steps mentioned in subsection (6), and

(d)
in relation to a qualifying parent undertaking, power to give a

direction under this paragraph to the parent undertaking

requiring it to take any of the steps mentioned in subsection (6).

(4)
A parent undertaking of a ring-fenced body by reference to which the

group restructuring powers are exercisable is for the purposes of this Part

a “qualifying parent undertaking” if —

Notices of Amendments: 2 July 2013
490

Financial Services (Banking Reform) Bill, continued

(a)
it is a body corporate which is incorporated in the United

Kingdom and has a place of business in the United Kingdom, and

(b)
it is not itself an authorised person.

(5)
The steps that the ring-fenced body may be required to take are—

(a)
to dispose of specified property or rights to an outside person;

(b)
to apply to the court under Part 7 for an order sanctioning a ring-

fencing transfer scheme relating to the transfer of the whole or

part of the business of the ring-fenced body to an outside person;

(c)
otherwise to make arrangements discharging the ring-fenced

body from specified liabilities.

(6)
The steps that another authorised person or a qualifying parent

undertaking may be required to take are—

(a)
to dispose of any shares in, or securities of, the ring-fenced body

to an outside person;

(b)
to dispose of any interest in any other body corporate that is a

member of the ring-fenced body’s group to an outside person;

(c)
to dispose of other specified property or rights to an outside

person;

(d)
to apply to the court under Part 7 for an order sanctioning a ring-

fencing transfer scheme relating to the transfer of the whole or

part of the business of the authorised person or qualifying parent

undertaking to an outside person.

(7)
In subsections (5) and (6) “outside person” means a person who, after the

implementation of the disposal or scheme in question, will not be a

member of the group of the ring-fenced body by reference to which the

powers are exercised (whether or not that body is to remain a ring-fenced

body after the implementation of the disposal or scheme in question).

(8)
It is immaterial whether a requirement to be imposed on an authorised

person by the appropriate regulator, or by the other regulator at the

direction of the appropriate regulator, is one that the regulator imposing

it could impose under section 55L or 55M.

142JC
Procedure: preliminary notices

(1)
If the appropriate regulator proposes to exercise the group restructuring

powers in relation to any authorised person or qualifying parent

undertaking (“the person concerned”), the regulator must give each of the

relevant persons a first preliminary notice stating—

(a)
that the regulator is of the opinion that the group ring-fencing

powers have become exercisable in relation to the person

concerned, and

(b)
its reasons for being satisfied as to the matters mentioned in

section 142JA(1).

(2)
Before giving a first preliminary notice, the regulator must—

(a)
give the Treasury a draft of the notice,

(b)
provide the Treasury with any information that the Treasury may

require in order to decide whether to give their consent, and

(c)
obtain the consent of the Treasury.

Notices of Amendments: 2 July 2013
491

Financial Services (Banking Reform) Bill, continued

(3)
The first preliminary notice must specify a reasonable period (which may

not be less than 14 days) within which any of the relevant persons may

make representations to the regulator.

(4)
The relevant persons are—

(a)
the person concerned,

(b)
the ring-fenced body, if not the person concerned, and

(c)
any other authorised person who will, in the opinion of the

appropriate regulator, be significantly affected by the exercise of

the group restructuring powers.

(5)
After considering any representations made by any of the relevant

persons, the regulator must either—

(a)
with the consent of the Treasury, give each of the persons a

second preliminary notice, or

(b)
give each of them a notice stating that it has decided not to

exercise its group restructuring powers.

(6)
A second preliminary notice is a notice stating—

(a)
that the regulator proposes to exercise the group restructuring

powers, and

(b)
the manner in which it proposes to do so.

(7)
The second preliminary notice must specify a reasonable period (which

may not be less than 14 days) within which any of the relevant persons

may make representations to the regulator about the proposals.

(8)
The regulator must after considering any representations made in

response to the second preliminary notice give each of the relevant

persons a third preliminary notice stating—

(a)
whether it has made any revisions to the proposals, and

(b)
if so, what the revisions are.

142JD
Procedure: warning notice and decision notice

(1)
If the appropriate regulator has given a third preliminary notice, it must

either—

(a)
if it still proposes to exercise the group restructuring powers,

give each of the relevant persons a warning notice during the

warning notice period, or

(b)
before the end of the warning notice period, give each of them a

notice stating that it has decided not to exercise the powers.

(2)
The “warning notice period” is the period of 6 months beginning with the

first anniversary of the day on which the third preliminary notice was

given.

(3)
Before giving a warning notice under subsection (1)(a), the appropriate

regulator must —

(a)
give the Treasury a draft of the notice,

(b)
provide the Treasury with any information that the Treasury may

require in order to decide whether to give their consent, and

(c)
obtain the consent of the Treasury.

