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Lords Amendments to the Financial Services (Banking Reform) Bill


 
 

161

 
 

(i)    

is requested by the CMA group for the purpose of

 

the investigation, or

 

(ii)    

in the FCA’s opinion, it would be appropriate to

 

give to the CMA group for that purpose.

 

(4)    

A CMA group, in carrying out a relevant investigation, must take

 

into account any information given to it under this section.

 

(5)    

In this section “CMA group” has the same meaning as in

 

Schedule 4 to the Enterprise and Regulatory Reform Act 2013.

 

234M  

Function of keeping market under review

 

(1)    

For the purpose of the functions conferred on it by sections 234I

 

to 234L the FCA is to have the function of keeping under review

 

the market for financial services.

 

(2)    

The function conferred by subsection (1) is to be carried out with

 

a view to (among other things) ensuring that the FCA has

 

sufficient information to take informed decisions and to carry out

 

its other functions effectively.

 

234N  

Exclusion of general duties

 

(1)    

Section 1B (the FCA’s general duties) does not apply in relation

 

to anything done by the FCA in the carrying out of its functions

 

by virtue of sections 234I to 234L.

 

(2)    

But in the carrying out of any functions by virtue of sections 234I

 

to 234L, the FCA may have regard to any of the matters in respect

 

of which a duty is imposed by section 1B if it is a matter to which

 

the CMA is entitled to have regard in the carrying out of those

 

functions.

 

234O  

Supplementary provision

 

(1)    

If any question arises as to whether, by virtue of section 234I or

 

234J, any functions fall to be, or are capable of being, carried out

 

by the FCA in relation to any particular case, that question is to

 

be referred to, and determined by, the Treasury.

 

(2)    

No objection is to be taken to anything done under the

 

Competition Act 1998 or Part 4 of the Enterprise Act 2002 by or

 

in relation to the FCA on the ground that it should have been

 

done by or in relation to the CMA.”

 

4          

In section 3I of FSMA 2000 (power of PRA to require FCA to refrain from

 

specified action), in subsection (3)(a), after “55I” insert “, a power

 

conferred on it by sections 234I to 234M”.

 

5          

In section 348 of FSMA 2000 (restrictions on disclosure of confidential

 

information by FCA, PRA etc), after subsection (6) insert—

 

“(7)    

Nothing in this section applies to information received by a

 

primary recipient for the purposes of, or in the discharge of, any

 

functions of the FCA under the Competition Act 1998 or the

 

Enterprise Act 2002 by virtue of Part 16A of this Act.

 

    

(For provision about the disclosure of such information, see Part

 

9 of the Enterprise Act 2002.)”


 
 

162

 
 

6          

In section 354A of FSMA 2000 (FCA’s duty to co-operate with others),

 

after subsection (2) insert—

 

“(2A)    

Subsection (1) does not apply in relation to the Competition and

 

Markets Authority in a case where the FCA has made a reference

 

under section 131 of the Enterprise Act 2002 as a result of section

 

234I (but see section 234L).”

 

7    (1)  

Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority) is

 

amended as follows.

 

      (2)  

In paragraph 8 (arrangements for discharging functions), after sub-

 

paragraph (4) insert—

 

  “(5)  

In respect of the exercise of a function under Part 1 of the

 

Competition Act 1998, the power in sub-paragraph (1) is

 

subject to provision in rules made under section 51 of that Act

 

by virtue of paragraph 1A of Schedule 9 to that Act.”

 

      (3)  

In paragraph 23 (fees), after sub-paragraph (2) insert—

 

“(2A)  

The functions referred to in sub-paragraph (1)(a) include

 

functions of the FCA under the Competition Act 1998 or the

 

Enterprise Act 2002 as a result of Part 16A of this Act; but this

 

sub-paragraph is not to be regarded as limiting the effect of the

 

definition of “functions” in paragraph 1.”

 

Part 2

 

Amendments of other legislation

 

Company Directors Disqualification Act 1986

 

8          

In section 9E of the Company Directors Disqualification Act 1986

 

(interpretation of sections 9A to 9D), in subsection (2), after paragraph

 

(g) insert—

 

“(h)    

the Financial Conduct Authority.”

 

Competition Act 1998

 

9          

In section 54 of the Competition Act 1998 (regulators), in subsection (1),

 

after paragraph (i) insert—

 

“(j)    

the Financial Conduct Authority.”

 

Enterprise Act 2002

 

10  (1)  

Section 136 of the Enterprise Act 2002 (investigations and reports on

 

market investigation references) is amended as follows.

 

      (2)  

In subsection (7), after paragraph (e) insert—

 

“(ea)    

in relation to the Financial Conduct Authority, section

 

234J of the Financial Services and Markets Act 2000;”.

