House of Commons Amendments

Session 2013 - 14
Internet Publications
Other Bills before Parliament

Consideration of Bill: 8 July 2013
548

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
215
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
220
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
225
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
230
(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
235
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.
240
(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.
245
(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).
250
(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
255
(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”)

Consideration of Bill: 8 July 2013
549

Financial Services (Banking Reform) Bill, continued

has contravened a requirement of a direction given to P by that regulator

as a result of section 142JB(2)(d) or (3)(d).

(2)
The regulator may impose a penalty of such amount as it considers
260
appropriate on—

(a)
P, or

(b)
any person who was knowingly concerned in the contravention.

(3)
The regulator may, instead of imposing a penalty on a person, publish a

statement censuring the person.
265
(4)
The regulator may not take action against a person under this section after

the end of the limitation period unless, before the end of that period, it has

given a warning notice to the person under section 142JJ.

(5)
“The limitation period” means the period of 3 years beginning with the

first day on which the regulator knew of the contravention.
270
(6)
For this purpose a regulator is to be treated as knowing of a contravention

if it has information from which the contravention can reasonably be

inferred.

(7)
The requirements that a regulator may be required to impose as a result

of a direction under section 142JB(2)(c) or (3)(c) include requirements
275
that the regulator would not but for the direction have power to impose.

142JJ
Procedure and right to refer to Tribunal

(1)
If a regulator proposes to take action against a person under section

142JI, it must give the person a warning notice.

(2)
A warning notice about a proposal to impose a penalty must state the
280
amount of the penalty.

(3)
A warning notice about a proposal to publish a statement must set out the

terms of the statement.

(4)
If the regulator decides to take action against a person under section

142JI, it must give the person a decision notice.
285
(5)
A decision notice about the imposition of a penalty must state the amount

of the penalty.

(6)
A decision notice about the publication of a statement must set out the

terms of the statement.

(7)
If the regulator decides to take action against a person under section
290
142JI, the person may refer the matter to the Tribunal.

142JK
Duty on publication of statement

After a statement under section 142JI(3) is published, the regulator must

send a copy of the statement to—

(a)
the person in respect of whom it is made, and
295
(b)
any person to whom a copy of the decision notice was given

under section 393(4).

142JL
Imposition of penalties under section 142JI: statement of policy

(1)
Each regulator must prepare and issue a statement of policy with respect

to—

Consideration of Bill: 8 July 2013
550

Financial Services (Banking Reform) Bill, continued

300
(a)
the imposition of penalties under section 142JI, and

(b)
the amount of penalties under that section.

(2)
A regulator’s policy in determining what the amount of a penalty should

be must include having regard to—

(a)
the seriousness of the contravention,
305
(b)
the extent to which the contravention was deliberate or reckless,

and

(c)
whether the person on whom the penalty is to be imposed is an

individual.

(3)
A regulator may at any time alter or replace a statement issued under this
310
section.

(4)
If a statement issued under this section is altered or replaced, the

regulator must issue the altered or replacement statement.

(5)
In exercising, or deciding whether to exercise, a power under section

142JI(2) in the case of any particular contravention, a regulator must
315
have regard to any statement of policy published under this section and

in force at a time when the contravention occurred.

(6)
A statement under this section must be published by the regulator

concerned in the way appearing to the regulator to be best calculated to

bring it to the attention of the public.
320
(7)
A regulator may charge a reasonable fee for providing a person with a

copy of the statement published under this section.

(8)
A regulator must, without delay, give the Treasury a copy of any

statement which it publishes under this section.

(9)
Section 192I applies in relation to a statement under this section as it
325
applies in relation to a statement under section 192H.’

As Amendments to Mr Chancellor of the Exchequer’s proposed Amendment (No.

6):—

Mr Andrew Tyrie

(a)

Line  23,  at end insert—

‘(5A)
Condition E is that the appropriate regulator judges that there are serious failures

in the culture and standards of the ring-fenced body or another member of its

group.

(6)
When judging whether there are serious failures in the culture and standards of

the ring-fenced body or another member of its group, the appropriate regulator

must take account of the recommendations in the five reports of the Parliamentary

Commission on Banking Standards.’.

Mr Andrew Tyrie

(b)

Line  106,  leave out ‘notices’ and insert ‘notice’.

Mr Andrew Tyrie

(c)

Line  110,  leave out ‘first’.

Consideration of Bill: 8 July 2013
551

Financial Services (Banking Reform) Bill, continued

Mr Andrew Tyrie

(d)

Line  116,  leave out ‘first’.

Mr Andrew Tyrie

(e)

Line  119,  leave out from ‘require’ to end of line 120.

Mr Andrew Tyrie

(f)

Line  121,  leave out ‘first’.

Mr Andrew Tyrie

(g)

Line  122,  leave out ‘14 days’ and insert ‘6 weeks’.

Mr Andrew Tyrie

(h)

Line  130,  leave out from beginning to end of line 147.

Mr Andrew Tyrie

(i)

Line  149,  leave out from beginning to ‘must’ and insert ‘At the end of the period

for making representations required under section 142JC(3), the regulator’.

Mr Andrew Tyrie

(j)

Line  155,  at end insert—

‘(1A)
If, following representations, the regulator makes revisions to the proposals, it

must inform the relevant persons of those revisions.’.

Mr Andrew Tyrie

(k)

Line  156,  leave out from ‘beginning’ to end of line 158 and insert ‘at the end of

the period for making representations required under section 142JC(3).’.

Mr Andrew Tyrie

(l)

Line  163,  leave out from ‘require’ to end of line 164.

Mr Andrew Tyrie

(m)

Line  166,  leave out ‘third’.

Mr Andrew Tyrie

(n)

Line  169,  leave out ‘third’.

Mr Andrew Tyrie

(o)

Line  173,  leave out ‘third’.

Consideration of Bill: 8 July 2013
552

Financial Services (Banking Reform) Bill, continued

Mr Andrew Tyrie

(p)

Line  178,  leave out from ‘must’ to end of line 183 and insert ‘specify the period

for completion of the actions required by the notice.’.

Ed Balls

Chris Leslie

Cathy Jamieson

Catherine McKinnell

18

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.’.

Mr Andrew Tyrie

19

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.

Consideration of Bill: 8 July 2013
553

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),

Consideration of Bill: 8 July 2013
554

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.’.

Mr Chancellor of the Exchequer

7

Clause  4,  page  13,  line  10,  leave out from beginning to ‘any’ and insert—

‘(1)
This section has effect for the interpretation of this Part.’

Mr Chancellor of the Exchequer

8

Clause  4,  page  13,  line  14,  at end insert—

‘(3)
Any reference to the group restructuring powers is to be read in accordance with

section 142JB(1).’

Mr Chancellor of the Exchequer

9

Clause  4,  page  13,  line  14,  at end insert—

‘( )
In section 133 of FSMA 2000 (proceedings before Tribunal), in subsection (7A)

after paragraph (i) insert—

“(ia)
a decision to take action under section 142JI;”.

( )
In section 392 of FSMA 2000 (application of sections 393 and 394)—

(a)
in paragraph (a), after “131H(1),” insert “142JJ(1),”, and

(b)
in paragraph (b), after “131H(4),” insert “142JJ(4),”.’

Mr Chancellor of the Exchequer

10

Clause  4,  page  13,  line  26,  at end insert—

‘( )
In Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority), in paragraph

8(3)(c)(i), after “138N,” insert “142JL,”.



© Parliamentary copyright	Revised 8 July 2013