(4)
The action specified in the warning notice may be different from that

specified in the third preliminary notice if—

Notices of Amendments: 2 July 2013
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Financial Services (Banking Reform) Bill, continued

(a)
the appropriate regulator considers that different action is

appropriate as a result of any change in circumstances since the

third preliminary notice was given, or

(b)
the person concerned consents to the change.

(5)
The regulator must, in particular, have regard to anything that—

(a)
has been done by the person concerned since the giving of the

third preliminary notice, and

(b)
represents action that would have been required in pursuance of

the proposals in that notice.

(6)
If the regulator decides to exercise the group restructuring powers it must

give each of the relevant persons a decision notice.

(7)
The decision notice must allow at least 5 years from the date of the

decision notice for the completion of—

(a)
any disposal of shares, securities or other property that is

required by the notice, or

(b)
any transfer of liabilities for which the notice requires

arrangements to be made.

(8)
The giving of consent for the purpose of subsection (4)(b) does not affect

any right to refer to the Tribunal the matter to which any decision notice

resulting from the warning notice relates.

(9)
“The relevant persons” has the same meaning as in section 142JC.

142JE
References to Tribunal

(1)
A notified person who is aggrieved by—

(a)
the imposition by either regulator of a requirement as a result of

section 142JB(2)(a) or (b) or (3)(a) or (b),

(b)
a requirement to be imposed as a result of the giving by one

regulator to the other of a direction under section 142JB(2)(c) or

(3)(c), or

(c)
the giving by either regulator of a direction under section

142JB(2)(d) or (3)(d),


may refer the matter to the Tribunal.

(2)
“Notified person” means a person to whom a decision notice under

section 142JD(6) was given or ought to have been given.

142JF
Subsequent variation of requirement or direction

(1)
A regulator may at any time with the consent of the person concerned

vary—

(a)
a requirement imposed by it as a result of section 142JB(2)(a) or

(b) or (3)(a) or (b), or

(b)
a direction given by it as a result of section 142JB(2)(c) or (d) or

(3)(c) or (d).

(2)
The person concerned may at any time apply to the appropriate regulator

for the variation of—

(a)
a requirement imposed by it as a result of section 142JB(2)(a) or

(b) or (3)(a) or (b), or

(b)
a direction given by it as a result of section 142JB(2)(c) or (d) or

(3)(c) or (d).

Notices of Amendments: 2 July 2013
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Financial Services (Banking Reform) Bill, continued

(3)
Sections 55U, 55V, 55X and 55Z3 apply to an application under

subsection (2) as they apply to an application for the variation of a

requirement imposed by the appropriate regulator under section 55L or

55M.

142JG
Consultation etc. between regulators

(1)
Where a notice under section 142JC or a warning notice or decision

notice under section 142JD relates to a requirement to be imposed in

pursuance of a direction to be given as a result of section 142JB(2)(c) or

(3)(c), the appropriate regulator must—

(a)
consult the other regulator before giving the notice, and

(b)
give a copy of the notice to the other regulator.

(2)
The appropriate regulator must consult the other regulator before varying

under section 142JF a direction given as a result of section 142JB(2)(c)

or (3)(c).

(3)
Directions given by the FCA as a result of section 142JB(3)(c) are subject

to any directions given to the FCA under section 3I.

142JH
Relationship with regulators’ powers under Parts 4A and 12A

(1)
Subsection (2) applies in relation to—

(a)
a ring-fenced body which is a member of a mixed group, and

(b)
a parent undertaking of such a ring-fenced body.

(2)
A regulator may not exercise its general powers in relation to the ring-

fenced body or parent undertaking so as to achieve either of the results in

subsection (3).

(3)
Those results are—

(a)
that no existing group member is a parent undertaking of the

ring-fenced body;

(b)
that the ring-fenced body is not a member of a mixed group.

(4)
In subsection (3)(a) “existing group member” means a person who is a

member of the ring-fenced body’s group at the time when the

requirement is imposed or the direction given.

(5)
Except as provided by subsections (1) to (4), the provisions of sections

142JA to 142JG do not limit the general powers of either regulator.

(6)
For the purposes of this section, a regulator’s “general powers” are its

powers under the following provisions—

(a)
section 55L or 55M (imposition of requirements in connection

with Part 4A permission);

(b)
section 192C (power to direct qualifying parent undertaking).

(7)
For the purposes of this section, a ring-fenced body is a member of a

mixed group if a member of the ring-fenced body’s group carries on an

excluded activity.

Failure of parent undertaking to comply with direction

142JI
Power to impose penalty or issue censure

(1)
This section applies if a regulator is satisfied that a person who is or has

been a qualifying parent undertaking as defined in section 142JB(4) (“P”)



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