142.66-72

House of Commons

Session 2013 - 14
Internet Publications
Other Bills before Parliament

Lords Amendments to the Financial Services (Banking Reform) Bill

66

(b)
given before, or at the same time as, the Bank discloses the

information.

(7)
The prohibition in subsection (2) does not apply—

(a)
to disclosure by one regulator to the other regulator where the

regulator making the disclosure informs the other regulator that the

information is specially protected information by virtue of this

section;

(b)
where the Bank has consented to disclosure of the information;

(c)
to information which has been made available to the public by

virtue of being disclosed in any circumstances in which, or for any

purposes for which, disclosure is not precluded by this section;

(d)
to information which the regulator is required to disclose in

pursuance of any EU obligation.

(8)
In this section references to disclosure by or to a regulator or by the Bank

include references to disclosure by or to any of the following—

(a)
persons who are, or are acting as, officers of, or members of the staff

of, the regulator;

(b)
persons who are, or are acting as, officers, employees or agents of

the Bank;

(c)
auditors, experts, contractors or investigators appointed by the

regulator or the Bank under powers conferred by this Part or

otherwise.

(9)
References to disclosure by a regulator do not include references to

disclosure between persons who fall within subsection (8)(a) or (b) in

relation to that regulator.

(10)
Each regulator must take such steps as are reasonable in the circumstances

to prevent the disclosure of specially protected information, in cases not

excluded by subsection (7), by those who are or have been—

(a)
its officers or members of staff (including persons acting as its

officers or members of staff);

(b)
auditors, experts, contractors or investigators appointed by the

regulator under powers conferred by this Part or otherwise;

(c)
persons to whom the regulator has delegated any of its functions.”
119
Insert the following new Clause—


“Disclosure of information by Bank to Regulator


In section 246 of the Banking Act 2009 (information), in subsection (2), after

paragraph (c) insert—

“(ca)
the Payment Systems Regulator (established under section

(The Payment Systems Regulator) of the Financial Services

(Banking Reform) Act 2013);”.”
120
Insert the following new Clause—

“Guidance

Guidance

(1)
The Payment Systems Regulator may give guidance consisting of such

information and advice as it considers appropriate—

67

(a)
with respect to the operation of specified provisions of this Part;

(b)
with respect to any other matter relating to its functions under this

Part;

(c)
with respect to any other matters about which it appears to the

Payment Systems Regulator to be desirable to give information or

advice.

(2)
Guidance given by the Payment Systems Regulator under this section must

include guidance about how it intends to advance its payment systems

objectives in discharging its functions under this Part in relation to

different categories of payment system or participants in payment systems.

(3)
In this Part “general guidance” means guidance given by the Payment

Systems Regulator under this section which—

(a)
is given—

(i)
to persons generally,

(ii)
to participants in payment systems, or regulated payment

systems, generally, or

(iii)
to a class of participant in a payment system or regulated

payment system,

(b)
is intended to have continuing effect, and

(c)
is given in writing or other legible form.

(4)
The Payment Systems Regulator may give financial or other assistance to

persons giving information or advice of a kind which the Payment Systems

Regulator could give under this section.

(5)
The Payment Systems Regulator may—

(a)
publish its guidance,

(b)
offer copies of its published guidance for sale at a reasonable price,

and

(c)
if it gives guidance in response to a request made by any person,

make a reasonable charge for that guidance.”
121
Insert the following new Clause—

“Reports


Reports


If it considers that it is desirable to do so in order to advance any of its

payment systems objectives, the Payment Systems Regulator may prepare

and publish a report into any matter which it considers relevant to the

exercise of its functions under this Part.”
122
Insert the following new Clause—

“Relationship with other regulators


Duty of regulators to ensure co-ordinated exercise of functions

(1)
The following are regulators for the purposes of this section—

(a)
the Payment Systems Regulator;

(b)
the Bank of England;

(c)
the FCA;

68

(d)
the PRA.

(2)
The regulators must co-ordinate the exercise of their relevant functions (see

subsection (5)) with a view to ensuring—

(a)
that each regulator consults every other regulator (where not

otherwise required to do so) in connection with any proposed

exercise of a relevant function in a way that may have a material

adverse effect on the advancement by that other regulator of any of

its objectives;

(b)
that where appropriate each regulator obtains information and

advice from every other regulator in connection with the exercise of

its relevant functions in relation to matters of common regulatory

interest in cases where the other regulator may be expected to have

relevant information or relevant expertise.

(3)
The duty in subsection (2) applies only to the extent that compliance with

the duty—

(a)
is compatible with the advancement by each regulator of any of its

objectives, and

(b)
does not impose a burden on the regulators that is disproportionate

to the benefits of compliance.

