142.126-132

House of Commons

Session 2013 - 14
Internet Publications
Other Bills before Parliament

Lords Amendments to the Financial Services (Banking Reform) Bill

126

27
In section 85 (temporary public ownership), in subsection (1), for “third”

substitute “fourth”.

28
In section 136 (overview), in the Table in subsection (3), for “152”

substitute “152A”.

29
After section 152 insert—

“152A
Property transfer from transferred institution

(1)
This section applies where the Bank of England—

(a)
makes a resolution instrument that transfers securities

issued by a bank (or a bank’s parent undertaking), in

accordance with section 12A(2), and

(b)
later makes a property transfer instrument from the bank

or from another bank which is or was in the same group

as the bank, in accordance with section 41A(2).

(2)
This Part applies to the transferor under the property transfer

instrument made in accordance with section 41A(2) as to the

transferor under a property transfer instrument made in

accordance with section 12(2).

(3)
For that purpose this Part applies with any modifications

specified by the Treasury in regulations; and any regulations—

(a)
are to be made by statutory instrument, and

(b)
may not be made unless a draft has been laid before and

approved by resolution of each House of Parliament.”

30
In section 220 (insolvency etc), after subsection (4) insert—

“(4A)
The fact that ownership of an authorised bank is transferred or

otherwise changed as a result of a resolution instrument (or an

instrument treated as a resolution instrument) does not itself

prevent the bank from relying on section 213.”

31
In section 259 (statutory instruments)—

(a)
in the Table in subsection (3), in Part 1, in the entry relating to

section 60 for “Third party compensation” substitute “Third

party compensation: partial property transfers”;

(b)
in the Table in subsection (3), in Part 1, at the appropriate places

insert—

“48F(1)
Power to amend
Draft

and (2)
definition of
affirmative

“excluded liabilities”
resolution

48G
Insolvency treatment
Draft

principles
affirmative

resolution

48P
Safeguarding of
Draft

certain financial
affirmative

arrangements
resolution

52A
Bail-in compensation
Draft

orders
affirmative

resolution”

127

“60A
Third party
Draft

compensation:
affirmative

instruments
resolution”;

containing special

bail-in provision

(c)
in the Table in subsection (3), in Part 3, at the appropriate place

insert—

“152A
Property transfer
Draft

from transferred
affirmative

institution
resolution”;

(d)
in subsection (5), after paragraph (d) insert—

“(da)
section 60A (special resolution regime:

instruments containing special bail-in

provision),”;

(e)
in subsection (5), after paragraph (k) insert—

“(ka)
section 152A (bank administration: property

transfer from transferred institution),”.

32
In section 261 (index of defined terms), in the Table, at the appropriate

places insert—

“Bail-in
49”

compensation

order

“Resolution
12A”

instrument

“Special bail-
48B”.

in provision

Part 2

Modification of Investment Bank Special Administration Regulations 2011

33  (1)
This paragraph modifies the application of the Investment Bank Special

Administration Regulations 2011 (S.I. 2011/245) (“the regulations”) in

cases where a resolution instrument has been made under section 12A of

the Banking Act 2009 with respect to the investment bank in the relevant

3-month period.

      (2)
In sub-paragraph (1) “the relevant 3-month period” means the 3 months

ending with the date on which the FCA receives the notification under

Condition 1 in regulation 8 of the regulations.

128

      (3)
In their application to those cases, the regulations have effect with the

modifications in sub-paragraph (4); and any enactment that refers to the

regulations is to be read accordingly.

      (4)
In regulation 8 (in its application to those cases)—

(a)
in paragraph (5)(c)(ii), for “appropriate regulator” substitute

“Bank of England” and after “notice” insert “and the appropriate

regulator”;

(b)
in paragraph (6), omit sub-paragraph (a) (but continue to read

“that” in sub-paragraph (b) as a reference to the insolvency

procedure to which the notice relates);

(c)
after paragraph (6) insert—

“(6A)
Where the FCA receives notice under Condition 1, it must

also inform the Bank of England of the contents of the

notice.

(6B)
Where the Bank of England receives notice under

paragraph (6A), it must, within the period in Condition 3,

inform the person who gave the notice and the

appropriate regulator whether or not it consents to the

insolvency procedure to which the notice relates going

ahead.””
174
Insert the following new Schedule—

“Consequential amendments relating to Part 4

Financial Services and Markets Act 2000

1    (1)
Section 59 of FSMA 2000 (approval for particular arrangements) is

amended as follows.