 

      (3)  

In subsection (8), after “the Office of Rail Regulation,” insert “the

 

Financial Conduct Authority,”.


 
 

163

 
 

Enterprise and Regulatory Reform Act 2013

 

11         

In section 52(4) of the Enterprise and Regulatory Reform Act 2013

 

(power to remove concurrent competition functions of sectoral

 

regulators), after paragraph (g) insert—

 

“(h)    

the Financial Conduct Authority.”

 

12         

In Schedule 4 to the Enterprise and Regulatory Reform Act 2013 (the

 

Competition and Markets Authority), in paragraph 16 (concurrency

 

report), at the end of sub-paragraph (7) insert—

 

“(i)    

the Financial Conduct Authority.””

180

Insert the following new Schedule—

 

“Building societies

 

Introductory

 

1          

The Building Societies Act 1986 is amended as follows.

 

Exclusion of small business deposits from funding limit

 

2    (1)  

Section 7 (the funding limit) is amended as follows.

 

      (2)  

In subsection (3), omit the “and” at the end of paragraph (a) and after that

 

paragraph insert—

 

“(aa)    

subject to subsection (3A), the principal of, and interest

 

accrued on, sums deposited with the society or any

 

subsidiary undertaking of the society by a small business

 

(see subsection (10));”.

 

      (3)  

After subsection (3) insert—

 

“(3A)    

In respect of any day by reference to which the value of X falls to

 

be calculated for the purposes of subsection (1) in relation to the

 

society, the total amount to be disregarded under subsection

 

(3)(aa) may not exceed 10% of the amount that would, in the

 

absence of subsection (3)(aa), be the value of X on that day.”

 

      (4)  

After subsection (6) insert—

 

“(6ZA)    

Where a person declares that the person is a small business, the

 

person shall, unless the contrary is shown, be conclusively

 

presumed for the purposes of this section to be a small business.”

 

      (5)  

After subsection (9) insert—

 

“(10)    

In this section “small business” means any person (other than an

 

individual acting as a sole trader) carrying on a business which

 

had a turnover in the relevant financial year of less than

 

£1,000,000.

 

(11)    

For the purposes of subsection (10)—

 

(a)    

the “relevant financial year”, in relation to any day by

 

reference to which the value of X falls to be calculated for

 

the purposes of subsection (1) in relation to a building

 

society, means the last financial year ending before that

 

day;


 
 

164

 
 

(b)    

“turnover”, in relation to a small business, means the

 

amount derived from the provision of goods and services

 

falling within the business’s ordinary activities, after

 

deduction of trade discounts, value added tax and any

 

other taxes based on the amounts so derived;

 

(c)    

in respect of any relevant financial year, the reference to

 

£1,000,000 includes the equivalent amount in any other

 

currency, calculated as at the last day of that year.

 

(12)    

The Treasury may, by order made by statutory instrument,

 

amend the figure for the time being specified in subsections (10)

 

and (11)(c).

 

(13)    

A statutory instrument containing an order under subsection (12)

 

is subject to annulment in pursuance of a resolution of either

 

House of Parliament.”

 

3    (1)  

In article 3 of the Building Societies Act 1986 (Substitution of Specified

 

Amounts and Modification of the Funding Limits Calculation) Order

 

2007 (S.I. 2007/860), in paragraph 3, for “the modification required by

 

this article” substitute “the modifications required by this article and by

 

section 7(3)(aa)”.

 

      (2)  

The amendment by this paragraph of a provision contained in

 

subordinate legislation is without prejudice to any power to amend that

 

provision by subordinate legislation.

 

Ability to create floating charges

 

4    (1)  

Omit section 9B (restriction on creation of floating charges).

 

      (2)  

In Schedule 15A (application of other companies insolvency legislation

 

to building societies), omit the following paragraphs—

 

(a)    

paragraph 18 (which modifies section 15 of the Insolvency Act

 

1986);

 

(b)    

paragraph 20 (which modifies section 19 of that Act);

 

(c)    

paragraph 40 (which modifies Article 28 of the Insolvency

 

(Northern Ireland) Order 1989);

 

(d)    

paragraph 42 (which modifies Article 31 of that Order).

 

      (3)  

In consequence of the amendment made by sub-paragraph (1)—

 

(a)    

in section 1(1A)(b), for “, 9A and 9B” substitute “and 9A”;

 

(b)    

in the Building Societies Act 1997, omit section 11;

 

(c)    

in section 11(3) of the Banking (Special Provisions) Act 2008, for

 

paragraph (c) substitute—

 

“(c)    

sections 8 and 9A of the Building Societies Act

 

1986 (restrictions on raising funds and borrowing

 

and on transactions involving derivative

 

instruments etc);”;

 

(d)    

in section 251 of the Banking Act 2009, omit subsection (7);

 

(e)    

in the Financial Services Act 2012, omit section 55.