(4)
A function conferred on a regulator relates to matters of common

regulatory interest if—

(a)
another regulator exercises similar or related functions in relation

to the same persons,

(b)
another regulator exercises functions which relate to different

persons but relate to similar subject-matter, or

(c)
its exercise could affect the advancement by another regulator of

any of its objectives.

(5)
“Relevant functions” means—

(a)
in relation to the Payment Systems Regulator, its functions under

this Part;

(b)
in relation to the Bank of England, its functions under Part 5 of the

Banking Act 2009 (inter-bank payment systems);

(c)
in relation to the FCA, the functions conferred on it by or under

FSMA 2000 (see section 1A(6) of that Act);

(d)
in relation to the PRA, the functions conferred on it by or under

FSMA 2000 (see section 2A(6) of that Act).

(6)
“Objectives” means—

(a)
in relation to the Payment Systems Regulator, its payment systems

objectives;

(b)
in relation to the Bank of England, its Financial Stability Objective

under section 2A of the Bank of England Act 1998;

(c)
in relation to the FCA, its strategic objective and operational

objectives under section 1B of FSMA 2000;

(d)
in relation to the PRA, its general objective under section 2B of that

Act.”
123
Insert the following new Clause—

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“Memorandum of understanding

(1)
The following are regulators for the purposes of this section—

(a)
the Payment Systems Regulator;

(b)
the Bank of England;

(c)
the FCA;

(d)
the PRA.

(2)
The regulators must prepare and maintain a memorandum which

describes in general terms—

(a)
the role of each regulator in relation to the exercise of relevant

functions which relate to matters of common regulatory interest,

and

(b)
how the regulators intend to comply with section (Duty of regulators

to ensure co-ordinated exercise of functions) in relation to the exercise

of such functions.

(3)
The regulators must review the memorandum at least once in each

calendar year.

(4)
The regulators must give the Treasury a copy of the memorandum and any

revised memorandum.

(5)
The Treasury must lay before Parliament a copy of any document received

by them under this section.

(6)
The regulators must ensure that the memorandum as currently in force is

published in the way appearing to them to be best calculated to bring it to

the attention of the public.

(7)
The memorandum need not relate to any aspect of compliance with section

(Duty of regulators to ensure co-ordinated exercise of functions) if the regulators

consider—

(a)
that publication of information about that aspect would be against

the public interest, or

(b)
that that aspect is a technical or operational matter not affecting the

public.

(8)
In this section—

(a)
the reference in subsection (2)(a) to matters of common regulatory

interest is to be read in accordance with section (Duty of regulators to

ensure co-ordinated exercise of functions)(4), and

(b)
references to relevant functions are to be read in accordance with

section (Duty of regulators to ensure co-ordinated exercise of

functions)(5).”
124
Insert the following new Clause—


“Power of Bank to require Regulator to refrain from specified action

(1)
Where the first, second and third conditions are met, the Bank of England

may give a direction under this section to the Payment Systems Regulator.

(2)
The first condition is that the Payment Systems Regulator is proposing to

exercise any of its powers under this Part in relation to a participant in a

regulated payment system.

70

(3)
The second condition is that the Bank of England is of the opinion that the

exercise of the power in the manner proposed may—

(a)
threaten the stability of the UK financial system,

(b)
have serious consequences for business or other interests in the

United Kingdom, or

(c)
have an adverse effect on the Bank’s ability to act in its capacity as

a monetary authority.

(4)
The third condition is that the Bank of England is of the opinion that the

giving of the direction is necessary in order to avoid the possible

consequence falling within subsection (3).

(5)
A direction under this section is a direction requiring the Payment Systems

Regulator not to exercise the power or not to exercise it in a specified

manner.

(6)
The direction may be expressed to have effect during a specified period or

until revoked.

(7)
The Payment Systems Regulator is not required to comply with a direction

under this section if or to the extent that in the opinion of the Payment

Systems Regulator compliance would be incompatible with any EU

obligation or any other international obligation of the United Kingdom.”
125
Insert the following new Clause—


“Power of FCA to require Regulator to refrain from specified action

(1)
Where the first, second and third conditions are met, the FCA may give a

direction under this section to the Payment Systems Regulator.

(2)
The first condition is that the Payment Systems Regulator is proposing to

exercise any of its powers under this Part in relation to a participant in a

regulated payment system.

(3)
The second condition is that the FCA is of the opinion that the exercise of

the power in the manner proposed may have an adverse effect on the

ability of the FCA to comply with its duty under section 1B(1) of FSMA

2000 (FCA’s general duties).

(4)
The third condition is that the FCA is of the opinion that the giving of the

direction is necessary in order to avoid the possible consequence falling

within subsection (3).