      (2)
In subsection (1), for the words from “the appropriate regulator” to the

end substitute “that person is acting in accordance with an approval

given by the appropriate regulator under this section.”

      (3)
In subsection (2), for the words from “the appropriate regulator” to the

end substitute “that person is acting in accordance with an approval

given by the appropriate regulator under this section.”

2    (1)
Section 59A of FSMA 2000 (specifying functions as controlled functions:

supplementary) is amended as follows.

      (2)
In subsection (1)(a) and (b), for “significant-influence” substitute “senior

management”.

      (3)
After subsection (3) insert—

“(3A)
“Senior management function” has the meaning given by section

59ZA.”

3    (1)
Section 63 of FSMA 2000 (withdrawal of approval) is amended as

follows.

      (2)
In subsection (1A)(a), for “significant-influence function” substitute

“relevant senior management function”.

      (3)
For subsection (1B) substitute—

129

“(1B)
In subsection (1A) “relevant senior management function”

means a function which the PRA is satisfied is a senior

management function as defined in section 59ZA (whether or not

the function has been designated as such by the FCA).”

4
In section 63A of FSMA 2000 (power to impose penalties), in subsection

(2), for paragraph (b) substitute—

“(b)
P, when performing the function, is not acting in

accordance with an approval given under section 59.”

5    (1)
Section 66 of FSMA 2000 (disciplinary powers) is amended as follows.

      (2)
In subsection (3), for paragraph (ab) (and the “or” following it)

substitute—

“(ab)
impose, for such period as it considers appropriate, any

conditions in relation to any such approval which it

considers appropriate;

(ac)
limit the period for which any such approval is to have

effect;”.

      (3)
In subsection (3A), for “restriction” substitute “condition”.

      (4)
In subsection (3B), for “or restriction” substitute “, condition or

limitation”.

      (5)
In subsection (3C), for “restriction” substitute “condition”.

      (6)
In subsection (3D)—

(a)
in paragraph (a), for “or restriction” substitute “, condition or

limitation”,

(b)
omit the “or” at the end of paragraph (a),

(c)
in paragraph (b), for “restriction” substitute “condition”, and

(d)
after that paragraph insert—

“(c)
vary a limitation so as to increase the period for

which the approval is to have effect.”

      (7)
In subsection (9), for “restriction” substitute “condition”.

6    (1)
Section 67 of FSMA 2000 (disciplinary measures: procedure and right to

refer to Tribunal) is amended as follows.

      (2)
In subsection (1), for “or (ab)” substitute “, (ab) or (ac)”.

      (3)
In subsection (2A), for “restriction” (in both places) substitute

“condition”.

      (4)
After subsection (2A) insert—

“(2B)
A warning notice about a proposal to limit the period for which

an approval is to have effect must state the length of that period.”

      (5)
In subsection (4), for “or (ab)” substitute “, (ab) or (ac)”.

      (6)
In subsection (5A), for “restriction” (in both places) substitute

“condition”.

      (7)
After subsection (5A) insert—

“(5B)
A decision notice about limiting the period for which an

approval is to have effect must state the length of that period.”

130

      (8)
In subsection (7), for “or (ab)” substitute “, (ab) or (ac)”.

7
In section 69 of FSMA 2000 (statement of policy), in subsection (1)—

(a)
in paragraph (a), for “or restrictions” substitute “, conditions or

limitations”;

(b)
omit the “and” at the end of paragraph (b);

(c)
in paragraph (c), for “restrictions” substitute “conditions”;

(d)
at the end of paragraph (c) insert “; and

(d)
the period for which approvals under section 59

are to have effect as a result of a limitation under

section 66.”

8
In section 138A of FSMA 2000 (modification or waiver of rules), in

subsection (2), before paragraph (a) insert—

“(za)
rules made by either regulator under section 64A (rules of

conduct);”.

9
In section 138D of FSMA 2000 (actions for damages), in subsection (5),

before paragraph (a) insert—

“(za)
rules under section 64A (rules of conduct);”.

10
In section 140A of FSMA 2000 (interpretation), in the definition of

“regulating provisions”—

(a)
in paragraph (a)—

(i)
omit sub-paragraph (iii), and

(ii)
in sub-paragraph (iv), omit “64 or”;

(b)
in paragraph (b), omit sub-paragraphs (ii) and (iii).

11
In section 347 of FSMA 2000 (the record of authorised persons etc.), in

subsection (2)(g), in sub-paragraphs (ii) and (iii), for “relevant authorised

person” substitute “authorised person concerned”.

