Session 2013 - 14
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Other Bills before Parliament


 
 

Report Stage Proceedings: 8 July 2013                  

164

 

Financial Services (Banking Reform) Bill, continued

 
 

(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”)

 

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.


 
 

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Financial Services (Banking Reform) Bill, continued

 

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—

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.


 
 

Report Stage Proceedings: 8 July 2013                  

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Financial Services (Banking Reform) Bill, continued

 
 

(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

 

Not called  (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

 

Not called  (b)

 

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

 

Mr Andrew Tyrie

 

Not called  (c)

 

Line  110,  leave out ‘first’.

 

Mr Andrew Tyrie

 

Not called  (d)

 

Line  116,  leave out ‘first’.

 

Mr Andrew Tyrie

 

Not called  (e)

 

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


 
 

Report Stage Proceedings: 8 July 2013                  

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Financial Services (Banking Reform) Bill, continued

 
 

Mr Andrew Tyrie

 

Not called  (f)

 

Line  121,  leave out ‘first’.

 

Mr Andrew Tyrie

 

Not called  (g)

 

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

 

Mr Andrew Tyrie

 

Not called  (h)

 

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

 

Mr Andrew Tyrie

 

Not called  (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

 

Not called  (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

 

Not called  (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

 

Not called  (l)

 

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

 

Mr Andrew Tyrie

 

Not called  (m)

 

Line  166,  leave out ‘third’.

 

Mr Andrew Tyrie

 

Not called  (n)

 

Line  169,  leave out ‘third’.

 

Mr Andrew Tyrie

 

Not called  (o)

 

Line  173,  leave out ‘third’.

 

Mr Andrew Tyrie

 

Not called  (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.’.


 
 

Report Stage Proceedings: 8 July 2013                  

168

 

Financial Services (Banking Reform) Bill, continued

 
 

Ed Balls

 

Chris Leslie

 

Cathy Jamieson

 

Catherine McKinnell

 

Negatived on division  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

 

Not called  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.

 

(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;


 
 

Report Stage Proceedings: 8 July 2013                  

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Financial Services (Banking Reform) Bill, continued

 
 

(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),

 

(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).


 
 

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Financial Services (Banking Reform) Bill, continued

 
 

(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

 

Agreed to  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

 

Agreed to  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

 

Agreed to  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

 

Agreed to  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,”.

 

( )    

In Schedule 1ZB to FSMA 2000 (the Prudential Regulation Authority), in

 

paragraph 16(3)(c)(i), after “69,” insert “142JL,”.’

 



 
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