(5)
A direction under this section is a direction requiring the Payment Systems

Regulator not to exercise the power or not to exercise it in a specified

manner.

(6)
The direction may be expressed to have effect during a specified period or

until revoked.

(7)
The Payment Systems Regulator is not required to comply with a direction

under this section if or to the extent that in the opinion of the Payment

Systems Regulator compliance would be incompatible with any EU

obligation or any other international obligation of the United Kingdom.”
126
Insert the following new Clause—

71


“Power of PRA to require Regulator to refrain from specified action

(1)
Where the first, second and third conditions are met, the PRA may give a

direction under this section to the Payment Systems Regulator.

(2)
The first condition is that the Payment Systems Regulator is proposing to

exercise any of its powers under this Part in relation to—

(a)
a class of PRA-authorised persons, or

(b)
a particular PRA-authorised person.

(3)
The second condition is that the PRA is of the opinion that the exercise of

the power in the manner proposed may—

(a)
threaten the stability of the UK financial system,

(b)
result in the failure of a PRA-authorised person in a way that would

have an adverse effect on the stability of the UK financial system,

(c)
threaten the continuity of core services provided in the United

Kingdom, or

(d)
have an adverse effect on the ability of the PRA to comply with its

duty under section 2B(1) of FSMA 2000 (the PRA’s general

objective).

(4)
The third condition is that the PRA is of the opinion that the giving of the

direction is necessary in order to avoid the possible consequence falling

within subsection (3).

(5)
A direction under this section is a direction requiring the Payment Systems

Regulator not to exercise the power or not to exercise it in a specified

manner.

(6)
The direction may be expressed to have effect during a specified period or

until revoked.

(7)
The Payment Systems Regulator is not required to comply with a direction

under this section if or to the extent that in the opinion of the Payment

Systems Regulator compliance would be incompatible with any EU

obligation or any other international obligation of the United Kingdom.

(8)
The reference in subsection (3)(b) to the “failure” of a PRA-authorised

person is to be read in accordance with section 2J(3) and (4) of FSMA 2000.

(9)
In this section—

“core services” has the same meaning as in FSMA 2000 (see section

142C of that Act), and

“PRA-authorised person” has the same meaning as in FSMA 2000 (see

section 2B(5) of that Act).”
127
Insert the following new Clause—

“Consultation, accountability and oversight

Regulator’s general duty to consult

(1)
The Payment Systems Regulator must make and maintain effective

arrangements for consulting relevant persons on—

(a)
the extent to which its general policies and practices are consistent

with its general duties under section (Regulator’s general duties in

relation to payment systems), and

(b)
how its payment systems objectives may best be achieved.

72

(2)
The following are “relevant persons” for the purposes of this section—

(a)
participants in regulated payment systems, and

(b)
those who use, or are likely to use, services provided by regulated

payment systems.

(3)
Arrangements under this section must include the establishment and

maintenance of one or more panels of persons to represent the interests of

relevant persons.

(4)
Where the Payment Systems Regulator establishes a panel under

subsection (3), it must appoint one of the members of the panel to be its

chair.

(5)
The Treasury’s approval is required for the appointment or dismissal of the

chair of a panel established under subsection (3).

(6)
The Payment Systems Regulator must—

(a)
consider representations that are made to it in accordance with

arrangements made under this section, and

(b)
from time to time publish, in such manner as it thinks fit, responses

to the representations.”
128
Insert the following new Clause—

“Consultation in relation to generally applicable requirements

(1)
In this section references to imposing a generally applicable requirement

are to—

(a)
giving a general direction under section (Directions), or

(b)
imposing a generally-imposed requirement under section (System

rules),


and references to the requirement are to be read accordingly.

(2)
Before imposing a generally applicable requirement, the Payment Systems

Regulator must—

(a)
consult the Bank of England, the FCA and the PRA, and

(b)
after doing so, publish a draft of the proposed requirement in the

way appearing to the Payment Systems Regulator to be best

calculated to bring it to the attention of the public.

(3)
The draft must be accompanied by—

(a)
a cost benefit analysis,

(b)
an explanation of the purpose of the proposed requirement,

(c)
an explanation of the Payment Systems Regulator’s reasons for

believing that imposing the requirement is compatible with its

duties under section (Regulator’s general duties in relation to payment

systems), and

(d)
notice that representations about the proposed requirement may be

made to the Payment Systems Regulator within a specified time.

(4)
Before imposing the proposed requirement the Payment Systems

Regulator must have regard to any representations made to it in

accordance with subsection (3)(d).

(5)
If the Payment Systems Regulator proposes to impose the requirement, it

must publish an account, in general terms, of—