 

Annual business statements

 

5    (1)  

Section 74 (duty of directors to prepare annual business statement) is

 

amended as follows.


 
 

165

 
 

      (2)  

In subsection (4), omit the words from “and other officers” to “them”.

 

      (3)  

In subsection (8), omit “or other officer”.

 

Summary financial statements

 

6    (1)  

Section 76 (summary financial statement for members and depositors) is

 

amended as follows.

 

      (2)  

After subsection (8A) insert—

 

“(8AA)    

The society shall also—

 

(a)    

publish the summary financial statement and (where

 

applicable) the auditor’s report on a web site, and

 

(b)    

ensure that the statement and (where applicable) the

 

report may be accessed on the web site until the

 

publication of the next summary financial statement.”

 

      (3)  

After subsection (8D) insert—

 

“(8E)    

If, at any time during the period beginning with the publication

 

of the summary financial statement and ending with the

 

publication of the next summary financial statement, an

 

individual for the first time subscribes for shares in the society,

 

the society shall at that time notify the individual of the

 

information in subsection (8C)(c)(i) to (iii).

 

(8F)    

In a case where subsection (8E) applies, the society is not

 

required under section 115B (right to hard copy version) to send

 

the individual a version of the summary financial statement or

 

(where applicable) the auditor’s report in hard copy form (within

 

the meaning of that section).”

 

      (4)  

Omit subsections (9) to (9E).

 

      (5)  

In subsection (11), for “subsection (9)” substitute “subsection (8AA) or

 

(8E)”.

 

7          

In consequence of the amendments made by paragraph 6—

 

(a)    

in section 78(6), for “subsections (8) and (9) of section 76 extend”

 

substitute “subsection (8) of section 76 extends”;

 

(b)    

in paragraphs 7(3) and 8(3) of Schedule 2, omit “the summary

 

financial statement,”.

 

Transfers of business: distributions and share rights

 

8    (1)  

Section 100 (regulated terms etc: distributions and share rights) is

 

amended as follows.

 

      (2)  

For subsection (8) substitute—

 

“(8)    

The terms of a transfer of a society’s business may confer a right

 

to acquire shares in the successor on a member of the society only

 

if the member—

 

(a)    

held shares in the society throughout the period of two

 

years ending with the qualifying day, or

 

(b)    

on that day, holds deferred shares in the society that are

 

of a class described in the transfer agreement;


 
 

166

 
 

    

and it is unlawful for any right in relation to shares to be

 

conferred in contravention of this subsection.”

 

      (3)  

In subsection (9), for the words from “who” to “and” substitute “who—

 

(a)    

held shares in the society throughout the period of two

 

years ending with the qualifying day, or

 

(b)    

on that day, hold deferred shares in the society that are of

 

a class described in the transfer agreement;

 

    

and”.

 

Methods of communicating with members etc

 

9          

After section 115 insert—

 

“115A

Deemed agreement to use of web site

 

(1)    

For the purposes of this Act, a person is to be taken to have

 

agreed with a building society to access a document, information

 

or facility on a web site if—

 

(a)    

the person has been asked individually by the society to

 

agree to access documents, information or facilities

 

generally, or documents, information or facilities of the

 

description in question, on a web site, and

 

(b)    

the society has not received a response within the period

 

of 28 days beginning with the date on which the society’s

 

request was received.

 

    

This is subject to subsections (2) to (4).

 

(2)    

A person is not to be taken to have so agreed if the society’s

 

request—

 

(a)    

did not state clearly what the effect of a failure to respond

 

would be, or

 

(b)    

was sent less than 12 months after a previous request

 

made to the person for the purposes of this section in

 

respect of the same or a similar description of document,

 

information or facility.

 

(3)    

A person who is taken to have made an agreement by virtue of

 

subsection (1) may revoke the agreement.

 

(4)    

Subsection (1) does not apply in relation to the following

 

documents—

 

(a)    

a statement required to be sent to members by paragraph

 

1(1) of Schedule 16 (statements in connection with

 

proposed mergers);

 

(b)    

a merger statement (within the meaning of Part 2 of that

 

Schedule) required to be sent to members by paragraph 3

 

of that Schedule;

 

(c)    

a transfer statement or transfer summary (within the

 

meaning of Part 1 of Schedule 17) required to be sent to

 

members by paragraph 4(1) or (2) of that Schedule;

 

(d)    

a transfer proposal notification (within the meaning of

 

Part 1A of Schedule 17) required to be sent to members by

 

paragraph 5B(1) of that Schedule.


 
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