12
In section 387 of FSMA 2000 (warning notices), in subsection (1A), for “or

55I(8)” substitute “, 55I(8) or 61(2D)”.

13
In section 388 of FSMA 2000 (decision notices), in subsection (1A), for “or

55I(8)” substitute “, 55I(8) or 61(2D)”.

14
In section 395 of FSMA 2000 (supervisory notices), in subsection (13),

after paragraph (a) insert—

“(aa)
63ZC(4), (8) or (9)(b);”.

15  (1)
Section 415B of FSMA 2000 (consultation in relation to taking certain

enforcement action) is amended as follows.

      (2)
In subsection (4)—

(a)
in paragraph (b), for “significant-influence” substitute “relevant

senior management”, and

(b)
omit the definitions appearing after that paragraph.

      (3)
After subsection (4) insert—

“(5)
In subsection (4)—

“arrangement” has the same meaning as in section 59;

“relevant senior management function” means a function

which the FCA is satisfied is a senior management

131

function as defined in section 59ZA (whether or not it has

been designated as such under section 59(6A) or (6B)).”

16
In Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority), in

paragraph 8(3)—

(a)
in paragraph (b), omit “64 or”;

(b)
in paragraph (c)(i)—

(i)
after “section” insert “63ZD,”, and

(ii)
omit “64,”.

17
In Schedule 1ZB to FSMA 2000 (the Prudential Regulation Authority), in

paragraph 16(3)—

(a)
omit paragraph (b);

(b)
in paragraph (c)(i)—

(i)
after “section” insert “63ZD,”, and

(ii)
omit “64,”.

Financial Services Act 2012

18
In section 14 of the Financial Services Act 2012, omit subsection (4).

19  (1)
Section 85 of the Financial Services Act 2012 (relevant functions in

relation to complaints scheme) is amended as follows.

      (2)
In subsection (4)—

(a)
in paragraph (b), omit “64 or”;

(b)
in paragraph (c)(i)—

(i)
after “section” insert “63ZD,”, and

(ii)
omit “64,”.

      (3)
In subsection (5)—

(a)
omit paragraph (b);

(b)
in paragraph (c)(i)—

(i)
after “section” insert “63ZD,”, and

(ii)
omit “64,”.”
175
Insert the following new Schedule—

“The Payment Systems Regulator

Introductory

1
In this Schedule—

(a)
“the Regulator” means the Payment Systems Regulator;

(b)
references to the functions of the Regulator are to functions

conferred on it by or under this Part.

Constitution

2    (1)
The constitution of the Regulator must provide for it to have a board

whose members are the directors of the Regulator.

      (2)
The board is to consist of the following members—

(a)
a member to chair it, appointed by the FCA with the approval of

the Treasury;

132

(b)
a member to be the Managing Director, appointed by the FCA

with the approval of the Treasury;

(c)
one or more other members appointed by the FCA.

      (3)
The persons who may be appointed under sub-paragraph (2) include

persons who are members of the FCA’s governing body.

      (4)
A person may be appointed under sub-paragraph (2) only if the person

has knowledge or experience which is likely to be relevant to the exercise

by the Regulator of its functions.

      (5)
A person appointed under sub-paragraph (2)(a) or (b) is liable to

removal from office by the FCA (acting with the approval of the

Treasury).

      (6)
A person appointed under sub-paragraph (2)(c) is liable to removal from

office by the FCA.

Status

3    (1)
The Regulator is not to be regarded as exercising functions on behalf of

the Crown.

      (2)
The officers and staff of the Regulator are not to be regarded as Crown

servants.

Budget

4    (1)
The Regulator must adopt an annual budget which has been approved

by the FCA.

      (2)
The budget must be adopted—

(a)
in the case of the Regulator’s first financial year, as soon as

reasonably practicable after it is established, and

(b)
in the case of each subsequent financial year, before the start of

the financial year.

      (3)
The Regulator may, with the approval of the FCA, vary the budget for a

financial year at any time after its adoption.

      (4)
Before adopting or varying a budget, the Regulator must consult—

(a)
the Treasury, and

(b)
such other persons (if any) as the Regulator considers

appropriate.

      (5)
The Regulator must publish each budget, and each variation of a budget,

in the way it considers appropriate.

Arrangements for discharging functions

5    (1)
The Regulator may make arrangements for any of its functions to be

discharged by—

(a)
a committee, sub-committee, officer or member of staff of the

Regulator;

(b)
an officer or member of staff of the FCA.


This is subject to sub-paragraphs (2) to (4).